Constantino v.

Asia Life- Non-payment of Insurance

Premiums
87 PHIL 248
Facts:
> Appeal consolidates two cases.
> Asia life insurance Company (ALIC) was incorporated
in Delaware.
> For the sum of 175.04 as annual premium duly paid to
ALIC, it issued Policy No. 93912 whereby it insured the
life of Arcadio Constantino for 20 years for P3T with Paz
Constantino as beneficiary.
First premium covered the period up to Sept. 26, 1942.
No further premiums were paid after the first premium
and Arcadio died on Sept. 22, 1944.
> Due to Jap occupation, ALIC closed its branch office in
Manila from Jan. 2 1942-1945.
> On Aug. 1, 1938, ALIC issued Policy no. 78145
covering the lives of Spouses Tomas Ruiz and Agustina
Peralta for the sum of P3T for 20 years. The annual
premium stipulated was regularly paid from Aug. 1, 1938
up to and including Sept. 30, 1940.

Effective Aug. 1, 1941, the mode of payment was

changed from annually to quarterly and such quarterly
premiums were paid until Nov. 18, 1941.
Last payment covered the period until Jan. 31, 1942.
Tomas Ruiz died on Feb. 16, 1945 with Agustina Peralta
as his beneficiary.
> Due to Jap occupation, it became impossible and
illegal for the insured to deal with ALIC. Aside from this
the insured borrowed from the policy P234.00 such that
the cash surrender value of the policy was sufficient to
maintain the policy in force only up to Sept. 7, 1942.
> Both policies contained this provision: All premiums
are due in advance and any unpunctuality in making such
payment shall cause this policy to lapse unless and
except as kept in force by the grace period condition.
> Paz Constantino and Agustina Peralta claim as
beneficiaries, that they are entitled to receive the
proceeds of the policies less all sums due for premiums
in arrears. They also allege that non-payment of the
premiums were caused by the closing of ALICs offices
during the war and the impossible circumstances by the
war, therefore, they should be excused and the policies
should not be forfeited.
> Lower court ruled in favor of ALIC.

Issue:

May a beneficiary in a life insurance policy recover the

amount thereof although the insured died after repeatedly
failing to pay the stipulated premiums, such failure being
caused by war?

It should be noted that the parties contracted not only as

to peace time conditions but also as to war-time
conditions since the policies contained provisions
applicable expressly to wartime days. The logical
inference therefore is that the parties contemplated the
uninterrupted operation of the contract even if armed
conflict should ensue.

Held:

Insular v Ebrado G.R. No. L-44059 October 28, 1977

NO.

Facts:

Due to the express terms of the policy, non-payment of

the premium produces its avoidance. In Glaraga v. Sun
Life, it was held that a life policy was avoided because
the premium had not been paid within the time fixed;
since by its express terms, non-payment of any premium
when due or within the 31 day grace period ipso fact
caused the policy to lapse.

J. Martin:

When the life insurance policy provides that non-payment

of premiums will cause its forfeiture, war does NOT
excuse non-payment and does not avoid forfeiture.
Essentially, the reason why punctual payments are
important is that the insurer calculates on the basis of the
prompt payments. Otherwise, malulugi sila.

Cristor Ebrado was issued by The Life Assurance Co.,

Ltd., a policy for P5,882.00 with a rider for Accidental
Death. He designated Carponia T. Ebrado as the
revocable beneficiary in his policy. He referred to her as
his wife.
Cristor was killed when he was hit by a failing branch of a
tree. Insular Life was made liable to pay the coverage in
the total amount of P11,745.73, representing the face
value of the policy in the amount of P5,882.00 plus the
additional benefits for accidental death.
Carponia T. Ebrado filed with the insurer a claim for the
proceeds as the designated beneficiary therein, although
she admited that she and the insured were merely living
as husband and wife without the benefit of marriage.

Pascuala Vda. de Ebrado also filed her claim as the

widow of the deceased insured. She asserts that she is
the one entitled to the insurance proceeds.

nugatory, as the same could easily be circumvented by

modes of insurance.

Issue: WON a common-law wife named as beneficiary in

the life insurance policy of a legally married man can
claim the proceeds in case of death of the latter?

When not otherwise specifically provided for by the

Insurance Law, the contract of life insurance is governed
by the general rules of the civil law regulating contracts.
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 a fife
insurance policy by the person who cannot make a
donation to him. Common-law spouses are barred from
receiving donations from each other.

