Digests For Quimson

Insurance Law Digests
Prof. Jose B. Quimson
1) Constantino v Asia Life Insurance Co. (Anastacio) FACTS: FIRST CASE: AsiaLife, an American corporation, insured the life of Arcadio Constantino for a term of 20 years for P3,000.00. The beneficiary of the said policy was Paz Lopez de Constantino (plaintiff). The policy stipulated that nonpayment of premiums (to be paid every Sept 27 but with a grace period of 31 days) will cause its forfeiture. "all premium payments are due in advance and any unpunctuality in making any such payment shall cause this policy to lapse..."Only the first payment was made and no further premiums were paid. The insured died on Sept 22, 1944. AsiaLife had to close its branch office due to the Japanese occupation SECOND CASE: AsiaLife issued its Policy No. 78415 (Joint Life 20-Year Endowment Participating with Accident Indemnity), covering the lives of the spouses Tomas Ruiz and Agustina Peralta, for the sum of P3,000.00. The mode of payment was changed from annual to quarterly... But after sometime, no further premiums were paid to the insurer. Upon the Japanese occupation, the insured and the insurer became separated by the lines of war and it became illegal for them to deal with each other. (so in effect, hindi na nakapagpatuloy pang magbayad ng premiums yun magasawa sa AsiaLife). So when Peralta (Ruiz' beneficiary) demanded for payment when Ruiz died, AsiaLife refused to pay due to non-payment of premiums. The plaintiffs in both cases believed that they were entitled to receive the proceeds of the policies minus all sums due for premiums in arrears. They were alleging that the non-payment of the premiums was caused by the closing of AsiaLife's branch office due to the Japanese occupation and the impossible circumstances of the war. AsiaLife contends that the policies had lapsed for non-payment of premiums, in accordance with the contract of the parties and the law applicable to the situation. ISSUE: Whether the beneficiary in a life insurance policy may recover the amount thereof although the insured died after repeatedly failing to pay the stipulated premiums, such failure having been caused by war HELD: NO. Since the Phil law on Insurance was largely copied from the Civil Code of California, this Court announced its intention to supplement the statutory laws with general principles prevailing on the subject in the US. In Young v Midland, its Court held that the compliance of the insured with the terms of the contract is a condition precedent to the right of recovery. It appears that the first policy had no reserve value, and that the equitable values of the second had been practically returned to the insured in the form of loan and advance for premium. RATIO: Prof Vance of Yale divided the effect of non-payment of premiums occassioned by war into 3 groups, the Connecticut rule (mere protection of the year), the NY rule (privilege of renewing for each succeeding year by paying the premium for that year at the time agreed upon -- meaning war merely suspends the contracts and upon tender of all premiums due, the contract is revived), and the US rule (declares that the contract is abrogated by reason of nonpayment of premiums, since the time of the payments is peculiarly of the essence of the contracts and additionally held that it would be unjust to allow the insurer to retain the reserve value of the policy, which is the excess of the premiums paid Anastacio, Beron, Calinisan, Cruz, Delgado, Fernandez, Gana, Lopez, Mendiola, Morada, Rivas, Sarenas
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over the actual risk carried during the years when the policy had been in force) THIS Court held that it must be conceded that promptness of payment is essential in the insurance bizness. All the calculations of the insurance co. are based on the hypothesis of prompt payments. 1. They not only calculate on the receipt of the premiums when due, but on compounding interest upon them. Forfeiture for non-payment is a necessary means of protecting themselves from embarassment. Courts cannot vary the stipulations of the parties by introducing equity for the relief of the insured against their own negligence. 2. Another reason why the contract should not be revived is because the parties do not stand on equal ground (mas maraming namamatay during the war shempre). AsiaLife correctly contended that the periodic payment of premiums, at least after those after the first, is not an obligation of the insured, so much so that it is not a debt enforceable by action of the insurer. Also, we should take note that when the Insurance Act was amended, the Congress preserved the defense of nonpayment of premiums, recognizing its importance and was specifically recognized.
2) Insular Life Assurance vs. Ebrado (Beron) FACTS: Buenaventura Ebrado (husband) wa issued by the Insular Life, policy on a whole-life plan. The husband designated Carponia (common-law wife) as the revocable beneficiary in his policy. He referred to her as his wife. The husband died as aresult of an accident when he was hit be a falling branch of a tree. As a result therof, Insular Life stands liable to pay the coverage of the life insurance. Common-law wife filed with Insular a claim for the proceeds of the policy as the designated beneficiary therein, although she admits that she and the insured husband are living together without the benefit of marriage. Pascuala Ebrado (legal wife) also filed her claim as widow of the deceased insured. Insular Life then filed this action for interpleader. Trial court rendered judgment declaring the common-law wife disqualified from becoming the beneficiary of the inusred husband and directing the payment of the insurance proceeds to the estate of the deceased husband. ISSUE: Can a common-law wife named as beneficiary in the life insurance policy of alegally married man clim the proceeds thereof incase of death of the legally married man? HELD: NO. The decision of the trial court was affirmed. The Insurance Act or even the new Insurane Code does not contain any specific provision that would answer the query at hand. Article 2011 of the Civil Code states: "The contract of insurance is governed by special laws. Matters not expresslyprovided for in such special laws shall be regulated by this Code." And under Article 2012 of the same code, "any person who is forbidden from receiving any donation under Article 739 cannot be named beneficiary of alife insurance policy by the person who cannot make a donation to him. Common law spouses are definitely barred from receiving donations from each other. A life insurance policy is no different from a civil donation insofar as the beneficiary is concerned. Both are founded on the same consideration: liberality.
3) Qua Chee Gan v Law Union (Calinisan)
Anastacio, Beron, Calinisan, Cruz, Delgado, Fernandez, Gana, Lopez, Mendiola, Morada, Rivas, Sarenas
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Facts:
Qua Chee Gan seeks to recover from Law Union and Rock Insurance Co., Ltd, through its agent Warner, Barnes & Co., Ltd upon 4 bodegas in Albay and merchandise that were burned during 1940. Such bodegas contained copra, hemp, baled and loose. The fire lasted for more than a week. Insurance proceeds were awarded to Qua, thus the Law Union appealed to the SC. Law Union refused to pay since it claims that there were violations of the warranties and conditions, filing of fraudulent claims, and that the fire had been deliberately caused by the insured or by other persons in connivance with him. Law Union further states that since the bodegas has an external wall perimeter of 500 meters, Qua should have 11 fire hydrants. It only had 2.
Issues: W/N Qua violated the terms of the insurance contract. W/N the insurance contract is void ab initio. Held:
The insurer is barred by estoppel to claim violation of the so-called fire hydrant warranty where, knowing fully well that the number of hydrants demanded in the warranty never existed from the very beginning; it nevertheless issued the policies subject to such warranty, and received the corresponding premiums. The contract of insurance is one of perfect good faith (uberrimae fidei) 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 responisiblity. By reason of the exclusive control of the insurance company over the terms and phraseology of the the insurance contract, the ambiguity must be strictly interpreted against the insurer and liberally in favor of the insured, specifically to avoid a forfeiture. The gasoline carried was only incidental to his business, merely for 2 days supply. It is not part of oils having a flash point below 300 degrees Farenheit as oils in the ordinary parlance means lubricants. Gasoline is not specifically mentioned as part of the prohibited articles listed in the Hemp Warranty. The keeping of inflammable oils on the premises, though prohibited by the policy does not void the insurance contract if such keeping is incidental to the business. Bodega #2, which contained the gasoline, was not affected by the fire. Qua did not violate the Hemp Warranty provisions.
4) TY v FILIPINAS COMPANIA DE SEGUROS (Fernandez) Facts:
Diosdado Ty was an employee of Broadway Cotton (in Caloocan City). He took Personal Accident Policies from several insurance companies (Filipinas Compania, Peoples Surety, South Sea Surety, Philippine Guaranty, Universal Insurance, Plaridel Surety) for one year each. The factory of Broadway Cotton caught fire. While Ty was trying to be a herokasi kumukuha siya ng fire extinguishera heavy object fell upon his left hand. The accident resulted to the temporary disability of Tys hand. Ty tried to claim from the insurance companies but the companies refused. It was the contention of the insurance companies that the terms of the insurance policies were clear in stating that the partial disability of the insured caused by loss of either hand to be compensable, the loss must result in the amputation of that hand. Ty, on the other hand, argues that under the insurance contract any bodily injury, total or partial, sustained by him shall be paid by the insurance company. He further argued that it is the disability that ought to be compensated, and not the amputation. Ty also said that the definition of what constitutes loss of hand is ambiguous and calls for interpretation. CFI of Manila favored the insurance companies
Issue: Under the terms of the contract, what constitutes loss of hand that can be considered a disability and is entitled to indemnity?
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Held: It should be a severance or amputation of the affected body part of the insured. The insurance policies were clear and unambiguous. Partial disability is defined as loss of either hand by amputation through the bones of the wrist. The agreement contained in the insurance policies is the law between the parties, an interpretation of the contract that would include the mere fracture or other temporary disability not covered by the policies would be unwarranted. In this case, there was no such amputation so Ty is not entitled to the indemnity sought.
5) Phil American Life Insurance v Ansaldo (Gana) FACTS
ISSUE HELD RATIO
PATERNO wrote Commissioner ANSALDO alleging certain problems encountered by agents, supervisors, managers and public consumers of PHILAMLIFE as a result of certain practices by said company A hearing was held on the validity of the Contract of Agency complained of by PATERNO wherein PATERNO o Prayed that the provisions on charges and fees stated in the Contract of Agency executed between PHILAMLIFE and its agents as well as the implementing provisions as published in the agents handbook, agency bullentins and circulars be declared null and void and o Asked that the charges and fees already deducted and collected by PHILAMLIFE in connection therewith be reimbursed to the agents with interest at the prevailing rate reckoned from the date when they were deducted ORTEGA, Senior Vice President of PHILAMLIFE, filed a Motion to Quash alleging among others that the Insurance Commissioner ANSALDO does not have jurisdiction over the matter W/N THE RESOLUTION OF THE LEGALITY OF CONTRACT OF AGENCY FALLS WITHIN THE JURISDICTION OF THE INSURANCE COMMISSIONER NO, NO PROVISION IN THE INSURANCE CODE GOVERNING RELATIONSHIP BETWEEN INSURANCE COMPANY AND ITS AGENTS The Solicitor General upholds the authority of the Insurance Commissioner under Sections 414 and 415 of the Insurance Code, HOWEVER o A plain reading of Sections 414 and 415 show that the Insurance Commissioner has the authority to regulate the business of insurance o The term doing an insurance business within the meaning of the Code shall include (a) making, or proposing to make, as an insurer, any insurance contract (b) making, or proposing to make, as surety, any contract of suretyship as a vocation and not merely incidental to any other legitimate business or activity of the surety (c) doing any kind of business, including a reinsurance business, specifically recognized as constituting the doing of an insurance business within the meaning of this Code; (d) doing or proposing to do any business in substance equivalent to any of the foregoing (Sec 2) o Hence, since the Contract of Agency entered into by PHILAMLIFE and its agents is not included within the meaning of an insurance business, Section 2 of the Insurance Code cannot be invoked to give jurisdiction to the Insurance Commissioner ANSALDO claims that the quasi-judicial power of the Insurance Commissioner under Section 416 applies in this case, HOWEVER o Section 416 provides that the Insurance Commissioner has the power to adjudicate claims and complaints involving any loss, damage or liability for which an insurer may be answerable under any kind of policy or contract of insurance x x x o A reading of the said section shows that the quasi-judicial power of the Insurance Commissioner is limited by law to claims and complaints involving any loss, damage or liability for which an insurer may be answerable under any kind of policy or contract of insurance x x x o Hence, this power does not cover the relationship affecting the insurance company and its agents but is limited to adjudicating claims and complaints filed by the insured against the insurance company Moreover, while the subject of Insurance Agents and Brokers is discussed under the Insurance Code, these provisions speak only of licensing requirements and limitations imposed on insurance agents and brokers
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NOTE The Insurance Code does not have provisions governing the relations between insurance companies and their agents Hence, the Insurance Commissioner cannot have jurisdiction over this matter 2 kinds of agents (Great Pacific Life Assurance v. Judico and Investment Planning Corp v Social Security Commission) o Salaried employees governed by Contract of Employment and Labor Code o Agents on commission basis governed by the Contract of Agency and provisions of Civil Code on Agency
6) Philamcare Health Systems, Inc. vs. Court of Appeals (Lopez) Facts: -
Ernani Trinos applied for and was granted a health care coverage from Philamcare which entitled him to avail of hospitalization benefits and other out-patient benefits. In the application form, Ernani 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).
Issue: Held: -
During the period of his coverage, he suffered a heart attack and was confined at the Manila Medical Center (MMC) for one month. His wife, Julita Trinos, tried to claim benefits from Philamcare but the latter denied her claim saying that there was concealment on the part of Ernani. Apparently, the doctors at the MMC found out that he was hypertensive, diabetic and asthmatic, contrary to his answer in his application form. This is why Julita was forced to pay her husbands hospital expenses. Ernani later on died. Julita filed a suit in the RTC to cliam damages against Philamcare. She won in the RTC as well as in the CA. W/n Julita can claim on the health care coverage. SC says yes, she can claim on the coverage. Section 3 of the Insurance Code states that any contingent or unknown event, whether past or future, which may damnify a person having an insurable interest against him, may be insured against. Every person has an insurable interest in the life and health of himself, according to Sec. 10 of the Insurance Code. The Court said that the health care agreement was in the nature of non-life insurance, which is primarily a contract of indemnity, wherein the insurable interest is Ernanis own health. 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. As to the argument that there was concealment on the part of Ernani, the SC said that the answer assailed by Philamcare 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 Ernani 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. Concealment as a defense for the health care provider or insurer to avoid liability is an affirmative defense and the duty to establish such defense by satisfactory and convincing evidence rests upon the provider or insurer.
7) White Gold vs. Pioneer Insurance (Mendiola) Facts:
White Gold procured a protection and indemnity coverage for its ships from Steamship Mutual through Pioneer Insurance (as agent of Steamship Mutual). When White Gold failed to fully pay its accounts, Steamship Mutual refused to renew the coverage. Thereafter, Steamship Mutual filed a case against White Gold for collection of sum of money in order to recover White Golds unpaid balance.
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On the other hand, White Gold filed a case with the Insurance Commissioner alleging that Steamship Mutual violated sections of the Insurance Code regarding the requirement of insurance companies to first acquire a certificate of authority before engaging in the business of insurance. The Insurance Commission dismissed the complaint. According to the Commission, Steamship is not required to secure a license because it was not engaged in the insurance business. It further stated that Pioneer need not obtain another license as an agent because Steamship was not engaged in the business of insurance. Now, White Gold argues that Steamship is a Protection and Indemnity Club because it is an association composed of shipowners in general who band together to provide insurance cover on liabilities incidental to shipowning. On the other hand, Steamship argues that it is merely an association of shipowners who have come together to provide mutual protection against liabilities incidental to shipowning.
Issue: Is Steamship Mutual engaged in insurance business? Held:
Yes, Steamship is a form of insurance against third party liability, where the third party is anyone other than the Protection and Indemnity Club and the members. A mutual insurance company is a cooperative where the members are both insured and insurer. They provide 3 types of coverage: protection and indemnity, war risks, and defense costs. Steamship maintains a resident agent in the Philippines to solicit insurance and to collect payments in its behalf. Thus, o continue doing business here, steamship must secure a license from the Insurance Commission.
8) Philamcare vs. CA (Morada) (Refer to previous digest) Doctine relevant to Section 3 -Section 3 of the Insurance Code states that any contingent or unknown event, whether past or future, which may cause damage to a person having an insurable interest, may be insured against. -Every person has an insurable interest in the life and health of himself, according to Section 10 of the Insurance Code: Section 10: Every person has an insurable interest in the life and health: 1) of himself, of his spouse, and of his children; 2) of any person on whom he depends wholly or in part for education or support, or in whom he has a pecuniary interest; 3) of any person under a legal obligation to him for the payment of money, respecting property or service, of which death or illness might delay or prevent the performance; and 4) of any person upon whose life any estate or interest vested in him depends.
9)
Filipinas Cia De Seguros v. Christern Huenefeld & Co. (Rivas) Christern Huenefeld (CF) obtained a fire policy insurance covering its merchadise in a building from Filipinas Cia (FC) During the Japanese occupation, the building and the insured merchandise were burned and CF filed a claim under its policy. CF demanded P92,000 after deducting the amount of the salvaged goods. FC refused to pay CF becasue it argued that the policy ceased to be enforceable when the US declared war against Germany. FC is under the US jurisdiction while CF if controlled by German subjects But under the order of the Director of Bureau of Financinf, FC paid CF the P92,000 FC is now trying to recover the P92,000 it paid CF FC: the insured merchandise were burned after the policy ceased to be effective because CF became an enemy of the US when it declared war against Germany CFI & CA: dismissed FC's claim W/N FC can recover the P92,000 from CF because the policy became null and void upom the declaration of war Anastacio, Beron, Calinisan, Cruz, Delgado, Fernandez, Gana, Lopez, Mendiola, Morada, Rivas, Sarenas
FACTS: ISSUE:
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by the US against Germany HELD: YES!
Under the Philippine Insurance Law, anyone except a public enemy may be insured In the case of Haw Pia vs. China Banking Corporation, China Bank came within the meaning of the word "enemy" not only because it was incorporated under the laws of an enemy country but because it was controlled by enemies CF being controlled by Germans abd FC by the US, the policy ceased to exist when the US declared war against Germany HOWEVER, elementary rules of justice require that the premiums paid by CF for the period after the US declared war against Germany be returned by FC to CF.
10) San Miguel v. Law Union Rock Ins. Co. (Sarenas) Facts:
San Miguel wanted to claim upon 2 policies of insurance underwritten by the Law Union Rock Insurance Company and Filipinas Compania Seguros for the sum of P7,500 each, insuring property which has been destroyed by fire. San Miguel was merely a mortgagee of the property that was destroyed. The owner of the property, Henry Harding, was also made a party to the case. Harding is saying that the balance of the mortgage should be taken out from the proceeds that San Miguel will be getting from the insurance companies. The companies do not want to pay anything to Harding on the ground that under the contracts of insurance, the liability of the companies was limited to the insurable interest of San MIguel. The trial judge agreed with the companies.
Mortgagor/Mortgagee story: Henry Dunn(the previous owner) mortgaged the property to secure a debt of P10K to SMB In the contract of mortgage, Dunn agreed to keep the property insured in his own expense. So SMB applied with Law Union Rock to have it insured to the extent of P15K. SMB disclosed that they are merely the mortgagee of the property and not the owner. No inquiry on who the owner is was made. Law Union Rock in turn applied with Filipinas to halve the liability. Both policies were made in the name of SMB. The premiums were paid by SMB for the account of Dunn. Dunn later on sold the property to Harding but no transfer of the insurance was made. Issue: Held: W/N Harding has any interest in the insurance and should therefore receive amounts from the insurance companies No, Harding does not have any insurable interest. He is not a party to the contracts of insurance and cannot directly maintain an action thereon. SMB on the other hand cannot claim an amount in excess of its mortgage credit.
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June 26, 2006 11) Grepalife v CA (Anastacio) FACTS: A contract of group life insurance was executed between Grepalife and DBP wherein the former agreed to insure the lives of eligible housing loan mortgagors of the latter. Dr. Wilfredo Leuterio was a housing debtor of DBP and applied for such membership. Grepalife issued an insurance coverage of Dr. Leuterio to the extent of P86,200.00. Dr. Leuterio died due to massive caerebral hemorrhage. When DBP submitted its claim to Grepalife, the latter refused to pay alleging that Dr. Leuterio was not physically healthy when he applied for an insurance coverage. Also, Grepalife insisted that Dr. Leuterio did not disclose that he had been suffering from hypertension, which caused his death which consisted of concealment which justified the denial of the claim. The widow Medarda Leuterio filed a complain against Grepalife for Specific performance with damages. Grepalife alleges that she was not a real party-in-interest ISSUE: Who is the real party-in-interest in such a case? HELD: 1. 2. The insured may be regarded as the real party-in-interest, although he has assigned the policy for the purpose of collection, or has assigned as collateral security any judgment he may obtain. The insured private respondent did not cede to the mortgagee all his rights or interests in the insurance as contained in the policy. The rationale of a group insurance policy of mortgagors is a device for the protection of both the mortgagee and the mortgagor. On the part of the mortgagee, in case of the unexpected death of the mortgagor, the proceeds from such insurance shall be applied to the payment of the mortgage debt, thereby relieving his heirs from paying the obligation. On the part of the mortgagor, the mortgage obligation shall be extinguished by the application of the insurance proceeds to the mortgage indebtedness. There must be fraudulent intent on the part of the insured to entitle the insurer to rescind the contract. Aside from the statement of the widow who was not even sure if the medicines taken by Dr. Leuterio were for hypertension, Grepalife had not proven or produced any witness who could attest to Dr. Leuterios medical history. Unless the interest of a person insured is susceptible of exact pecuniary measurement, the measure of indemnity under the policy of insurance upon life or health is the sum fixed in the policy. Where the mortgagee has already foreclosed on the mortgage, it cannot collect the insurance proceeds ---------- the proceeds now belong to Dr. Leuterios heirs represented by his widow.
3. NOTES:
12) Castro vs. Insular Life (Beron) FACTS: Castro filed a complaint against Insular Life for Insulars failure or refusal to pay the proceeds of an insurance policy. Insular denied the material allegations in the complaint and at the same tome raising the affirmative defense that the policy issued by them is null and void and therefore Castro as the sole or named beneficiary is not entitled to any benefit thereunder. Insurance Commissioner ruled in favor of Insular in declaring the insurance policy as null and void for lack of insurable interest of Castro in the life of his driver (the insured). ISSUE: Whether or not Castro as employer can validly insure the life of his employee-driver HELD: YES. When death of the insured occurred, it was reasonable to expect and/ or to infer that petitioner Castro and his family for that matter suffered pecuniary loss. This case falls under paragraph c of Section 10 of the Insurance Code, which provides: of any person under a legal obligation to him for the payment of money, or respecting property or service of which death or illness might delay or prevent the performance. The relationship in this case is of such a nature that the person taking out the insurance as beneficiary has a legal claim upon the insured for services or support. Beneficiary Castro has a reasonable right to expect some pecuniary advantage form the continuance of the life of the driver or to fear loss from the drivers death. Anastacio, Beron, Calinisan, Cruz, Delgado, Fernandez, Gana, Lopez, Mendiola, Morada, Rivas, Sarenas
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Comments by the respondents: Insurance Commissioner, Insular Life and Rogelio Marasigan Petitioner had no insurable interest on the life of Terrenal who was only his driver. Insurance was for 20 years. Castro however has failed to establish that he had a legal claim upon Terrenal for services during the said period of 20 years. The Respondents cited Am Jur stating: The rule derivable from the cases on the subject is that the mere existence of the relationship of employer and employee is not sufficient in itself to give the employer an insurable interest, but that it must be further shown that such a relationship exists so that it might reasonably be expected that the employer would realize a substantial; pecuniary gain through the continued life of the employee or sustain a substantial pecuniary loss in case of his death.
13) Lincoln National Life v San Juan (Calinisan) Facts: Luis Parco secured 5 life insurance policies from Lincoln National Life. He insured a certain Misterioso San Juan. He FALSELY represented in the policies that: o Mysterioso was a proprietor and a fish merchant for 10 years. o That he had no employer but himself o That his income exceeds P5T a year o And that he had no pending applications for life insurance Misterioso was in fact not a merchant, and that he is employed as a tenant of Luis. Also, a number of applications for insurance have been filed by Luis, several of which have been declined. Luis subsequently tries to collect from the policies. Allegedly, Misterioso was killed. A severed human head in an advanced state of decomposition found in a jeepney by its driver apparently left intentionally by 2 unidentified passengers was said to be Misterioso. Lincoln refuses to pay stating that there was false misrepresentations and concealment of material facts made by Misterioso and Luis. Issue: W/N Luis can collect on the insurance policies. Held: No. There is no shred of evidence that Lincoln had previous knowledge of said false misrepresentations when it approved the life insurance. The present action is one for rescission of insurance contracts, and Luis has the burden of proving the defense that Lincoln as the insurer had previous notivce of such false misrepresentations and/or concealment of material facts when they approved the applications and issued the life insurance policies. The policies are in effect wagering or highly speculative contacts which are void for reasons of public policy. They lack the element of INSURABLE INTEREST. Misterioso could not have afforded the insurance policies. There is abundant evidence that the real party in interest in these policies-the one who really took out the policies-is the defendant Luis, and that Misterioso is merely a nominal party. (see the enumeration on p 9 if you want more details, but such information is enough) Luis or his wife Virginia is the beneficiary in every insurance policy. There is no need to rule on W/N Misterioso is really dead, for the polcieis are void and without force and effect. Note however that the amount of the paid premiums on the insurance policies (P1.600T)should be returned to Luis, since it has not been proved that he killed Misterioso. No criminal case has been filed.
14) Nario V Philamlife (Fernandez) Facts: Mrs. Alejandra Santos-Nario was, upon application, issued a life insurance policy by Philamlife. Her husband, Delfin Nario, and their minor son Ernesto Nario was designated as irrevocable beneficiaries. Later on, Mrs. Nario applied for a loan on the insurance policy with Philamlife (a benefit that the policy provides after the contract has been in force for 3 years). The proceeds of the loan was intended for the school expenses of Ernesto. The loan application bore the signature of Delfin as beneficiary and as father-guardian of Ernesto.
