INSURANCE (ATTY.

QUIMSON)
MA. ANGELA AGUINALDO
ATENEO LAW 2010
These provisions would have been fatal to any attempt at recovery even by
D. P. Dunn, if the ownership of the property had continued in him up to the
time of the loss; and as regards Harding, an additional insuperable obstacle
is found in the fact that the ownership of the property had been charged,
prior to the loss, without any corresponding change having been effected in
the policy of insurance. In section 19 of the Insurance Act we find it stated
that "a change of interest in any part of a thing insured unaccompanied by
a corresponding change of interest in the insurance, suspends the
insurance to an equivalent extent, until the interest in the thing and the
interest in the insurance are vested in the same person." Again in section
55 it is declared that "the mere transfer of a thing insured does not transfer
the policy, but suspends it until the same person becomes the owner of
both the policy and the thing insured."
Undoubtedly these policies of insurance might have been so framed as to
have been "payable to the Sane Miguel Brewery, mortgagee, as its interest
may appear, remainder to whomsoever, during the continuance of the risk,
may become the owner of the interest insured." (Sec 54, Act No. 2427.)
Such a clause would have proved an intention to insure the entire interest
in the property, not merely the insurable interest of the San Miguel
Brewery, and would have shown exactly to whom the money, in case of
loss, should be paid. But the policies are not so written.
GREPALIFE V. CA 316 SCRA 677
FACTS:
1. A contract of group life insurance was executed between petitioner Great
Pacific Life Assurance Corporation (hereinafter Grepalife) and Development
Bank of the Philippines (hereinafter DBP). Grepalife agreed to insure the
lives of eligible housing loan mortgagors of DBP.
2. Leuterio, a physician and a housing debtor of DBP applied for
membership in the group life insurance plan. In an application form, Dr.
Leuterio answered questions concerning his health condition as follows:
7. Have you ever had, or consulted, a physician for a heart condition, high
blood pressure, cancer, diabetes, lung; kidney or stomach disorder or any
other physical impairment?
Answer: No. If so give details_ _ _ _ _ _ _ _ _ _ _ _ _.
8. Are you now, to the best of your knowledge, in good health?
Answer: [x] Yes [ ] NO. 4

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3. Grepalife issued Certificate No. B18558, as insurance coverage of Dr.

Leuterio, to the extent of his DBP mortgage indebtedness amounting to
eightysix thousand, two hundred (P86,200.00) pesos.
4. Dr. Leuterio died due to "massive cerebral hemorrhage." Consequently,
DBP submitted a death claim to Grepalife. Grepalife denied the claim
alleging that Dr. Leuterio was not physically healthy when he applied for an
insurance coverage. Grepalife insisted that Dr. Leuterio did not disclose he
had been suffering from hypertension, which caused his death. Allegedly,
such nondisclosure constituted concealment that justified the denial of the
claim.
5. The widow of the late Dr. Leuterio, respondent Medarda V. Leuterio, filed
a complaint During the trial, Dr. Hernando Mejia, who issued the death
certificate, was called to testify. Dr. Mejia's findings, based partly from the
information given by the respondent widow, stated that Dr. Leuterio
complained of headaches presumably due to high blood pressure. The
inference was not conclusive because Dr. Leuterio was not autopsied,
hence, other causes were not ruled out.
6. The trial court rendered a decision in favor of respondent widow and
against Grepalife.
HELD:
The rationale of a group insurance policy of mortgagors, otherwise known
as the "mortgage redemption insurance," is a device for the protection of
both the mortgagee and the mortgagor. On the part of the mortgagee, it
has to enter into such form of contract so that in the event of the
unexpected demise of the mortgagor during the subsistence of the
mortgage contract, the proceeds from such insurance will be applied to the
payment of the mortgage debt, thereby relieving the heirs of the mortgagor
from paying the obligation. 7 In a similar vein, ample protection is given to
the mortgagor under such a concept so that in the event of death; the
mortgage obligation will be extinguished by the application of the insurance
proceeds to the mortgage indebtedness. Consequently, where the
mortgagor pays the insurance premium under the group insurance policy,
making the loss payable to the mortgagee, the insurance is on the
mortgagor's interest, and the mortgagor continues to be a party to the
contract. In this type of policy insurance, the mortgagee is simply an
appointee of the insurance fund, such loss payable clause does not make
the mortgagee a party to the contract.
Sec. 8 of the Insurance Code provides:
Unless the policy provides, where a mortgagor of property effects insurance
in his own name providing that the loss shall be payable to the mortgagee,
or assigns a policy of insurance to a mortgagee, the insurance is deemed to
be upon the interest of the mortgagor, who does not cease to be a party to
the original contract, and any act of his, prior to the loss, which would
otherwise avoid the insurance, will have the same effect, although the
property is in the hands of the mortgagee, but any act which, under the
contract of insurance, is to be performed by the mortgagor, may be
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performed by the mortgagee therein named, with the same effect as if it

had been performed by the mortgagor.
The insured private respondent did not cede to the mortgagee all his rights
or interests in the insurance, the policy stating that: "In the event of the
debtor's death before his indebtedness with the Creditor [DBP] shall have
been fully paid, an amount to pay the outstanding indebtedness shall first
be paid to the creditor and the balance of sum assured, if there is any, shall
then be paid to the beneficiary/ies designated by the debtor." When DBP
submitted the insurance claim against petitioner, the latter denied payment
thereof, interposing the defense of concealment committed by the insured.
Thereafter, DBP collected the debt from the mortgagor and took the
necessary action of foreclosure on the residential lot of private respondent.
And since a policy of insurance upon life or health may pass by transfer, will
or succession to any person, whether he has an insurable interest or not,
and such person may recover it whatever the insured might have
recovered, the widow of the decedent Dr. Leuterio may file the suit against
the insurer, Grepalife.
Sec. 9. If an insurer assents to the transfer of an insurance from a
mortgagor to a mortgagee, and, at the time of his assent, imposes further
obligation on the assignee, making a new contract with him, the act of the
mortgagor cannot affect the rights of said assignee.
TRANSFER OF INSURANCE WITH APPROVAL OF INSURER
Generally, where the mortgagor effects insurance in his own name
payable to the mortgagee, or assigns in his policy to a mortgagee, the
mortgagor doesn't cease to be a party to the insurance contract and his
acts still affect the policy
Under this provision, where an insurer assents to the transfer of an
insurance from a mortgagor to a mortgagee, and at the time of his assent,
imposes new obligations to the assignee, a new and distinct consideration
passes from the mortgagee to the insurer and a new contract is created
between them. In this scenario, the mortgagor cannot anymore affect the
rights of the assigneemortgagee.
INSURABLE INTEREST
Sec. 10. Every person has an insurable interest in the life and health:
(a) Of himself, of his spouse and of his children;
(b) Of any person on whom he depends wholly or in part for education or
support, or in whom he has a pecuniary interest;
(c) Of any person under a legal obligation to him for the payment of
money, or respecting property or services, of which death or illness might
delay or prevent the performance; and
(d) Of any person upon whose life any estate or interest vested in him
depends.
INSURABLE INTEREST
A person has insurable interest in the subject matter insured where he
has such a relation or connection with, or concern in, it that he will derive
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pecuniary benefit or advantage from its preservation and will suffer