Held: No. Petition

Article 739 provides that void donations are those made

between persons who were guilty of adultery or
concubinage at the time of donation.

Insular commenced an action for Interpleader before the

trial court as to who should be given the proceeds. The
court declared Carponia as disqualified.

Ratio:
Section 50 of the Insurance Act which provides that "the
insurance shall be applied exclusively to the proper
interest of the person in whose name it is made"
The word "interest" highly suggests that the provision
refers only to the "insured" and not to the beneficiary,
since a contract of insurance is personal in character.
Otherwise, the prohibitory laws against illicit relationships
especially on property and descent will be rendered

There is every reason to hold that the bar in donations

between legitimate spouses and those between
illegitimate ones should be enforced in life insurance
policies since the same are based on similar
consideration. So long as marriage remains the threshold
of family laws, reason and morality dictate that the
impediments imposed upon married couple should
likewise be imposed upon extra-marital relationship.
A conviction for adultery or concubinage isnt required
exacted before the disabilities mentioned in Article 739
may effectuate. The article says that in the case referred
to in No. 1, the action for declaration of nullity may be
brought by the spouse of the donor or donee; and the

guilty of the donee may be proved by preponderance of

evidence in the same action.
The underscored clause neatly conveys that no criminal
conviction for the offense is a condition precedent. The
law plainly states that the guilt of the party may be proved
in the same acting for declaration of nullity of donation.
And, it would be sufficient if evidence preponderates.
The insured was married to Pascuala Ebrado with whom
she has six legitimate children. He was also living in with
his common-law wife with whom he has two children.
Qua v Law Union. G.R. No. L-4611 December 17, 1955

insurance claim, the trial court ruled in favor of Qua and

entitled him to recover more than Php 300,000 for
indemnities from the insurance company. Hence, the
company appealed to the SC.
In its first assignment of error, the insurance company
alleged that the trial Court should have held that the
policies were avoided for breach of warranty. The
contract noted that fire hydrants were required in a
particular measurement of space (every 150 feet).
Hence, they argued that since the bodegas insured had
an external wall perimeter of 500 meters, the appellee
should have 11 fire hydrants in the compound, and that
he actually had only 2, with a further pair.

J. Reyes
Issues:
Facts:
Qua owned 4 warehouses used for the storage of copra
and hemp. They were insured with the Law Union.
Fire broke out and completely destroyed 3 bodegas. The
plaintiff submitted claims totalling P398,562.81. The
Insurance Company resisted payment on the grounds
that the fire had been deliberately caused by the insured
or by other persons in connivance with him.
Que Chee Gan and his brother were tried for arson, but
were acquitted by the trial court. As regards the

1. WON the insurance company can void the policies it

had issued
2. WON the insured violated the "Hemp Warranty"
provisions of the policy against the storage of gasoline
3. WON the insured planned the destruction of the
bodega

Held: No. No. No.

Ratio:
1. The insurer, who at the time of issuance, has
knowledge of existing facts which would invalidate the
contract from the beginning, such constitutes a waiver of
conditions in the contract inconsistent with the facts, and
the insurer is stopped thereafter from asserting the
breach of such conditions. Also, an insurance company
intends to executed a valid contract in return for the
premium received; and when the policy contains a
condition which renders it voidable at its inception, and
this result is known to the insurer, it will be presumed to
have intended to waive the conditions and to execute a
binding contract, rather than to have deceived the
insured into thinking he is insured when in fact he is not.
The appellant is barred estoppel to claim violation of the
so-called fire hydrants warranty, because it knew the
number of hydrants demanded therein never existed from
the very beginning and issued the policies.
To allow a company to accept one's money for a policy of
insurance which it then knows to be void and of no effect,
though it knows as it must, that the assured believes it to
be valid and binding, is so contrary to the dictates of
honesty and fair dealing, and so closely related to
positive fraud, as to the abhorrent to fair-minded men.