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Philamlife, however, denied the application on the ground that the signature of the father as guardian must be authorized by the court in a competent guardianship proceeding. After the denial, Mrs. Nario wanted to surrender the policy and demanded for its cash value (another option available to the holder as contained in the policy). This was, again, denied on the same ground as that of the loan. Hence, Mr and Mrs Nario filed an action to compel Philamlife to grant their policy loan application and/or accept the surrender of the policy in exchange for its cash value. Philamlifes defense was that inasmuch as the loan application and the surrender of the policy involved acts of disposition of the property rights of the minor, they are not within the powers of the legal administrator. And the mere written consent of the father-guardian without court authority was not sufficient compliance with the law. As such, the denials were justified. Trial court ruled in favor of Philamlife and stated that since Mrs. Nario did not reserve the right to change the beneficiaries, she may not designate a new beneficiary without the consent of those originally designated. Since Ernesto, as designated beneficiary, already acquired a vested right to all benefits accruing to the policy, the involved acts (loan application and surrender of policy) would require court authority. The same being acts of disposition and alienation of property. Spouses Nario contend that: the minors interest is only one -half of the policys cash surrender value of P520 (so 260 lang); that payment of wards debts is within the powers of the guardian where no realty is involved and; the father may validly agree to the proposed transaction without court authority.
Issue: a. What was the extent of the minors interest in the policy? b. Is court authority needed for the father-guardian to validly agree to the proposed transaction(s)? Held: a. The vested interest of the beneficiaries in the policy should be measured on its full face value (P5k) and not on its cash surrender value, for in case of death of the insured, the beneficiaries are paid on the basis of its face value and in case the insured should discontinue paying premiums, the beneficiaries may continue paying it and are entitled to automatic extended term or paid-up insurance options, and that the vested right under the policy cannot be divisible at any given time. b. The transactions involved acts of disposition or alienation of property rights because they involved the incurring or termination of contractual obligations. The full face value of the policy is P5k, as one of the two beneficiaries the minor has a vested interest of P2.5k. And under the Rule 93 of the Rules of Court in relation to Art 320 of the Civil Code, when the property of the child is more than 2 thousand pesos, the father or mother shall be considered guardian of the childs property after filing a sufficient bond as approved by the court, and after filing a proper petition for guardianship. In this case, there was neither an application for guardianship nor was a bond filed. Philamlife was then justified in denying the application for failure to sufficiently comply with the law. And even if the property of the minor was less than P2kwhere they would be exempt from filing a bond and seeking judicial appointmentthe powers of a legal guardian does not extend to acts of encumbrance or disposition. A parent as legal administrator would need special authority to dispose or alienate property rights of his/her ward, something which can only be given by the court. The Narios cannot, also, invoke parental power under the Civil Code of 1889 as it was not completely revived by the Civil Code of the Phils. 15) SSS v Davac (Gana)
FACTS
PETRONILO Davac, an employee of Lianga Bay, was a member of the SSS PETRONILO designated CANDELARIA Davac as his beneficiary and indicated his relationship to her as that of a wife When PETRONILO died, Lourdes TUPLANO, woman claiming to be PETRONILOS wife filed for her claim for the death benefit with SSS The SSS, not knowing to whom to give the proceeds, filed a petition praying that CANDELARIA and TUPLANO be required to interpose and litigate between themselves their conflicting claims TULPANOS main argument was that SSS benefits are in the nature of a life insurance policy and CANDELARIA being PETRONILOS second wife is disqualified to be a beneficiary under Article 2012 in relation to Article 739 Anastacio, Beron, Calinisan, Cruz, Delgado, Fernandez, Gana, Lopez, Mendiola, Morada, Rivas, Sarenas
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ISSUE HELD RATIO
W/N CANDELARIA CAN CLAIM THE PROCEEDS AS BENEFICIARY OF PETRONILO DESPITE HER BEING THE 2ND WIFE YES, NO EVIDENCE OF CONCUBINAGE OR BIGAMY Article 2012 of the New Civil Code, Any person who is forbidden from receiving any donation under Article 739 cannot be named beneficiary of a life insurance policy x x x Article 739 of the New Civil Code, The following donations are void: (1) Those made between persons who were guilty of adultery or concubinage at the time of donation However, Article 2012 and Article 739 is not applicable in the case at bar because CANDELARIA, the named beneficiary, is not guilty of concubinage, there being no proof that she had knowledge of the previous marriage of her husband PETRONILO Benefits accruing from membership of the SSS do not form part of the properties of the conjugal partnership of the covered member The amounts thus received cannot be considered as property earned by the member during his lifetime and cannot be claimed by his wife as part of the conjugal partnership
NOTE
16) Facts: -
In Re: Mario V. Chanliongco (Lopez) This matter refers to the claims for retirement benefits filed by the heirs of the late Atty. Mario Chanliongco, a lawyer in the Supreme Court. At the time of his death, Mario was 63 yrs. old, with more than 38 years of service in the government. The claimants herein are: Fidela Chanliongco, the wife; Mario II, the legitimate son; Mrs. Angelina C. Buenaventura and Mario Jr., both born out of wedlock to Angelina B. Crespo, and duly recognized by the deceased. It seems that Mario failed to state in his application for membership with the GSIS the beneficiary/ies of his retirement benefits, should he die before retirement. Who can claim the retirement benefits of Mario Chanliongco? The SC held that the retirement benefits shall accrue to he estate and will be distributed among his legal heirs in accordance with the law on intestate succession, as in the case of a life insurance if no beneficiary is named in the insurance policy (Vda. de Consuegra vs. GSIS). Most of the case is devoted to the computation of how much each heir is going to take home. For the retirement benefits, the computation is as follows: to Mario II, to the widow Fidela, and 1/8 each to Angelina and Mario Jr. As to the unused vacation and sick leave, unpaid salary and 10% adjustment, these benefits were treated as conjugal property because Vacation with pay is not a gratuity but is compensation for services rendered. Thus, automatically goes to the widow, Fidela and the other half would be distributed in the same way as the retirement benefits.
Issue: Held: -
17) Facts:
Gercio vs. Sun Life Assurance Co. of Canada (Mendiola)
Sun Life Insurance issued an insurance policy on the4 life of Hilario Gercio. The insurance was a 20-year endowment policy wherein after 20 years from the perfection of the contract, the insurance company will pay P2,000 to Gercio or to his wife Andrea if Gercio will die within the 20 years. 9 years after the contact was entered into, Andrea was convicted of adultery. Anastacio, Beron, Calinisan, Cruz, Delgado, Fernandez, Gana, Lopez, Mendiola, Morada, Rivas, Sarenas
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Issue: W/N Gercio can compel Sun Life to Change the beneficiary of the insurance policy. Held: Gercio cannot compel the change of the beneficiary. On the 10th year, a decree of divorce was issued which dissolved the marital ties between Andrea and Gercio. Gercio informed Sun Life that it had revoked his donation in favor of Andrea. Gercio also asked Sun Life to change the beneficiary of the policy. He wants his new wife Adela to be the new beneficiary. Sun Life refused to change the beneficiary.
Preliminaries The court said that it had to use the general principles used in American cases because the laws in the Philippines (Code of Commerce, Civil Code, and Insurance Act) were deficient. Ruling If the policy contains no provision authorizing the change of beneficiary without the consent of the beneficiary, the insured cannot make the change. In other words, the insured can change the beneficiary without the consent of the beneficiary only when there is a stipulation to that effect. A life insurance policy of a husband made payable to the wife as beneficiary is the separate property of the beneficiary and beyond the control of the husband. There is no law in the Philippines that allows a wife-beneficiary to be changed by virtue of a divorce. The divorce does not destroy their rights under the policy.
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June 28, 2006 18) Harvardian Colleges vs. Country Bankers (Morada) -Harvardian Colleges (Harvardian) is a family corporation owned by Idelfonso Yap, Virginia Yap, and their children -An agent of Country Bankers Insurance Corp. (CBIC) proposed to Harvardian to insure the latters school building. Although at first reluctant, Harvardian agreed. Thus a Fire Insurance Policy was issued to Harvardian insuring the building for P 500,000. -During the effectivity of the insurance policy, the property was burned rendering it a total loss. -When Harvardian made a claim upon CBIC, it was denied by the latter contending that Harvardian has no insurable interest over the building which was burned because that building and the lot on which it stood were owned by Idelfonso Yap. -Harvardian filed a complaint for collection of P500,000, based on a Deed of Assignment of the property allegedly executed by Yap. The RTC held CBIC liable for the said amount. ISSUE: W/N CBIC is liable for the claim; W/N Harvardian has an insurable interest HELD: YES, Harvardian has an insurable interest in the property. CBIC is thus liable but not for the full amount of P500,000. -Section 13 of the Insurance Code provides: Sec. 13. Every interest in property, whether real or personal, or any relation thereto, or liability in respect thereof, of such nature that a contemplated peril might directly damnify the insured, is an insurable interest. -Thus, any title to, or interest in property, legal or equitable, will support a contract of fire insurance. - Even though the insured has no title, the contract will be upheld if his interest in, or his relation to, the property is such that he will, or may be benefited by its continued existence or suffer a direct pecuniary loss from its destruction or injury. -The test in determining insurable interest in property is whether one will derive pecuniary benefit or advantage from its preservation, or will suffer pecuniary loss or damage from its destruction, termination or injury by the happening of the even insured against. -Although a person has no title, legal or equitable, in the property, and neither possession nor right to possession, yet he has an insurable interest if he is so situated with respect to the property that he will suffer loss as the proximate result of its damage or destruction. -An insurable interest exists in any of the ff cases: 1) when the insured possesses a legal title to the property insured, whether vested or contingent, defeasible or indefeasible; 2) when he has an equitable title to whatever character and in whatever manner acquired; 3) when he possesses a qualified property or possessory right in the subject of the insurance; 4) when he has mere possession or right of possession; and 5) when he has neither possession of the property nor any other legal interest in it but stands in such relation with respect to it that he may suffer from its destruction, loss of a legal right dependent upon its continued existence. -It may be assumed that had the building not been burned, Harvardian would be allowed to continue using it as a school, as it had been doing so for several years. Thus Harvardian would have been directly benefited by the preservation of the property, and it suffered a pecuniary loss by its being burned. -Even if there had been no Deed of Assignment executed by Yap, Harvardian has an insurable interest in the property. -CBICs argument of fraudulent concealment was not supported by evidence. Side issue: -The Court is not convinced that there was indeed a Deed of Assignment of the property by Yap in favor of Harvardian. -The amount of P500,000 awarded by the RTC was based on the assumption that Harvardian was the owner of the insured building by virtue of the Deed of Assignment. -Since Harvardian is not the owner, the amount of the insurers liability must limited to the actual loss incurred by Harvardian as one with a right of possession and use of the property. This is in accordance with the terms of the insurance contract, which provides for an open policy. -The amount to be recovered could be less than but not more that P500,000, the maximum amount of the open policy.
19) Lampano v Jose (Rivas) FACTS: Baretto constructed a house for Jose. On November 12, 1912, Jose sold the house for P6,000 to Lampano Anastacio, Beron, Calinisan, Cruz, Delgado, Fernandez, Gana, Lopez, Mendiola, Morada, Rivas, Sarenas
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Thereafter, the house was destroyed by a fire. At the time of the fire, Lampano still owed Jose P2,000 while Jose still owed Baretto on the cost of the construction the sum of P2,000. Before the fire broke out, Barretto took out an insurance policy upon the house on his own name, with the consent of Jose, for the sum of P4,000 Baretto was able to collect P3,600 form the insurance company Lampano: there was a verbal agreement between her and Jose at the time of the sale of the house to the effect that the latter agreed to deliver the insurance to her therefore neither Jose nor Barretto has any right on the proceeds of the insurance. Also, it is contended by Lampano that she did not learn that the policy was in the name of Barretto until after the fire. Jose: the insurance was taken out and paid for by Barretto before the sale of the house to Lampano and that the said insurance was entirely for the personal account and exclusive interest of Barretto. Lower Court: judgment was entered against Barretto and in favor of Jose for the sum of P1,298.50, being the difference between the amount collected by Barretto on the insurance and the amount yet due him for the construction of the house, including the premiums paid. The lower court also found that there was no privity of contract between Lampano and Barretto. W/N Lampano has any right to recover from Barretto any portion of the insurance money NONE! Lampano has no right whatsoever from the proceeds received by Barretto. The policy was in the name of Barretto alone. It was therefore a personal contract between him and the insurance company and not a contract which ran with the property. According to this personal contract, the insurance policy was payable to the insured without regard to the nature and extent of his interest in the property, provided that he had an insurable interest at the time of the making of the contract and also at the time of the fire. Where different persons have different interests in the same property, the insurance taken by one in his own right and in his own interest does not in any way inure to the benefit of another. It is well settled that a policy of insurance is a distinct and independent contract between the insured and the insurers, and third persons have no right either in a court of equity, or in a court of law, to the proceed of it UNLESS there be a contract or trust, express or implied, between the insured and the third persons (Vandergraaff vs. Medlock). Where a mortgagee at his own expense and without any agreement or understanding with the mortgagor obtains insurance upon his interest as a mortgagee and collects the money from the insurer after a loss, he is not bound to account for it to the mortgagor (Burlingame vs. Goodspeed) Lastly, the deed of purchase and sale makes no mention of the agreement between Lampano and Jose. Although it was agreed that the vendor would transfer to the vendee all of the formers right, title, and interest in the leasehold to the land upon which the house was built, it would seem that if the vendor agreed to transfer the policy, this agreement would have been inserted in the document of purchase and sale, the same as that with reference to the lease.
ISSUE: HELD: -
20) Lopez v. del Rosario & Quiogue (Sarenas) Facts: Issue: Held: Anastacio, Beron, Calinisan, Cruz, Delgado, Fernandez, Gana, Lopez, Mendiola, Morada, Rivas, Sarenas Mrs. del Rosario owned a bonded warehouse in Manila (for copra and other merchandise) Froilan Lopez deposited copra in the warehouse as evidenced by 14 warehouse receipts in the declared value of P107,990.40 Mrs. del Rosario secured insurance and its contents in 5 different insurance companies in the amount of P404,800. The warehouse and its contents were destroyed by fire on June 6,1920. Not all the copra was burnt, P49,985 worth of copra was salvaged. Mrs. del Rosario was able to collect from the insurance companies to a total of P414,258. She was able to satisfy all the persons who had copra in her warehouse except for Lopez. She offered P71,994 then P72,724 then P17,000. No deal, sabi ni Lopez. He is saying that he should collect not less than P88,595.43. W/N Mrs. del Rosario is liable to Lopez in the amount of at least P88,595.43 W/N Mrs. del Rosario was an agent for Lopez or a reinsurer of the contents of the bodega
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Yes, Mrs. del Rosario is liable to Lopez for a net amount of P81,093.65 (after deducting his share of the expenses and payment for storage and insurance) Del Rosario was acting as an agent for Lopez when she took out the insurance on the contents of the bodega. She is not a reinsurer of the copra. This was deduced from the terms of the warehouse receipts, the insurance policies and circumstances. In the statement of claim of del Rosario against the insurance companies, she acknowledged her responsibility to the owners of the copra against risk by fire. The award covered not only del Rosarios warehouse but the products stored inside as well.
21) San Miguel v Law Union (Cruz) RC Note: Please see previous digest.
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22) Cha v CA (Delgado) Facts: Spouses Nilo Cha and Stella Uy-Cha, as lessees, entered into a lease contract with CKS Development Corporation, a lessor. The lease contract is good for one year. Cha spouses insured against loss by fire the merchandise inside the leased premises for P500,000 with United Insurance Co.,Inc. without the written consent of CKS. On the day the lease contract was to expire (malas naman ni insurer), fire broke out inside the leased premises. (sinadya o di sinadya?) When CKS learned of the insurance earlier procured by the Cha spouses, it wrote the insurer a demand letter asking that the proceeds of the insurance contract (between Cha spouses and United) be paid directly to CKS, based on its lease contract with Cha. One of the provisions in the lease contract is that when lessee insures the merchandise in the leased premises, the proceeds of which when the contingency happens is deemed assigned to the lessor. United refused to pay CKS hence the latter filed case against Cha and united. RTC had it for CKS ordering United to pay P335,000 and Cha spouses damages. The CA affirms. Issue: W/N CKS is entitled of the proceeds of the insurance policy. Held: No. The provision in the lease contract is void. That is against the express provision of law. Section 18 of the Insurance Code provides that no contract or policy of insurance on property shall be enforceable except for the benefit of some person having an insurable interest in the property insured. The basis of this is to prevent a person from taking out an insurance policy upon a property which he has no insurable interest since this is tantamount to a wager which is void. CKS has no insurable interest. Section 17 of the Insurance Code provides that the measure of an insurable interest in property is the extent to which the insured might be damnified by loss or injury thereof. The insurable interest over the merchandise remains with the Cha spouses. United cannot be compelled to pay the proceeds to a person who has no insurable interest.
23) Garcia v Hongkong Fire (Anastacio) FACTS: Domingo Garcia, a merchant and owner of the "Las Novedades" bazaar insured his merchandise with the HongKong Fire & Marine Insurance Co. in the sum of P15,000.00, through a friend (kasi hindi marunong mag English si plaintiff natin). The defendant, however, issued through error, carelessness and negligence its fire insurance policy in favor of Garcia, not on the merchandise, but on the building which contained the merchandise. Garcia executed a mortgage to PNB on the merchandise insured by the defendant. There was a correspondence between PNB and the defendant, and with the consent of the latter, it endorsed its policy to PNB. A fire took place which destroyed the merchandise of the value of P20K, together with the building itself. A demand was made for the payment of P15k, as stated in the policy, but the defendant refused contending that the Bank during its correspondence with the defendant knew that the policy covered the building and not the merchandise (kasi yun isang letter nawala na yun word na merchandise.) And that having such knowledge, the Bank should have notified the defendant, which it failed to do. ISSUE: WoN the defendant is liable to the extent of P15K as stated in the policy? HELD: YES RATIO: 1. It appears that the policy was in English of which plaintiff Garcia Anastacio, Beron, Calinisan, Cruz, Delgado, Fernandez, Gana, Lopez, Mendiola, Morada, Rivas, Sarenas
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was ignorant (ewan kung bakit hindi pinresent as witness un friend who applied for him). Garcia was the exclusive owner of the merchandise and he did not claim any interest in the building. 2. As to the contention of the defendant that PNB knew of the mistake, the fact remains that there was personal notice to the defendant in the correspondence that it was the merchandise that was insured and not the building. And even though, it is PNB who was in possession of the policy, the defendant has its own records upon which the policy was issued, and as a matter of fact, its agents knew or should have known the kind of property insured. It is only an inference that PNB knew of the mistake.
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July 5, 2006 24) Tai Tong vs Insurance Commission (Beron) FACTS: This petition for review on certiorari seeks the reversal of the decision of the Insurance Commission, dismissing the complaint for recovery of the alleged unpaid balance of the proceeds of the Fire Insurance Polices issued by respondent insurance company. Pedro and Azucena Palomo acquired from a certain Rolando Gonzales a parcel of land and a building. Pedro and Azucena Palomo assumed the mortgage of the building in favor of S.S.S., which building was insured with respondent S.S.S. Accredited Group of Insurers. Azucena Palomo obtained loan for Tai Tong Chuache, Inc. To secure the payment of the loan, a mortgage was executed over the land and the building in favor of Tai Tong. Arsenio Chua, representative of Tai Tong insured the latters interest with Travelers Multi-Indemnity Corporation. Pedro Palomo secured a fire insurance covering the building for P50,000 with respondent Zenith Insurance. Fire insurance was secured from respondent Phil British Assurance covering the same building and the contents thereof. The building and the contents were totally razed by fire. Demand was made form respondent Travelers for its share in the loss but the same was refused. The other insurance companies paid their respective shares in the loss. Demand was made by complainant to the other insurance companies. The other insurance companies denied liability on the ground that the claim of the complainants Palomo had already been waived, extinguished or paid. Travelers alleged that the fire policy covering the furniture and building of complainants Palomo was secured by a certain Arsenio Chua, mortage creditor, for the purpose of protecting his mortgage credit against the complainants; that the said policy was issued in the name of Azucena Palomo only to indicate that she owns the insured premises. Tai Tong filed a complaint in intervention claiming the proceeds of the fire insurance. Travelers in answer to the complaint in intervention alleged that Tai Tong is not entitled to indemnity under its fire insurance for lack of insurable interest before the loss if the insured premises and that the Palomos had already paid in full their mortgage indebtredness to Tai Tong. Complaint in intervention was dismissed by the Insurance Commissioner. The Palomos testified that they are still indebted to Tai Tong but this allegation has not been sufficiently proven by documentary evidence. Tai Tong the filed this petition.
ISSUE: Is Travelers Insurance Co. liable to Tai Tong? HELD: YES. It is the contention of the petitioner that the respondent Insurance Commissioner decided an issue not raised in the pleadings when it ruled that a certain Arsenio Chua is the one entitled to the insurance proceeds and not Tai Tong Chauache. The Supreme Court found this contention untenable. The decision did not declare that Arsenio Chua was the one entitled, rather it declared that Tai Tong has no insurable interest in the insured premises at the time of the peril and therefore not entitled to the proceeds. This ruling however by the Insurance Commissioner is reversed by the Supreme Court. As respondent Travelers advanced an affirmative defense of lack of insurable interest on the part of Tai Tong before the occurrence of the peril, the Palomos having already paid their debt to Tai Tong, Travelers has the burden of proof. Upon that point, there is failure of proof. Travelers exerted no effort to present any evidence to substantiate its claim.\
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The record of the case shows that the petitioner to support its claim for the insurance proceeds offered as evidence the contract of mortgage which has not been cancelled or released. It has been held in a long line of cases that when the creditor is in possession of the document o credit, he need not prove nonpayment for it is presumed. This claim by petitioner was corroborated by Azucena Palomo who testified that hey are still indebted to herein petitioner. 25) Bachrach v British American Assurance Co. (Calinisan)
Facts: British American Assurance Co. issued a Fire Insurance Policy to Bachrach. The insurance contract is located in p 556-557. Contents are irrelevant. Among its defenses, British alleges that Bachrach transferred his interest in and to the property covered by the policy to HW Peabody and Co. to secure certain indebtedness, and Bachrach also transferred interest in certain goods to one Macke to secure certain obligations assumed by the said Macke for and in behalf of the accused. British also says that Bachrach made no proof of the loss within the time required by condition of the policy. In response, Bachrach says that he made no proof of the loss set up in his complaint for the reason that immediately after he had given the defendant notice in writing of said loss, the defendant British waived all right to require proof of said loss by denying all liability under the policy and by declaring the policy to be null and void. Lower court sided with Bachrach, therefore British appealed. Main issue: W/N the execution of the chattel mortgages annulled the policy of insurance. Held: No. There is no provision in said policy prohibiting the plaintiff from placing a mortgage upon the property insured. Interest in property insured does not pass by the mere execution of a chattel mortgage, and while the chattel mortgage is a conditional sale, there is no alienation, within the meaning of the insurance law, until the mortgagee acquires a right to take possession by default under the terms of the mortgage. The ALIENATION CLAUSE (preventing transfers found in most insurance contracts) is inapplicable. When property is insured any condition upon which the insurer wishes to rely, in order to avoid liability in case of a loss, must be expressed in the policy. Where the terms of an insurance policy requires that notice of loss be given, a denial of liability by the insurers under the policy operates as a waiver of notice of loss because if the policy is null and void the furnishing of such notice would be in vain and useless. Immediate notice means within a reasonable time.
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July 10, 2008
26) Argente v West Coast Life Insurance (Cruz) FACTS: This refers to the insurance policy of Vicenta, deceased, as claimed by hubby Bernardo Argente, which the West Coast Life Insurance rejected on one ground: concealment. That: 1. Spouses, through an agent, applied for joint insurance, and Vicenta applied another separate insurance. 2. Dr. Sta. Ana of West Coast examined the spouses. 3. All information in the application and the Medical Exam were provided by Bernardo Argente. 4. Vicenta died. West Coast investigation revealed that info were false, follow: a. Have you ever consulted a physician, or suffered from any ailment, disease of nervous system? No. b. Have you consultedfor other than above? Yes. Scabies c. What physician have you consulted in the last 5 yrs.? None.
In fact, Bernardo was confined in PGH for cerebral congestion and Bells palsy.
d. How frequently do you take alcohol, etc? Beer, occasionally.
In fact, Vicenta was diagnosed as alcoholic when brought to San Lazaro Hospital.
ISSUE and HELD: On Rescission of the Contract. Concealment is a neglect to communicate that which a party knows and ought to communicate. Proven. On Materiality to Avoid the Contract. Had the true facts been disclosed, the insurance would never have been granted. On W/N the insurer was deceived into entering in a contract or in fixing the premium. It is held that if untrue or false answers are given in response to inquiries and they relate to material facts, the policy is avoided without regard to any. On W/N right to rescind is still available after action is already commenced. Yes. California Law was referred to in deciding that where the insurer has tendered the premium and issued notice of cancel, it must operate to rescind the contract.
27) Saturnino vs. Phil. American Life Insurance (Delgado) Facts: Subject in this controversy is a 20-year endowment non-medical insurance taken on the life of Estefania Saturnina. This kind of policy dispenses the regular medical examination required in life insurance policies. However, the applicant still needs to fill-up an application form in which the questions related to health matters are being asked. Saturnino submitted the same to Edward Santos, the agent. In that form, she was asked whether or not she has cancer or tumor and whether or not she has consulted a physician in the past five years. She answered these in the negative. She eventually died of pneumonia and influenza. The surviving husband and minors are claiming the proceeds but Phil. American denied them
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since there was concealment. Phil.Am. learned that she went breat operation which involved its removal including the pectoral muscles in the armpit. Issue: W/N there was concealment which can be a ground for rescission. Held: Yes. The law provides that concealment, whether intentional or unintentional, entitles the insurer to rescind the contract. There was concealment on the part of the insured when she didnt declare that she had an operation earlier. The argument that insurer can also be faulted when it didnt require medical examination cannot be countenanced. In this kind of policy, medical check-up is dispensed. Should she declared the said prior operation, then the insurer could have conducted medical examination. Clearly, what she declared was false. She gave a clean bill of health yet she had a prior ailment which the doctor found to be malignant.
28) Fieldmens Insurance v De Songco (Fernandez)