pecuniary loss or damage from its destruction, termination, or injury by the
happening of the event insured against
NECESSARY TO VALIDITY OF INSURANCE CONTRACT
Insurable interest essential to the validity and enforceability of the
insurance contract
A policy issued to a person without interest in the subject matter is a
mere wager policy or contract
Insurable interest exists when there is reasonable ground, founded on the
relations of the parties, either pecuniary or contractual or by blood or
affinity, to expect some kind of benefit or advantage from the continuance
of the life of the insured
IN ONES OWN LIFE
A person has an unlimited interest in his own life which will support a
policy taken by him in favor of himself, his estate, or in favor of another
person, regardless of whether or not the latter has an insurable interest
provided, in case the beneficiary is without insurable interest, that there is
no bad faith or fraud
IN ONES SPOUSES AND CHILDREN
The law presumes that a person has an insurable interest in the life of his
spouse and his children
The law makes no qualification
BASED ON PECUNIARY INTEREST
Mere blood relationship doesn't create an insurable interest in the life of
another
The existence of relationship by affinity doesn't constitute insurable
interest
The abovementioned persons may have insurable interest if there exists
pecuniary interest between them
A person can have an insurable interest with any other person or stranger
as long as he has come pecuniary interest in the latters life
BASED ON SOME LEGAL OBLIGATION
A person has an insurable interest in the life of another who is under a
legal obligation to him for the payment of money, or respecting property or
services an whose death or illness might delay or prevent the performance
of the obligation
A person who has a commercial or contractual relationship with another
has an insurable interest in the latter if his death will delay or prevent the
performance by the latter of some legal obligation in favor of the former
WHERE ESTATE OR INTEREST IS DEPENDENT ON THE LIFE OF THE
INSURED
Every person has an insurable interest in the life and health of any person
upon whose life any estate or interest vested in the person taking the
policy depends
WHEN DOES INSURABLE INTEREST MUST EXIST

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 When the insurance takes effect but need not exist after or when the loss
occurs or at the time of the death of the insuredthis is because life
insurance is not a contract of indemnity but is meant to give financial
security either to the insured himself or his beneficiaries
COL. C. CASTRO V. INSURANCE COMMISSIONER
GR 55836, FEBRUARY 16, 1981
FACTS:
Col. Castro was the employer of the deceased. While the deceased was still
living, he worked as the family driver of Castro. Castro took a life insurance
policy on behalf of the deceased and when the latter died, Castro tried to
claim the proceeds from the insurance company. The company denied the
claim, maintaining that the policy taken was null and void and thus, Castro
is not entitled to any proceeds. This position was sustained by the court
and thus, Castros complaint was dismissed.
POINTS RAISED BY PETITIONER:
1. An employer has an insurable interest in the life of his employee
2. Insurance company cannot deny liability under the policy
3. There is no legal effect on the act of the insurance company to remit a
refund check
POSITION TAKEN BY INSURANCE COMPANY: Castro doesn't have any
insurable interest on the life of Terrenal.
A life insurance policy was taken for Terrenal by Castro for a period of 20
years who was only his driver. Castro failed to establish that he had a legal
claim over Terrenal for services during the period of 20 years.
Mere existence of employeremployee relationship is not enough to
establish insurable interest. The employer should show that he would suffer
economic loss in case the employee dies.
AN EXAMPLE WHEREIN THERE IS ECONOMIC LOSS TO THE EMPLOYER IF
AN EMPLOYEE IS PLACED IN HARMS WAY OR DIES
Employer sends his employee abroad to take postgraduate studies.
Together with paying his tuition, the employer pays for the transportation,
board and lodging, while still continuing to pay the employees salary.
LINCOLN NATIONAL LIFE V. SAN JUAN
CAGR NO. 3458688, MAY 27, 1971
FACTS:
Plaintiffs seek the rescission of five insurance policies of defendants on the
ground that there was concealment of material facts and false
representations. Lack of insurable interest was also cited as a ground for
rescission by the plaintiffs. The defendants denied these allegations
however. The trial court adjudged the case in favor of the plaintiffs,
declaring the policies null and void.
HELD:
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The five insurance policies were in effect wagering or highly speculative

contracts of insurance, which are void for reasons of public policy and not
being based on the existence of insurable interest on the part of appellant
Luis Parco on the life of San Juan, the insurance having been brought about
and procured through false affirmations or representations and
concealment of material points.
The spouses didn't have any insurable interest on the life of Mysterioso San
Juan, who was just a farm laborer of the spouses. There is no evidence
showing that there was economic loss to be incurred by the spouses in case
of death of San Juan. The beneficiaries named in the policies were not even
the children of San Juan.
*Note:Insurance companies rescind extrajudicially. They just write a letter
and then issue a check, to accompany the same. They can only do this
though before a claim is filed.
Sec. 11. The insured shall have the right to change the beneficiary he
designated in the policy, unless he has expressly waived this right in said
policy.
BENEFICIARY, DEFINED
Person, whether natural or juridical, for whose benefit the policy is issued
and is the recipient of the proceeds of the insurance
LIMITATIONS AND DISQUALIFICATIONS
A person may take a life insurance on his life payable to any person called
a beneficiary even though said beneficiary is a stranger and has no
insurable interest in the insureds life
However, any person who is forbidden from receving any donation under
Article 739 CC cannot be named as beneficiary of a life insurance policy by
the person who cannot make any donation to him
WHEN NO BENEFICIARY DESIGNATED
In case of failure to designate a beneficiary or where such designation is
void, the proceeds of the insurance will go the estate of the insured
INSULAR LIFE V. EBRADO NARIO V. PHILAMLIFE 20 SCRA 434
FACTS:
Alejandra Nario took a life insurance policy on her life, designated her
husband and son as the irrevocable beneficiaries. She then applied for a
loan on said policy which she was entitled to after the policy has been in
force for three years, for the purpose of using the proceeds to defray the
school expenses of her son. The application bore twice the signature of her
husband, one for being an irrevocable beneficiary and two, for being the
legal administrator of the sons properties. The application was however
denied as it maintained that it must also be authorized by the court in
competent guardianship proceedings.
HELD:

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The proposed transactions in question constitute acts of disposition or

alienation of property rights and not merely of management or
administration because they involve the incurring or termination of the
contractual obligations.
It appearing that the minors beneficiarys vested interest or right on the
policy exceeds P2000 and as there was no court petition and bond, the
consent given by the father for and in behalf of the minor son, without
court authorization, to the policy loan application and the surrender of such
policy, was insufficient and ineffective, and Philamlife was justified in
disapproving the proposed transactions in question.
Sec. 12. The interest of a beneficiary in a life insurance policy shall be
forfeited when the beneficiary is the principal, accomplice, or accessory in
willfully bringing about the death of the insured; in which event, the
nearest relative of the insured shall receive the proceeds of said insurance
if not otherwise disqualified.
WHEN BENEFICIARY FORFEITS INSURANCE PROCEEDS
When the beneficiary is the principal, accomplice or accessory in willfully
bringing about the death of the insured, such beneficiary forfeits the right
to receive the proceeds of the life insurance policy
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.
INSURABLE INTEREST IN PROPERTY
Exists as long as such interest, whether real or personal, or any relation
thereto or liability thereof, is of such a nature that a contemplated peril
might directly damnify the insured
Where the interest of the insured in, or his relation to, the property is
such that, he will be benefited by the continued existence or will suffer a
direct pecuniary loss by its destruction, the contract of insurance will be
upheld
HARVARDIAN COLLEGE V. COUNTRY BANKERS 1 CARA 1; 83 OG (NO. 31)
FACTS:
Harvardian College is a family corporation owned by spouses Yap and their
children. They insured the school building, per advice of an insurance
agent. During the effectivity of the policy, the school building was totally
burned. They tried to claim from the insurance company but they were
denied on the ground that the building and land it was constructed on was
owned by Ildefonso Yap and not by Harvadian Colleges.
HELD:
Any title to, or interest in property, legal or equitable, will support a
contract of fire insurance, and even when the insured had no title the
contract will be upheld if his interest, or his relation to, the property is such
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that he will, or may be benefited by its continued existence or suffer a

direct pecuniary loss from its destruction or injury.
The plaintiff in this case has long been using and possessing the building
for several years with both the consent and knowledge of Ildefonso Yap. As
such, it is reasonable to assume that had the building not been burned,
plaintiff would have been allowed the continued use of the same in its
operations of an educational institution.
FILIPINO MERCHANTS V. CA 179 SCRA 638
FACTS:
A consignee of goods aboard a vessel insured the goods. Due to the
damage incurred by the goods during the voyage, consignee now seeks
proceeds from the insurance company. This led to litigation as the company
failed to pay him indemnity.
HELD:
Contracts of insurance are contracts of indemnity upon the terms and
conditions specified in the policy. The agreement has the force of law
between the parties. The terms of the policy constitute the measure of the
insurers liability. If such terms are clear and unambiguous, they must be
taken and understood in their plain, ordinary and popular sense.
Anent the issue of insurable interest, the consignee had an insurable
interest in insuring the goods. In principle, anyone has an insurable interest
in property who derives a benefit from its existence or would suffer loss
from its destruction whether he has or has not any title in, lien upon or
possession of the property. insurable interest in property may consist in an
existing interest, an inchoate interest founded on an existing interest, or an
expectancy, coupled with an existing interest in that out of which the
expentancy arises. Herein, the consignee has an existing interest in the
goods insured. This insurable interest was grounded on a valid contract of
sale. This contract vested an equitable interest on the property being
shipped.
Sec. 14. An insurable interest in property may consist in:
(a) An existing interest;
(b) An inchoate interest founded on an existing interest; or
(c) An expectancy, coupled with an existing interest in that out of which the
expectancy arises.
LAMPANO V. JOSE 30 PHIL 537
FACTS:
Barreto constructed a house for Jose. During the construction of the house
and Joses disposition of the same, Barreto took an insurance policy on the
house. Subsequently, Jose sold the house to Lampano and there was still a
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remaining balance from the latter. On an unfortunate date however, the

house was destroyed by fire.
Lampano filed a complaint against Barreto and Jose. She asserted that
there was a verbal agreement between her and Jose that upon sale of the
house, the latter would deliver the insurance policy to her. She maintained
that Barreto and Jose don't have any right to the insurance policy anymore.
The trial court ruled in favor of Jose collectively. First, it ruled that Barreto
owed Jose the balance between the proceeds of the insurance policy and
the premium paid by him. Second, it ruled that Lampano pay the remaining
balance for the sale of the house to Jose.
HELD:
If Barreto had an insurable interest in the house, he could insure this
interest for his sole protection. The policy was in his name alone. It was,
therefore, a personal contract between him and the 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 extent and nature 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 known right and in his own interest doesn't in any way inure
to the benefit of another. This is the general rule prevailing in the US, and
this is no different from our own jurisdiction.
A contract of insurance made for insurers indemnity only, as where there
was no agreement, express or implied, that it shall be for the benefit of a
third person, doesn't attach to or run with the title to the insured property
on a transfer thereof personal as between the insurer and insured. In such
case, strangers to the contract cannot acquire in their own right any
interest in the insurance money, except through an assignment or some
contract with which they are connected.
In the case at bar, Barreto assumed the responsibility for the insurance.
The premiums were paid by him without any agreement or right to recoup
the amount paid therefore should no loss result to the property. It would
not, therefore, be in accordance with law and his contractual obligations to
compel him to account for the insurance money, or any part thereof, to the
plaintiff, who assumed no risk whatsoever.
That he had insurable interest in the house, there is no question. Barreto
constructed the house, furnished all materials and supplies, and insured it
after it had been completed.
Sec. 15. A carrier or depository of any kind has an insurable interest in a
thing held by him as such, to the extent of his liability but not to exceed
the value thereof.
LOPEZ V. DEL ROSARIO 44 PHIL 98
FACTS:
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Del Rosario was engaged in the business of warehouse keeping. She owned
a bonded warehouse, wherein she stored copra and other merchandise.
One of the people who stored copra in her warehouse was Lopez. Del
Rosario procured many insurance policies, covering the warehouse and the
merchandise it stored. On an unfortunate date however, the warehouse
together with majority of the had transferred his insurable interest by
conveying the insurance policy to another to secure certain debts due.
Third, preceding immediately the fire, he willfully stored the gasoline barrel
inside the building. Plaintiff denied this. He maintained that he has been
acquitted of the charges of arson earlier on and that he was able to prove
loss due to the fire.
HELD:
With reference to the second assigned error, defendant contended that the
execution of the chattel mortgage without the knowledge and consent of
the insurance company annulled the insurance policy. However, upon
reading the policy, there was no provision prohibiting the plaintiff from
placing a mortgage over the property insurance. And even if there was an
intended alienation clause, it is to be noted that mere execution of a chattel
mortgage and that alienation within the meaning of the insurance law until
the mortgagee acquires a right to take possession by default under the
terms of the mortgager. No right is claimed to have accrued in this case.
Sec. 21. A change in interest in a thing insured, after the occurrence of an
injury which results in a loss, does not affect the right of the insured to
indemnity for the loss.
Sec. 22. A change of interest in one or more several distinct things,
separately insured by one policy, does not avoid the insurance as to the
others.
Sec. 23. A change on interest, by will or succession, on the death of the
insured, does not avoid an insurance; and his interest in the insurance
passes to the person taking his interest in the thing insured.
DEATH OF INSURED DOESN'T AVOID THE INSURANCE ON PROPERTY
An insurance policy on property taken by the insured who dies doesn't
affect the property except that his interest passes to his heir or legal
representative
The heir or legal representative may continue the insurance policy on the
property of the decedent by paying the premiums thereof and will receive
the proceeds of the insurance in case loss occurs
Sec. 24. A transfer of interest by one of several partners, joint owners, or
owners in common, who are jointly insured, to the others, does not avoid
an insurance even though it has been agreed that the insurance shall cease
upon an alienation of the thing insured.
Sec. 25. Every stipulation in a policy of insurance for the payment of loss
whether the person insured has or has not any interest in the property