The appellant company so worded the policies that while

exacting the greater number of fire hydrants and
appliances, it kept the premium discount at the minimum
of 2 1/2%, thereby giving the insurance company a
double benefit. Such abnormal treatment of the insured
strongly points at an abuse of the insurance company's
selection of the words and terms of the contract, over
which it had absolute control.
Receipt of Premiums or Assessments after Cause for
Forfeiture Other than Nonpayment. It is a well settled
rule of law that an insurer which with knowledge of facts
entitling it to treat a policy as no longer in force, receives
and accepts a premium on the policy, estopped to take
advantage of the forfeiture. It cannot treat the policy as
void for the purpose of defense to an action to recover for
a loss thereafter occurring and at the same time treat it
as valid for the purpose of earning and collecting further
premiums.
Moreover, taking into account the well known rule that
ambiguities or obscurities must be strictly interpreted
against the party that caused them, the "memo of
warranty" invoked by appellant bars the latter from
questioning the existence of the appliances called for in
the insured premises
2. The ambiguity must be held strictly against the insurer
and liberally in favor of the insured, specially to avoid a
forfeiture. So long as insurance companies insist upon

the use of ambiguous, intricate and technical provisions,

which conceal rather than frankly disclose, their own
intentions, the courts must, in fairness to those who
purchase insurance, construe every ambiguity in favor of
the insured.
Appellee admitted that there were 36 cans of gasoline in
the building designed. It However, gasoline is not
specifically mentioned among the prohibited articles
listed in the so-called "hemp warranty." The cause relied
upon by the insurer speaks of "oils", and is uncertain
because, "Oils" usually mean "lubricants" and not
gasoline or kerosene.
If the company intended to rely upon a condition of that
character, it ought to have been plainly expressed in the
policy.
The contract of insurance is one of perfect good faith not
for the insured alone, but equally so for the insurer; in
fact, it is mere so for the latter, since its dominant
bargaining position carries with it stricter responsibility.
Also, the gasoline kept in Bodega No. 2 was only
incidental to his business, being no more than a
customary 2 day's supply for the five or six motor
vehicles used for transporting of the stored merchandise.
"It is well settled that the keeping of inflammable oils on
the premises though prohibited by the policy does not
void it if such keeping is incidental to the business."

3. It was unlikely that Qua burned the warehouse to

defraud the company because he had the resources to
pay off the National Bank in a short time. Also, no motive
appears for attempt to defraud the insurer. While the
acquittal of the insured in the arson case is not res
judicata on the present civil action, the insurer's
evidence, to judge from the decision in the criminal case,
is practically identical in both cases and must lead to the
same result, since the proof to establish the defense of
connivance at the fire in order to defraud the insurer
"cannot be materially less convincing than that required
in order to convict the insured of the crime of arson."
As to the defense that the burned bodegas could not
possibly have contained the quantities of copra and
hemp stated in the fire claims, the insurer relied on its
adjuster investigator who examined the premises during
and after the fire. His testimony, however, was based on
inferences from the photographs and traces found after
the fire, and must yield to the contradictory testimony of
those who actually saw the contents of the bodegas
shortly before the fire, while inspecting them for the
mortgagee Bank.

Ty v. Filipinas Compaia de Seguros - Insurance

Policy
17 SCRA 364
Facts:
> Ty was employed as a mechanic operator by
Braodway Cotton Factory at Grace Park, Caloocan.
> In 1953, he took personal accident policies from 7
insurance companies (6 defendants), on different dates,
effective for 12 mos.
> On Dec. 24. 1953, a fire broke out in the factory were
Ty was working. A hevy object fell on his hand when he
was trying to put out the fire.
> From Dec. 1953 to Feb. 6, 1954 Ty received treatment
at the Natl Orthopedic Hospital for six listed injuries. The
attending surgeon certified that these injuries would
cause the temporary total disability of Tys left hand.
> Insurance companies refused to pay Tys claim for
compensation under the policies by reason of said
disability of his left hand. Ty filed a complaint in the
municipal court who decided in his favor.
> CFI reversed on the ground that under the uniform
terms of the policies, partial disability due to loss of either
hand of the insured, to be compensable must be the
result of amputation.

Issue:
Whether or not Ty should be indemnified under his
accident policies.

Held.
NO.
SC already ruled in the case of Ty v. FNSI that were the
insurance policies define partial disability as loss of either
hand by amputation through the bones of the wrist, the
insured cannot recover under said policies for temporary
disability of his left hand caused by the fractures of some
fingers. The provision is clear enough to inform the party
entering into that contract that the loss to be considered a
disability entitled to indemnity, must be severance or
amputation of the affected member of the body of the
insured.

Del Rosario v Equitable G.R. No. L-16215 June 29,

1963

Held: Judgment affirmed. Still 2,000.