Facts: Federico Songco (from Pampanga), who only attained grade 1 education, owned a private jeepney for the year 1960. On Sept. 15, 1960, he was induced by Fieldmens Insurance agent Benjamin Sambat to apply for a Common Carriers Liability Insurance Policy. Upon paying the annual premium of P16.50, Federico was issued the said policy effective from Sept15, 1960-Sept 15, 1961. The policy was renewed and the period was extended to October 15, 1962. During the effectivity of the policy, Rodolfo Songco (duly licensed driver and son of Federico), while driving the insured vehicle, collided with a car in Calumpit, Bulacan. The accident resulted to Rodolfo and Federicos death, while Carlos (another son) and Angelita (wife) and a family friend sustained physical injuries. Fieldmens Insurance denied liability on the ground that what was insured (twice) was a private vehicle and not a common carrier. Amor (son of Federico) testified during trial that when insurance agent Sambat was inducing his father to insure the vehicle, they were assured that even if the vehicle was for private use and not for passengers, it can still be insured under the same policy. It was further explained to them that the insurance company is not government-owned, this being so, the company can do what they please whenever they believe that the vehicle is insurable. The lower court held Fieldmens Insurance liable. The CA affirmed.
Issue: Is Fieldmens Insurance liable considering that what was insured under a Common Carrier Insurance Policy was a private vehicle? Held: Yes. Based on the case of Qua Chee Gan v Law Union, 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 Fieldmens Insurance had led the insured Federico Songco to believe that he could qualify under the common carrier liability insurance policy, and to enter into the 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. Fieldmens Insurance knew all along that the insured owned a private vehicle, not a common carrier. In fact, its agent, not only once but twice, without any objection, exerted utmost pressure on the insured, a man of scant education, to enter into such a contract. On the contention that the insurer incurred no legal liability (considering that the wording of the policy limits liability to those that the insured will pay to passengers), it was held that the insurer is estopped from asserting breach of conditions as some of the conditions contained in the policy were impossible to comply with under the existing conditions at the time and was inconsistent with the known facts On the argument that there was an ambiguity in the contract, it must be remembered that ambiguities or obscurities ought to be interpreted strictly against the party that caused them (the insurer). A contract of insurance is one of perfect good faith not for the insured alone, but equally for the insurer; in fact it is more so for the latter, since its dominant bargaining position carries with it stricter responsibility. 29) Insular Life (Gana)
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FACTS ISSUE HELD RATIO
FELICIANO was suffering from advanced pulmonary tuberculosis when he signed for his application for insurance with INSULAR LIFE On the same day he signed for an application, DR TREPP, who had taken X-ray pictures of his lungs, informed DR FELICIANO, brother of applicant FELICIANO, that the latter was in a very serious and hopeless condition Nevertheless, FELICIANO answered the question have you ever suffered from any ailment or disease of the lungs, pleurisy, pneumonia or asthma? NO. Below the questions is the statement I declare on behalf of myself and of any person who shall have or claim any interest in any policy issued hereunder that each of the above answers is full, complete and true x x x But in reality, the false answer of NO was written by INSULAR LIFES soliciting agent DAVID in collusion with the medical examiner DR VALDEZ in order to boost sales of its policies for FELICIANO signed the application in blank FELICIANO died INSULAR LIFE refused to pay the proceeds claiming FELICIANOS false answer in his application FELICIANOS heirs contend that the answer was written by DAVID and DR VALDEZ and not FELICIANO himself W/N INSULAR LIFE CAN DENY PAYMENT OF PROCEEDS DESPITE THE FACT THAT ITS EMPLOYEES CAUSED THE FALSE ANSWER IN THE APPLICATION YES, EMPLOYEES BECAME AGENTS OF FELICIANO Policies were issued on the basis of the statement subscribed by applicant FELICIANO to the effect that he is in good health when as a matter of fact he is suffering from advanced pulmonary tuberculosis Although the agent DAVID and medical examiner DR VALDEZ knew it to be false, no valid contract was entered into because there was no real meeting of the minds Moreover, when FELICIANO signed the application in blank and authorized agent DAVID and/or DR VALDEZ to write answers for him, he made them his own agents for that purpose and he was responsible for their acts From all the facts and circumstances, the Court rules that FELICIANO was a co-participant and corresponsible with agent DAVID and medical examiner DR VALDEZ in the fraudulent procurement of the policy in question hence the policies are void ab initio
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30) Sunlife Assurance Company of Canada vs. Court of Appeals (Lopez) Facts: Robert Bacani procured a life insurance contract for himself from Sunlife with his mother, Bernarda Bacani, as the beneficiary. Robert died in a plane crash but when Bernarda tried to claim the proceeds of the insurance, Sunlife rejected her claim. Sunlife is saying that the contract of insurance is void because the insured gave false statements in the application. Robert apparently answered yes to the question within the past 5 years have you consulted any doctor or other health practitioner? However, Sunlife found out that two weeks prior to his application, Robert was examined and confined at the Lung Center of the Philippines, where he was diagnosed with renal failure. Bernarda filed an action for specific performance in the lower court which she won. The RTC held that the concealment done by Robert was in good faith and that the cause of death of Robert was unrelated to the facts concealed. This was affirmed by the CA. W/n Roberts concealment would give Sunlife the right to declare the contract of insurance void. SC says YES. Sec. 26 of the Insurance Code is explicit in requiring a party to a contract of insurance to communicate to the other, in good faith, all facts within his knowledge which are material to the contract. Materiality is to be determined not by the event, but solely by the probable and reasonable influence of the facts upon the party to whom communication is due, in forming his estimate of the disadvantages of the proposed contract or in making his inquiries. The information which the insured failed to disclose were material and relevant to the approval and issuance of the insurance policy. The matters concealed would have definitely affected petitioners action on his application, wither by approving it with the corresponding adjustment for a higher premium or rejecting the same. Thus, Sunlife had every right to declare the insurance contract of Robert void.
Issue: Held: -
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July 12, 2006 31) Ng Gan Zee vs. Asian Crusader Life Assurance Corp. (Mendiola) Facts: Kwong Nam applied for a 20 year endowment insurance on his life for 20,000, with Ng Gan Zee as beneficiary. Kwong Nam died of Cancer of the liver with metastasis. Ng Gan Zee presented a claim for the proceeds of the insurance. Asian Crusader denied the claim by saying that the answers given by the insured to the questions in the application were untrue. The Insurance Commissioner found no material concealment on the part of Kwong Nam. The Insurance Commissioner, therefore, said that Asian Crusader should pay. Notwithstanding the pronouncement of the Insurance Commissioner, Asian Crusader still refused to pay. According to Asian Crusader, Kwong Nam answered No to the question in the application asking if any insurance company ever refused his application or reinstatement. It said that Insular Life denied the reinstatement of his lapsed life insurance. Asian Crusader also argues that when Kwong Nam was given a physical exam, Kwong Nam gave Asain Crusaders medical examiner false and misleading information. According to Asian Crusader, the statement of Kwong Nam in the application that he had been operated on for a tumor (size of a hens egg) as a result of ulcer, is a misrepresentation. Asian Crusader pointed to the fact that the report of the doctor who operated Kwong Nam stated that Kwong Nam had peptic ulcer and that the removed object was 12cm x 19 cm x 15 cm. Issue: Is Kwong Nam guilty of misrepresentation? Was Asian Crusader misled into entering the contract. Held: No misrepresentation by Kwong Nam. It is a fact that Kwong Nam had informed the examiner of the tumor associated with ulcer. In the absence of evidence that Kwong Nam had sufficient medical knowledge to distinguish between peptic ulcer and a tumor, his statement should be construed as an _expression made in good faith. It was made without his knowledge of its incorrectness and without any intent on his part to mislead. If a question appears not to be answered at all or to be imperfectly answered, and the insurer issues the policy without further inquiry, they waive the imperfection of the answer and render the omission to answer more fully immaterial. If the ailment and operation had such an important bearing, the court cannot understand why the medical examiner did not make further inquiries. It would be inequitable to allow Asian Crusader to escape liability when it was so eager to get the application and receive premium.
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July 19, 2006 32) Harding vs. Commercial Union (Morada) Facts: -Defendant Commercial Union is a foreign corporation organized and existing under the laws of Great Britain and duly registered in the Philippine Islands. Smith, Bell & Co. is the agent in the Philippines of Commercial Union -Plaintiffs allege that Mrs. Henry E. Harding was the owner of a Studebaker automobile registered in Manila. -The vehicle was purchased by Mr. Henry Harding at the cost of P2,800. He gave the automobile to his wife as a present. -The automobile was repaired and repainted at the Luneta Garage for P900. -Luneta Garage, acting as agent for Smith Bell & Co., solicited from Mrs. Harding the insurance of the automobile by Commercial Union. -The proposal was filled out by Smith Bell and signed by Mrs. Harding. -In the proposal, under the heading Price paid by proposer is the amount of P3,500 and under another heading Present value is the amount P3,000 -After the proposal was made a representative of Smith Bell went to the Luneta Garge and examined the automobile. -Mr. Server, the General Manager of the Luneta Garage, an experienced automobile mechanic, testified that at the time the automobile was insured it was worth about P3,000 -Commercial Union issued an insurance policy for a premium of P150. -A month after, the car was totally destroyed by fire. -The iron and steel portions which did not burn were sold for only P10. -Commercial Union denied Hardings claim on the ground that the latter misrepresented facts as to a) price paid for the automobile; b) the value of the automobile; c) ownership of the automobile. Issue: W/N Harding is guilty of fraudulent misrepresentation so as to bar the claim against Commercial Union. Held: NO, Harding is not guilty of misrepresentation. -There was no false statement regarding the cost of the automobile. On the contrary, the automobile cost more than the amount mentioned. It cost P2,800, plus repairs worth P900. Mr. Server, an expert mechanic, even testified as to the value of the automobile. -Moreover, the proposal was made out by the insurance companys agent. The company also had the automobile inspected before issuance of the policy. -Under the circumstances, the company cannot claim that the facts stated in the proposal be held as a warranty of the insured. The proposal here is to be regarded as the act of the insurer and not of the insured. -Agents employed by insurance companies often mislead the insured to induce the latter to take out a policy. Thus, the information contained in proposals may not be used against the insured. Notes: -The insured was only asked to estimate the market value of the property. His only duty is to act in good faith. The absolute correctness of the valuation given must not be made a condition precedent to his recovery. -The insurance company is not in a position to challenge the validity of the transfer or donation by the husband. Even assuming it may question the transfer, it has not shown that the transfer is not a moderate one, thus not under the exceptions. 33) Musngi vs. West Coast Life Insurance Co. (Rivas) FACTS: ARSENIO GARCIA was insured by WEST COAST LIFE in two insurance policies, July 25, 1931 and October 20, 1931. The 2 policies were subsisting and valid at the time of the death of Arsenio. But West Coast refuses to pay the premiums on this ground: o On both the applications the insured had answered inquiries as to his state of health and that of his family. The following question was asked: what physician or practitioner or any other person not named above have you consulted or been treated by, and for what illness or ailment? he answered No on both the policies. West Coast later discovered that the aforementioned answers were false and fraudulent because the truth was that the insured, before answering and signing the application and before the issuance of the policies had been treated in the General Hospital by Dr. Pilar Cruz for several ailments. It was also found out that the insured was a frequent visitor of the hospital from the months of August 30 until January 31.
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LOWER COURT: West Coast must pay the beneficiaries for the health of the insured before the acceptance of his application and the issuance of the policies could neither be discussed nor questioned by the defendant for the insured was examined by 3 physicians of the company an d all of them unanimously certified that he was in good health and that he could be properly insured. W/N the 2 answers given by the insured in his applications are false and if they were the cause, or one of the causes, which induced the insurer to issue the policies YES! The answers of the insured were false and the policy is rendered void. The insured knew that he had suffered from numerous ailments before subscribing the application yet he concealed them and omitted the hospital where he was confined as well as the name of the lady physician. Concealment is the neglect to communicate that which a party knows and ought to communicate. It exists where the assured has knowledge of a fact material to the risk, and honesty, good faith and fair dealing requires that he should communicate it to the assured. The basis of the rule vitiating the contract in cases of concealment is that it misleads or deceives the insurer into accepting the risk, or accepting it at a rate agreed upon.
ISSUE: HELD: -
34) Edillon v. Manila Bankers Life Insurance Corp. (Sarenas) Facts: Issue: Held: April 15, 1969: Carmen Lapuz applied with Manila Bankers Life Insurance Corp. (MBL) for insurance coverage against accident and injuries. She gave the date of her birth as July 11, 1904. She then paid P20 as premium and was issued a receipt. A certificate of insurance was then issued to Lapuz, effective for 90 days. May 31, 1969: Lapuz died in a car accident. June 7, 1969: Regina Edillon, sister of Lapuz and beneficiary in the policy, filed a claim. Her claim was denied. MBL is resisting the claim because of an exclusionary provision in the certificate of insurance that states MBL is not liable for claims in behalf of people below 16 years of age and above 60 years of age. Lapuz was 65 when she applied for the insurance. RTC agreed with MBL, hence this petition W/N MBL can resist the claim citing the said provision No. MBL should pay the claim. The age of Lapuz was not concealed to the insurance company at the time insurance was applied. Despite such disclosure, MBL still issued the said policy. MBLs inaction to revoke the policy despite a departure from the exclusionary condition constituted a waiver of such condition (Gan v. Law Union) It would be unfair for MBL to get the premium and the repudiate the contract at their own will.
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July 26, 2006 35) Tan Chay Heng v West Coast Life (Anastacio) FACTS: * Sec 47 (Whenever a right to rescind a contract of insurance is given to the insurer by any provision of this chapter, such right must be exercised previous to the commencement of an action on the contract) *Tan Caeng insured *West Coast Life Insurance Co. insurer (home office at San Francisco, California) *Tan Chay Heng sole beneficiary *Go Chulian,Francisco Sanchez, Dr. Locsin conspirators *Fraud, Misrepresentation, Concealment, Falsification (grounds alleged by West Coast. Apparently, the conspirators were involved in procuring fraudulent life insurance policies) Misrepresentation Truth, and in fact - Tan Caeng, single - legally married with children -Tan Hay Cheng, nephew - not his nephew -Tan Caeng, merchant - merely an employee -Tan Caeng, in good health -suffering from an incurable case of pulmonary tuberculosis, addicted to morphine and cocaine - Tan Caengs worth P40,000 -Reinstatement (certificate of good health) - April 10, 1925 Premiums were paid when the temporary policy was issued pending approval by the home office in Frisco. - West Coast discovered fraud so it never delivered the permanent policy. - January 4, 1926 Tan Chay Heng commenced an action against West Coast for refusal to pay the policy proceeds. - February 27, 1926 West Coast filed its original answer (general and specific denial) - August 31, 1926 West Coast filed its amended answer - Tan Chay Heng contends that West Coast is barred and estopped to plead and set forth the matters alleged in its special defense, by applying Sec 47 - West Coast contends that Sec 47 does not apply to new matters alleged in the special defense. ISSUE: WoN Sec 47 is applicable in the case at bar, thereby barring West Coast to plead his defense? HELD: NO. 1. Sec 47 is not applicable because West Coast does not seek to have the alleged insurance contract rescinded. It denies the very existence of an insurance contract and therefore there is no contract to rescind. If all the material facts alleged by West Coast are correct, there really was no contract simply because there was no meeting of the minds. 2. BUT upon the question on whether or not the facts alleged by West Coast are true, the Court had no time to rule on that issue 36) Soliman v US Life (Beron) FACTS: US Life brought this action against Soliman in the CFI seeking the rescission of certain reinstated policy secured on the life of the wife of Soliman and its relief from all claims under said policy by virtue of its having refunded to Soliman all premiums paid theron subsequent to the date of it reinstatement. June 12, 1947: US Life issued a 20-year endowment life policy in the amount of P3,000 on the joint lives of Patricio Soliman and his wife Rosario, each of said parties being therein named the beneficiary of the other. March 24, 1949: The spouses were notified by US Life that the premium due on January 12, 1949 was still unpaid. They were also furnished at the same time health certificates for the reinstatement of their insurance upon satisfactory proof of insurability, together with the remittance of the amount of premiums due. April 12, 1949: Spouses submitted the health certificates and paid the amount due. January 7, 1950: Rosario died. Upon demand from US Life for the payment of the face value of the policy, insurance company refused to pay on the ground that in the application of Rosario, her answer was incomplete and false and that she failed to disclose that she had been suffering from bronchial asthma. May 31, 1950: US Life filed a complaint for rescission of the reinstated policy. Soliman denied the allegations of said complaint and set up the special defense that US Life is in estoppel in rescinding the policy for the reason that the same has been in force for more that 2 year and is now incontestable. Anastacio, Beron, Calinisan, Cruz, Delgado, Fernandez, Gana, Lopez, Mendiola, Morada, Rivas, Sarenas
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LOWER COURT and CA: declared the reinstatement of the policy rescinded and relieving US Life of all claims.
ISSUE: Whether US Life has the right to rescind the policy despite lapse of 2 years from date of its issue. HELD: YES. The contention of Soliman that the policy has become incontestable by reason of the lapse of 2 years from date of original issuance of policy is untenable. For this 2-year incontestability rule shall be deemed to run from the date of reinstatement upon the theory that the company should be given reasonable time to investigate and determine the truth of the new facts that may arise after the lapse of the policy. By reinstatement is meant that the policy is put back into force and effect; not that a new policy is issued containing different terms. It is only reasonable that he old defenses which were barred by the running of the first incontestable clause remain barred they are not automatically revived. But as to the new representations made which may be false and fraudulent, the insurer is entitled to a reasonable time to investigate and to determine their truth. The same length of time (2 years) fixed by the policy as to the original defenses will be given to new defenses after reinstatement. 37) Tan v CA (Calinisan) Facts: This is a case of Emilio Tan and his fellow petitioners v Philippine American Life (PAL) Insurance Company for the recovery of the proceeds of their dads policy. Sept 23, 1973: Tan Lee Siong (the dad) applied for life insurance with PAL in the amount of P80T. It was approved. The petitioners are the beneficiaries. Effectivity: Nov 6: 1973 April 26, 1975: dad died of hepatoma Sept 11. 1975: PAL denied the claim and rescinded the policy for alleged misrepresentation and concealment. The premiums were then refunded. The petitioners filed a case against PAL with the Office of the Insurance Commissioner, which dismissed their complaint. CA dismissed it as well. The petitioners contend that PAL no longer had the right to rescind the contract of insurance as rescission must allegedly be done during the lifetime of the insured within 2 years and prior to the commencement of action. Issue: W/N PAL may rescind the insurance contract. Held: Yes. The policy was issued on Nov 6, 1973 and the insured died on April 26, 1975. The policy was thus in force for only a period of only 1 year and 5 months. Considering that thte insured died before the 2 year period has lapsed, respondent company is not therefore barred from proving that the policy is void ab initio by reason of the insureds fraudulent concealment or misrepresentation. Moreover, respondent company rescinded the contract of insurance and refunded the premiums paid on Sept. 11, 1975, previous to the commencement of this action on November 27, 1975. The legislative answer to the arguments posed by Tan is the incontestability clause added by the second paragraph of Sec 48. There is no showing that the SC should apply the fine print or contract of adhesion rule for this case. There is no showing that the questions in the application form for insurance regarding the insureds medical history are in smaller print than the rest of the printed form or that they are designed in such a way as to conceal from the applicant their importance.
38) Collado v Insular Life (Cruz) 39) Enriquez v Sunlife (Delgado) Facts: Enriquez, as the administrator of the estate of Joaquin Herrer, seeks to recover from Sun Life the sum of P6,000 paid by the deceased for a life annuity. -Herrer made an application to the Sun Life Assurance of Canada Anastacio, Beron, Calinisan, Cruz, Delgado, Fernandez, Gana, Lopez, Mendiola, Morada, Rivas, Sarenas
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-two days later, he paid P6,000 to the manager of Sun Life in its Manila Branch -Manila Branch forwarded it to its head office in Montreal, Canada -Nov.26,1917, head office cabled Manila Office notifying its acceptance of the policy -Dec.4,1917 the policy was issued at Montreal -Dec.18,1917 Atty. Torres wrote Sun Life Manila that Herrer wants to withdraw his application -Manila Office replied that the policy was approved and issued already pointing out the Nov.26 approval -Dec.20,1917, Herrer died -Dec.21,1917, Atty. Torres received the reply of Sun Life -Trial court favored Sun Life Issue: W/N the contract of life annuity between Herrer and Sun Life was perfected. Held: No. Because the Law on Insurance is silent as to the methods to be followed in order that there may be a contract of Insurance, the Civil Code will govern since the Civil Code not only describes the contract of life annuity but gives strong clues as to the proper disposition of the case. The law on contracts is also applicable in the case at hand. One of its requirements is consent. Consent is shown by the concurrence of offer and acceptance with respect to the thing and the consideration which are to constitute the contract. An acceptance made by letter shall not bind the person making the offer except from the time it came to his knowledge. The letter dated Nov.26 notifying Mr. Herrer of the approval of his application was prepared and signed by the local office and was placed to the ordinary channels of transmission. But there is no proof that it was mailed to Herrer thus the latter cannot be deemed to have received it. Relying on American jurisprudence, when a letter is addressed and mailed with postage, there is a rebuttable presumption of the fact that it was received by the addressee. But in this case, there is no proof that it was indeed mailed.
40) Perez v CA (Fernandez) Facts: Primitivo B. Perez was insured with the BF Lifeman Insurance Corporation for P20k. October 1987, Rodolfo Lalog, agent of BF Lifeman convinced Perez (who was in Guinayangan, Quezon province) to apply for an additional insurance coverage of P50k to avail of a promo discount of P400 if the premium were paid annually. Perez accomplished an application for such and her wife paid P2,075 to Lalog. The receipt issued by Lalog indicated that the amount was received as deposit Lalog lost Perezs application form so another form was filled up. Perez passed the corresponding medical examination. The application was then forwarded to the Gumaca, Quezon office, which ought to forward the same to the Manila office. Nov 25, 1987 Perez died when his banca capsized during a storm. At the time of his death, his application papers were still with the Gumaca office. That same day, Lalong delivered the papers to the Manila office. Virginia, the wife of Perez, tried to claim from BF Lifeman. She was paid for the first policy (received 40k since there was double indemnity), but the company refused to pay under the second policy. The company claims that the policy was not yet perfected at the time of Perezs death. So it just refunded the premiums paid by Virginia. BF Lifeman filed a complaint for the rescission of the 2nd insurance contract. Virginia argues that Perez had fulfilled all his obligations under the policy and that all elements of a valid contract are present. Trial court favored Perez. CA reversed.
Issue: Was there a perfected 2nd insurance policy between the parties? Held: None. A contract of insurance, like other contracts, must be assented to by both parties either in person or by their agents. So long as an application for insurance has not been either accepted or rejected, it is merely an offer or proposal to make a contract. There can be no contact of insurance unless the minds of the parties have met in agreement. When Perez filed an application for the 2nd policy, paid premiums, and submitted the medical examination results, his application was subject to the acceptance by BF Lifeman. The assent of BF Lifeman was not given when it merely received the application form. Its assent was given upon the issuance of the policy to the applicant. Under the application Anastacio, Beron, Calinisan, Cruz, Delgado, Fernandez, Gana, Lopez, Mendiola, Morada, Rivas, Sarenas
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form, only when the applicant pays the premium and receives and accepts the policy while he is in good health that the contract of insurance is deemed to have been perfected. When Perez died, however, his application was still with the Gumaca office as the same was delivered to Manila only some days later. There was absolutely no way the acceptance of the application could have been communicated inasmuch as the applicant was already dead. The conditions imposed by BF Lifeman for the perfection of the contract of insurance (policy was issued; premiums paid; policy was delivered to and accepted by the applicant while he is in good health) did not constitute a potestative or facultative condition. The health of the applicant at the time of delivery of the policy is beyond the control of the corporation. BF Lifeman cannot be held liable for gross negligence. Delay in acting on the application does not constitute acceptance even though the insured has forwarded his first premium with his application. But there is no proper subject of rescission as there was no contract at all.