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insured, or that the policy shall be received as proof of such interest, and
every policy executed by way of gaming or wagering, is void.
VOID STIPULATIONS IN PROPERTY INSURANCE
1. The following stipulations in a contract are void
a. Stipulation for the payment of loss whether the person insured
has or has no interest in the property insured
b. Stipulation that the policy shall be received as proof of such interest
2. Every policy executed by way of gaining or wagering is likewise void
CHA V. CA 277 SCRA 690
FACTS:
Petitionerspouses Nilo Cha and Stella UyCha, as lessees, entered into a
lease contract with private respondent CKS. One of the conditions of the
lease was that the lessee wouldn't take any insurance policy on any
chattels or merchandise placed in the stalls, etc. without first obtaining the
consent of the lessor. Notwithstanding this agreement, the spouses insured
their merchandise. Days before the expiration of the lease, a fire broke out
and destroyed the goods. CKS upon knowing of the insurance policy, sought
the proceeds of the same.
HELD:
Sec. 18 of the Insurance Code provides:
Sec. 18. 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.
A nonlife insurance policy such as the fire insurance policy taken by
petitioner spouses over their merchandise is primarily a contract of
indemnity. Insurable interest in the property insured must exist at the time
the insurance takes effect and at the time the loss occurs. The basis of such
requirement of insurable interest in property insured is based on sound
public policy: to prevent a person from taking out an insurance policy on
property upon which he has no insurable interest and collecting the
proceeds of said policy in case of loss of the property. In such a case, the
contract of insurance is a mere wager which is void under Section 25 of the
Insurance Code, which provides:
Sec. 25. Every stipulation in a policy of Insurance for the payment of loss,
whether the person insured has or has not any interest in the property
insured, or that the policy shall be received as proof of such interest, and
every policy executed by way of gaming or wagering, is void.
In the present case, it cannot be denied that CKS has no insurable interest
in the goods and merchandise inside the leased premises under the
provisions of Section 17 of the Insurance Code which provide:
Sec. 17. The measure of an insurable interest in property is the extent to
which the insured might be damnified by loss of injury thereof.
Therefore, respondent CKS cannot, under the Insurance Code, a special
law, be validly a beneficiary of the fire insurance policy taken by the
petitionerspouses over their merchandise. This insurable interest over said
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merchandise remains with the insured, the Cha spouses. The automatic
assignment of the policy to CKS under the provision of the lease contract
previously quoted is void for being contrary to law and/or public policy. The
proceeds of the fire insurance policy thus rightfully belong to the spouses
Nilo Cha and Stella UyCha (herein copetitioners). The insurer (United)
cannot be compelled to pay the proceeds of the fire insurance policy to a
person (CKS) who has no insurable interest in the property insured.
CONCEALMENT
Sec. 26. A neglect to communicate that which a party knows and ought to
communicate, is called a concealment.
PROVISIONS ON CONCEALMENT
The provisions on concealment, representation, and warranties are based
on one of the fundamental characteristics of an insurance contractthat it
be of perfect good faith on the part of both parties
CONCEALMENT
Neglect to communicate that which a party knows or ought to
communicate, whether intentional or unintentional
WHEN IT EXISTS
Concealment exists where the assured had knowledge of a fact material
to the risk, and honesty, good faith, and fair dealing requires that he should
communicate it to the assurer, but he designedly and intentionally
withholds the same Sec. 27. A concealment whether intentional or
unintentional entitles the injured party to rescind a contract of insurance.
(As amended by Batasang Pambansa Blg. 874)
ARGENTE V. WEST COAST LIFE
51 PHIL 725
FACTS:
Bernardo Argente signed an application for joint insurance with his wife in
the sum of P2,000. The wife, Vicenta de Ocampo, signed a like application
for the same policy. Both applications, with the exception of the names and
the signatures of the applicants, were written by Jose Geronimo del
Rosario, an agent for the West Coast Life Insurance Co. But all the
information contained in the applications was furnished the agent by
Bernardo Argente. The spouses were then medically examined by the
doctor. All information was written by the doctor with some being furnished
by Bernardo.
The spouses then asked for the increase of the amount covered by the
policy. They were issued a temporary insurance policy and the permanent
one wasn't delivered until the first payment of premium of the spouses.
Days after, Vicenta died of cerebral apoplexy. Bernardo sought the proceeds
but was denied on the ground of concealment.
The court found from the evidence that the representations made by
Bernardo Argente and his wife in their applications to the defendant for life
insurance were false with respect to their estate of health during the period
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of five years preceding the date of such applications, and that they knew
the representations made by them in their applications were false. The
court further found from the evidence that the answers given by Bernardo
Argente and his wife at the time of the medical examination by Doctor Sta.
Ana were false with respect to the condition of their health at that time and
for a period of several years prior thereto. Based on these findings which
must here be accepted since the stenographic transcript is incomplete, the
question arises as to the estate of the law in relation thereto.
HELD:
One ground for the rescission of a contract of insurance under the
Insurance Act is "a concealment," which in section 25 is defined as "A
neglect to communicate that which a party knows and ought to
communicate."
In an action on a life insurance policy where the evidence conclusively
shows that the answers to questions concerning diseases were untrue, the
truth of falsity of the answers become the determining factor. In the policy
was procured by fraudulent representations, the contract of insurance
apparently set forth therein was never legally existent. It can fairly be
assumed that had the true facts been disclosed by the assured, the
insurance would never have been granted.
Concealment 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, but he designated and intentionally with
holds the same.
Another rule is that if the assured undertakes to state all the circumstances
affecting the risk, a full and fair statement of all is required.
The basis of the rule vitiating the contract in case of concealment is that it
misleads or deceives the insurer into accepting the risk, or accepting it at
the rate of premium agreed upon. The insurer, relying upon the belief that
the assured will disclose every material within his actual or presumed
knowledge, is misled into a belief that the circumstance withheld does not
exist, and he is thereby induced to estimate the risk upon a false basis that
it does not exist. The principal question, therefore, must be, Was the
assurer misled or deceived into entering a contract obligation or in fixing
the premium of insurance by a withholding of material information of facts
within the assured's knowledge or presumed knowledge?
It therefore follows that the assurer in assuming a risk is entitled to know
every material fact of which the assured has exclusive or peculiar
knowledge, as well as all material facts which directly tend to increase the
hazard or risk which are known by the assured, or which ought to be or are
presumed to be known by him. And a concealment of such facts vitiates the
policy. "It does not seem to be necessary . . . that the . . . suppression of
the truth should have been willful." If it were but an inadvertent omission,
yet if it were material to the risk and such as the plaintiff should have
known to be so, it would render the policy void. But it is held that if untrue
or false answers are given in response to inquiries and they relate to
Page 13 of 26