J. Paredes
Ratio:
Facts:
Equitables insurance policy covered indemnities for
bodily injuries and deaths, however, it never specificed
an amount to be given in case of a persons death by
drowning. It specified amounts from 1,000 to 3,000 for
other causes of death, however.
Francisico del Rosario died from drowning after jumping
from a sinking ship. The insurer, Equitable, agreed to pay
Php 1,000 as the claim for an accident. His attorney,
howvever, contended that he amount should be greater
under section 2, Php 1500. The issue was resolved in the
Insurance Commison, where it was held that Section 1,
under the provisions applied. (Php 1,000 as indemnity)
The lawyer still didint agree and instituted a suit. The trail
court held that the company had the discretion to pay
from Php 1,000 to 3,000 for death by drowning since
there was no fixed amount for this type of death. The
amended decision ordered the company to pay Php
2,000

Issue: What should the amount be?

The interpretation of obscure stipulations in a contract

should not favor the party who cause the obscurity.
Ambigious terms in a policy are to be construed strictly
against, the insurer, and liberally in favor of the insured
for the payment of indemnity where forfeiture is involved.
The company takes great care in the wording and has
legal advisers who create the contracts to the benefit of
the company.
Trial court ruling are well considered because they are
supported by doctrines on insurance resolving cases
against the party who caused the ambiguity in the
wording of the contracts terms. This was also due to the
fact that the insured didnt have much of a say in
formulating the contract.

Philamlife v.
Ansaldo Jurisdiction of the
Insurance
Commissioner
234 SCRA 509
Facts:
> Ramon M. Paterno sent a letter-complaint to the Insurance
Commissioner alleging certain problems encountered by

agents, supervisors, managers and public consumers of the

Philamlife as a result of certain practices by said company.
> Commissioner requested petitioner Rodrigo de los Reyes, in
his capacity as Philamlife's president, to comment on
respondent Paterno's letter.
> The complaint prays that 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 bulletins and
circulars, be declared as null and void. He also asked that the
amounts of such 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
> Manuel Ortega, Philamlife's Senior Assistant Vice-President
and Executive Assistant to the President, asked that the
Commissioner first rule on the questions of the jurisdiction of
the Insurance Commissioner over the subject matter of the
letters-complaint and the legal standing of Paterno.
> Insurance Commissioner set the case for hearing and sent
subpoena to the officers of Philamlife. Ortega filed a motion to
quash the subpoena alleging that the Insurance company has
no jurisdiction over the subject matter of the case and that
there is no complaint sufficient in form and contents has been
filed.

> The motion to quash was denied.

Issue:
Whether or not the insurance commissioner had jurisdiction
over the legality of the Contract of Agency between Philamlife
and its agents.

On the other hand, Section 415 provides:

"In addition to the administrative sanctions provided elsewhere
in this Code, the Insurance Commissioner is hereby
authorized, at his discretion, to impose upon insurance
companies, their directors and/or officers and/or agents, for
any willful failure or refusal to comply with, or violation of any
provision of this Code, or any order, instruction, regulation or
ruling of the Insurance Commissioner, or any commission of
irregularities, and/or conducting business in an unsafe or
unsound manner as may be determined by the Insurance
Commissioner, the following:

Held:

a) fines not in excess of five hundred pesos a day; and

No, it does not have jurisdiction.

b) suspension, or after due hearing, removal of directors

and/or officers and/or agents."

The general regulatory authority of the Insurance

Commissioner is described in Section 414 of the Insurance
Code, to wit:
"The Insurance Commissioner shall have the duty to see that
all laws relating to insurance, insurance companies and other
insurance matters, mutual benefit associations and trusts for
charitable uses are faithfully executed and to perform the
duties imposed upon him by this Code, . . . ."

A plain reading of the above-quoted provisions show that the

Insurance Commissioner has the authority to regulate the
business of insurance, which is defined as follows:
"(2)
The term 'doing an insurance business' or
'transacting an insurance business,' within the meaning of this
Code, 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 and
not as merely incidental 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 in
a manner designed to evade the provisions of this Code.
(Insurance Code, Sec. 2 [2])
Since the contract of agency entered into between 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 over the same to the Insurance
Commissioner. Expressio unius est exclusio alterius.

damages. Rizal claimed that the policy only covered damage

on the four span building and not the two storey building. The
trial court ruled in Transworlds favor and ordered Rizal to pay
actual damages only. The court of appeals increased the
damages. The insurance company filed a MFR. The CA
answered by modifying the imposition of interest. Not satisfied,
the insurance company petitioned to the Supreme Court.
Issue:
WON Rizal Surety is liable for loss of the two-storey building
considering that the fire insurance policy sued upon covered
only the contents of the four-span building.
Held: Yes. Petition dismissed.