41) Grepalife v CA (Gana) 42) Pacific Timber v CA (Lopez) Facts: Pacific Timber secured a temporary insurance from Workmens Insurance Company for it s exportation of 1,250,000 board feet of Philippine Lauan and Apitong logs to be shipped from Quezon Province to Japan. Workmens issued a Cover Note as evidence. The regular marine cargo policies were issued by Workmens on April 2, 1963. After the issuance of the Cover Note but before the issuance of the marine policies, some of the logs were lost during loading operations. The logs were to be loaded on the SS Woodlock but while the logs were alongside the vessel, bad weather developed resulting in the loss of 30 logs. Pacific Timber filed a Claim Statement which Workmens denied on the ground that all the logs covered by the MARINE POLICIES were received in good order at their point of destination. Pacific Timber wrote to the Insurance Commissioner, who said that it is only fair and equitable that Pacific Timber be compensated through the COVER NOTE. CFI rule in favor of Pacific Timber but CA reversed. W/n Pacific Timber can recover under the COVER NOTE. SA says YES. SC upheld Pacific Timber's submission that the Cover Note was not without consideration. The fact that no separate premium was paid on the Cover Note before the loss insured against occurred, does not militate against the validity of Pacific Timber's contention, for no such premium could have been paid, since by the nature of the Cover Note, it did not contain, as all Cover Notes do not contain particulars of the shipment that would serve as basis for the computation of the premiums. As a logical consequence, no separate premiums are intended or required to be paid on a Cover Note. It may be true that the marine insurance policies issued were for logs no longer including those which had been lost during loading operations. This had to be so because the risk insured against is not for loss during loading operations anymore, but for loss during transit, the logs having already been safely placed aboard. The Cover Note acts legally as a binder. It binds the insurer while the regular policies are being processed. In this case, had all the logs been lost during the loading operations, but after the issuance of the Cover Note, liability on the note would have already arisen even before payment of premium. Otherwise, the cover note would serve no practical purpose in the realm of commerce. This is supported by the doctrine that where a policy is delivered without requiring payment of the premium, the presumption is that a credit was intended and policy is valid.
Issue: Held: -
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August 2, 2006 43) Bonifacio v Mora (Mendiola)
44) Coquia v Fieldman (Morada) Facts: Fieldmens Insurance Co. (Company) issued in favor of the Manila Yellow Taxicab Co., Inc. (Insured) a common carrier accident insurance policy. The policy stipulated that: The Company will indemnify the Insured in the event of any accident arising out of the use of Motor Vehicle against all sums which the Insured will become legally liable to pay in respect of: Death or bodily injury to any fare-paying passenger including the Driverwho is riding in the motor vehicle insured at the time of accident or injury. While the policy was in force, a taxicab of the Insured, driven by Carlito Coquia, met a vehicular accident in Pangasinan, as a consequence of which Carlito died. The Insured filed therefore a claim for P5,000 to which the Company replied with an offer to pay P2,000 by way of compromise. The Insured rejected the same and made a counter-offer for P4,000 but the Company did not accept it. The Insured and Carlito Coquias parents, Melecio and Maria, filed a complaint against the Company to collect the proceeds of the policy. In its answer the Company admitted the existence of the policy but pleaded lack of cause of action on the part of the plaintiffs. Trial Court: ruled in favor of plaintiffs, hence this appeal by the Company Issue: W/N the taxi cab drivers parents, who were not parties to the insurance contract, have a cause of action against the insurance company. Held: YES. It is stipulated in the insurance policy that the Company will indemnify any authorized Driver who is driving the Motor Vehicle of the Insured and, in the event of death of said driver, the Company shall indemnify his personal representatives. It was also stipulated that the Company may, at its option, make indemnity payable directly to the claimants or heirs of claimants, it being the true intention of this Policy to protect the liabilities of the Insured towards the passengers of the Motor Vehicle and the Publicin other words, third parties. Thus, the policy here is typical of contracts pour atrui, this character being made more manifest by the fact that the deceased driver paid 50% of the corresponding premiums, which were deducted from his weekly commissions. It is clear that Coquias parentssole heirs of the deceasedhave a cause of direct cause of action against the Company. And since they could have filed this action by themselves, it may be said that they acted properly in joining the Insured in filing this complaint 45) Del Val v Del Val (Rivas) FACTS: PLAINTIFF and DEFENDANT are brothers and sisters and are the only heir of GREGORIO DEL VAL During the lifetime of the Gregorio, he took a life insurance policy and made ANDRES DEL VAL (defendant) his sole beneficiary After the death of Gregorio, Andres collected the premiums and used that money to redeem certain properties which the decedent had sold to 3rd persons with a right to repurchase. The redemption was made by the lawyer of Andres in the name of both the plaintiffs and defendants PLAINTIFFS argued that: o The premiums of the insurance policy belonged to the estate of the deceased and not to Andres personally o They are entitled to the partition of not only the real and personal properties, but also of the premiums. The counterargument of Andres on the other hand are: o He has no knowledge or consent that the redemption was made in his name and of the plaintiffs o It was not his intention to use the proceeds of the insurance for the benefit of any person but himself Anastacio, Beron, Calinisan, Cruz, Delgado, Fernandez, Gana, Lopez, Mendiola, Morada, Rivas, Sarenas
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RTC held that: o Andres is the sole owner of the premiums o Dismissed the action because the complaint does not contain an adequate description of the real property of which partition is demanded. Who is the real owner of the insurance proceeds and the redeemed property The proceeds is solely owned by Andres but as to the determination of the owner of the redeemed property, the case is remanded to the trial court for further proceeding. Proceeds of an insurance policy belongs exclusively to the beneficiary and not to the estate of the person whose life was insured, and that such proceeds are the separate and individual property of the beneficiary, and not of the heirs of the person whose life was insured. The contract of insurance is a special contract and the destination of the proceeds thereof is determined by special laws which deal exclusively with that subject. The Civil Code has no provisions which relate directly and specifically to life insurance contracts or to the destination of life insurance proceeds. That subject is regulated exclusively by the Code of Commerce which provides for the terms of the contract, the relations of the parties and the destination of the proceeds of the policy. The proceeds of the life insurance policy being the exclusive property of the defendant and he having used a portion thereof in the repurchase of the real estate sold by the decedent prior to his death with right to repurchase, it must still be proved whether the intention of Andres was to redeem the property for the benefit of all the heirs or of himself alone. Because of this, the case was ordered remanded to the lower court to determine the true intention of Andres in redeeming the property.
ISSUE: HELD: -
46) RCBC v CA (Sarenas) Facts: This is a consolidated case involving the fire loss claim of Goyu & Sons Inc (GOYU) with Malayan Insurance (Malayan) in connection with mortgage contract between Goyu and RCBC(bank). Goyu applied for a loan from RCBC. The bank approved the loan for P30M and was later increased to P117M. As security, Goyu executed 2 REMs and 2 chattel mortgages. Under the 4 agreements, Goyu committed itself to insure the mortgaged properties with an insurance company to be approved by the bank. Goyu obtained in its name 10 insurance policies from Malayan. 9 of the policies were then endorsed to RCBC by Alchester, the agent of Malayan. 1992: Goyus factory in Valenzuela was gutted by fire. Goyu then filed a claim from Malayan Malayan denied the claim saying that the policies were either attached pursuant to different court orders and some are being claimed by other creditors of Goyu. Goyu then filed for specific performance and damages. The bank also filed a claim with Malayan but said claim was also denied under the same grounds used to deny Goyus claim. RTC: judgment in favor of Goyu o Malayan to pay the claim of Goyu plus damages due to delay o RCBC to pay Goyu actual and compensatory damages o RCBC & Malayan jointly and severally pay Goyu exemplary damages and attorneys fees. RTC & CA: endorsements does not bear the signature of any officer of Goyu, the endorsements are therefore defective. W/N RCBC as mortgagee, has any right over the insurance policies Yes. Although Goyu obtained the policies naming itself as the sole payee, the intentions of the parties as shown by their contemporaneous acts must be given due consideration in order to better serve the interest of justice and equity. The insurance agent could not have reached the idea of endorsing the policies to the bank had there been no instructions from Goyu. Goyu also bought the policies from Malayan, a sister company of RCBC, and not from any other insurance company. Goyu is estopped in claiming that there was no endorsement made because Goyu failed to seasonabl refute the endorsements made by the persons that allegedly had no authority to do so. RCBC in good faith relied that the endorsements made were with the authority of Goyu. Anastacio, Beron, Calinisan, Cruz, Delgado, Fernandez, Gana, Lopez, Mendiola, Morada, Rivas, Sarenas
Issue: Held:
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Issue: Held: The endorsement of Alchester had the effect that the endorsement was made by Goyu itself. W/N Goyu can seek relief under Section 53 of the Insurance Code Goyu cannot claim under Section 53 of the insurance code. The peculiarity of the case presents a justification to take exception to the strict application of Sec 53. It could be gleaned from the mortgage agreements that it was the intention of the parties to constitute RCBC as beneficiary of the different policies. Having assigned its rights, Goyu has lost its standing as the beneficiary of the policies.
47) San Miguel v Law Union (Anastacio) FACTS: repeated case Dunn mortgaged a parcel of land to SMB to secure a debt of 10T Dunn likewise authorized SMB to take out an insurance policy for him Property was insured for 7,500 (Law Union Rock) and 7,500 (Filipinas Cia de Seguros). Both policies were issued in the name of SMB only and contained no other interests in the property. Policies state that SMBs interest is merely that of a mortgagee Premiums were paid by SMB and charged to Dunn Dunn sold the property to Harding but contained no assigned of policies made to the latter. Property was destroyed by fire, SMB collected on the insurance SMB denied liability to pay Dunn and Harding
ISSUE: WoN Law Union Rock Insurance Co. is liable to pay Dunn and Harding? HELD: NO. 1. Insurance Act provides that the insurance shall be applied exclusively to the proper interest of the person in whose name it is made. 2. SEC 57 A policy can be framed to inure to the benefit of whomsoever becomes the owner of the interest insured If the wording had been Payable to SMB, as its interests may appear, remainder to whomsoever, during the continuance of the risk, may become owner of the interest insured, it would have proved an 3.
intention to insure the entire interest in the property, and not merely SMBs and would have shown to whom the money, in case of loss, should be paid.
Also, Sec 58 provides that the transfer of the thing insured does not automatically transfer policy. It is not automatic because a contract is only enforceable to those who are privy to the contract. (You cannot novate unless both SMB and Law Union Rock consent to the novation)
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August 7, 2006
Sorry my laptop crashed. -Ralph Devt Insurance vs IAC (Beron) FACTS: A fire occurred in the building of the Philippine Union Realty (PUR) and it sued for recovery of damages from the Devt. Inusrance (DI) on the basis of an insurance contract between them. DI's contention: It argues that since at the time of the fire the building insured was worth P5,800,000.00, the private respondent should be considered as its own insurer for the difference between that amount (P5.8M) and the face value (P2.5M) of the policy and should share pro rata in the loss sustained. In support of this contention, the petitioner cites Condition 17 of the policy, which provides: If the property hereby insured shall, at the breaking out of any fire, be collectively of greater value than the sum insured thereon then the insured shall be considered as being his own insurer for the difference, and shall bear a ratable proportion of the loss accordingly. ISSUE: Indemnity due to the private respondent under its insurance contract with the petitioner. This will require an examination of this contract, Policy No. RY/F-082, as renewed, by virtue of which the petitioner insured the private respondent's building against fire for P2,500,000.00. HELD: ACTUAL LOSS OF P508,867.00. The contention of DI that it must be held liable only up to the extent of the P2, 500,000 (face value of the policy) and anything in excess of such amount shall be shouldered by the inusred (PUR) is untenable. There is no evidence on record that the building was worth P5,800,000.00 at the time of the loss; only the petitioner says so and it does not back up its
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self-serving estimate with any independent corroboration. On the contrary, the building was insured at P2,500,000.00, and this must be considered the actual value of the property insured on the day the fire occurred. This valuation becomes even more believable if it is remembered that at the time the building was burned it was still under construction and not yet completed. The Court notes that Policy RY/F-082 is an open policy. In the event of loss, whether total or partial, it is understood that the liability of the company, if established, shall be limited to the actual loss and in no case shall exceed the amount of the policy (P2.5M). The actual loss has been ascertained in this case and in the absence of proof that it was arrived at arbitrarily, such shall be respected by the court. There is no such showing. Hence, applying the open policy clause as expressly agreed upon by the parties in their contract, we hold that the private respondent is entitled to the payment of indemnity under the said contract in the total amount of P508,867.00.
NEW LIFE (See photocopy) (laptop crashed) (Calinisan)
SAURA IMPORT v. PHIL. INTL SURETY CRUZ FACTS: -Saura mortgaged land to PNB to secure a promissory note. -The contract of mortgage states, among others, that: 1) Saura shall insure the mortgaged property against fire and earthquake; 2) indorse the policy to PNB; 3) keep the property in good condition. -Saura insured property to Phil. Intl Surety and endorsed the policy to PNB. -13 days after the issuance of the policy, insurer cancelled the same. -Nov. 8, 1954: PNB Davao received the notice of cancellation from the insurer. -April 6, 1955: fire burned the property.
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-April 11, 1055: Saura filed a claim with the insurer and PNB. -It was only now that Saura learned of the cancellation throught the bank. -Saura filed civil case against the insurer, later included PNB when it refused to sue with jontly. -RTC dismissed. ISSUE: W/N THE POLICY HAS BEEN PROPERLY CANCELLED SO AS TO BAR CLAIM BY SAURA AGAINST THE INSURER. HELD: -The form and sufficiency of a notice of cancellation is determined by policy provisions. -The policy here does not provide so. The Insurance Law does not likewise provide for such notice. The Court applied the generaaly accepted principles of insurance regarding cancellation. -Actual notice of cancel;latyion in clear and equivocal manner, preferrably in writing, in view of the importance of an insurance contract, should be given by the insurer to the insured, so that the latter might be given opportunity to obtain other insurance for his protection. -The notice shopuld be personal; and not through authorized person. -Notice to a mortgagee is not effective notice. -Principal liabity attaches to the insurance company.
Malayan Insurance vs. Cruz Ansaldo Delgado Facts: On June 1981, Malayan Insurance Corporation (MICO) issued a fire insurance policy to Coronacion Pinca insuring the latters house for the amount of P100T. -The insurance policy is is supposedly from July 22, 1981 to July 22, 1982. -October 15, 1981, MICO allegedly cancelled the premium for non-payment of premium. -December 24, 1981, Pinca gave payment to Adora, agent of MICO. -January 15, 1982, Adora remitted the payment with MICO.
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-January 18, 1982, house of Pinca razed by fire. -February 5, 1982, Pinca tried to claim against the insurer but she was told it was cancelled earlier and her premiums were returned. -She went to Insurance Commissioner and got a favorable ruling. Issue: W/N the cancellation is valid. Held: No. As for the method of cancellation, Section 65 provides as follows: SEC. 65. All notices of cancellation mentioned in the preceding section shall be in writing, mailed or delivered to the named insured at the address shown in the policy, and shall state (a) which of the grounds set forth in section sixty-four is relied upon and (b) that, upon written request of the named insured, the insurer will furnish the facts on which the cancellation is based. A valid cancellation must, therefore, require concurrence of the following conditions: (1) There must be prior notice of cancellation to the insured; (2) The notice must be based on the occurrence, after the effective date of the policy, of one or more of the grounds mentioned; (3) The notice must be (a) in writing, (b) mailed, or delivered to the named insured, (c) at the address shown in the policy; (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. - The defense of MICO that it sent it to the mailing section cannot be well-taken since there is no proof that indeed it was sent to Pinca. It cannot overturn the positive assertion of Pinca that she didnt receive anything. When a person's house is razed, the fire usually burns down the efforts of a lifetime and forecloses hope for the suddenly somber future. The vanished abode becomes a charred and painful memory. Where once stood a home, there is now, in the sighing wisps of smoke, only a gray desolation. The dying embers leave ashes in the heart.
Malayan Insurance vs. Cruz Arnaldo (Mendiola) Facts: l Malayan Insurance (MICO) issued a Fire insurance policy in favor of Pinca.
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l l l l l l l In October 1981, MICO allegedly cancelled the policy for In December 1981, Pinca paid a premium. It was received by Adora remitted the payment to MICO. In Jan. 1982, Pincas property burned. In Feb 1982, Pincas payment was returned to Adora on the ground Pinca made a claim for the proceeds of the insurance. MICO refused to pay stating that the insurance had been
non-payment of the premium and sent a notice to Pinca. Adora, an agent of MICO.
that her policy had been cancelled. Adora refused to accept it.
cancelled. Issue: W/N MICO is liable to pay Pinca. Held: l l l l MICO is liable to pay Pinca. MICO argues using Sec. 77 of the Insurance Code, which states However, Sec. 77 is not applicable because the payment of the The premium invoice issued to Pinca at the time of the delivery
that the non-payment of the premiums cancels the insurance contract. premium was eventually made. of the policy (June 1981) was stamped payment received. This suggests that MICO had an understanding with the insured that the payment could be made later. l o o o o l l l l For there to be a valid cancellation the ff must be present. Prior notice to the insured Based on a ground mentioned in Sec. 64 Notice must be in writing, mailed or delivered to the insured Notice must state the ground The only proof that MICO has is the testimony of one of its However, there is no proof that the notice was actually mailed Sec. 64 behooves MICO to make sure that the cancellation was If Pinca really received the policy, she would not have made
employees who stated that the memo was sent to the assured through mail. to and received by Pinca. actually sent to and received by the insured. payment on the policy.
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August 30, 2006 Philippine Phoenix Surety & Insurance, Inc. vs. Woodworks, Inc. Lopez Facts: Issue: Held: Phoenix issued to Woodworks a fire insurance policy for the amount of 300,000 on Apr. 1, 1960. The premiums supposed to be paid on that policy amounted to 6,051.95. However, Woodworks was only able to pay 3,000. After several demands, Phoenix then instituted an action in the lower court. The lower court held that Woodworks should pay Phoenix for the premium. W/n Woodworks should pay the remaining premium. SC says YES. There is no dispute that there is a perfected contract of insurance between Woodworks and Phoenix. Upon perfection, the obligation of Phoenix to assume the risk of fire arose and the obligation of Woodworks to pay the premium became demandable. The Court said that they cannot agree with Woodworks position that their non-payment of the premium constituted a cancellation of the policy. This flawed theory would place exclusively in the hands of one of the contracting parties the right to decide whether the contract should stand or not. The better view is that as the contract was perfected, the parties could demand form each other the performance of whatever obligations they had assumed.
Philippine Phoenix Surety vs. Woodworks (Mendiola) Facts: Phoenix issued a fire insurance policy for 500,000 over the building of Woodworks. The premium plus other charges as stated in the policy amounted to P10,593.36. Woodworks neither paid the premium when the policy was issued nor at any time after. Before the expiration of the policy, Phoenix notified Woodworks of the cancellation of the policy. Phoenix credited Woodworks the amount of P3,110.25 for the unexpired period. Hence, Phoenix claims a balance of P7,483.11 from Woodworks. Woodworks disclaimed any liability saying that it need not pay premium because Phoenix did not stand liable for any indemnity. Phoenix field an action to recover the amount. Trial court favored Phoenix. Woodworks now brings the case before the SC. Issue: W/N Woodworks is liable to pay the premium. Held: Woodworks is not liable to pay the premium. From the provisions of the contract, the policy requires a prepayment of premium before the policy takes effect. Since the premium had not been paid, the policy must be deemed to have lapsed. The non-payment of the premium does not merely suspend but puts an end to an insurance contract, since the time of payment is peculiarly of the essence in the contract. Upon failure to pay the premium or assessment, the policy shall become void or forfeited. N.B. The insurer cannot treat a contract as valid for the purpose of collecting premiums and invalid for the purpose of indemnity.
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Valenzuela v. CA (Morada) Facts: Arturo P. Valenzuela is a General Agent of Philamgen Insurance Co. authorized to solicit and sell non-life insurance, and in consideration of services was entitled to receive a commission of 32.5% Valenzuela solicited marine insurance from one of his clients, the Delta Motors, Inc. for P4.4M However, Valenzuela did not receive his full commission which amounted to P1.6M from the policy of Delta Philamgen expressed its intent to share in the commission due Valenzuela on a 50-50 basis. Valenzuela refused. Philamgen again insisted, but with no success. Because of the refusal of Valenzuela, Philamgen and its officers took drastic action against him: a) they stopped crediting the commission earned from Delta; b) placed agency transactions on a cash-and-carry basis, removing the 60-day credit for premiums due; c) threatened cancellation of policies solicited by him; d) started to leak out news that Valenzuela has a substantial account with Philamgen. These acts resulted in the decline of Valenzuelas business as insurance agent Valenzuela sued Philamgen and its officers for reinstatement and payment of commission due him. Philamgen filed counterclaim for unpaid and uncollected premiums. TC ruled in favor of Valenzuela. CA reversed, holding Valenzuela liable. W/N Valenzuela is liable to Philamgen for unpaid and uncollected premiums. NO Under Section 77 of the Insurance Code, the remedy for the non-payment of premiums is to put an end to and render the insurance policy not binding. In Philippine Phoenix Surety v. Woodworks, Inc. it was held that the non-payment of premium dos not merely suspend but puts an end to an insurance contract since the time of the payment is peculiarly of the essence of the contract. Since the premiums in this case have not been paid, the policies issued have lapsed. The insurance coverage did not go into effect or did not continue and the obligation of Philamgen as insurer ceased. Hence, Philamgen who had no more liability under the lapsed and inexistent policies had no right to demand, much less sue Valenzuela for the unpaid premiums.
Issue: Held:
Side Issues: -The Court also held that Philamgen was the one liable to Valenzuela for the commissions earned by the latter. -The Agency Agreement may not be revoked at will by Philamgen since it was coupled with interest. Moreover, Philamgen acted in bad faith when it terminated the agency. SOUTH SEA SURETY AND INSURANCE CO. VS. CA (RIVAS) FACTS: ISSUE: HELD: YES! 1/16: VALENZUELA HARDWOOD entered into an agreement with 7 BROTHERS wherby the latter undertook to load on board its vessel MV 7 AMBASSADOR the former's logs for shipment to Manila. 1/20: Valenzuela insured the logs against loss and/or damage with SOUTH SEA SURETY AND INSURANCE CO. for 2M 1/24: Valunzuela gave the check in payment of the premium on the insuarance policy to VIcTORIO CHUA, agent of South Sea. 1/25: the MV 7 Ambassador sank resulting in the loss of Valenzuela's logs. 1/30: South Sea gave Valenzuela a check amounting to P5,625, to cover the payment of the premiums paid RTC: ruled in favor of Valenzuela W/N South Sea is liable to Valenzuela for the loss of its logs
The payment of the premiums is the condition precedent, and is essential, for the efficaciousness of the contract. The only exception are: (1) in case og health insurance where grace period applies and (2) when the insurer makes a written acknowledgement of the receipt of premium. At the time the boat sank, the insured had already delivered to Chua the check in payment of the premiums. Anastacio, Beron, Calinisan, Cruz, Delgado, Fernandez, Gana, Lopez, Mendiola, Morada, Rivas, Sarenas
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Although Chua testified that the check was delivered only 5 days after the vessel sank, it is of no moment bacause Chua is the agent of South Sea and is authorized to receive the premium which is due on the insurer's behalf.
UCPB vs Masagana Telamart (Beron) FACTS: This is the resolution of the motion for reconsideration filed by Masagana on the decision of the SC ruling that the policy was not extended. Masagana obtained from UCPB 5 insurance policies on its properties in Pasay City and Manila. All five (5) policies reflect on their face the effectivity term: "from 4:00 P.M. of 22 May 1991 to 4:00 P.M. of 22 May 1992." June 13, 1992: Masagana properties located at Pasay City were razed by fire. July 13, 1992: Masagana tendered, and UCPB accepted, five (5) Equitable Bank Manager's Checks in the total amount of P225,753.45 as renewal premium payments for which Official Receipt was issued by UCPB. July 14, 1992: Masagana made its formal demand for indemnification for the burned insured properties. On the same day, defendant returned the five (5) manager's checks stating in its letter that it was rejecting Masagana's claim on the following grounds: a) Said policies expired last May 22, 1992 and were not renewed for another term; b) Defendant had put Masagana and its alleged broker on notice of non-renewal earlier; and c) The properties covered by the said policies were burned in a fire that took place last June or before tender of premium payment. 13, 1992,
The case reached the SC and the said court in the issue of whether the fire insurance policies issued by UCPB to the Masagana covering the period from May 22, 1991 to May 22, 1992 . . . had been extended or renewed by an implied credit arrangement though actual payment of premium was tendered on a later date and after the occurrence of the (fire) risk insured against, answered in the negative. ISSUE: Whether the fire insurance policies issued by UCPB to the Masagana covering the period from May 22, 1991 to May 22, 1992 . . . had been extended or renewed by an implied credit arrangement though actual payment of premium was tendered on a later date and after the occurrence of the (fire) risk insured against. HELD: YES. The motion for reconsideration of Masagana was granted. Masagana contends: that parties may agree expressly or impliedly on the extension of credit or time to pay the premium nor consider a policy binding before actual payment. It urges the Court to take judicial notice of the fact that despite the express provision of Section 77 of the Insurance Code, extension of credit terms in premium payment has been the prevalent practice in the insurance industry. Most insurance companies, including Petitioner, extend credit terms because Section 77 of the Insurance Code is not a prohibitive injunction but is merely designed for the protection of the parties to an insurance contract. The Code itself, in Section 78, authorizes the validity of a policy notwithstanding non-payment of premiums. Masagana contends: that the principle of estoppel applies to UCPB. Despite its awareness of Section 77 UCPB persuaded and induced Masagana to believe that payment of premium on the 60- to 90-day credit term was perfectly alright; in fact it accepted payments within 60 to 90 days after the due dates. The SC found that : (1) UCPB had been granting, for four years, Masagana a 60- to 90-day credit term within which to pay the premiums on the renewed policies (2) There was no valid notice of non-renewal of the policies in question, as there is no proof at all that the notice sent by ordinary mail was received by Masagana, and the copy thereof allegedly sent to Zuellig was ever transmitted to Masagana. (3) The premiums for the policies in question in the aggregate amount of P225,753.95 were paid by Masagana within the 60- to 90-day credit term and were duly accepted and received by UCPB's cashier.
