//////////Paz Lopez De Constantino vs Asia Life Insurance Company/////////////

There are two cases consolidated here. First is that of Arcadio Constantino who
acquired a life insurance from Asia Life Insurance Company in September 1941. He
paid the first premium which was good until September 1942. War broke out and h
e was not able to pay the second and subsequent premiums. He died in 1944. His b
eneficiary was Paz Lopez De Constantino.
The second case was that of Tomas Ruiz who acquired his life insurance from Asia
Life in August 1938. He has been paying his premium religiously but due to the
war, he was not able to pay his subsequent premiums in 1942. He died in 1945. Hi
s beneficiary was Agustina Peralta.
The beneficiaries from both insurance policies filed their claims when the war i
s over. They point out that the obligation of the insured to pay premiums was ex
cused (suspended) during the war owing to impossibility of performance, and that
consequently no unfavorable consequences should follow from such failure (New Y
ork Rule).
Asia Life argued that the nonpayment of premiums cancelled the insurance policy.
An insurance contract is one in which time is material and of the essence. Nonpayment at the day involves absolute forfeiture if such be the terms of the cont
ract (United States Rule).
ISSUE: Whether or not the beneficiaries are entitled to the claims.
HELD: No. The Supreme Court adopts the United States Rule. It should be noted th
at the parties contracted not only for peacetime conditions but also for times o
f war, because the policies contained provisions applicable expressly to wartime
days. The logical inference, therefore, is that the parties contemplated uninte
rrupted operation of the contract even if armed conflict should ensue.
//////////////ALPHA INSURANCE AND SURETY CO. vs. ARSENIA SONIA CASTOR///////////
////
July 2, 2014 Leave a comment
G.R. No. 198174, September 2, 2013 (PERALTA, J.)
FACTS:
Arsenia Sonia Castor (Castor) obtained a Motor Car Policy for her Toyota Revo DL
X DSL with Alpha Insurance and Surety Co (Alpha). The contract of insurance obli
gates the petitioner to pay the respondent the amount of P630,000 in case of los
s or damage to said vehicle during the period covered.
On April 16, 2007, respondent instructed her driver, Jose Joel Salazar Lanuza to
bring the vehicle to nearby auto-shop for a tune up. However, Lanuza no longer
returned the motor vehicle and despite diligent efforts to locate the same, said
efforts proved futile. Resultantly, respondent promptly reported the incident t
o the police and concomitantly notified petitioner of the said loss and demanded
payment of the insurance proceeds.
Alpha, however, denied the demand of Castor claiming that they are not liable si
nce the culprit who stole the vehicle is employed with Castor. Under the Excepti
ons to Section III of the Policy, the Company shall not be liable for (4) any ma
licious damage caused by the insured, any member of his family or by A PERSON IN
THE INSURED S SERVICE .
Castor filed a Complaint for Sum of Money with Damages against Alpha before the

Regional Trial Court of Quezon City. The trial court rendered its decision in fa
vor of Castor which decision is affirmed in toto by the Court of Appeals. Hence,
this Petition for Review on Certiorari.
ISSUE:
Whether or not the loss of respondent s vehicle is excluded under the insurance po
licy
HELD:
NO. The words loss and damage mean different things in common ordinary usage. The wo
rd loss refers to the act or fact of losing, or failure to keep possession, while
the word damage means deterioration or injury to property. Therefore, petitioner c
annot exclude the loss of Castor s vehicle under the insurance policy under paragr
aph 4 of Exceptions to Section III , since the same refers only to malicious damage ,
or more specifically, injury to the motor vehicle caused by a person under the ins
ured s service. Paragraph 4 clearly does not contemplate loss of property .
A contract of insurance is a contract of adhesion. So, when the terms of the ins
urance contract contain limitations on liability, courts should construe them in
such a way as to preclude the insurer from non-compliance with his obligation.
Thus, in Eternal Gardens Memorial Park Corporation vs. Philippine American Life
Insurance Company, this Court ruled that it must be remembered that an insurance
contract is a contract of adhesion which must be construed liberally in favor o
f the insured and strictly against the insurer in order to safeguard the latter s
interest.
////////////////Perez v. CA- Perfection of the Contract of Insurance////////////
////
323 SCRA 613 (2000)
Facts:
> Primitivo Perez had been insured with the BF Lifeman Insurance Corporation si
nce 1980 for P20,000.00.
> In October 1987, an agent of Lifeman, Rodolfo Lalog, visited Perez in Quezon
and convinced him to apply for additional insurance coverage of P50,000.00, to a
vail of the ongoing promotional discount of P400.00 if the premium were paid ann
ually.
> Primitivo B. Perez accomplished an application form for the additional insura
nce coverage. Virginia A. Perez, his wife, paid P2,075.00 to Lalog. The receipt
issued by Lalog indicated the amount received was a "deposit."
> Unfortunately, Lalog lost the application form accomplished by Perez and so o
n October 28, 1987, he asked the latter to fill up another application form. On
November 1, 1987, Perez was made to undergo the required medical examination, wh
ich he passed.
> Lalog forwarded the application for additional insurance of Perez, together w
ith all its supporting papers, to the office of BF Lifeman Insurance Corporation
n in Quezon which office was supposed to forward the papers to the Manila office
.
> On November 25, 1987, Perez died while he was riding a banca which capsized d
uring a storm.
> At the time of his death, his application papers for the additional insurance