Rizal Surety v CA G.R. No.

112360. July 18, 2000
J. Purisima
Facts:
Rizal Surety issued a 1 million peso fire insurance policy with
Transworld. This was increased to 1.5 million. A four span
building was part of the policy. A fire broke out and gutted the
building, together with a two storey building behind it were
gaming machines were stored. The company filed its claims
but to no avail. Hence, it brought a suit in court. It aimed to
make Rizal pay for almost 3 million including legal interest and

Ratio:
The policy had clauses on the building coverage that read:
"contained and/or stored during the currency of this Policy in
the premises occupied by them forming part of the buildings
situated within own Compound"
"First, said properties must be contained and/or stored in the
areas occupied by Transworld and second, said areas must
form part of the building described in the policy xxx"
This generally means that the policy didnt limit its coverage to
what was stored in the four-span building.
As to questions of fact, both the trial court and the Court of
Appeals found that the so called "annex " was not an annex
building but an integral part of the four-span building described
in the policy and consequently, the machines and spare parts
stored were covered by the fire insurance.

A report said: "Two-storey building constructed of partly timber

and partly concrete hollow blocks under g.i. roof which
isadjoining and intercommunicating with the repair of the
first right span of the lofty storey building and thence by
property fence wall."
"Art.1377. The interpretation of obscure words or stipulations
in a contract shall not favor the party who caused the
obscurity"
Landicho v GSIS- the 'terms in an insurance policy, which are
ambiguous, equivocal, or uncertain are to be construed strictly
and most strongly against the insurer, and liberally in favor of
the insured so as to effect the dominant purpose of indemnity
or payment to the insured
The issue of whether or not Transworld has an insurable
interest in the fun and amusement machines and spare parts,
which entitles it to be indemnified for the loss thereof, had
been settled in another SC case.

Perla v CA G.R. No. 96452 May

7, 1992
Facts:
The Lim spouses opened a chattel mortgage and bought a
Ford Laser from Supercars for Php 77,000 and insured it with
Perla Compania de Seguros. The vehicle was stolen while
Evelyn Lim was driving it with an expired license. The spouses
requested for a moratorium on payments but this was denied
by FCP, the assignee of rights over collection of the mortgage
amount of the car. The spouses also called on the insurance
company to pay the balance of the mortgage due to theft but
this was denied by the company due to the spouses violation

of the Authorized Driver clause stating (driving with an expired

license before being carnapped):
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 Scheduled 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.
Since the spouses didnt pay the mortgage, FCP filed suit
against them. The trial court ruled in its favor ordering spouses
to pay. The appellate court reversed their decision. FCP and
Perla appealed to the SC.
Issues:
1.Was there grave abuse of discretion on the part of the
appellate court in holding that private respondents did not
violate the insurance contract because the authorized driver
clause is not applicable to the "Theft" clause of said Contract?
2. Whether or not the loss of the collateral exempted the
debtor from his admitted obligations under the promissory note
particularly the payment of interest, litigation expenses and
attorney's fees.
Held: No, No. Petition dismissed.
Ratio:
1. The car was insured against a malicious act such as theft.
Therefore the Theft clause in the contract should apply and

not the authorized driver clause. The risk against accident is

different from the risk against theft.
The appellate court stated: The "authorized driver clause" in a
typical insurance policy is in contemplation or anticipation of
accident in the legal sense in which it should be understood,
and not in contemplation or anticipation of an event such as
theft. The distinction often seized upon by insurance
companies in resisting claims from their assureds between
death occurring as a result of accident and death occurring as
a result of intent may, by analogy, apply to the case at bar.
There was no connection between valid possession of a
license and the loss of a vehicle. Ruling in a different way
would render the policy a sham because the company can
then easily cite restrictions not applicable to the claim.
2. The Supreme Court stated:
The chattel mortgage constituted over the automobile is
merely an accessory contract to the promissory note. Being
the principal contract, the promissory note is unaffected by
whatever befalls the subject matter of the accessory contract.
Therefore, the unpaid balance on the promissory note should
be paid, and not just the installments due and payable before
the automobile was carnapped, as erronously held by the
Court of Appeals.
The court, however, construed the insurance, chattel
mortgage, and promissory note as interrelated contracts,
hence eliminating the payment of interests, litigation expenses,
and attorneys fees stated in the promissory note. The
promissory note required securing a chattel mortage which in
turn required opening an insurance contract. The insurance
was made as an accessory to the principal contract, making