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Section 77 has 5 exceptions, namely: (1) The first exception is provided by Section 77 itself, and that is, in case of a life or industrial life policy whenever the grace period provision applies. (2) Section 78. Any acknowledgment in a policy or contract of insurance of the receipt of premium is 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. (3) Makati Tuscany Condominium Corporation vs. Court of Appeals: Section 77 may not apply if the parties have agreed to the payment in installments of the premium and partial payment has been made at the time of loss. (4) Insurer may grant credit extension for the payment of the premium. This simply means that 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. (5) Estoppel. UCPB had consistently granted a 60- to 90-day credit term for the payment of premiums despite its full awareness of Section 77. Estoppel bars it from taking refuge under said Section, since Masagana relied in good faith on such practice. Estoppel then is the fifth exception to Section 77. Section 77 merely precludes the parties from stipulating that the policy is valid even if premiums are not paid, but does not expressly prohibit an agreement granting credit extension, and such an agreement is not contrary to morals, good customs, public order or public policy. Makati Tuscany Condominium vs. Court of Appeals Delgado Facts: Insurer American Home Assurance (AHAC) through agent American Underwriters Philippines Insured Makati Tuscany Condominium on its building in Makati Periods: 1982-83 for a premium of P466T and it was paid on four installments 1983-1984 still same premium and was so paid on four installments 1984-1985 only two installments paid Feb (P52T) and June (P100T) Reason for refusal to pay balance: contained reservations: 2. Acceptance of this payment shall not waive any of the company rights to deny liability on any claim under the policy arising before such payments or after the expiration of the credit clause of the policy; and 3. Subject to no loss prior to premium payment. If there be any loss such is not covered. Insurer filed a claim to collect balance but RTC dismissed. It was reversed my CA. On petition to the Supreme Court, Insurer argues that there is no valid and binding contract unless the premium is fully paid and with the acknowledgement as required by Section 78. Issue: W/N the premium is valid and binding even if the premium is paid on installments. Held: Yes of course. We hold that the subject policies are valid even if the premiums were paid on installments. The records clearly show that petitioner and private respondent intended subject insurance policies to be binding and effective notwithstanding the staggered payment of the premiums. The initial insurance contract entered into in 1982 was renewed in 1983, then in 1984. In those three (3) years, the insurer accepted all the installment payments. Such acceptance of payments speaks loudly of the insurer's intention to honor the policies it issued to petitioner. Certainly, basic principles of equity and fairness would not allow the insurer to continue collecting and accepting the premiums, although paid on installments, and later deny liability on the lame excuse that the premiums were not prepared in full.
GREPALIFE v CA Sec 81 Fernandez Anastacio, Beron, Calinisan, Cruz, Delgado, Fernandez, Gana, Lopez, Mendiola, Morada, Rivas, Sarenas
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Facts:
Teodoro Cortez, through underwriter Siega, applied for a 20-year endowment policy for 30k with Great Pacific Life Insurance (Grepalife). The application was with the requisite medical examination. The policy was released on Jan 24, 1973 and was personally delivered to Cortez by Siega. The effective date of the policy was Dec 25, 1972. Since Siega assured Cortez that the first premium may be paid within a grace period of 30 days from date of delivery, Cortez paid said first premium in 3 installments (evidenced by 3 checks with different dates-Feb 5, 1973, Feb 17, 1973, Feb 21, 1973) On June 1, 1973, Grepalife informed Cortez that the policy was not in force for failure to remit the balance of the first premium. Grepalife also informed Cortez to have another full medical examination. Cortez, thereafter, informed Grepalife that he is canceling the policy and demanded the return of his premium plus damages. Grepalife ignored that demand so Cortez filed an action. Trial court awarded the return of the premium plus damages. CA lowered award of damages.
Issue: Is Cortez entitled to the refund of his premium? Held: Yes under Sections 79, 81 and 82 of the Insurance Code. Since the policy was in fact inoperative or ineffectual from the beginning, the company was never at risk, hence it is not entitled to keep the premium. Grepalife committed a serious breach of the contract of insurance when it informed the insured that his policy had never been in force and that he must pay another premium and undergo another medical examination to make the policy effective. Moreover, Grepalife should have informed Cortez of the deadline for paying the first premium before or at least upon delivery of the policy to him, so he could have complied with what was needed from him and he would not have been misled into believing that he and his family were protected by the insurance. And if the premium was unacceptable for being late, it was Grepalifes duty to return them. By accepting the premiums without giving the corresponding protection, Grepalife is guilty of bad faith.
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November 4, 2006 I did not receive the other missing cases here. Please send to me. -Ralph
Prats & Co. vs. Phoenix Insurance Company Lopez Facts: This case concerns several insurance policies issued by Phoenix to Prats & Co. The latter is claiming the proceeds of the policies on account of losses they incurred as to their merchandise because of fire. (Prats was in the mercantile industry) As special defense, Phoenix alleges that the fire had been set by Prats and that the insured had submitted under oath a fraudulent claim of loss in violation of the express terms of the policy. RTC ruled in favor of Phoenix. W/n Phoenix has the right to deny Prats claim on the insurance policy. o W/n it was Prats who set up the fire. o W/n Prats presented fraudulent claims of loss. SC says YES to all the questions. As to Phoenixs argument that it was Prats who caused the fire, the SC found the following circumstances: o The other partners to Prats & Co., Elias Hanna and Isidro Bejar, were Turkish subjects of unsavory reputation in insurance circles. o It was Prats who purchased and renovated the property which burned down. The 1 story building was very old. o It was located near the house of one Domingo Romero, who was an employee of the BIR and is the _____ of Mr. Prats. o As to the policies, the SC found that Mr. Prats had omit the names of his other partners in the name of the partnership just to be able to get the insurance policies. That was how bad the reputation of the two was. o It seems that a certain Ramon Osete was the one chosen to be the incendiary. Mr. Romero helped him in renting out a place near the bodega. Mr. Prats accompanied him in buying two cans of petroleum. o After the fire had been started, Mr. Osete sent his muchacho to the bodega in order to prevent other people from stopping the fire. The muchacho was ordered to tell those who came to help that he had already tripped the alarm. o The Fire Chief who responded to the fire said that when he arrived, he found that the alarm was not set off. Also, that he saw black smoke coming from the bodega suggesting the combustion of inflammable materials. He also said that he smelled petroleum at the scene of the fire. The SC ruled that all these circumstances point to the conclusion that it was Mr. Prats, in collusion with several people, who burned the bodega down. As to the allegation regarding fraudulent claims, the SC affirmed the findingd of the trial court that: o Mr. Prats tried to claim the amount of 12,800 from the insurance policy when the real value of the jewelry he is claiming is only 600. o He also sought to recover the value of goods which had been surreptitiously withdrawn by him from the bodega prior to the fire. o The SC also found that Mr. Prats fabricated several invoices to increase the value of the goods in the bodega. In the end the SC said, Upon the whole, we are forced to state the conclusion, not only that the plaintiff (Prats) caused the fire to be set, or connived therein, but also that it submitted fraudulent proof as the trial judge found.
Issue: Held: -
Pacific Banking Corporation vs. CA (Rivas) FACTS: ORIENTAL ASSURANCE CORPORATION issued a Fire insurance Policy in favor of PARAMOUNT SHIRT MANUFACTURING.
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Oriental bound itself to pat indemnify Oriental for any loss or damage not exceeding P61,000 caused by fire to its property for a period of 1 year. Oriental was the debtor of PACIFIC BANKING CORP. in the amount of not less than P800, 000 and the goods mentioned in the fire insurance policy were held in trust the insured for Pacific under a trust receipt. The fir insurance policy was endorsed to Pacific as motgagee/trustor, with the consent of Oriental, to the effect that any loss under the policy is payable to Pacific A fire broke out during the effectivity of the policy. Pacific sent a letter of demand to Oriental for indemnity Oriental replied that it was not yet ready to accede to the demand because it was still waiting for the report of the insurance adjuster. Insurance adjuster informed Oriental that Pacific had not filed any claim not submitted any proof of loss which is a violation of POLICY CONDITION 11 Pacific answered the insurance adjuster by asking the adjuster to verify the records of the Bureau of Customs. Because Pacifics failure to file a claim, Oriental did not pay Pacific Orientals defenses: o Lack of formal claim by the insured o Premature filing of the suit because no proof of loss was filed in violation of Policy Condition 11 RTC: decided on favor of Pacific CA: reversed the decision of the RTC W/N Oriental is bound to pay Pacific NO! Insured is guilty of false representation because it failed to inform Oriental that it procured other insurance policies other that the insurance policy made by Oriental Clear violation of POLICY CONDITION NO. 3 which states that the insured must give notice to the insurer of any insurance already effected or which may subsequently be effected, covering the property already insured, otherwise, all benefit under the fore insurance policy issued by Oriental will be forfeited. The basis of the misrepresentation: had the insurer known that there were many co-insurances, it could have hesitated or plainly desisted from entering into such contract. The argument that the notice of co-insurances may be made orally is preposterous because under POLICY CONDITION NO 20, it is required that all notices to the insurer must be made in writing. Also, POLICY CONDITION NO. 11 specifically provides that the insured shall on the happening of any loss or damage give notice to the insurer and shall within 15 days after such loss or damage deliver to the insurer (A) a claim in writing giving particular account as to the articles or goods destroyed and the amount of loss or damage and (B) particulars of all the insurances, if any. Even after the notice sent by Oriental and the insurance adjuster, the insured failed to file any written claims. Compliance with Policy Condition No. 11 is a requirement sine qua non to the right to maintain an action as prior thereto no violation of Pacifics right can be attributable to the insurer.
ISSUE: HELD: -
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September 6, 2006 Pioneer Ins v Yap (Beron) FACTS: Oliva YAP was the owner of a store in a two-storey building located at No. 856 Juan Luna Street, Manila. April 19, 1962: YAP took out Fire Insurance Policy No. 4219 from Pioneer Insurance & Surety Corporation (PIONEER) with a face value of P25,000.00 covering her stocks, office furniture, fixtures and fittings of every kind and description. Among the conditions in the policy executed by the parties is that: "The Insured shall give notice to the Company of any insurance or insurances already effected, or which may subsequently be effected, covering any of the property hereby insured, and unless such notice be given and the
particulars of such insurance or insurances be stated in, or endorsed on this Policy by or on behalf of the Company before the occurrence of any loss or damage, all benefits under this Policy shall be forfeited."
At the time of the insurance of Policy No. 4219 in favor of respondent YAP, an insurance policy for P20,000.00 issued by the Great American Insurance Company (GREAT AMERICAN) covering the same properties was noted on said policy as co-insurance. September 26, 1962: YAP took out another fire insurance policy for P20,000.00 covering the same properties, this time from the Federal Insurance Company, Inc., (FEDERAL) which was, however, procured without notice to and the written consent of PIONEER and, therefore, was not noted as a co-insurance in Policy No. 4219. December 19, 1962: A fire broke out in the building housing YAP's above-mentioned store, and the said store was burned. YAP filed an insurance claim, but the same was denied by PIONEER. on the ground of "breach and/or violation of any and/or all terms and conditions" of Policy No. 4219. July 17, 1963: YAP filed with the Court of First Instance of Manila the present complaint RTC / CA: YAP is entitled to the payment of her claim.
ISSUE:
Whether or not PIONEER should be absolved from liability on Fire Insurance Policy No. 4219 on account of any violation by respondent YAP of the co-insurance clause therein. HELD: YES. There was a violation by respondent YAP of the co-insurance clause contained in Policy No. 4219 that resulted in the avoidance of PIONEER's liability. By the plain terms of the policy, other insurance without the consent of PIONEER would ipso facto avoid the contract. It required no affirmative act of election on the part of the company to make operative the clause avoiding the contract, wherever the specified conditions should occur. Its obligations ceased, unless, being informed of the fact, it consented to the additional insurance. The rule is to the effect that a clause in a policy to the effect that the procurement of additional insurance without the consent of the insurer renders the policy void is a valid provision. Additional insurance, unless consented to, or unless a waiver was shown, ipso facto avoided the contract, and the fact that the company had not, after notice of such insurance, cancelled the policy, did not justify the legal conclusion that it had elected to allow it to continue in force. The obvious purpose of the aforesaid requirement in the policy is to prevent over-insurance and thus avert the perpetration of fraud. The public, as well as the insurer, is interested in preventing the situation in which a fire would be profitable to the insured. According to Justice Story: "The insured has no right to complain, for he assents to comply with all the stipulation on his side, in order to entitle himself to the benefit of the contract, which, upon reason or principle, he has no right to ask the court to dispense with the performance of his own part of the agreement, and yet to bind the other party to obligations, which, but for those stipulation would not have been entered into." Geagonia v CA (Calinisan) Facts: Armando Geagonia is the owner of Normans mart in San Francisco, Agusan del Sur. On 22 December 1989, he obtained from the private respondent fire insurance policy for P100,000.00.
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The period of the policy: 22 December 1989 to 22 December 1990 and covered the following: "Stock-in-trade consisting principally of dry goods such as RTW's for men and women wear and other usual to assured's business." Geagonia declared in the policy under the subheading entitled CO-INSURANCE that Mercantile Insurance Co., Inc. was the co-insurer for P50,000.00. Fire broke out which destroyed everything. Country Bankers denied Geagonias claim. Reason: stocks-in-trade were likewise covered by 2 fire insurance policies for P100,000.00 each, issued by the Cebu Branch of the Philippines First Insurance Co., Inc.(PFIC). There was an alleged violation of condition 3. o 3. The insured shall give notice to the Company of any insurance or insurances already affected, or which may subsequently be effected, covering any of the property or properties consisting of stocks in trade, goods in process and/or inventories only hereby insured, and unless such notice be given and the particulars of such insurance or insurances be stated therein or endorsed in this policy pursuant to Section 50 of the Insurance Code, by or on behalf of the Company before the occurrence of any loss or damage, all benefits under this policy shall be deemed forfeited, provided however, that this condition shall not apply when the total insurance or insurances in force at the time of the loss or damage is not more than P200,000.00. Such 2 policies were PRIOR policies to that of Country Bankers.
Issue: W/N Geagonia may collect. Held: Yes. Country Bankers knew of such policies beforehand. Condition 3: not totally free from ambiguity and must, perforce, be meticulously analyzed. Such analysis leads us to conclude that (a) the prohibition applies only to double insurance, and (b) the nullity of the policy shall only be to the extent exceeding P200,000.00 of the total policies obtained. The first conclusion is supported by the portion of the condition referring to other insurance "covering any of the property or properties consisting of stocks in trade, goods in process and/or inventories only hereby insured," and the portion regarding the insured's declaration on the subheading CO-INSURANCE that the co-insurer is Mercantile Insurance Co., Inc. in the sum of P50,000.00. A double insurance exists where the same person is insured by several insurers separately in respect of the same subject and interest. As earlier stated, the insurable interests of a mortgagor and a mortgagee on the mortgaged property are distinct and separate. Since the two policies of the PFIC do not cover the same interest as that covered by the policy of the private respondent, no double insurance exists. The non-disclosure then of the former policies was not fatal to the petitioner's right to recover on the private respondent's policy. By stating within Condition 3 itself that such condition shall not apply if the total insurance in force at the time of loss does not exceed P200,000.00, the private respondent was amenable to assume a co-insurer's liability up to a loss not exceeding P200,000.00. What it had in mind was to discourage over-insurance. Indeed, the rationale behind the incorporation of "other insurance" clause in fire policies is to prevent over-insurance and thus avert the perpetration of fraud. When a property owner obtains insurance policies from two or more insurers in a total amount that exceeds the property's value, the insured may have an inducement to destroy the property for the purpose of collecting the insurance. The public as well as the insurer is interested in preventing a situation in which a fire would be profitable to the insured.
Philamlife v Auditor General (Cruz)
Artex Development vs. Wellington Insurance (Delgado) Facts: -Artex insurance insured its stock-in-trade and machineries with Wellington Insurance for the amount of P24M. -The insurance is against loss or damage by fire -Artex later added P800T for such coverage and P5.2M for loss or damage arising from business interruption. -Later on, stocks and machineries of spinning section were destroyed by fire. -The adjuster assessed the loss P10 M as to the fire and P3M because of business interruption.
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-Wellington paid P6M as to the loss or damage caused by fire and P1M as to the business interruption leaving a balance of P3M and P1M respectively. -Artex later on made manifestation that it is accepting P3.6M -Wellington moved to suspend court proceedings because of the manifestation and argues that the issue at hand is the remaining balance to be paid by its reinsurer in New York, Alexander and Alexander, Inc. -CFI denied hence this appeal. Issue: W/N Artex can enforce its claim against the reinsurer Held: No. In order for a third person to enforce claim in a contract that it is not a party into, there must be stipulation pour autrii which is not extant in this case. -Insured is not party to the reinsurance hence cannot enforce its claim against Alexander and Alexander. -The argument of Wellington that Artex should go to the reinsurer for the P24M insurance because of its P500T paid-up capital stock, is untenable. -Assuming that it could avail of the reinsurance contracts, the defendant Wellington cannot be excused of its direct contractual obligation under the insurance polices.
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September 11, 2006 Go Tiaco y Hermanos v Union Insurance (Fernandez) Facts: Go Tiaco transported rice on the steamship Hondagua from Saigon to Cebu. The ship was covered by a marine insurance issued by Union Insurance Society Upon arrival at Cebu, 1,473 sacks of rice were damaged by sea water. The inflow of water was found to be caused by a defective drain pipe in the ship. The trial court ruled in favor of Union considering that the loss was not covered by the policy. It appears that the elbow pipe connected to the drain pipe corroded in the course of time and an opening developed. This hold had been in existence even before the voyage of the ship. While there was an attempt to repair the opening (filling it with cement and bolting over it a strip of iron), water washed out the cement-filling on the hole. The trial court said that the hole was a result of ordinary wear and tear and not from the straining of the ship in rough weather on that voyage. It also said that the repairs made on the pipes were defective. For these reasons, the trial court held the ship unseaworthy. The policy purports to insure: Perils of the seas, men, war, fire, enemies, pirates, x x x and misfortunes x x x.
Issue: Is Union Insurance liable? Held: No. When the policy states perils of the seas together with other particular hazards, the phrase should be interpreted as covering risks which are of like kind (ejusdem generis). It must also be considered that a loss which, in the ordinary course of events, results from the natural and inevitable action of the sea, from the ordinary wear and tear of the ship, or from the negligent failure of the ships owner to provide the vessel with proper equipment to convey the cargo under ordinary conditions, is not a peril of the sea. (Such a loss is more aptly called peril of the ship) The entry of sea water into the ship was not due to any accident which happened during the voyage but to the failure of the ships owner to properly repair a defect which he has knowledge of. The loss was more analogous to that which results from unseaworthiness than to that which results from perils of the sea. It must be remembered that in every marine insurance, a warranty is implied that the ship shall be seaworthy at the time of the inception of the voyage. The owner of the rice may just go against the shipowner for redress. White Gold Marine v Pioneer Insurance (Gana) FACTS WHITE GOLD procured a protection and indemnity coverage for its vessels from STEAMSHIP MUTUAL through PIONEER When WHITE GOLD failed to pay, STEAMSHIP MUTUAL refused to renew the coverage STEAMSHIP MUTUAL thereafter filed a case against WHITE GOLD for collection of sum of money to recover the unpaid balance of WHITE GOLD WHITE GOLD, on the other hand, filed a complaint before the INSURANCE COMMISSIONER claiming that STEAMSHIP MUTUAL and PIONEER does not have the required license but is engaged in the insurance business INSURANCE COMMISSIONER: DISMISSED! o STEAMSHIP MUTUAL not engaged in insurance business but was only a P&I club o PIONEER was already licensed and need not obtain another license to be an agent of STEAMPSHIP MUTUAL CA: AFFIRMED! W/N STEAMSHIP MUTUAL IS ENGAGED IN THE INSURANCE BUSINESS YES, SPECIFICALLY MARINE INSURANCE BUSINESS Section 2 of the Insurance Code enumerates what constitutes doing business an insurance business (alam nyo
ISSUE HELD RATIO
na toh.)
The test to determine if the contract is an insurance contract or not depends on the nature of the promise, the act required to be performed and the exact nature of the agreement and NOT by what it is called Basically, an insurance contract is a contract of indemnity Anastacio, Beron, Calinisan, Cruz, Delgado, Fernandez, Gana, Lopez, Mendiola, Morada, Rivas, Sarenas
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In particular, a marine insurance undertakes to indemnify the assured against marine losses and Section 99 of the Insurance Code enumerates such losses Relatedly, a P&I Club is a form of insurance against third party liability, where the third party is anyone other than the P&I Club and the members By definition then, STEAMSHIP MUTUAL as a P&I Club is a mutual insurance association engaged in marine insurance business Being engaged in insurance business, STEAMSHIP MUTUAL should have a license to do such Absent such license, STEAMSHIP MUTUAL should not be allowed to continue doing insurance business in the Philippines As to PIONEER, even if it has license to engage in insurance business, it should have a separate license to be an agent/broker of STEAMSHIP MUTUAL
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September 18, 2006 Madrigal, Tiangco & Co., et al. vs. Hanson, Orth & Stevenson, Inc., et al. (Lopez) Facts: Issue: Held: Madrigal, Tiangco & Co. (Madrigal) owned a motor launch named Isla Verde which was rented by Roman Mabanta to be delivered on a certain date. However, the delivery was delayed because the launch still had to be drydocked and repaired. When the launch was finally delivered to Mabanta, it sank, becoming a total loss. Madrigal brought this action to recover the value of the launch from Mabanta and the insurance company that issued a policy on the launch Hanson, Orth & Stevenson. The lower court dismissed the case because it found that the launch was received by Mabanta unseaworthy. W/n Madrigal can claim the value of the launch from the insurance company. SC says NO The Court found a preponderance of evidence towards the conclusion that there was no delivery of the launch in accordance with the terms of the contract. There were several certifications that were not procured. Nevertheless, the fact of delivery of the launch becomes irrelevant once it is proven that the launch was indeed unseaworthy. Here, the Court also found a preponderance of evidence towards the conclusion that indeed the launch was delivered to Mabanta unseaworthy. The Court took note that there was neither typhoon nor waves on the night of its sinking. Also, the launch did not hit anything on its voyage. Despite these facts, the engine room of the launch was still filled with water which led to its sinking. As for the insurance company, the Court said that the finding that the motor launch was unseaworthy at the time she sank precludes recovery by the plaintiffs of the amount for which the motor launch was insured under the policy issued by Hanson, Orth & Stevenson.
Roque vs. IAC (Mendiola) Facts: Manila Bay (common carrier) entered into a contract with Roque whereby Manila Bay would load and carry on its barge named Mable 10 logs. Roque insured the logs against loss for P100,000 with Pioneer Insurance However, Mable 10 sank on its way from Palawan to Manila. Roque claimed from Manila Bay and Pioneer but they refused to pay For that reason, Roque brought a suit against Manila Bay and Pioneer. The trial court favored Roque. The IAC absolved Pioneer by stating that there was a breach of the implied warranty of seaworthiness and that the loss was caused by the perils of the ship and not the perils of the sea. Roque appeals to the SC Issue: w/n the implied warranty of seaworthiness pertains to Roque being a mere shipper and not the owner of the vessel. Held: The implied warranty of seaworthiness also pertains to Roque. The term cargo can be the subject of a marine insurance and that once it is made, the implied warranty of seaworthiness immediately attaches to whoever is insuring the cargo. It becomes the obligation of the cargo owner to look for a reliable common carrier which keep vessels in seaworthy condition. Issue: w/n Pioneer is liable. Held: Pioneer is not liable. The loss of the cargo was caused by the perils of the ship rather than the perils of the sea. At the time of the loss, there was no typhoon. Although there were strong waves and winds, this was ordinary and natural in open sea. Evidence shows that the sinking of Mable 10 was caused by the improper loading of the logs. The logs were placed in such a way that the barge was tilting on one side. Anastacio, Beron, Calinisan, Cruz, Delgado, Fernandez, Gana, Lopez, Mendiola, Morada, Rivas, Sarenas