were still with the Quezon office. Lalog testified that when he went to follow
up the papers, he found them still in the Quezon office and so he personally bro
ught the papers to the Manila office of BF Lifeman Insurance Corporation. It was
only on November 27, 1987 that said papers were received in Manila.
> Without knowing that Perez died on November 25, 1987, BF Lifeman Insurance Co
rporation approved the application and issued the corresponding policy for the P
50,000.00 on December 2, 1987
> Virginia went to Manila to claim the benefits under the insurance policies of
the deceased. She was paid P40,000.00 under the first insurance policy for P20,
000.00 (double indemnity in case of accident) but the insurance company refused
to pay the claim under the additional policy coverage of P50,000.00, the proceed
s of which amount to P150,000.00 in view of a triple indemnity rider on the insu
rance policy.
> In its letter of January 29, 1988 to Virginia A. Perez, the insurance company
maintained that the insurance for P50,000.00 had not been perfected at the time
of the death of Primitivo Perez. Consequently, the insurance company refunded t
he amount of P2,075.00 which Virginia Perez had paid
> Lifeman filed for the rescission and the declaration of nullity. Perez, on t
he other hand, averred that the deceased had fulfilled all his prestations under
the contract and all the elements of a valid contract are present.
> RTC ruled in favor of Perez. CA reversed.

Issue:
Whether or not there was a perfected additional insurance contract.

Held:
The contract was not perfected.
Insurance is a contract whereby, for a stipulated consideration, one party under
takes to compensate the other for loss on a specified subject by specified peril
s. A contract, on the other hand, is a meeting of the minds between two persons
whereby one binds himself, with respect to the other to give something or to re
nder some service.

Consent must be manifested by the meeting of the offer and the acceptance upon t
he thing and the cause which are to constitute the contract. The offer must be c
ertain and the acceptance absolute. When Primitivo filed an application for insu
rance, paid P2,075.00 and submitted the results of his medical examination, his
application was subject to the acceptance of private respondent BF Lifeman Insur
ance Corporation. The perfection of the contract of insurance between the deceas
ed and respondent corporation was further conditioned upon compliance with the f
ollowing requisites stated in the application form:
"there shall be no contract of insurance unless and until a policy is issued on
this application and that the said policy shall not take effect until the premiu
m has been paid and the policy delivered to and accepted by me/us in person whil
e I/We, am/are in good health."

The assent of private respondent BF Lifeman Insurance Corporation therefore was

not given when it merely received the application form and all the requisite sup
porting papers of the applicant. Its assent was given when it issues a correspon
ding policy to the applicant. Under the abovementioned provision, it is only whe
n 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.