material facts the policy is avoided without regard to the knowledge or

fraud of assured, although under the statute statements are
representations which must be fraudulent to avoid the policy. So under
certain codes the important inquiries are whether the concealment was
willful and related to a matter material to the risk.
SATURNINO V. PHILAMLIFE
7 SCRA 316
FACTS:
It appears that two months prior to the issuance of the policy to her,
Saturnino was operated on for cancer, involving complete removal of the
right breast, including the pectoral muscles and the glands found in the
right armpit. She stayed in the hospital for a period of eight days, after
which she was discharged, although according to the surgeon who operated
on her she could not be considered definitely cured, her ailment being of
the malignant type.
Notwithstanding the fact of her operation Estefania A. Saturnino did not
make a disclosure thereof in her application for insurance. On the contrary,
she stated therein that she did not have, nor had she ever had, among
other ailments listed in the application, cancer or other tumors; that she
had not consulted any physician, undergone any operation or suffered any
injury within the preceding five years; and that she had never been treated
for nor did she ever have any illness or disease peculiar to her sex,
particularly of the breast, ovaries, uterus, and menstrual disorders. The
application also recites that the foregoing declarations constituted "a
further basis for the issuance of the policy."
The policy sued upon is one for 20year endowment nonmedical insurance.
This kind of policy dispenses with the medical examination of the applicant
usually required in ordinary life policies. However, detailed information is
called for in the application concerning the applicant's health and medical
history. The written application in this case was submitted by Saturnino and
the policy was issued on the same day, upon payment of the first year's
premium. On a later date, Saturnino died of pneumonia, secondary to
influenza. Appellants here, who are her surviving husband and minor child,
respectively, demanded payment of the face value of the policy. The claim
was rejected and this suit was subsequently instituted.
HELD:
The question at issue is whether or not the insured made such false
representations of material facts as to avoid the policy. There can be no
dispute that the information given by her in her application for insurance
was false, namely, that she had never had cancer or tumors, or consulted
any physician or undergone any operation within the preceding period of
five years. Are the facts then falsely represented material? The Insurance
Law (Section 30) provides that "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 the communication is due, in forming his estimate
Page 14 of 26

of the proposed contract, or in making his inquiries." It seems to be the

contention of appellants that the facts subject of the representation were
not material in view of the "nonmedical" nature of the insurance applied
for, which does away with the usual requirement of medical examination
before the policy is issued. The contention is without merit. If anything, the
waiver of medical examination renders even more material the information
required of the applicant concerning previous condition of health and
diseases suffered, for such information necessarily constitutes an important
factor which the insurer takes into consideration in deciding whether to
issue the policy or not. It is logical to assume that if appellee had been
properly apprised of the insured's medical history she would at least have
been made to undergo medical examination in order to determine her
insurability.
INSULAR LIFE V. FELICIANO
74 PHIL 468
FACTS:
Evaristo Feliciano, was suffering with advanced pulmonary tuberculosis
when he signed his applications for insurance with the petitioner. On that
same date Doctor Trepp, who had taken Xray pictures of his lungs,
informed the respondent Dr. Serafin D. Feliciano, brother of Evaristo, that
the latter "was already in a very serious ad practically hopeless condition."
Nevertheless the question contained in the application "Have you ever
suffered from any ailment or disease of the lungs, pleurisy, pneumonia or
asthma?" appears to have been answered , "No" And above the signature
of the applicant, following the answers to the various questions propounded
to him, is the following printed 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, and that to the best of my knowledge and belief I
am a proper subject for life insurance. (Exhibit K.)
The false answer above referred to, as well as the others, was written by
the Company's soliciting agent Romulo M. David, in collusion with the
medical examiner Dr. Gregorio Valdez, for the purpose of securing the
Company's approval of the application so that the policy to be issued
thereon might be credited to said agent in connection with the inter
provincial contest which the Company was then holding among its soliciting
agents to boost the sales of its policies. Agent David bribed Medical
Examiner Valdez with money which the former borrowed from the
applicant's mother by way of advanced payment on the premium, according
to the finding of the Court of Appeals. Said court also found that before the
insured signed the application he, as well as the members of his family, told
the agent and the medical examiner that he had been sick and coughing for
some time and that he had gone three times to the Santol Sanatorium and
had Xray pictures of his lungs taken; but that in spite of such information
the agent and the medical examiner told them that the applicant was a fit
subject for insurance.
Page 15 of 26