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Philamgen vs. CA (Morada) Facts: Coca-Cola Bottlers Phils., Inc. (Coke) loaded on board MV Asilda, a vessel owned and operated by respondent Felman Shipping Lines (Felman) 7,500 cases of 1-liter Coke softdrink bottles to be shippes from Zamboanga to Cebu. The shipment was insured with Philiamgen. MV Asilda left Zamboanga in fine weather at 8 p.m. Around 8:45 a.m. the next day, the vessel with all its cargo sank in the waters of Zamboanga del Norte. Philamgen paid Cokes claim because Felman refused to pay. Claiming its right of subrogation, Philamgen sued Felman. Philamgen alleged that the sinking of the vessel was due to its unseaworthiness since it was put to sea in an unstable condition. Also, the vessel was improperly manned and its officers were grossly negligent in not proceeding to a nearby port when the vessel started to list. TC: dismissed Philamgens complaint. CA: set aside the dismissal and remanded the case to the lower court. Upon remand: TC held that the vessel was seaworthy. CA held that it was unseaworthy for being top-heavy as 2,500 cases of Coke bottles were improperly stowed on deck. However, both TC and CA denied Philamgen on the ground that the assureds implied seaworthiness was not complied with. Thus, Philamgen was not properly subrogated to the rights and interests of the shipper. CA also held that the filing of notice of abandonment had absolved the shipowner/agent from liability. Issue 1: W/N MV Asilda was seaworthy when it left the port of Zamboanga. Held: NO. The proximate cause of the sinking of the vessel was its condition of being top-heavy when it departed from the port of Zamboanga. This caused the vessel to list towards the side where the bulk of the cargo was placed. The vessel was designed to be a fishing vessel and it was not designed to carry a substantial amount of cargo on deck. It is settled that carrying a deck cargo raises the presumption of unseaworthiness unless it can be shown that the deck cargo will not interfere with the proper management of the ship. The strong winds and waves encountered by the vessel are ordinary in sea voyage and merely contributed to its already unstable condition. Issue 2: W/N Felman is liable to Philamgen based on the latters right of subrogation. Held: NO. Where the policy stipulates that the seaworthiness of the vessel between assured and assurer is admitted, the question of seaworthiness cannot be raised by the assurer unless there is concealment/misrepresentation by the assured. Par.8 of the policy states that seaworthiness of the vessel is admitted. Such risk is assumed by the assurer. Right of subrogation is not dependent upon privity of contract or payment of the insurance claim. Side issue: - Limitation of the ship agents liability by abandonment of the vessel under Art.587 Code of Commerce applies only when fault or negligence is committed solely by the captain. It does not apply to the present case were the shipowner is likewise to be blamed for lack of supervision. (Presumption of negligence of common carrier applies.)
Philippine Manufacturing Co. vs. Union Insurance Society (Rivas) FACTS: PHILIPPINIE MANFACTURING CO. (PMC) is the owner of a steel tank lighter named PHILMACO UNION INSURANCE SOCIETY OF CANTON insured Philmaco against absolute total loss During the life of the policy and as a result of a typhoon, Philmaco was sunk in the Manila Bay. Under the instruction of Union Insurance, PMC employed a third party to proceed with the salvage of the vessel. After several attempts, it was finally raised and was thereafter repaired amounting to the original cost of the lighter. PMC refused to pay arguing that it was only liable for an absolute total loss and since there was no total destruction of the lighter, it is not liable to pay PMC RTC: ruled n favor of the insurances policy
ISSUE:
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HELD: W/N the loss was is an absolute total loss within the terms and provision of the policy YES! And Insurance Union is liable to pay PMC. The Insurance Code provides that a total loss may be either actual or constructive and that the loss of the thing by sinking, or by being broken up or that any damage to the thing which renders it valueless to the owner for the purposes for which he held it is an actual total loss To render it valueless to the owner, it is not necessary that there should be an actual or total loss or destruction of all the different parts of the entire vessel. If it was not of any value to the owner, then there was an actual loss or a total destruction of the thing insured within the meaning of the Insurance Code. The argument of Union Insurance that the policy should be construed under the Marine Law of great Britain has no merit. The rule is that the court of one country cannot take cognizance of the law of another without plea and proof. Also, Philippine courts cannot be presumed to be acquainted with or to have judicial knowledge of laws of foreign country unless it is pleaded and proved.
Malayan Insurance v. CA (Sarenas) Facts: Issue: Held: TKC Marketing loaded MV Al Kaziemah with soya bean meal for transportation from Brazil to Manila MICO insured the cargo with 2 Marine Cargo Policies While the ship was in South Africa, it was detained by authorities because of a lawsuit questioning ownership of the ship TKC notified MICO about what happened in South Africa and made a formal claim ($916K) MICO denied the claim saying that the arrest was not a peril covered by the policies TKC then advised MICO that the cargo was to be transferred to another boat. TKC is requesting that the policies be extended until the transfer. MICO approved the extension. However, the goods were sold in South Africa due to its perishable nature. TKC reduced its claim after applying the proceeds of the sale. MICO is still denying the claim with still the same defense. TC&CA: in favor of TKC W/N arrest is covered by the policy Yes. The policies included all perila with the exception of the F.C. & S. Clause (Free from Capture & Seizure Clause) However, the F.C. & S. Clause was deleted from the policies and the Institute War Clauses were used. In the said clause, arrest covered by ordinary judicial process is included in the perils insured against. If a marine insurance desires to limit the operation of the contract, it should express such limitation in a clear and unmistakable language.
Pan Malayan v CA (Calinisan) (from Rhys) Facts: The Food and Agricultural Organization of the United Nations (FAO), received a formal offer from the Luzon Steevedoring Corporation (Luzteveco) whereby the latter offered to ship the formers cargo, consisting of 3,000 metric tons in 2 lots of rice seeds, to Vietnam Ocean Shipping Industry in Vietnam for freight fees of $55.50/MT, subject to the terms and conditions indicated in the corresponding communication FAO wrote LUZTEVECO accepting the offer in respect of one lot of 1,500 metric. The cargo was loaded on board LUZTEVECO arge and consisted of 34,122 bags of IR-36 certified rice seeds purchased by FAO from the bureau of Plant Industry for P4602T. The loading was completed and LUZTEVECO issued its Bill of Lading in favor of FAO. FAO then secured insurance coverage in the amount of P5250T from Pan. FAO gave instructions to LUZTEVECO to leave for Vaung Tau, Vietnam to deliver the cargo which, by its nature could not withstand delay because of the inherent risks of germination and or spoilage. On the same date, the insurance premiums on the shipment was paid by FAO to Pan. FAO was informed by LUZTEVECO that the tugboat and barge carrying FAOs shipment returned to Manila after and that the shipment again left Manila for Vaung Tau, Vietnam 5 days later with the barge being towed by a different tugboat.
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FAO was advised of the sinking of the barge in the China Sea, hence it informed Pan thereof and formally filed its claim under the marine insurance policy. After a month, FAO was informed by LUZTEVECO of the recovery of the lost shipment for which reason FAO formally filed its claim LUZTEVECO refused to pay. Pan Asiatic Adjustment and Marine Surveying Corporation made a report denying the claim.
Issue: W/N he CA erred in ruling that there was total loss of the shipment despite the fact that only 27,922 bags of rice seeds out of 34,122 bags were rendered valueless to FAO and the shipment sustained only a loss of 78%. Held: No. CA was correct. The law classifies loss into either total or partial. Total loss may be actual or absolute, or it may otherwise be constructive or technical. As found by the court below and approved by the CA, FAO has never been compensated for this total loss or damaga, a fact whih is not denied nor controverted. If there were some cargoes saved, by LUZTEVECO, FAO abandoned it and the same was sold or used for the benefit of LUZTEVECO or Pan Malayan Corporation. Under Secs 129 and 130 of the NIC, a total loss may either be actual or constructive. In case of total loss in Marine Insurance, the assured is entitled to recover from the underwriter the whole amount of his subscription. In case of total loss in marine insurancem the assured is entitled to recover from the underwriter the whole amt of his subscription. The completephysical destruction of the subject matter is not essential to constitute an actual total loss. Such a loss may exist where the form and specie of the thing is destroyed although the materials of which it constituted still exists, as where the cargo by the process of decomposition or other chemical agency no longer remains the same kind of thing as before. All the bags were rendered to be valueless to FAO. In case of actual loss, the right of the insured to claim the whole insurance is absolute without need of a notice of abandonment. Oriental vs CA (Beron) FACTS: January 1986:Panama Sawmill Co., Inc. (Panama) bought 1,208 pieces of apitong logs, with a total volume of 2,000 cubic meters. It hired Transpacific Towage, Inc., to transport the logs by sea to Manila and insured it against loss for P1-M with petitioner Oriental Assurance Corporation (Oriental Assurance). The policy stipulates: "Warranted that this Insurance is against TOTAL LOSS ONLY. " The logs were loaded on two (2) barges: (1) on barge 1 - 610 pieces of logs with a volume of 1,000 cubicmeters; and (2) on Barge 2 - 598 pieces of logs, also with a volume of 1,000 cubic meters. 28 January 1986: The two barges were towed by one tug-boat, the MT 'Seminole' but, during the voyage, rough seas and strong winds caused damage to Barge 2 resulting in the loss of 497 pieces of logs out of the 598 pieces loaded thereon. Panama demanded payment for the loss but Oriental Assurance refuse on the ground that its contracted liability was for "TOTAL LOSS ONLY." Panama filed a Complaint for Damages against Oriental Assurance, before the Regional Trial Court RTC: Ordering the defendant Oriental Assurance Corporation to pay plaintiff Panama Saw Mill Inc. the amount of P415,000.00 as insurance indemnity CA: The Decision of the RTC was affirmed. Both Courts shared the view that the logs loaded in the two barges should be treated separately such that the loss sustained by the shipment in one of them may be considered as "constructive total loss" and correspondingly compensable.
ISSUE: Whether or not Oriental Assurance can be held liable under its marine insurance policy based on the theory of a divisible contract of insurance and, consequently, a constructive total loss.
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HELD: NO LIABILITY on the part of Oriental. Oriental's liability was for "total loss only." A total loss may be either actual or constructive. Under Section 139 of the Insurance Code, a person insured by a contract of marine insurance may abandon the thing insured, or any particular portion thereof 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 injured against if more than three-fourths thereof in
value is actually lost, or would have to be expended to recover it from the peril.
Appellate Court treated the loss as a constructive total loss, and for the purpose of computing the more than three-fourths value of the logs actually lost, considered the cargo in one barge as separate from the logs in the other. Thus, it concluded that the loss of 497 pieces of logs from barge TPAC-1000, mathematically speaking, is more than three-fourths () of the 598 pieces of logs loaded in that barge and may, therefore, be considered as constructive total loss. This computation by the Appelate Court is erroneous. The requirements for the application of Section 139 of the Insurance Code, have not been met. The logs involved, although placed in two barges, were not separately valued by the policy, nor separately insured. Therefore, the logs lost in barge 2 in relation to the total number of logs loaded on the same barge can not be made the basis for determining constructive total loss. The logs having been insured as one inseparable unit, the correct basis for determining the existence of constructive total loss is the totality of the shipment of logs. Of the entirety of 1,208, pieces of logs, only 497 pieces thereof were lost or 41.45% of the entire shipment. Since the cost of those 497 pieces does not exceed 75% of the value of all 1,208 pieces of logs, the shipment can not be said to have sustained a constructive total loss under Section 139(a) of the Insurance Code.
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September 20, 2006 Jarque vs. Smith Bell & Co. (Delgado) Facts: -Francisco is the owner of the wooden motorboat Pandan. -He obtained a marine insurance from National Union Fire Insurance Company for the amount of P45,000. -The said policy contained the usual contents of a marine insurance policy that it is liable to perils at sea, restraint of princes, arrest, barratry (ibig sabihin ng barratry sadyang pag-aalsa ng tauhan ng barko), jettison (or pagtapon ng epektos at kargamento sa dagat upang masagip ang sasakyang-pandagat), other perils, losses and misfortunes. -However, there was a rider that the insurer is ONLY LIABLE TO ABSOLUTE TOTAL LOSS OF THE VESSEL, AND TO PAY PROPORTIONATE SALVAGE CHARGES OF THE DECLARED VALUE. - somewhere in Ticlin Island (sa may Sorsogon toh banda tinawag na Ticlin dahil madaming Egret birds sa lugar na toh or sa amin sa bisaya ang Ticlin ay Tikling yung ibon na mahahaba ang paa), bad weather met the boat and the ship had to do jettison or throw some cargoes worth P2T -Jarque claims contribution for general average from the insurer but the latter denied because of the rider. -CFI for Jarque. Issue: W/N insurer liable for contribution to general average. Held: Yes. -Although the rider is superior to the printed provision of the marine policy, still insurer is liable to contribute to general average based on Art 859 of the Code of Commerce.
ART. 859. The underwriters of the vessel, of the freight, and of the cargo shall be obliged to pay for the indemnity of the gross average in so far as is required of each one of these objects respectively.
The article is mandatory in its terms, and the insurers, whether for the vessel or for the freight or for the cargo, are bound to contribute to the indemnity of the general average. And there is nothing unfair in that provisions; it simply places the insurer on the same footing as other persons who have an interest in the vessel, or the cargo therein at the time of the occurrence of the general average and who are compelled to contribute. In the present case it is not disputed that the ship was in grave peril and that the jettison of part of the cargo was necessary. If the cargo was in peril to the extent of call for general average, the ship must also have been in great danger, possibly sufficient to cause its absolute loss. The jettison was therefore as much to the benefit of the underwriter as to the owner of the cargo. The latter was compelled to contribute to the indemnity; why should not the insurer be required to do likewise? If no jettison had take place and if the ship by reason thereof had foundered, the underwriter's loss would have been many times as large as the contribution now demanded.
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September 25, 2006 BACHRACH v BRITISH AMERICAN ASSURANCE CO. (Fernandez) Facts: E.M. Bachrach procured a fire insurance policy from British American Assurance (through WF Stevenson Ltd.) covering Bachrachs furniture (and paint/varnish) shop. The policy also covers a Calalac automobile and the insured is permitted to store, in the cars tank, gasoline for the vehicle but not to exceed 10 gallons. Bachrach transferred his interest in the property to Peabody and Co to secure and indebtedness. Interest on certain goods were also transferred to Macke. Bachrach, contrary to the conditions of the policy, stored 10 gallons of gasoline on the 2nd floor of the shop. A lighted alcohol lamp was also placed near the gasoline. Fire broke out and destroyed the shop and properties therein (car was recovered). No proof of loss was submitted to the insured within the time required. Meanwhile, Bachrach was acquitted from a charge of arson. British American refuses to pay the insurance on the ground that Bachrach violated the conditions of the policy (gasoline storage, no notice of loss).
Issue: Is British American liable despite alleged violations of the policy? Held: Yes. The keeping of alcohol and/or varnish, though prohibited by the policy, does not avoid it if such keeping is incidental to the business. So why is this under Sec 170? Codal says act of insured in increasing the risk and is a cause of loss but does not violate the policy does not affect fire policy. Here, even if Bachrach stored gasoline/varnish/alcoholwhich increased the risk of firethis did not violate the policy as such materials were incidental to the furniture business. So insured may still claim. Irrelevant issues for purposes of Sec 170: execution of chattel mortgage without knowledge of insurance companyno provision in the policy prohibiting such; as to the notice, it can be filed within a reasonable time GALIAN V STATE ASSURANCE (Gana) FACTS GALIAN procured an open policy of fire insurance of his household effects with STATE ASSURANCE for P3,000 His property was razed by fire The next day, GALIAN presented an itemized statement of goods contained in the house at the time of the fire amounting to P4,512 The insured property was not a total loss and some of it were afterwards sold by GALIAN in a public auction for P120.42 GALIAN filed a complaint for recovery of total amount of the policy less that recovered from the public auction P2,919.74 (3,000 minus (2/3 times P120.40)) STATE ASSURANCE denied liability because the claim presented by GALIAN was fraudulently false such that o GALIAN alleged total loss when there was only partial loss o Not all the articles listed in GALIANS claim were in the house when the fire occurred o GALIAN attributed much greater value to the articles included in the list than they were worth During trial, GALIAN testified that the list he made was prepared from memory immediately after the fire by himself and his brother On the other hand, STATE ASSURANCE introduced 3 witnesses who were sent to the scene shortly after the fire occurred to estimate the value of the property o 1st witness P1,000 o 2nd witness P1,500 o 3rd witness P1,500 Trial Court o Dismissed appraisal made by GALIAN and his brother because they were not qualified to appraise the property o Also dismissed testimony of 3 witnesses for not being a reliable basis for finding as to damages o And rendered judgment in favor of GALIAN for P1,500 based on its own findings Hence, this petition Anastacio, Beron, Calinisan, Cruz, Delgado, Fernandez, Gana, Lopez, Mendiola, Morada, Rivas, Sarenas
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ISSUE HELD RATIO
WHAT IS THE VALUE OF THE PROPERTY LOST BY FIRE? THAT GIVEN BY GALIAN AND HIS BROTHER Appraisal made by GALIAN and his brother should be accepted! o TC was wrong in saying GALIAN and his brother were not qualified to appraise the value of the lost items o What were lost were household effects which people of ordinary education and refinement are reasonably familiar with o Such articles are on sale in retail shops everywhere and most of them are purchased by persons for their own convenience and comfort o Thus, information as to their value must necessarily acquired by said individuals who bought them o In the case at bar, GALIAN was the person who bought most of the items lost o Hence, his statement as to the cost of each should be given weight Testimony of 3 witnesses should NOT be accepted! o It appears that GALIANS property was entirely consumed by the fire and so badly damaged that it was impossible to judge its value just by mere looking at it o Inspection made by these witnesses were so superficial o Hence, the witnesses conclusions do not carry any conviction STATE ASSURANCE should pay GALIAN P2,919.92
NOTE At no time did GALIAN allege total loss as he even offered salvaged items for sale at an auction
SECURITY PACIFIC ASSURANCE V TRIA-INFANTE (Gana) FACTS ANZURES instituted a complaint against VILLALUZ for BP 22 and also an Ex-Parte Motion for Preliminary Attachment Trial Court issued an Order for the issuance of the Writ of Preliminary Attachment upon ANZURES posting of a bond fixed at P2,123,400 ANZURES posted such bond The sheriff then attached certain properties of VILLALUZ Trial Court acquitted VILLALUZ CA affirmed Case was elevated to the SC and during its pendency, VILLALUZ posted a counterbond in the amount of P2,500,000 issued by SECURITY PACIFIC SC affirmed the decision of the Trial Court and the CA ANZURES moved for the execution of the decision A Writ of Execution was issued against VILLALUZ and the sheriff tried to serve said writ to VILLALUZ but the latter cannot be found in her given address Sheriff then sent a Notice of Garnishment to SECURITY PACIFIC by virtue of the counterbond posted by VILLALUZ SECURITY PACIFIC denied liability because the bond wasnt approved by the SC (Belisle Investment v State Investment House ruled that mere posting of a counterbond does not automatically discharge the writ of attachment as it is only after hearing and after the judge ordered the discharge of the attachment x x x that the writ of attachment is properly discharged) W/N SECURITY PACIFIC IS LIABLE YES, SURETY IS JOINTLY AND SEVERALLY LIABLE UPON RETURN OF WRIT OF EXECUTION WHICH IS UNSATISIFIED Suretyship o Suretyship is a contractual relation resulting from an agreement whereby one person, the surety, engages to be answerable for the debt, default or miscarriage of another person, known as the principal. Anastacio, Beron, Calinisan, Cruz, Delgado, Fernandez, Gana, Lopez, Mendiola, Morada, Rivas, Sarenas
ISSUE HELD RATIO
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o The suretys obligation is not an original one o Nevertheless, his liability to the creditor is said to be direct, primary and absolute Application o SECURITY does not deny contract between it and VILLALUZ is suretyship but points out that the kind of surety agreement between them merely waives its right of excussion o SC disagrees as the counterbond itself states that the parties be jointly and severally liable to secure the payment of any judgment plaintiff may recover against defendant in the action o Hence, SECURITY PACIFIC should pay ANZURES because as surety it is jointly and severally liable with its principal VILLALUZ
NOTE Jurisprudence stating that sureties are liable upon judgment against person they posted the bond for Tijan v Sibonghanoy After the judgment for the plaintiff has become executory and the execution is returned unsatisified, the liability of the bond automatically attaches and in failure of the surety to satisfy the judgment, a writ of execution may issue against the surety Luzon Steel Corp v Sia Counterbonds posted to obtain the lifting of a writ of attachment is due to these bonds being security for the payment of any judgment that the attaching party may obtain x x x liability of the countersureties after judgment has become final becomes ascertainable Imperial Insurance v De Los Angeles Section 17 Rule 57 of the ROC cannot be construed that an exection agains the debtor first be returned unsatisfied before a surety can be held liable for the bond he has posted Philippine British Assurance v IAC Counterbond is intended to secure the payment of any judgment
Phil Pryce Assurance vs. CA (Lopez) Facts: Interworld Assurance Corporation (the company now carries the corporate name Philippine Pryce Assurance Corporation) was the butt of the complaint for collection of sum of money, filed on May 13, 1988 by respondent, Gegroco, Inc. before the Makati Regional Trial Court It issued two surety bonds in behalf of its principal Sagum General Merchandise for P500,000.00 and 1,000,000.00 In its Answer, dated July 29, 1988, but filed only on August 4, 1988, Phil Pryce admitted having executed the said bonds, but denied liability because allegedly 1) the checks which were to pay for the premiums bounced and were dishonored hence there is no contract to speak of between petitioner and its supposed principal; and 2) that the bonds were merely to guarantee payment of its principal's obligation, thus, excussion is necessary. The case was set for pre-trial conference on September 29, 1988. Phil Pryce received its notice on September 9, 1988, while the notice addressed to its counsel was returned to the trial court with the notation "Return to Sender, Unclaimed. On the scheduled date for pre-trial conference, only the counsel for Phil Pryce appeared. The pre-trial conference was re-scheduled again and again and the Phil. Pryce Assurance officials always failed to appear until, upon motion, they were declared in default. RTC in favor of Gegroco W/n the arguments of Phil Pryce in its Answer is untenable. SC says YES SC pointed to Sec. 177 saying that the 1st argument of Phil Pryce should fail because the said article says that a surety contract is still valid despite failure to pay premiums except when the oblige already accepted a bond. In this case, the testimony of Mr. Guzman proves that surety bonds were required by Phil Pryce from Sagum General Merchandise. On the other hand, Phil Pryce's defense that it did not have authority to issue a Surety Bond when it did is an admission of fraud committed against respondent. No person can claim benefit from the wrong he himself committed. A representation made is rendered conclusive upon the person making it and cannot be denied or disproved as against the person relying thereon.
Issue: Held: -
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September 27, 2006
NAPOCOR vs. CA (Mendiola) Facts: NPC entered into a contract with FEEI for the erection of the Angat Balitawak Phase transmission lines for the Angat Hydro Electric Plant. FEEI agreed to complete the work within 120 days from the signing of the contract, otherwise it would pay NPC P200.00 per calendar day as liquidated damages, while NPC agreed to pay the sum of P97,829.00 as consideration. On the other hand, Philippine American General Insurance Co., Inc. (Philamgen) issued a surety bond in the amount of P30,672.00 for the faithful performance of the undertaking by FEEI, as required. The condition of the bond reads:The liability of the PHILIPPINE AMERICAN GENERAL INSURANCE COMPANY, INC. under this bond will expire One (1) year from final Completion and Acceptance and said bond will be cancelled 30 days after its expiration, unless surety is notified of any existing obligation thereunder. FEEI started construction, but on May 30, 1963, both FEEI and Philamgen wrote NPC requesting the assistance of the latter to complete the project due to unavailability of the equipment of FEEI. The work was abandoned leaving the construction unfinished. Philamgen and FEEI informed NPC that FEEI was giving up the construction due to financial difficulties. NPC wrote Philamgen informing it of the withdrawal of FEEI from the work and formally holding both FEEI and Philamgen liable for the cost of the work to be completed as of July 20, 1962 plus damages. The work was completed by NPC. NPC notified Philamgen that FEEI had an outstanding obligation in the amount of P75,019.85, exclusive of interest and damages, and demanded the remittance of the amount of the surety bond the answer for the cost of completion of the work. NPC filed Civil Case No. 70811 for collection of the amount of P75,019.89 spent to complete the work abandoned The trial court rendered judgment in favor of NPC, the dispositive portion of which reads:
Issue: W/N Philamgen is liable to give the amount of the bond to NPC Held: Philamgen is liable to NPC As correctly assessed by the trial court, the evidence on record shows that as early as May 30, 1963, Philamgen was duly informed of the failure of its principal to comply with its undertaking. When FEEI informed NPC that it was abandoning the construction job, the latter forthwith informed Philamgen of the fact on the same date. The fact that Philamgen was seasonably notified, was even bolstered by its request from NPC for information of the percentage completed by the bond principal prior to the relinquishment of the job to the latter and the reason for said relinquishment. The 30-day notice adverted to in the surety bond applies to the completion of the work by the contractor. This completion by the contractor never materialized. In the case at bar, it cannot be denied that the breach of contract in this case, that is, the abandonment of the unfinished work of the transmission line of the petitioner by the contractor Far Eastern Electric, Inc. was within the effective date of the contract and the surety bond. Such abandonment gave rise to the continuing liability of the bond as provided for in the contract which is deemed incorporated in the surety bond executed for its completion. To rule therefore that private respondent was not properly notified would be gross error.
Ong Guan Can vs. Century Insurancce Corp (Mendiola) Facts: Ong' s building and the goods inside the building were insured in the amount of 30K and 15 respectively with Century Insurance Corp. On Feb. 28, 1923, the entire building and the merchandise was razed by fire. Anastacio, Beron, Calinisan, Cruz, Delgado, Fernandez, Gana, Lopez, Mendiola, Morada, Rivas, Sarenas
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Century INsurance claims that according to clause 14 of the policy, it may rebuild the house burnt. It claims that although the house may be smaller, it would be sufficient indemnity to the insured for the actual loss suffered by Ong.
Issue: W/N Century INsurance can rebuild the building. Held: No, Century cannot rebuild. THe obligation of the insurer under the policy is an alternative one. It must be noted that in alternative obligations, the debtor, the insurance company in this case, must notify the creditor of his election. The object of the notice is to give the creditor (Ong in this case) the opportunity to express his consent, or to impugn the alection made by the debtor. In the records, it appears that the insurer did not give a formal notice of its election to rebuild. While witnesses Cedrun and Cacho speak of the proposed reconstruction of the house destroyed, Ong has not given his consent , for the reason that a smaller house and materials of lower kind than those employed will be built. It would be unjust to compel Ong to accept the rebuilding of a smaller house with a lower kind of materials, without offering him the an additional indemnity for the difference in the size between the two houses.
Tangco vs. Phil. Guaranty Co. (Mendiola) Facts: Tanco's automobile figured in a collision. At the time of the mishap, the car was being driven by his Brother, Manuel Tangco, at the southern approach of Jones Bridge. It so happens that Manuel had no valid license, it having been expired. Tanco paid for the repairs of the vehicle amounting to 2,536.99 Tanco then filed his claim with Phil Guaranty. Phil Guaranty denied the claim by alleging that the one driving was not an Authorized Driver of the vehicle. According to the insurer, it shall be liable for the damages on the vehicle as long as it was driven by an Authorized Driver (the insured himself, or any person driving under the Insured's order, provided that the person driving is permitted in accordance with licensing or other laws) The CFI of Manila decided in favor of Tanco. According to the CFI, there was an absence of evidence to prove that Manuel ha been disqualified by order of court or law.