It is not disputed, however, that when Primitivo died on November 25, 1987, his
application papers for additional insurance coverage were still with the branch
office of respondent corporation in Gumaca and it was only two days later, or on
November 27, 1987, when Lalog personally delivered the application papers to th
e head office in Manila. Consequently, there was absolutely no way the acceptanc
e of the application could have been communicated to the applicant for the latte
r to accept inasmuch as the applicant at the time was already dead.
////////// UNION MANUFACTURING CO., INC. and the REPUBLIC BANK, plaintiffs,REPUB
LIC BANK vs. PHILIPPINE GUARANTY CO., INCTopic: G. Warrantiesiv. Violation of Ma
terial Warranty, Effect (Sec.74)////////////////////
Facts:
(1) Union Manufacturing Co., Inc. obtained certain loans, overdrafts and other c
reditaccommodations from the Republic Bank for P415,000.00 with interest at 9% p
er annumfrom said date and to secure the payment, Union Manufacturing executed a
real and chattelmortgages on certain properties.(2) As additional condition of
the mortgage contract, Union Manufacturing undertook tosecure insurance coverage
over the mortgaged properties for the same amount of P415,000.00.(3) As Union M
anufacturing failed to secure insurance coverage on the mortgagedproperties, Rep
ublic Bank procured from the Philippine Guaranty Co., Inc. an insurancecoverage
on loss against fire for P500,000.00 over the properties of the UnionManufacturi
ng with the annotation that loss or damage, if any, under is payable to Republic
Bank as its interest may appear, subject however to the printed conditions of th
e FireInsurance Policy Form;(4) Fire Insurance Policy No. 43170 was issued for t
he sum of P500,000.00 in favor of theassured, Union Manufacturing for which the
corresponding premium of was paid by theRepublic Bank to Philippine Guaranty(5)
Upon the expiration of said fire policy, the same was renewed by the Republic Ba
nkupon payment of the corresponding premium,(7) A fire occurred in the premises
of the Union Manufacturing,(8) Union Manufacturing filed its fire claim with Phi
lippine Guaranty but was denied on thefollowing grounds: (a.)When Philippine Gua
ranty issued Fire Insurance Policy No. 43170 ...in the sum of P500,000.00 to cov
er the properties of the Union Manufacturing the sameproperties were already cov
ered by Fire Policy of the Sincere Insurance Company and byinsurance policies of
the Oceanic Insurance Agency and (b) when Fire Insurance Policy No.43170 was al
ready in full force and effect, Union Manufacturing without the consent of Phili
ppine Guaranty Co., Inc., obtained other insurance policies totalling P305,000.0
0 overthe same properties prior to the fire.
Issue:
whether or not Republic Bank can recover its interest (as mortgagee) from the Fi
reInsurance Policy with Philippine Guaranty.
Ruling:
In as much as the Union Manufacturing has violated the condition of the policy t
o the effectthat it did not reveal the existence of other insurance policies ove
r the same properties, asrequired by the warranty appearing on the face of the p
olicy and that said UnionManufacturing Co., Inc. represented that there were no
other insurance policies at the timeof the issuance of said defendant's policy,
and it appearing furthermore that while the policyof the defendant was in full f
orce and effect the Union Manufacturing Co., Inc. secured otherfire insurance po
licies without the written consent of the defendant endorsed on the policy,the c
onclusion is inevitable that
both the Republic Bank and Union Manufacturing Co.,Inc. cannot recover from the