HELD:
When Evaristo Feliciano, the applicant for insurance, signed the application
in blank and authorized the soliciting agent and/or medical examiner of the
Company to write the answers for him, he made them his own agents for
that purpose, and he was responsible for their acts in that connection. If
they falsified the answers for him, he could not evade the responsibility for
he falsification. He was not supposed to sign the application in blank. He
knew that the answers to the questions therein contained would be "the
basis of the policy," and for that every reason he was required with his
signature to vouch for truth thereof.
Moreover, from the facts of the case we cannot escape the conclusion that
the insured acted in connivance with the soliciting agent and the medical
examiner of the Company in accepting the policies in question. Above the
signature of the applicant is the printed statement or representation: " . . .
I am a proper subject for life insurance." In another sheet of the same
application and above another signature of the applicant was also printed
this statement: "That the said policy shall not take effect until he first
premium has been paid and the policy as been delivered to and accepted
by me, while I am in good health." When the applicant signed the
application he was "having difficulty in breathing, . . . with a very high
fever." He had gone three times to the Santol Sanatorium and had Xray
pictures taken of his lungs. He therefore knew that he was not "a proper
subject for life insurance." When he accepted the policy, he knew that he
was not in good health. Nevertheless, he not only accepted the first policy
of P20,000 but then and there applied for and later accepted another policy
of P5,000.
It is unbelievable that the insured did not take the trouble to read the
answers contained in the photostatic copy of the application attached to
and made a part of the policy before he accepted it and paid the premium
thereon. He must have notice that the answers to the questions therein
asked concerning his clinical history were false, and yet he accepted the
first policy and applied for another.
Sec. 28. Each party to a contract of insurance must communicated to the
other, in good faith, all facts within his knowledge which are material to the
contract and as to which he makes no warranty, and which the other has
not the means of ascertaining.
FACTS TO BE COMMUNICATED: REQUISITES
Each party to an insurance contract must communicate to the other in
good faith
o Which are within his knowledge
o Which are material to the contract
o Which the other party has not the means of ascertaining
o As to which the party with the duty to communicate makes no warranty
MUST BE WITHIN PARTYS KNOWLEDGE
Page 16 of 26

 Concealment requires knowledge of the fact concealed by the party

charged with concealment
This must be proven by the party claiming the concealment
MUST BE MATERIAL TO THE CONTRACT
If the fact concealed is of such nature that had the insurer known of it, it
wouldn't have accepted the risk or would have demanded a higher
premium, or could have laid down different terms, or at least would have
made further inquiries before assuming the risk
NO MEANS OF ASCERTAINMENT BY THE OTHER PARTY
If such other party has means of ascertaining the nondisclosed fact like
public events under Section 32 or when the insurer had every means to
ascertain the nondisclosed fact the other facts already communicated but
neglects to make inquiries, the right of information is deemed waived under
Section 33
FIELDMANS INSURANCE V. SONGCO 25 SCRA 70
FACTS:
HELD:
Sec. 29. An intentional and fraudulent omission, on the part of one insured,
to communicate information of matters proving or tending to prove the
falsity of a warranty, entitles the insurer to rescind.
FACTS WHICH PROVE OR TEND TO PROVE FALSITY OF WARRANTY TO BE
DISCLOSED
Although facts or matters concerning which the insured has made a
warranty need not to be disclosed, the facts which prove or tend to prove a
falsity of the warrant must be communicated or disclosed
An intentional and fraudulent omission to communicate said facts which
proves or tends to prove the falsity of the warranty entitles the insurer to
rescind Sec. 30. Neither party to a contract of insurance is bound to
communicate information of the matters following, except in answer to the
inquiries of the other:
(a) Those which the other knows;
(b) Those which, in the exercise of ordinary care, the other ought to know,
and of
which the former has no reason to suppose him ignorant;
(c) Those of which the other waives communication;
(d) Those which prove or tend to prove the existence of a risk excluded by
a warranty, and which are not otherwise material; and
(e) Those which relate to a risk excepted from the policy and which are not
otherwise material.
Sec. 31. 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 the
communication is due, in forming his estimate of the disadvantages of the
proposed contract, or in making his inquiries.
TEST OF MATERIALITY
Page 17 of 26

 Materiality is determined not by the event but by the probable or

reasonable influence of the facts on the judgment of the parties in entering
into an insurance contract
SUN LIFE V. COURT OF APPEALS 245 SCRA 268
FACTS:
Bacani took an insurance policy on his life. He was issued Policy No. 3903
766X valued at P100,000.00, with double indemnity in case of accidental
death. The designated beneficiary was his mother, respondent Bernarda
Bacani. Insured Bacani died on a plane crash and his mother sought to
collect the proceeds of the policy but was denied on alleged concealment
done by her son. Petitioner discovered that two weeks prior to insureds
application for insurance, he was diagnosed with renal failure and was
subject to dialysis, etc.
HELD:
Section 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 and as to which he
makes no warranty, and which the other has no means of ascertaining. Said
Section provides:
A neglect to communicate that which a party knows and ought to
communicate, is called concealment.
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 Insurance Code, Sec. 31).
The terms of the contract are clear. The insured is specifically required to
disclose to the insurer matters relating to his health.
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 petitioner's action on his
application, either by approving it with the corresponding adjustment for a
higher premium or rejecting the same. Moreover, a disclosure may have
warranted a medical examination of the insured by petitioner in order for it
to reasonably assess the risk involved in accepting the application.
Anent the finding that the facts concealed had no bearing to the cause of
death of the insured, it is well settled that the insured need not die of the
disease he had failed to disclose to the insurer. It is sufficient that his non
disclosure misled the insurer in forming his estimates of the risks of the
proposed insurance policy or in making inquiries.
Sec. 32. Each party to a contract of insurance is bound to know all the
general causes which are open to his inquiry, equally with that of the other,
and which may affect the political or material perils contemplated; and all
general usages of trade.
CONSTRUCTIVE NOTICE TO BOTH PARTIES OF ALL GENERAL CAUSES AND
GENERAL USAGES OF TRADE
Page 18 of 26

1. The insured need not disclose public events such as that of a nation is at
war, or the laws and political conditions in other countries
2. He likewise need not communicate the general usages of trade like the
customs pertaining to maritime matters
Sec. 33. The right to information of material facts may be waived, either by
the terms of the insurance or by neglect to make inquiry as to such facts,
where they are distinctly implied in other facts of which information is
communicated.