Issue: W/N Phil Guaranty Co. is liable to Tanco. Held: The insurer is not liable to Tanco. According to Ameriacan cases, a clause in the policy excluding loss while the motor vehicle "is being operated by any person prohibited by law from driving an automobile" was held to be free from doubt or ambiguity, reasonable in its terms and in furtherance of the policy of the law prohibiting unlicensed drivers to operate motor vehicles. Under a provision in the policy that the insurer "shall not be liable while the automobile is operated ... by any person prohibited by law from driving," the insurance company was absolved, the Supreme Court of Michigan saying: "To require a person to secure an operator's license and meet certain requirements before driving an automobile is a regulation for the protection of life and property, the wisdom of which can scarcely be questioned. Under the terms of the contract, while under such statutory prohibition, plaintiff could not recover under his policy. To permit such recovery, notwithstanding the lack of a driver's license, would tend to undermine the protection afforded the public by virtue of Act No. 91 The exclusion clause in the contract invoked by appellant is clear. It does not refer to violations of law in general, which indeed would tend to render automobile insurance practically a sham, but to a specific situation where a person other than the insured himself, even upon his order or with his permission, drives the motor vehicle without a license or with one that has already expired.
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CCC Insurance vs. CA (Morada) Facts: o o o o o o Carlos F. Robes took an insurance with CCC on his Dodge Kingsway car against loss or damage through accident for an amount not exceeding P8,000 The Dodge, while being driven by Robes driver, became involved in a vehicular collision along Rizal Avenue Repair was estimated at P5,300, which CCC refused to pay Robes filed for recovery of the said amount plus damages CCCs defense: violation of insurance contract because the one driving the car was not an authorized driver CFI ruled in favor of Robes. CA affirmed.
Issue: W/N the driver of the insured vehicle was an authorized driver within the purview of the insurance policy. Held: Yes. o The insurance policy states who may be an authorized driver: (a) x x x (b) Any person driving with the Insureds permission, provided the person driving is permitted in accordance with licensing laws or regulations to drive the motor vehicle covered by this Policy, or has been so permitted and is not disqualified by order of a court or by any regulation from driving such Motor Vehicle. o Domingo Reyes, the driver at the time of the mishap, cannot read and write. He was able to secure a drivers license without passing any examination therefor. o Based on Act 3992 (Revised Motor Vehicles Law), the law enforced at the time of the accident, the examinations to determine ability to operate motor vehicles may be dispensed with in the discretion of the Motor Vehicles Office (MVO) officials. o The issuance of the license is proof that the MVO official considered Reyes qualified to operate motor vehicles, and the insured had the right to rely upon such license.
Villacorta v Insurance Commission (Rivas) FACTS: VILLACORTA was the owner of a COLT LANCER insured with EMPIRE INSURANCE COMPANY The insurance policy was for P35,000: own damage, P30,000: ,theft and P30,000: Third Party Liability 5/9/78: vehicle as brought to SUNDAY MACHINE WORKS for general check-ups and repair 5/11/78: while the car was in the custody of Sunday Machine, the car was allegedly taken by 6 persons. The car figured in an accident. EMPIRE denied liability invoking the provision: o Authorized Driver Clause because the driver of Villacortas car was not permitted by the owner to take the car o The car was not stolen and not covered by the Theft Clause because the element of Taking in Article 308 of the Revise Penal Code is not present INSRANCE COMMISION: ruled on favor of Empire Insurance W/N the insurer Empire Insurance is liable to Villacorta YES! The purpose of the Authorized Driver Clause is that a person other than the insured owner who drives the car on the insured order or permission must be duly licensed drivers and have no disqualification to drive a motor vehicle A car owner who entrusts his car to an established car service and repair shop necessarily entrusts his car key to the shop owner and employees who are presumed to have the insureds permission to drive the car for legitimate purposes of checking or road-testing the car. As to theft, the SC believes that there is theft in the case because where a car is admittedly unlawfully and wrongly taken by some people, be they employees of the car shop or not to whom it had been entrusted without the owners consent or knowledge, such taking constitutes or partakes of the nature of theft as defined in Article 308 of the RPC. THEFT: committed by any person who, with intent to gain but without violence against or intimidation of persons nor force upon things, shall take personal property of another without the latters consent The contention of Empire Insurance that the taking was merely temporary and not permanent was rebutted by the fact that the police found from the waist of the car driver one Cal. 45 Colt and apple type grenade. Anastacio, Beron, Calinisan, Cruz, Delgado, Fernandez, Gana, Lopez, Mendiola, Morada, Rivas, Sarenas
ISSUE: HELD: -
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Association of Baptists v. Fieldmens Insurance (Sarenas) Facts: Issue: Association of Baptists (Petitioner) insured a Chevrolet Carry-all (Car) with Fielmens Insurance (Insurer) under a Private Car Comprehensive Policy (Policy) against loss or damage up to the amount of P5K 1961: Car was placed at a gasoline station in Davao to have it displayed for sale 1962: one of the gas boys and a nephew of the owner took the car for a joy ride to Toril, Davao City without permission or authority. On the way back, the car bumped an electric post. Damage = P5,518.61 Insurer does not want to indemnify until the gas boy who borrowed the car be convicted of theft Trial Court: insurer must pay P5K for damage sustained plus P2K attorneys fees W/N the insurer should pay petitioner
Held: YES The policy includes loss of or damage to the motor vehicle by burglary or theft The act of the gas boy in taking the car for a joy ride constitutes theft within the meaning of the policy Recovery for the damage to the car is not barred by illegal use by one of the gas boys. There is no need for prior conviction of theft before insured could claim. In a civil case for recovery on an automobile insurance, the question whether the person using the car stole it or not is to be determined by a fair preponderance of evidence. Proof beyond reasonable doubt is not needed. Stokes v Malayan Insurance Co., Inc (Anastacio) FACTS: Daniel Stephen Adolfson had a subsisting MALAYAN car insurance policy against own damage as well as 3rd party liability when his car collided with a car owned by Cesar Poblete, resulting in damage to both vehicles. At the time of the accident, the car was driven by James Stokes, who was authorized to do so by Adolfson. Stokes, an Irish citizen who had been in the Philippines as a tourist for more than 90 days, had a valid and subsisting Irish drivers license, but without a Philippines drivers license. MALAYAN refused to pay Adolfsons claim contending that Stokes was not an authorized driver under Sec 21 of their insurance policy which refers to 1) the insured 2) any person driving on the insureds order or with his permission, PROVIDED that the person driving is permitted in accordance with the licensing or other laws or regulations to drive xxx Under Sec 21 of the LTTC it is provided that tourists who are duly license to drive in their respective countries may be allowed to drive during but NOT after 90 days of their sojourn here. After 90 days, they can do so ONLY if they pay fees and obtain and carry a license xxx
ISSUE: WoN Malayan is liable? HELD: NO. 1. 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 insurers liability, and compliance therewith is a condition precedent to the right of recovery. 2. An Irish citizen whose 90-day tourist visa had expired, cannot recover on his car insurance policy, not being authorized to drive a motor vehicle without a Philippines drivers license. Under the authorized driver clause, an authorized driver must not only be permitted under the law and regulations to drive the motor vehicle and is not disqualified from so doing under any enactment or regulation. 3. Acceptance of insurance premium payments does not estop an insurer from interposing a valid defense under the terms of the insurance policy.
Palermo vs Pyramid (Beron) FACTS: October 12,1968: After having purchased a brand new Nissan Cedric de Luxe Sedan car from the Ng Sam Bok Motors Co., Palermo insured the same with the Pyramid against any loss or damage for P 20,000.00 and against third party liability for P 10,000.00.
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The automobile was mortgaged by the Palermo with the vendor, Ng Sam Bok Motors Co., to secure the payment of the balance of the purchase price. April 17, 1968: While driving the automobile, Palermo met a violent accident. The La Carlota City fire engine crashed head on, and as a consequence, the Palermo sustained physical injuries, his father, Cesar Palermo, who was with himm in the car at the time was likewise seriously injured and died shortly thereafter, and the car in question was totally wrecked. The insurance policy, grants an option unto the Pyramid, in case of accident either to indemnify the Palermo for loss or damage to the car in cash or to replace the damaged car. Pyramid refused to take either of the abovementioned alternatives for the reason that the Palermo himself had violated the terms of the policy when he
drove the car in question with an expired driver's license.
The Private Car Comprehensive Policy MV-1251 provides: AUTHORIZED DRIVER: Any of the following: (a) The Insured; (b) Any person driving on the Insured's order or with his permission. Provided that the person driving is permitted in accordance with the licensing or other laws or regulations to drive the Motor Vehicle and is not disqualified from driving such motor vehicle by order of a Court of law or by reason of any enactment or regulation in that behalf. March 7, 1969: Palermo filed a complaint in the Court of First Instance against Pyramid Insurance Co., Inc., for payment of his claim under a Private Car Comprehensive Policy MV-1251 issued by the Pyramid. CFI: Ordered the Pyramid to pay Palermo the sum of P20,000.00, value of the insurance of the motor vehicle in question and to pay the costs.
ISSUE: Is Palermo an authorized driver under the policy? HELD: YES. There is no merit in the Pyramid's allegation that the Palermo was not authorized to drive the insured motor vehicle because his driver's license had expired. The driver of the insured motor vehicle at the time of the accident was, the insured himself, hence an "authorized driver" under the policy. While the Motor Vehicle Law prohibits a person from operating a motor vehicle on the highway without a license or with an expired license, an infraction of the Motor Vehicle Law on the part of the insured, is not a bar to recovery under the insurance contract. It however renders him subject to the penal sanctions of the Motor Vehicle Law. The requirement that the driver be "permitted in accordance with the licensing or other laws or regulations to drive the
Motor Vehicle and is not disqualified from driving such motor vehicle by order of a Court of Law or by reason of any enactment or regulation in that behalf," applies only when the driver" is driving on the insured's order or with his permission." It does not apply when the person driving is the insured himself.
Perla v CA (Calinisan/Murillo) Facts: Herminio and Evelyn Lim executed a promissory note in favor of Supercars incorporated in the sum of P78T and secured by a chattel mortgage over a brand new car (Laser) which is registered under the name of herminio and insured with Perla. Subsequently, whuile the car was parked one day, it was carneapped. The Lims filed a claim for loss with Perla but said claim was denied on the ground that Evelyn, who was driving the vehicle before it was carnapped, was in possession of an expired drivers license and was therefore no an authorized driver.
Issue: W/N Perla is liable to the Lims for the loss of the car. Held: While it is true that Evelyn was not an authorized driver within the purview of the policy, this is altogether a different matter. The comprehensive motorcar insurance policy issued by Perla undertook to indemnify the Lims against loss or damage to the car by accidental collision, by overturning, by fire, external explosion, self ignition, housebreaking or theft. Where a car is admittedly unlawfully taken without the owners consent or knowledge, such taking constitutes theft and therefore it is the theft clause and not the authorized driver clause that should apply. It is noteworthy that there is no causal relation between the possession of a valid drivers license and the loss of the Anastacio, Beron, Calinisan, Cruz, Delgado, Fernandez, Gana, Lopez, Mendiola, Morada, Rivas, Sarenas
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vehicle. To rule otherwise would render the car insurance practically a sham since an insurance company can easily escape liability by citing restrictions which are not applicable nor germane to the claim, thereby reducing the indemnity to a shadow.
Sun Insurance Office v. CA (Cruz) Facts: o o o o o o o
-Felix had Personal Accident Policy. -After a party, Felix (not intoxicated) played with a gun. His Secretary, Pilar was the only witness.. -The magazine of the gun was supposedly removed. -Pilar was asking whether the gun was loaded. -Felix believing it was not loaded, proved that its wasnt by pointing the same into his head; and, the next thing Pilar knew was that Felix was already dead. -Widow claimed before Sun Insurance but was rejected. -Sun Insurance refused because according to them while the event is not suicide, it is neither an accident covered by the policy.
ISSUE: W/N the case involves an accident which would allow claim of the widow. HELD: o Definition: Accident is an event which happens without any human agency or, if happening through human agency, an event which under the circumstances, is unusual to and not expected by the person to whom it happens. Invoking Dela Cruz v. Capital, there is no accident when a deliberate act is performed unless some additional, unexpected, independent and unforeseen happening occurs which produces the injury or death. -The additional, unexpectedxxxhere is the firing of the gun. The case does not fall under the four exceptions in the policy, i.e., the case is not suicide or the person willfully exposed himself to such peril. How? Felix could not have willfully exposed himself to peril when, in fact, he is proving that the gun is not loaded. The presence of negligence does not disprove accident as almost all accidents involve negligence one way or the other. But moral damages against the company -unjustified since it is believed to operate in good faith when it refused payment.
o o o
o o
Finman v CA (Delgado) Facts: -Deceased Carlie Suprosa was insured with the petitioner Finaman General Assurance Corporation. -The insured was a teacher and so he was insured under Finaman General teacher's Protection Plan. -His parents and brothers as beneficiaries. -His cousin Winston and him were on their wasy home from a fiesta in Rizal and attended Maskara Festival. -They were waiting for tricycle when three unidentified men without provocation and warning on their part stabbed Carlie. -Beneficiaries filed claim with an insurance company but denied since murder not within the scope of the coverage of the insurance policy. -RTC for beneficiaries. CA affirmed. Issue: W/N beneficiaries entitled to the benefits. Held: Yes. The terms "accident" and "accidental" as used in insurance contracts have not acquired any technical meaning, and are construed by the courts in their ordinary and common acceptation. Thus, the terms have been taken to mean that which happen by chance or fortuitously, without intention and design, and which is unexpected, unusual, and unforeseen. An accident is an event that takes place without one's foresight or expectation an event that proceeds from an unknown cause, or is an unusual effect of a known cause and, therefore, not expected. -In the case at bar, it cannot be pretended that Carlie Surposa died in the course of an assault or murder as a result of Anastacio, Beron, Calinisan, Cruz, Delgado, Fernandez, Gana, Lopez, Mendiola, Morada, Rivas, Sarenas
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his voluntary act considering the very nature of these crimes. -In the first place, the insured and his companion were on their way home from attending a festival. They were confronted by unidentified persons. The record is barren of any circumstance showing how the stab wound was inflicted. -Nor can it be pretended that the malefactor aimed at the insured precisely because the killer wanted to take his life. In any event, while the act may not exempt the unknown perpetrator from criminal liability, the fact remains that the happening was a pure accident on the part of the victim. -The insured died from an event that took place without his foresight or expectation, an event that proceeded from an unusual effect of a known cause and, therefore, not expected. Neither can it be said that where was a capricious desire on the part of the accused to expose his life to danger considering that he was just going home after attending a festival.
Fortune Insurance v CA (Fernandez) Facts: Producers Bank of the Philippines was issued by Fortune Insurance a Money, Security, and Payroll Robbery policy. On the way to transfer 725k cash to Makati, the armored car of Producers was robbed. The robbery took place along Taft Avenue. The driver of the armored car, the escorting security guard, and others were charged for the robbery. Driver and security guard were provided by PRC Management Systems. Producers tried to claim from Fortune but the latter refused on the ground that the loss was not covered by the policy. It was presented that any loss caused by a criminal act of an employee or authorized representative of the insured is an exception as stated in the policy. Trial Court ordered Fortune to pay Producers on the ground that the malefactors were not employees or authorized representatives of the insured. CA affirmed.
Issue: Can Fortune Insurance be held liable? Held: NO. Driver and escorting security guard were authorized representatives of Producers Bank with respect to the transfer of money from Pasay to Makati. For that particular task of transferring the money (at the time the theft took place) the driver and security guard acted as agents of the bank. A representative is defined as one who represents or stands in the place of another. Hence, the loss falls under the list of excepted risks as stated in the policy. (Court tried to determine if the driver and guard were employees considering that their employment was under a laboronly contract. The Court, however, said that even if labor-contracting only, the fact that these individuals were representatives of the insured when the crime was committed, then insurer is free from liability.) The insurance entered into by the parties is a theft/robbery insurance policy which is a form of casualty insurance and such types of insurance are governed by the general provisions applicable to all types of insurance. Outside of these, the rights and obligations of the parties must be determined by the terms of their contract, taking into consideration its purpose. It is settled that the terms of the policy constitute the measure of the insurers liability.
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October 2, 2006 GSIS vs. CA (Calinisan) FACTS: National Food Authority was the owner of a Chevrolet truck which was insured against liabilities for death of and injuries to third persons with the GSIS. May 9, 1979: At about 7:00 in the evening the said truck driven by Guillermo Corbeta collided with a public utility vehicle, a Toyota Tamaraw. The Toyota Tamaraw was owned and operated by Victor Uy, under the name and style of "Victory Line." The Tamaraw was a total wreck. All the collision victims were passengers of the Toyota Tamaraw. Among those injured were private respondents, Victoria Jaime Vda. de Kho and Gloria Kho Vda. de Calabia. Among the dead were Maxima Ugmad Vda. de Kho, Roland Kho and Willie Calabia, Sr. Cases were filed against NFA, GSIS and Cobreta. Court rendered its decision holding that Corbeta's negligence was the proximate cause of the collision. The findings of the trial court stated that the truck which crossed over to the other lane was speeding because after the collision, its left front wheel was detached and the truck traveled for about fifty (50) meters and fell into a ravine. GSIS was held solidarily liable with NFA for damages awarded. Court of Appeals agreed with the conclusions of the trial court.
ISSUE: Whether the CA erred in holding GSIS solidarily liable with the negligent insured/owner-operator of the Chevrolet truck for damages awarded to injured persons which are beyond the limitations of the insurance policy and the Insurance Memorandum Circular No. 5-78. HELD: CA is not correct. GSIS liability is direct but not solidary. It is now established that the injured or the heirs of a deceased victim of a vehicular accident may sue directly the insurer of the vehicle. Common carriers are required to secure Compulsory Motor Vehicle Liability Insurance [CMVLI] coverage as provided under Sec. 374 of the Insurance Code, precisely for the benefit of victims of vehicular accidents and to extend them immediate relief. However, although the victim may proceed directly against the insurer for indemnity, the third party liability is only up to the extent of the insurance policy and those required by law. While it is true that where the insurance contract provides for indemnity against liability to third persons, and such third persons can directly sue the insurer, the direct liability of the insurer under indemnity contracts against third party liability does not mean that the insurer can be held liable in solidum with the insured and/or the other parties found at fault. For the liability of the insurer is based on contract; that of the insured carrier or vehicle owner is based on tort. The liability of GSIS based on the insurance contract is direct, but not solidary with that of the NFA. The latter's liability is based separately on Article 2180 of the Civil Code.
Perla v Ancheta (Calinisan/Murillo) Facts: A collision occurred between an IH Scout and a Superlines bus alonf the national highway of Sta Elena Camarines Norte. Those who were riding the IH Scout sustained physical injuries in varying degrees of gravity. They files with the CFI of Camarines Norte a complaint for damages against Superlines, the bus driver and Perla, the insurer of the bus. The bus was insured for P50T for passenger liability and P50T for 3rd party liability, and on the other hand, the vehicle in which the respondents/complainants were riding was insured with the MICO. Even before summons could be served, the CFI judge, finding prima facie evidence of negligence of the driver of the Superlines bus, ordered Perla to pay immediately to respondents the P5T under the no-fault clause as provided for under Sec 378 of the Insurance Code. Perla now files this appeal on the ground that the P5T indemnity under the no-fault clause should be recovered by the respondents against MICO.
Issue: W/N Perla is liable for the P5T. Anastacio, Beron, Calinisan, Cruz, Delgado, Fernandez, Gana, Lopez, Mendiola, Morada, Rivas, Sarenas
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Held: No. MICO should be the one liable. From a reading of Sec 378 which is couched in straightforward and unambiguous language, the following rules on claims under the no-fault indemnity provision where the proof of fault or negligence is not necessary for the payment of any claim for death or injury to a passenger or a third party, are established: 1. Claims may be made against one motor vehicle only. 2. If the victim is an occupant of the vehicle, the claim shall lie against the INSURER OF THE VEHICLE which HE IS RIDING, mounting or dismounting from. 3. In any other case, the claim shall lie against the insurer of the directly offending vehicle; and 4. In all cases, the right of the party paying the claim to recover against the owner of the vehicle responsible for the accident shall be maintained. The essence of no-fault indemnity insurance is to provide the victims of vehicular accidents or their heirs immediate compensation although in a limited amount pending final determination of who is responsible for the accident and liable for the victims injuries or death. Irrespective of whether or not fault or negligence lies with the driver of the Superlines Bus, as respondents were nor occupants of the bus, they cannot claim the no-fault indemnity provided in Sec 378 from Perla. The claim should be made against the insurer of the vehicle they were riding. This is very clear from the law.
Shafer v Judge (Cruz) Summit Guaranty & Insurance vs. Arnaldo (Delgado) Facts: -Vehicular accident occured between Ford Pick-up owned by Marcos Olaso which was bumped by the truck owned by Alberto Floralde. -FGU Insurance, by reason of the Motor Vehicle Insurance, paid Oldaso P2,800 as share for the repair of the Ford Pickup. -Being subrogated to the rights of Olasso, it now claims against Floralde. -FGU requested conference with Summit Guaranty, the insurer of Floralde's truck, but to no avail. -FGU filed insurance claim beofre the Insurance Commissioner. -Summit filed motion to dismiss on the ground of prescription. -Summit argues that the Insurance Code gives one year for claims against the inurance. Since the accident happened on November 1976 and the claim was filed only in May 1978, it has already prescribed. -Insurance Commissioner for FGU hence this appeal. Issue: W/N prescription has set-in barring FGU from claiming. FGU: We are not original claimant. We only exercised our right of subrogation since we acquired rights of Olasso. It should be ten years. Held: No. As held in the Case of Aisporna vs. CA,
Legislative intent must be ascertained from a consideration of the statute as a whole. The particular words, clauses and phrases should not be studied as detached and isolated expressions, but the whole and every part of the statute must be considered in fixing the meaning of any of its parts and in order to produce a harmonious whole. A statute must be so construed as to harmonize and give effect to all its provisions whenever possible.
-If to interpret the law strictly, it would be detrimental to claimants since insurers may resort to tactics to delay filing of case and will eventually establish prescription as a defense after one year. -The one year period should be counted from the date of the rejection of the insurer as this is the time when the cause of action accrues. -In the present case, it is not denied that an extra-judicial demand was made by GFU which Summit failed to respond. The one-year prescriptive period set by Art.384 of the Insurance Code has not yet run. The cause of action arises only upon denial of the claim by the insurance company. Anastacio, Beron, Calinisan, Cruz, Delgado, Fernandez, Gana, Lopez, Mendiola, Morada, Rivas, Sarenas
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October 4, 2006 Gallardo v Morales (Morada) Facts: o o
o o
In a case filed by Gallardo against Morales, the latter was adjudged by the trial court to pay P7,000. Writ of execution was issued, pursuant to which the sheriff levied execution on the sum of P7,000 out of the P30,000 due from Capital Insurance to Morales, as beneficiary under a personal accident policy issued by Capital to Morales husband, Luis Morales, who died by assassination. The policy insured Morales husband for injuries and/or death as a result of murder or assault or attempt thereat. Trial court denied the motion to quash the writ filed by Morales.
Issue: W/N the policy issued to Luis Morales was a life insurance policy, thus exempt from execution under the Rules of Court. Held: o YES, it is a life insurance policy. Life insurance is, generally speaking, distinct and different from an accident insurance. However, when one of the risks insured in the latter is the death of the insured by accident, then there are authorities to the effect that such accident insurance may, also, be regarded as a life insurance. Insurance on life includes all policies of insurance in which the payment of the insurance money is contingent upon the loss of life. The Rules of Court makes reference to any life insurance, thus the exemption from execution applies to ordinary life insurance, as well as to those which, although intended primarily to indemnify risks arising from accident, likewise, insure against loss of life due, either to accidental causes, or to the willful and criminal act of another, which, as such is not strictly accidental in nature. Statutes exempting a life insurance policy from execution seek to enable the head of the family to secure his widow and children from becoming a burden upon the community, and should merit a liberal interpretation.
o o