same policy of the defendant because the same isnull and void.
/////////////Gulf Resorts, Inc. v. Phil Charter Insurance, Corporation 458 SCRA
550/////////////
Facts:
Plaintiff is the owner of the Plaza Resort situated at Agoo, La Union and had it
s properties in said resort insured originally with the American Home Assurance
Company (AHAC-AIU). Attached in the said insurance is an indorsement that the sa
me covers loss or damage (including loss or damage by fire) to any of the proper
ty insured by this Policy occasioned by or through or in consequence of Earthqua
ke. In the first four insurance policies issued by AHAC,
the risk of loss from earthquake shock was extended only to plaintiff s two swimmi
ng pools
. In 1990, an earthquake struck Central Luzon and Northern Luzon so the properti
es and two swimming pools in its Agoo Playa Resort were damaged. Petitioner file
d its formal demand for settlement of the damage to all its properties claiming
that, pursuant to its earthquake shock endorsement rider, Insurance Policy No. 3
1944 covers all damages to the properties within its resort caused by earthquake
. Respondent
denied petitioner s claim on the
ground that its insurance policy only afforded earthquake shock coverage to the
two swimming pools of the resort. It contended that the rider limits its liabili
ty for loss to the two swimming pools of petitioner.
Issue:
Whether or not the liability of the insurance company extends to the other prop
erties of the petitioner?
Held:
No. Petitioner cannot focus on the earthquake shock endorsement to the exclusio
n of the other provisions. All the provisions and riders, taken and interpreted
together, indubitably show the intention of the parties to extend earthquake sho
ck coverage to the two swimming pools only. A careful examination of the premium
recapitulation will show that it is the clear intent of the parties to extend e
arthquake shock coverage only to the two swimming pools. Section 2(1) of the Ins
urance Code defines a contract of insurance as an agreement whereby one undertak
es for a consideration to indemnify another against loss, damage or liability ar
ising from an unknown or contingent event. Thus, an insurance contract exists wh
ere the following elements concur: 1.) The insured has an insurable interest; 2.
) The insured is subject to a risk of loss by the happening of the designated pe
ril; 3. ) The insurer assumes the risk; 4.) Such assumption of risk is part of a
general scheme to distribute actual losses among a large group of persons beari
ng a similar risk; and 5.)
In consideration of the insurer's promise, the insured pays a premium
. An insurance premium is the consideration paid an insurer for undertaking to i
ndemnify the insured against a specified peril. In fire, casualty, and marine in
surance, the premium payable becomes a debt as soon as the risk attaches. In the
subject policy, no premium payments were made with regard to earthquake shock c
overage, except on the two swimming pools. There is no mention of any premium pa
yable for the other resort properties with regard to earthquake shock. This is c
onsistent with the history of pe
titioner s previous insurance
policies from AHAC-AIU.
///////AMERICAN HOME ASSURANCE COMPANY vs. TANTUCO ENTERPRISES, INC.////////
G.R. No. 138941October 8, 2001
FACTS: Respondent Tantuco Enterprises, Inc. is engaged in the coconut oil millin
g and refining industry.It owns two oil mills which were separately covered by f
ire insurance policies issued by petitionerAmerican Home Assurance Co., Philippi
ne Branch.

The first oil mill was insured for P3,000,000.00 underPolicy No. 306-7432324-3 f
or the period March 1, 1991 to 1992. The new oil mill was insured forP6,000,000.
00 under Policy No. 306-7432321-9 for the same term. Official receipts indicatin
g paymentfor the full amount of the premium were issued by the petitioner's agen
t.A fire that broke out in the early morning of September 30,1991 gutted and con
sumed the new oil mill.Respondent immediately notified the petitioner of the inc
ident but petitioner rejected respondent'sclaim for the insurance proceeds on th
e ground that no policy was issued by it covering the burned oilmill. It stated
that the description of the insured establishment referred to another building t
hus: "Ourpolicy nos. 306-7432321-9 (Ps 6M) and 306-7432324-4 (Ps 3M) extend insu
rance coverage to your oilmill under Building No. 5, whilst the affected oil mil
l was under Building No. 14. "ISSUE: Whether or not the Court of Appeals erred i
n its legal interpretation of 'Fire ExtinguishingAppliances Warranty' of the pol
icy.HELD: In construing the words used descriptive of a building insured, the gr
eatest liberality is shown bythe courts in giving effect to the insurance. In vi
ew of the custom of insurance agents to examinebuildings before writing policies
upon them, and since a mistake as to the identity and character of thebuilding
is extremely unlikely, the courts are inclined to consider that the policy of in
surance covers anybuilding which the parties manifestly intended to insure, howe
ver inaccurate the description may be.Notwithstanding, therefore, the misdescrip
tion in the policy, it is beyond dispute, to our mind, that whatthe parties mani
festly intended to insure was the new oil mill. If the parties really intended t
o protectthe first oil mill,
then there is no need to specify it as new
.In determining what the parties intended, the courts will read and construe the
policy as a whole and if possible, give effect to all the parts of the contract
, keeping in mind always, however, the prime rulethat in the event of doubt, thi
s doubt is to be resolved against the insurer. In determining the intent of the
parties to the contract, the courts will consider the purpose and object of the
contract.
//////Insurance Case Digest: Eternal Gardens Memorial Park Corp. V. Philippine A
merican Life Insurance Corp. (2008)//////////
G.R. No. 166245
April 9, 2008
Lessons Applicable: Exception to Perfection (Insurance)
FACTS:
December 10, 1980: Philippine American Life Insurance Company (Philamlife) enter
ed into an agreement denominated as Creditor Group Life Policy No. P-19202 with
Eternal Gardens Memorial Park Corporation (Eternal)
Under the policy (renewable annually), the clients of Eternal who purchased buri
al lots from it on installment basis would be insured by Philamlife
amount of insurance coverage depended upon the existing balance
Eternal complied by submitting a letter dated December 29, 1982, a list of insur
able balances of its lot buyers for October 1982 which includes John Chuang whic
h was stamped as received by Philam Life
August 2, 1984, Chuang died with a balance of 100,000 php
April 25, 1986: Philamlife had not furnished Eternal with any reply on its insur
ance claim so its demanded its claim
According to Philam Life, since the application was submitted only on November 1
5, 1984, after his death, Mr. John Uy Chuang was not covered under the Policy si
nce his application was not approved. Moreover, the acceptance of the premiums
are only in trust for and not a sign of approval.
RTC: favored Eternal
CA: Reversed RTC
ISSUE: W/N Philam's inaction or non-approval meant the perfection of the insuran
ce contract.