WAIVER OF DISCLOSURE OF MATERIAL FACTS

Page 19 of 26

Sec. 83. An agreement not to transfer the claim of the insured against the
insurer after the loss has happened, is void if made before the loss except
as otherwise provided in the case of life insurance.
TRANSFER OF INSURANCE CLAIM
A prohibition against the transfer of the claim after the loss is against
public policy and therefore void because the rights of the parties are fixed
after the loss, and the assignment is merely a transfer of a chose of action
against the insurer
An exception to this is found in Section 173 which prohibits the transfer of
a fire insurance policy to any person or company who acts as an agent or
otherwise represents the issuing company and declares such transfer void
insofar as it may affect other creditors of the insured
Another exception is what is provided for in life insurance
Sec. 84. Unless otherwise provided by the policy, an insurer is liable for a
loss of which a peril insured against was the proximate cause, although a
peril not contemplated by the contract may have been a remote cause of
the loss; but he is not liable for a loss which the peril insured against was
only a remote cause.
CAUSE OF LOSS OF INSURANCE
Take note that insurer is not liable if the peril insured against is just the
remote cause
PROXIMATE CAUSE
In a natural and continuous sequence, unbroken by any efficient
intervening cause, produces an injury and without which the injury would
not have occurred
It is the efficient cause that others into motion, to which the loss is to be
attributed although other and incidental causes may be nearer in time to
the result and operate more immediately in producing the loss
Sec. 85. An insurer is liable where the thing insured is rescued from a peril
insured against that would otherwise have caused a loss, if, in the course of
such rescue, the thing is exposed to a peril not insured against, which
permanently deprives the insured of its possession, in whole or in part; or
where a loss is caused by efforts to rescue the thing insured from a peril
insured against.
PRINCIPLE OF PROXIMATE CAUSE EXTENDED TO LOSS INCURRED WHILE
SAVING THE THING INSURED
An insurer is liable where while saving the property from the peril insured
against that would otherwise cause the loss, the thing insured is damaged
However where the loss took place not in the course of such rescue from
the peril insured against, the insurer is not liable
Sec. 86. Where a peril is especially excepted in a contract of insurance, a
loss, which would not have occurred but for such peril, is thereby excepted
although the immediate cause of the loss was a peril which was not
excepted.

Page 20 of 26

WHEN EXCEPTED PERIL IS THE PROXIMATE CAUSE

The insurer isnt liable if the proximate cause is an excepted peril
although the immediate peril is a peril not excepted
An immediate cause is the cause or condition nearest to the time and
place of injury
Proximate cause is not equivalent to immediate cause
The insurer has the burden of proof is proving that cause is excepted
PARIS MANILA PERFUME V. PHOENIX ASSURANCE 45 PHIL 753
FACTS:
Phoenix issued a fire insurance policy covering the properties of insured. On
a relevant date, a fire broke out and destroyed the properties of the
insured. The insured duly made a claim against Phoenix and was denied.
One of the grounds asserted by Phoenix is that the policy was not in the
name of the company but in Peril insured against Proximate cause of the
loss Insurer is liable the name of one Peter Johnson. Another ground raised
is that the policy doesn't cover explosions. The trial court however
overruled its defenses and ruled in favor of the insured.

HELD:
The factory where the fire occurred was filed with numerous kinds of
essences and oils used in the manufacture of perfumery and with a
quantity of alcohol and manufactured perfumes, all of which were of a
highly inflammable nature, and the fire may have started from any one of a
number of reasons. But in the final analysis, the fact remains that there
was a fire, and that the plaintiffs property was destroyed. It is true that it
may be that the explosion was the primary cause of the fire, but that is
only a matter of conjecture, and upon that point, the burden of proof was
upon the defendant.
It will be noted that section 5 of the subject policy excludes not only the
damages which may immediately result from an earthquake, but also any
damage which may follow the earthquake, and that section 6 excludes only
the damages which are the direct result of the explosion itself, and that it
does not except damages which occurred from the fire occuring after the
Page 21 of 26

explosion, even though the explosion may have been the primary cause of
the fire. But assuming, without deciding, that if it be a fact that the fire
resulted from an explosion that fact, if proven, would be a complete
defense, the burden of the proof of that fact is upon the defendant, and
upon that point, there is a failure of proof. There is no competent evidence
as to whether the explosion caused the fire or the fire caused the
explosion.
Sec. 87. An insurer is not liable for a loss caused by the willful act or
through the connivance of the insured; but he is not exonerated by the
negligence of the insured, or of the insurance agents or others.
PRATS V. PHOENIX ASSURANCE 52 PHIL 807
FACTS:
Prats and Company purchased a building on which it stored its
merchandise. The building and merchandise were covered by several
insurance policies and one of them was issued by Phoenix. A fire broke out
and destroyed the building. Prats duly filed its claim but was denied on the
ground that the fire was caused by connivance of the insured with others as
well as the claim wasn't in good faith.
HELD:
The insurance policy which was the subject of action in this case was held
to have been avoided by the connivance of the insured in setting fire to the
insured goods and the submission of the insured of fraudulent proof of loss.
The finding of the trial court in the effect that the plaintiff had submitted
false proof in the support of his claim is also well founded. That conclusion
appears to have been based upon three items of proof. These two facts are,
first, that the plaintiff had submitted a claim for jewelry lost in the fire as of
a value of P12,800 when the true value of said jewelry was about P600;
and, secondly, that the plaintiff had sought to recover from the insurance
company the value of goods which had been surreptitiously withdrawn by it
from the bodega prior to the fire. Neither of these two facts are consistent
with good faith on the part of the plaintiff, and each constituted a breach of
the stipulations of the policy against the use of fraudulent devices and false
proof with respect to the loss.
The other point relied upon to support conclusion that the plaintiff had
attempted to deceive the defendant with respect to the extent of the loss
was at least competent in its general bearing on the good faith of the
plaintiff, even if, as is probably true, not alone sufficient to constitute a
breach of the same stipulations. The point is this: After the fire the plaintiff
presented to the adjuster certain cost sheets and copies of supposed
invoices in which the prices and expenses of importation of a quantity of
goods were stated at double the true amount. The adjuster soon discovered
the artificial nature of these documents, and, with his consent, they were
withdrawn by Prats and subsequently destroyed. At the hearing Prats
stated that these documents had been fabricated in order that they might
Page 22 of 26

be exhibited to intending purchasers of the goods, thereby making it

appear to them that the cost of the merchandise had been much greater
than it in fact was a ruse which is supposed to have been entirely innocent
or at least not directed against the insurer. But a question naturally arises
as to the purpose which these documents might have been made to serve if
the fire, as doubtless intended by its designers, had been so destructive as
to remove all vestiges of the stock actually involved. Upon the whole we
are forced to state the conclusion, not only that the plaintiff caused the fire
to be set, or connived therein, but also that it submitted fraudulent proof as
the trial judge found.