Calanoc v CA (Rivas) FACTS: MELENCIO BASILIO was a watchman of MANILA AUTO SUPPLY and was insured with PHILIPPINE AMERICAN LIFE INSURANCE COMPANY for life insurance worth P2,000 with a supplemental contract covering death by accident for another P2,000 Malencio died of a gunshot wound on the occasion of a robbery committed in the house of Atty. Ojeda when the former agreed to help the latter and a traffic policeman to determine if the house was indeed being burglarized. VIRGINIA CALANOC, widow of Malencio was paid by the insurer P2,000 but the latter refused to pay another P2,000 for the supplemental policy. INSURER: Malencio died because he was murdered and not because of an accident CA: ruled in favor of the insurer. ISSUE: W/N Philippine American Insurance must pay Calanoc the additional P2,000 under the supplemental policy HELD: YES! The circumstance that he was a mere watchman and had no duty to heed the call of Atty. Ojeda should not be taken as a capricious desire on his part to expose his life to danger considering the fact that the place he was duty-bound to guard was only a block away. The insured cannot be blamed solely for doing what he believed was in keeping with his duty as a watchman and as a citizen As to the contention of the insurer that the death of Melencio was due to murder, there was no proof that the death was due to a crime for the record is bereft of any circumstance showing how the fatal shot was fired. It also cannot be said that that killing was intentional for there is the possibility that the malefactor had fired the shot merely to scare away the people around for his own protection and not necessarily to kill or hit the victim. Lastly, the victim could have been either the policeman or Atty. Ojeda for it cannot be pretended that the malefactor aimed at the deceased precisely because he wanted to take his life. Anastacio, Beron, Calinisan, Cruz, Delgado, Fernandez, Gana, Lopez, Mendiola, Morada, Rivas, Sarenas
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While a s a general rule, the parties may limit the coverage of the policy to certain particular accidents and risks or causes of loss, and may expressly except other risks or causes of loss therefrom. However, it is to be desired that the terms and phraseology of the exception clause be clearly expressed so as to be within the easy grasp and understanding of the insured for if the terms are doubtful or obscure the same must be interpreted against the one who caused the obscurity.
Kanapi v Insular Life (Sarenas) Facts: Insured Mr. Kanapi, Beneficiary Mrs. Kanapi, Insurer Insular Life Life Insurance Policy o Upon death of insured, beneficiary to receive P5k for death due to natural causes o Additional P5k if due to accident (Accidental Death Benefit Clause) o Clause would not apply if death resulted from injury intentionally inflicted by 3rd party Mr. Kanapi was shot by a Conrado Quemosing. Quemosing found guilty of murder. Insurer refuses to pay the additional P5k because the injury was intentionally inflicted by 3rd party W/N insurer is liable for the additional P5k under the accidental death benefit clause
Issue:
Held: NO The clause provides that payment shall be made upon proof that the death resulted from injury affected through external and violent means sustained in an accident However, from the facts, insured was clearly murdered. Injury was inflicted by a 3rd party, one of the exceptions to the clause. The clause clearly states that it shall not apply when death through injury caused by 3 rd party with or without provocation from the injured. Sabi pa nga ni Santa Clause, Insurer shall not pay.
Biagtan v Insular Life (Anastacio) FACTS: Jose Biagtan was insured with Insular life under Policy No. 498075 for the sum of P5,000 and, under a supplementary contract denominated as Accident Death Benefit Clause for an additional sum of P5,000 if the death of the insured resulted directly from bodily injury effected solely through external and violent means sustained in an accident xxx and independently of all other causes. The clause, however, expressly provided that it would not apply where death resulted from an injury intentionally inflicted by a third party One night, a band of robbers entered the house of Biagtan. In committing the robbery, the robbers, on reaching the staircase landing of the 2nd floor, suhed towards the doors of the 2nd floor room where they met Biagtan who received thrusts from their sharp pointed instruments, causing wounds on his body resulting in his death Insular paid the claim of the beneficiaries of the insured of the basic amount of P5,000 but refused to pay the additional sum of P5,000 under the accident death benefit clause that the insureds death resulted from injuries intentionally inflicted by 3rd parties and therefore not covered
ISSUE: WoN mortal wounds were inflicted intentionally HELD: YES. The beneficiaries cannot claim the additional P5,000 under the Accident death benefit clause. 1. 9 wounds were inflicted, all by means of thrusts with sharp pointed instruments wielded by the robbers. This is a physical act which is undisputed. Whether the robbers had the intent to kill or merely scare the victim or to ward off any defense he might offer, it cannot be denied that the act itself of inflicting the injuries was intentional. 2. The clause does not speak of the purpose, whether homicidal or not, of a third party in causing the injuries, but only of the fact that such injuries have been intentionally inflicted- this obviously to distinguish them from injuries, which although received at the hands of a third party, are purely accidental. 3. The Calanoc case is not controlling in the case at bar, because there was the possibility that the malefactor had fired the shot to scare the people around for his own protection and not necessarily to kill Anastacio, Beron, Calinisan, Cruz, Delgado, Fernandez, Gana, Lopez, Mendiola, Morada, Rivas, Sarenas
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or hit the victim. That possibility is ruled out in the case at bar for while a single shot fired from a
distance, and by a person who was not even seen aiming at the victim, could indeed have fired without intent to kill or injure; 9 wounds inflicted with bladed weapons at close range cannot be considered as innocent insofar as such intent is concerned. The manner of execution of the crime permits no other conclusion.
Dela Cruz v Capita (Beron) FACTS:
Eduardo de la Cruz, employed in the Itogon-Suyoc Mines, Inc. was the holder of an accident insurance policy underwritten by the Capital Insurance & Surety Co., Inc January 1, 1957: Itogon-Suyoc Mines, Inc. sponsored a boxing contest wherein the insured Eduardo de la Cruz, a non-professional boxer participated. In the course of his bout with another person, likewise a nonprofessional, Eduardo slipped and was hit by his opponent on the left part of the back of the head, causing Eduardo to fall, with his head hitting the rope of the ring. He was brought to the Baguio General Hospital the following day. The cause of death was reported as hemorrhage, intracranial, left Simon de la Cruz, the father of the insured and who was named beneficiary under the policy, thereupon filed a claim with the insurance company for payment of the indemnity under the insurance policy. The claim was denied. De la Cruz instituted the action in Court of First Instance for specific performance. Capital set up the defense that the death of the insured, caused by his participation in a boxing contest, was not accidental and, therefore, not covered by insurance. RTC: Ordered Capital to pay De la Cruz.
ISSUE: Is the order of the court proper? HELD: YES. The terms "accident" and "accidental", have been taken to mean that which happen by chance or fortuitously, without intention and design, and which is unexpected, unusual, and unforeseen. An accident is an event that takes place without one's foresight or expectation an event that proceeds from an unknown cause, or is an unusual effect of a known cause and, therefore, not expected. Capital would like to make a distinction between "accident or accidental" and "accidental means", which is the term used in the insurance policy involved here. It is argued that to be considered within the protection of the policy, what is required to be accidental is the means that caused or brought the death and not the death itself. SC: The tendency of court decisions in the United States in recent years is to eliminate the fine distinction between the terms "accidental" and "accidental means" and to consider them as legally synonymous. Where the death or injury is not the natural or probable result of the insured's voluntary act, or if something unforeseen occurs in the doing of the act which produces the injury, the resulting death is within the protection of policies insuring against death or injury from accident. In the present case, while the participation of the insured in the boxing contest is voluntary, the injury was sustained when he slipped, giving occasion to the infliction by his opponent of the blow that threw him to the ropes of the ring. Without this unfortunate incident, that is, the unintentional slipping of the deceased, perhaps he could not have received that blow in the head and would not have died. Furthermore, the policy involved herein specifically excluded from its coverage: Death or disablement consequent upon the Insured engaging in football, hunting, pigsticking, steeplechasing, polo-playing, racing of any kind, mountaineering, or motorcycling.
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Pineda v CA (Calinisan) Insular Life and Prime Marine Services, Inc (PMSI) entered into a group insurance for the latters sea based employees. PMSIs vessel, M/V Nemos sunk at sea. Along with it, were 6 who were covered by the said insurance plan. The relatives of those who died in the sea accident sought to claim death benefits from PMSI, specifically its president Capt Roberto Nuval. Nuval asked them to execute SPAs to follow up, ask, demand, collect, and receive for their benefit indemnities due them. They were able to claim from PMSI. PMSI on the other hand, through Capt. Nuval, without the knowledge of the relatives, claimed from Insualar Life formal claims for and in behalf of the beneficiaries. Nuval then deposited these checks as his own. The relatives subsequently learned about said group insurance policies, and sought to claim against Insular Life. Insular refused.
Issue: W/N the relatives can claim from Insular. W/N the mothers need to post a bond to receive the shares/benefits due of their minor children. Held: Yes. Regardless of the value of the unemancipated common childs property, the father and mother ipso jure become the legal guardian of the childs property. However, if the market value of the property or the annual income of the child exceeds P50T, a bond has to be posted by the parents concerned to guarantee the performance of the obligations of a general guardian. Note that the SPAs issued to Nuval were not enough for Nuval to claim the proceeds of the group life insurance. It excludes any intent to grant a special power of attorney or to constitute a universal agency. Being an SPA, it should be strictly construed. RC Note: To simplify: In group insurance policies, the employer is the agent of the insurer. The father and mother are the legal guardian of the childs property if the market value of the property does not exceed P50,000, otherwise a bond is required.
Edralin v Insular Life (Cruz) FACTS: Policy holder: Edralin, Josefina Insurer: Insular Life (Insular) value: 20K -Edralin died -Claims brought before RTC. -Insular alleges that Edralin committed suicide and under the policy, her beneficiaries couldnt claim more than the paid premiums. In fact, Insular delivered check in the amount of P302.60 -Factual findings of the RTC: -Witnesses only showed that Edralin purposely locked herself in the kitchen with the gas stove on. Anastacio, Beron, Calinisan, Cruz, Delgado, Fernandez, Gana, Lopez, Mendiola, Morada, Rivas, Sarenas
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-RTC in favour of Edralin beneficiaries, awarded 20K, the amount of policy and 2K as attys fees. ISSUE: WHETHER THE DEATH OF EDRALIN WAS ACCIDENTAL OR DID DHE COMMIT SUICIDE. HELD: No Suicide. I. Alleging suicide, the defendant must prove it by clear and convincing proof. -Findings of the court (not suicide) here not disturbed. -All witnesses came to the scene when Edralin was already unconscious. -The maids are in better position to narrate, but they were not presented. -The only evidence is that she locked herself in the kitchen with gas stove on, and nothing more. II. The police report betrays partiality. -Two conflicting reports. -The police was accommodating. III. Separate Opinion by J. Ramos: Poisoning as an exception in the Accidental Death Benefit Clause was not proved. -Poisoning must, as it should be, must be deliberate act of the insured or a third party. Accidental inhalation, like the case is not covered.
Grepalife v CA (Delgado/Anastacio) FACTS: A contract of group life insurance was executed between Grepalife and DBP wherein the former agreed to insure the lives of eligible housing loan mortgagors of the latter. Dr. Wilfredo Leuterio was a housing debtor of DBP and applied for such membership. Grepalife issued an insurance coverage of Dr. Leuterio to the extent of P86,200.00. Dr. Leuterio died due to massive caerebral hemorrhage. When DBP submitted its claim to Grepalife, the latter refused to pay alleging that Dr. Leuterio was not physically healthy when he applied for an insurance coverage. Also, Grepalife insisted that Dr. Leuterio did not disclose that he had been suffering from hypertension, which caused his death which consisted of concealment which justified the denial of the claim. The widow Medarda Leuterio filed a complain against Grepalife for Specific performance with damages. Grepalife alleges that she was not a real party-in-interest ISSUE: Who is the real party-in-interest in such a case? HELD: 4. 5. The insured may be regarded as the real party-in-interest, although he has assigned the policy for the purpose of collection, or has assigned as collateral security any judgment he may obtain. The insured private respondent did not cede to the mortgagee all his rights or interests in the insurance as contained in the policy. The rationale of a group insurance policy of mortgagors is a device for the protection of both the mortgagee and the mortgagor. On the part of the mortgagee, in case of the unexpected death of the mortgagor, the proceeds from such insurance shall be applied to the payment of the mortgage debt, thereby relieving his heirs from paying the obligation. On the part of the mortgagor, the mortgage obligation shall be extinguished by the application of the insurance proceeds to the mortgage indebtedness. There must be fraudulent intent on the part of the insured to entitle the insurer to rescind the contract. Aside from the statement of the widow who was not even sure if the medicines taken by Dr. Leuterio were for hypertension, Grepalife had not proven or produced any witness who could attest to Dr. Leuterios medical history.
6. NOTES:
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Unless the interest of a person insured is susceptible of exact pecuniary measurement, the measure of indemnity under the policy of insurance upon life or health is the sum fixed in the policy. Where the mortgagee has already foreclosed on the mortgage, it cannot collect the insurance proceeds ---------- the proceeds now belong to Dr. Leuterios heirs represented by his widow.
Commissioner v Lincoln (Fernandez) Facts:
Lincoln Philippine Life Insurance Co (Lincoln), prior to 1984, issued a special kind of life insurance policy known as the Junior Estate Builder Policy. This policy provides an automatic increase in the amount of life insurance coverage upon attainment of a certain age by the insured without the need of issuing a new policy. Documentary stamp taxes due on the policy were paid based on the initial sum assured. Lincoln also issued 50,000 shares of stock with a par value of P100. The actual value of the shares based on book value was P19.3M. Documentary stamp taxes were paid based on the par value of all the shares (50k x P100 = P5M). CIR issued deficiency documentary stamp tax assessments on Lincoln. The deficiency corresponds to the automatic increase of the life insurance policies and the book value of the shares. Lincoln questioned the assessment and sought the cancellation of such assessment before the CTA. CTA granted. CA affirmed the ruling on the insurance policies but ruled that the tax on the shares should be based on book value. CIR argues that the tax on the insurance policies should not only be based on the amount written in the policy but also on the automatic increase even if they are to take effect later on. That the automatic increase involves a separate transaction even if no new policy is issued.
Issue: What should be the basis of the documentary stamp tax on the insurance policies? Held: It should be based on the amount written in the policy and on whatever increase that will take effect. Under Sec 183 of the NIRC, DST on life insurance policies is based on the amount fixed in the policy (Or in the measure of indemnity unless the interest of a person insured is susceptible of exact pecuniary measurement as provided in Sec 183 of the Insurance Code). And the amount fixed in the policy is the figure written on its face and whatever increase that will take effect in the future by reason of the automatic increase clause embodied in the policy. The automatic increase feature of the policy, though effective at a future date, is part and parcel of the contract. The amount insured by the policy at the time of its issuance necessarily included the sum covered by the automatic increase clause because it was already determinable at the time the transaction was entered into and formed part of the policy. CIR correct.
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October 11, 2006 Cathay Insurance vs. CA (Mendiola) Facts: The petitioners are the six (6) insurance companies that issued fire insurance policies for the total sum of P4,000,000 to the Cebu Filipino Press of Cebu City The fire policies described the insured property as "stocks of printing materials, papers and general merchandise usual to the Assured's tradestored in a one-storey building of strong materials housing the Cebu Filipina Press located at UNNO Pres. Quirino cor. Don V. Sotto Sts., Mabolo, Cebu City. The co-insurers were indicated in each of the policies. All, except one policy (Paramount's), were renewals of earlier policies issued for the same property. On December 18, 1981, at around ten o'clock in the morning, the Cebu Filipina Press was razed by electrical fire together with all the stocks and merchandise stored in the premises. On January 15, 1982, Mrs. Lugay, owner and operator of the printing press, submitted sworn Statements of Loss Formal Claims to the insurers, through their adjusters. She claimed a total loss of P4,595,00. After nearly ten (10) months of wating for the insurers to pay his claim, she sued to collect on December 15, 1982. The insurance companies denied liability, alleging violation of certain conditions of the policy, misdeclaration, and even arson which was not seriously pressed for, come the pre-trial, the petitioners offered to pay 50% of her claim, but she insisted in full recovery. The lower court ordered Cathay to pay the Insured. The Court of Appeals affirmed in toto
Issue: w/n the claim of the insured had prescribed Held: Yes, it had prescribed The finding of the trial court and the Court of Appeals that the insured's cause of action had already accrued before she filed her complaint is supported by Section 243 of the Insurance Code which fixes a maximum period of 90 days after receipt of the proofs of loss by the insurer for the latter to pay the insured s claim. As the fire which destroyed the Cebu Filipina Press occurred on December 19, 1981 and the proofs of loss were submitted from January 15, 1982 through June 21, 1982 in compliance with the adjusters' numerous requests for various documents, payment should have been made within 90 days thereafter, or on or before September 21, 1982. Hence, when the assured file her complaint on December 15, 1982, her cause of action had a ready accrued.
Zenith Insurance v CA (Morada/J. Villanueva ) Facts: o o o o Lawrence Fernandez insured his car for own damage under a private car policy with Zenith Insurance Corp. The car figured in an accident and suffered actual damages in the amount of P3,640 After allegedly bin given a run around by Zenith for 2 months, Fernandez filed a complaint with the RTC for sum of money and damages. Zenith failed to present evidence and to appear in court after pre-trial. RC ruled in favor of Fernandez. CA affirmed.
Issue: W/N the award of moral and exemplary damages and attorneys fees in amounts more than that prayed for in the complaint was proper. Held: o Sec.244 of the Insurance Code provides that it is the duty of the Commissioner or the court to make a finding as to whether the payment of the insureds claim has been unreasonably denied or withheld; and in the affirmative, the insurance company shall be adjudged to pay damages. Damages that may be awarded are: 1) attorneys fees; 2) other expenses incurred by the insured by reason of such unreasonable denial or withholding of payment; 3)interest at twice the ceiling prescribed by the Monetary Board on the amount of the claim due; and 4) the amount of the claim.
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o The act of petitioner of delaying payment for 2 months is not so wanton or malevolent as to justify the award of P20,000 as moral damages, considering the actual damage was only P3,460. The reason for the delay was that the parties could not agree as to the amount of actual damage. Award reduced to P10,000 (same as the amount prayed for). Exemplary damages not warranted since the insurance company did not act in a wanton, oppressive, or malevolent manner. P5,000 for attorneys fees is proper although plaintiff only asked for P3,000, considering that there were other petitions filed by Fernandez in connection with this case. As to actual damages, affirmed.
o o o
Finman General Assurance Corporation vs. CA (Rivas) FACTS: USIPHIL INCORPORATED obtained a fire insurance policy from FINMAN GENERAL ASSURANCE CORPORATION It is stipulated in the policy that the insurer will indemnify the insured for any damage to or loss of said property arising from fire. Usiphil filed with Finman na insurance claim amounting to P987,000 for the loss of the insured properties due to fire Finamn appointed HH BAYNE to undertake the valuation and adjustment of the loss Usiphil submitted a Sworn Statement of Loss and Formal Claim and a Proof of Loss. Finance Manager of Finman and Accounting Manager of Usiphil signed a Statement/Agreement which indicated that the amount due to Usiphil was P842,000 FINMAN: refused to pay the claim of Usiphil because it failed to comply with Policy Condition No. 13 on the submission of certain documents top rove the loss RTC and CA: rule din favor of the insured Usiphil nad ordered the insure to pay 24% interest per annum, ISSUE: W/N Usiphil complied with Policy Condition No. 13 HELD: YES! A perusal of the records shows that Usiphil, after the occurrence of the fire, immediately notified Finman and submitted: (1) Sworn Statement of Loss and Formal Claim and (2) Proof of Loss. The submission of these documents, to the Courts mind. Constitutes substantial compliance with the Policy Condition Also, Finman itself acknowledged its liability when its Finance Manager signed the document indicating that the amount due to Usiphil is P842,000 As to the payment of the 24% interest per annum, it is authorized by Sections 243 and 244 of the Insurance Code. o Section 244, a prima facie evidence of unreasonable delay in payment of the claim is created by the failure of the insurer to pay the claim within the time fixed in both Sections 243 and 244. Section 29 of the insurance policy itself provides for the payment of interest if within 30 days after the proof of loss and ascertainment of the loss made in an agreement, the insurer failed to pay the insured.
Almendras Mining Corp V Office Of The Insurance Commission (Fernandez) Facts: Marine cargo vessel LCT Don Paulo, while on a voyage from Davao to Bataan, was forced aground somewhere in the vicinity of Tablas Island, Romblon after it was hit by strong winds and tidal waves brought by typhoon Nitang. Thereafter, Almendras Mining Corp (Almendras), as owner of the vessel, filed a corresponding Marine Protest. It also informed the vessels insurer Country Bankers Insurance Corp (Country Bankers) of its intention to file a provisional claim for indemnity for damages sustained by the vessel. Insurers liability was estimated at P2.2 M or the equivalent of 70% of all expenses necessary for the repair of the vessel. Country Bankers approved the estimate. Thereafter, repair on the vessel commenced. Repairs incurred delay. It was explained that this was due to the unavailability of spare parts. Notwithstanding the explanation, Almendras filed an administrative complaint against Country Bankers before the Insurance Commissioner seeking: revocation of Country Bankers certificate of authority to engage in the insurance business; immediate completion of repairs, and; damages. Later, Country Bankers agreed to replace the 4 damaged engines. This entailed additional costs but Almendras agreed to share in the costs upon inspection of the proposed replacement engine. Inspection of the engine was made. Almendras said that the engine was not at par with the vessels original engine. So Almendras just demanded a cash settlement for its claim. Thereafter, Almendras filed a separate civil action for damages with the Pasay City RTC.
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Parties also agreed to submit the administrative case before the Insurance Commission for resolution on the single issue of whether Country Bankers Certificate of Authority to engage in insurance business should be revoked. Insurance Commissioner dismissed complaint. It was found that the insurers failure to promptly settle the claim was attributable to the insureds act of insisting a cash settlement. It was also said that the alleged delay was not unreasonable. MR was filed but was denied. Almendras filed Certiorari questioning the Insurance Commissions decision.
Issue: Was it proper to appeal the order of the Insurance Commission to the court or should it be to the Secretary of Finance? Held: Secretary of Finance. Court has no jurisdiction to try the matter. Insurance Commission is an administrative agency vested with regulatory and adjudicatory power. Among such regulatory powers is the authority to issue and revoke a certificate of authority. Under Sec 414 of the Insurance Code, decisions of the Insurance Commissioner, in the exercise of its regulatory functions, are appealable to the Secretary of Finance. While Sec 416 provides that the decisions of the Insurance Commissioner, in the exercise of its adjudicatory functions, is appealable to the CA. While the initial prayer of Almendras involved the exercise of adjudicatory functions (performance and satisfaction of claim), the parties later agreed to limit the issue on the revocation/suspension of license which involved the exercise of a regulatory function. The Order, therefore, by the Insurance Commissioner is appealable to the Secretary of Finance. And it is to be noted that Almendras chose to litigate the substantive aspect of its claim before a the courts (when it filed a civil case before the RTC) Philamlife v Ansaldo (Gana) FACTS PATERNO sent a letter to the INSURANCE COMMISSIONER o Alleging certain problems encountered by agents, supervisors, managers and public consumers of PHILAMLIFE because of certain practices of the said company and o Praying that the provisions on charges and fees stated in the Contract of Agency executed between PHILAMLIFE and its agents be declared null and void o Asking that amounts of such charges and fees already deducted by PHILAMLIFE be reimbursed INSURANCE COMMISSIONER asked PHILAMLIFE to comment on letter PHILAMLIFE refused alleging that INSURANCE COMMISSIONER does not have jurisdiction over the subject matter of the letter-complaint INSURANCE COMMISSIONER nevertheless set the case for hearing and sent a subpoena to the officers of PHILAMLIFE W/N THE INSURANCE COMMISSIONER HAS JURISDICTION OVER THE MATTER NO, INSURANCE COMMISSIONER HAS NO JURISDICTION General authority of INSURANCE COMMISSIONER is provided in Article 414 of the Insurance Code, The Insurance Commissioner shall have to duty to see that all laws relating to insurance x x x are faithfully executed Moreover, Article 415 also provides for the specific powers of the INSURANCE COMMISSIONER, The INSURANCE COMMISSIONER is hereby authorized to impose upon insurance companies x x x for willful refusal to comply with any provision of this Code Reading these two provisions together shows that the INSURANCE COMMISSIONER has the authority to regulate the business of insurance The business of insurance is defined in Section 2 of the Code, The term doing an insurance business x x x shall include a) making or proposing to make, as insurer, any insurance contract; b) making or proposing to make as surety any contract of suretyship as a vocation x x x; c) doing any kind of business, including a reinsurance business x x x; d) doing or proposing to do any business in substance equivalent x x x In the case at bar, the subject matter brought to the attention of the INSURANCE COMMISSIONER is the Contract of Agency executed between PHILAMLIFE and its agents This Contract of Agency cannot be said to be included within the meaning of doing an insurance business under Section 2 of the Insurance Code Hence, the INSURANCE COMMISSIONER does not have jurisdiction over the matter
ISSUE HELD RATIO
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Insurance Law Digests

Prof. Jose B. Quimson

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3) Qua Chee Gan v Law Union (Calinisan)

Insurance Law Digests

4) TY v FILIPINAS COMPANIA DE SEGUROS (Fernandez) Facts:

Insurance Law Digests

5) Phil American Life Insurance v Ansaldo (Gana) FACTS

ISSUE HELD RATIO

Insurance Law Digests

6) Philamcare Health Systems, Inc. vs. Court of Appeals (Lopez) Facts: -

7) White Gold vs. Pioneer Insurance (Mendiola) Facts:

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Issue: Is Steamship Mutual engaged in insurance business? Held:

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ISSUE HELD RATIO

Gercio vs. Sun Life Assurance Co. of Canada (Mendiola)

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28) Fieldmens Insurance v De Songco (Fernandez)

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FACTS ISSUE HELD RATIO

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NEW LIFE (See photocopy) (laptop crashed) (Calinisan)

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Philamlife v Auditor General (Cruz)

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