HELD: YES. CA reversed

construed in favor of the insured and in favor of the effectivity of the insuran
ce contract
Upon a party s purchase of a memorial lot on installment from Eternal, an insuranc
e contract covering the lot purchaser is created and the same is effective, vali
d, and binding until terminated by Philamlife by disapproving the insurance appl
ication
Moreover, the mere inaction of the insurer on the insurance application must not
work to prejudice the insured
The termination of the insurance contract by the insurer must be explicit and un
ambiguous
/////Insurance Case Digest: Tanco Jr. V. Philippine Guaranty Co. (1965)//////
G.R. No.L-17312

November 29, 1965

Lessons Applicable: Definition and Coverage of Casualty Insurance (Insurance)

Laws Applicable:
FACTS:
While Tanco's automobile was driven by his brother Manuel Tanco, who at the time
didn't have a valid license since it was not renewed until the next week, had a
collision with a pick-up delivery van at the southern approach of the Jones bri
dge
The repairs cost P2,536.99 so he filed a claim against the insurance company whi
ch was rejected
He filed a claim in the Municipal Court of Manila and elevated to the Court of F
irst Instance of Manila on Appeal which favored Tanco
exception clause "the company shall not be liable in respect of any accident, lo
ss, damage or liability caused, sustained or incurred ... whilst (the insured ve
hicle) is ... being driven by or is for the purpose of being driven by him in th
e charge of any person other than an Authorized Driver.
Authorized Driver" to be the insured himself and "(b) any person driving on the
Insured's order or with his permission, provided that the person driving is perm
itted in accordance with the licensing or other laws or regulations to drive the
Motor Vehicle or has been permitted and is not disqualified by order of a court
of law or by reason of any enactment or regulation in that behalf from driving
such Motor Vehicle.
ISSUE: W/N the Tanco can claim because it was not covered by the exemption claus
e
HELD: NO. appealed from is reversed, with costs
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 automob
ile insurance practically a sham, but to a specific situation where a person oth
er 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. No pri
nciple of law or of public policy militates against the validity of such a provi
sion
//////// Insurance Law case digests SY 2010-2011//////////////////
Interpretation of insurance contracts
DIOSDADO C. TY vs. FIRST NATIONAL SURETY & ASSURANCECO. INC.G.R. NO. L-16138, Ap
ril 29, 9611 SCRA 1324Facts:Petitioner obtained personal accident policies which
stipulated,among others, that for partial disability resulting to the loss of e
ither hand, the insurer shall be liable for P650.00. It wasfurther stated in the
policies that, That loss of a hand shallmean the loss by amputation through the
bones of the wrist. Afire broke out which totally destroyed Broadway Cotton Facto

ry, Ty s employer. Fighting his way out of the factory, Ty wasinjured on the left
hand by a heavy object. As a result, Tysuffered a temporary total disability of
his left hand whichprevented hi from performing his work or labor necessary in t
hepursuance of his occupation.Issue:Whether or not the insurer is liableHeld: Th
e insurer was not liable. We can not go beyond the clear andexpress conditions o
f the insurance policies, all of which definedpartial disability as loss of eith
er hand by
amputation
throughthe bones of the wrist. There was no such amputation. All thatwas found w
as that the physical injuries caused temporary totaldisability of Ty s left hand.
We might add that the agreementcontained in the insurance policies are clear, ex
press andspecific that only amputation of the left hand should beconsidered as a
loss thereof, an interpretation that wouldinclude the mere fracture or other te
mporary disability notcovered by the policies would certainly be unwarranted.WHE
REFORE, the decision appealed from is hereby affirmed,with costs against the pla
intiff-appellant