Sec. 88. In case of loss upon an insurance against fire, an insurer is

exonerated, if notice thereof be not given to him by an insured, or some
person entitled to the benefit of the insurance, without unnecessary delay.
NOTICE OF LOSS MUST BE GIVEN WITHOUT UNNECESSARY DELAY
A notice of loss apprises the insurer of the occurence of the loss
Purpose is to enable the insurer to make proper investigation and take
such action as may be necessary to protect its interest
No particular form is prescribed by law
There is no unnecessary delay if the notice is given as soon as the
circumstances permitted the insured, in the exercise of reasonable diligence
to communicate
BACHRACH V. BRITISH AMERICAN ASSURANCE
HELD:
Where the terms of an insurance policy require 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 vain and useless. Immediate notice means reasonable
time.
Sec. 89. When a preliminary proof of loss is required by a policy, the
insured is not bound to give such proof as would be necessary in a court of
justice; but it is sufficient for him to give the best evidence which he has in
his power at the time.
Sec. 90. All defects in a notice of loss, or in preliminary proof thereof,
which the insured might remedy, and which the insurer omits to specify to
him, without unnecessary delay, as grounds of objection, are waived.
MALAYAN INSURANCE V. ARNALDO Supra
HELD:
The last point raised by the petitioner should not pose much difficulty. The
valuation fixed in fire insurance policy is conclusive in case of total loss in
the absence of fraud, which is not shown here. Loss and its amount may be
determined on the basis of such proof as may be offered by the insured,
Page 23 of 26

which need not be of such persuasiveness as is required in judicial

proceedings. If, as in this case, the insured files notice and preliminary
proof of loss and the insurer fails to specify to the former all the defects
thereof and without unnecessary delay, all objections to notice and proof of
loss are deemed waived under Section 90 of the Insurance Code.
The certification issued by the Integrated National Police, Laoang, Samar,
as to the extent of Pinca's loss should be considered sufficient. Notably,
MICO submitted no evidence to the contrary nor did it even question the
extent of the loss in its answer before the Insurance Commission. It is also
worth observing that Pinca's property was not the only building bumed in
the fire that razed the commercial district of Laoang, Samar, on January
18, 1982. There is nothing in the Insurance Code that makes the
participation of an adjuster in the assessment of the loss imperative or
indespensable, as MICO suggests.
PACIFIC BANK V. CA 168 SCRA 1
FACTS:
1. Paramount Shirts insured its properties against fire with Oriental
Assurance.
2. Paramount was indebted to petitioner for a long time already. It was
holding the same properties in trust in favor of petitioner under a trust
agreement.
3. Oriental was duly furnished notice of this fact. It knew that the insurance
proceeds were payable to petitioner.
4. On a relevant date, a fire broke out and destroyed Paramounts
properties.
5. Petitioner filed with Oriental Assurance its claim but it was informed to
wait as the latter was waiting for the assessors report on the matter.
6. The assessor reported that no claim was filed by Paramount which was
allegedly a clear violation of the policy.
HELD:
In the case at bar, policy condition No. 11 specifically provides that the
insured shall on the happening of any loss or damage give notice to the
company and shall within fifteen (15) days after such loss or damage
deliver to the private respondent (a) a claim in writing giving particular
account as to the articles or goods destroyed and the amount of the loss or
damage and (b) particulars of all other insurances, if any. Likewise, insured
was required "at his own expense to produce, procure and give to the
company all such further particulars, plans, specifications, books, vouchers,
invoices, duplicates or copies thereof, documents, proofs and information
with respect to the claim".
The evidence adduced shows that twentyfour (24) days after the fire,
petitioner merely wrote letters to private respondent to serve as a notice of
loss, thereafter, the former did not furnish the latter whatever pertinent
documents were necessary to prove and estimate its loss. Instead,
petitioner shifted upon private respondent the burden of fishing out the
necessary information to ascertain the particular account of the articles
Page 24 of 26

destroyed by fire as well as the amount of loss. It is noteworthy that

private respondent and its adjuster notified petitioner that insured had not
yet filed a written claim nor submitted the supporting documents in
compliance with the requirements set forth in the policy. Despite the notice,
the latter remained unheedful. Since the required claim by insured,
together with the preliminary submittal of relevant documents had not been
complied with, it follows that private respondent could not be deemed to
have finally rejected petitioner's claim and therefore the latter's cause of
action had not yet arisen. Compliance with condition No. 11 is a
requirement sine qua non to the right to maintain an action as prior thereto
no violation of petitioner's right can be attributable to private respondent.
This is so, as before such final rejection, there was no real necessity for
bringing suit. Petitioner should have endeavored to file the formal claim and
procure all the documents, papers, inventory needed by private respondent
or its adjuster to ascertain the amount of loss and after compliance await
the final rejection of its claim. Indeed, the law does not encourage
unnecessary litigation.
It appearing that insured has violated or failed to perform the conditions
under No. 3 and 11 of the contract, and such violation or want of
performance has not been waived by the insurer, the insured cannot
recover, much less the herein petitioner.
Sec. 91. Delay in the presentation to an insurer of notice or proof of loss is
waived if caused by any act of him, or if he omits to take objection
promptly and specifically upon that ground.
PACIFIC TIMBER V. CA Supra
HELD:
The defense of delay as raised by private respondent in resisting the claim
cannot be sustained. The law requires this ground of delay to be promptly
and specifically asserted when a claim on the insurance agreement is
made. The undisputed facts show that instead of invoking the ground of
delay in objecting to petitioner's claim of recovery on the cover note, it
took steps clearly indicative that this particular ground for objection to the
claim was never in its mind. The nature of this specific ground for resisting
a claim places the insurer on duty to inquire when the loss took place, so
that it could determine whether delay would be a valid ground upon which
to object to a claim against it.
In the proceedings that took place later in the Office of the Insurance
Commissioner, private respondent should then have raised this ground of
delay to avoid liability. It did not do so. It must be because it did not find
any delay, as this Court fails to find a real and substantial sign thereof. But
even on the assumption that there was delay, this Court is satisfied and
convinced that as expressly provided by law, waiver can successfully be
raised against private respondent. Thus Section 84 of the Insurance Act
provides: Section 84. Delay in the presentation to an insurer of notice or
proof of loss is waived if caused by any act of his or if he omits to take
objection promptly and specifically upon that ground.
Page 25 of 26

Sec. 92. If the policy requires, by way of preliminary proof of loss, the
certificate or testimony of a person other than the insured, it is sufficient
for the insured to use reasonable diligence to procure it, and in case of the
refusal of such person to give it, then to furnish reasonable evidence to the
insurer that such refusal was not induced by any just grounds of disbelief in
the facts necessary to be certified or testified.

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