sure that the value in the promissory note will be paid even if
the car was lost. The insurance company promised to pay
FCP for loss or damage of the property.
CA didnt err in requiring Perla to pay the spouses, but the
spouses must pay FCP for the balance in the note.

Insurance Case Digest:

Philamcare Health Systems,
Inc. V. CA (2002)
G.R. No. 125678

March 18, 2002

Lessons Applicable:

Elements (Insurance)

Blood Relationship (Insurance)

FACTS:

Ernani Trinos, deceased husband of Julita Trinos,

applied for a health care coverage with Philamcare
Health Systems, Inc.

He answered the standard application

form: 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). - NO

the application was approved for a period

for concealing Ernanis medical history so she paid

of one year from March 1, 1988 to March 1, 1989.

Accordingly, he was issued Health Care Agreement

the hospitalization expenses of P76,000.00 herself.

No. P010194

discovered at the time of Ernanis confinement that

Under the agreement, respondents

he was hypertensive, diabetic and asthmatic,

husband was entitled to avail of hospitalization

benefits, whether ordinary or emergency, listed

contrary to his answer in the application form.

therein. He was also entitled to avail of "outpatient benefits" such as annual physical
out-patient services.

General Hospital.
however, he was brought home again.

Hospital where he died

During the period of his coverage, Ernani

president, Dr. Benito Reverente

beginning March 9, 1990.

exemplary damages, attorney's fees and cost of

Julina Trinos tried to claim the benefits under the

Philamcare denied her claim saying

that the Health Care Agreement was void

RTC: Philamcare and Dr. Benito Reverent to pay

and reimburse P76k plus interest, moral damages,

While her husband was in the hospital,

health care agreement.

July 24, 1990: She brought action for damages

against Philamcare Health Systems Inc. and its

suffered a heart attack and was confined at the

He was brought to Chinese General

Manila Medical Center (MMC) for 1 month

April 13, 1990 morning: Ernani had fever and

was feeling very weak

increased to a maximum sum of P75,000.00 per

disability.

Due to financial difficulties,

1989 to March 1, 1990, then from March 1, 1990

to June 1, 1990. The amount of coverage was

Later, he was admitted at the Chinese

Upon the termination of the agreement, the

same was extended for another year from March 1,

After being discharged from the MMC, he was

attended by a physical therapist at home.

examinations, preventive health care and other

Doctors at the MMC allegedly

suit

CA: affirmed the decision of RTC but deleted all

awards for damages and absolved Philamcare

Philamcare brought an instant petition for

review arguing that:

2.

W/N the spouse being "not" legal wife can claim

- YES

health care agreement is not an

insurance contract; hence the "incontestability

clause" under the Insurance Code does not apply.

HELD: Petition is DENIED. CA AFFIRMED.

grants "living benefits," such as medical

check-ups and hospitalization which a member

1. YES.

may immediately enjoy so long as he is alive upon

effectivity of the agreement until its expiration
one-year thereafter
only medical and hospitalization benefits

are given under the agreement without any

indemnification, unlike in an insurance contract
where the insured is indemnified for his loss
since Health Care Agreements are only

for a period of one year, as compared to insurance

contracts which last longer; incontestability clause
does not apply, as the same requires an effectivity
period of at least two years
insurance company is governed by the

Insurance Commission, but a Health Maintenance

Organization under the authority of the
Department of Health
ISSUE:
1.

W/N the health care agreement is a contract of

insurance. - YES

P.D. 612 Insurance Code

Sec. 2 (1)
(1) A "contract of insurance" is an agreement whereby one un
consideration to indemnify another against loss, damage or lia
from an unknown or contingent event.
Sec. 3
Sec. 3. Any contingent or unknown event, whether past or futu
damnify a person having an insurable interest, or create a liab
him, may be insured against, subject to the provisions of this c

The consent of the husband is not necessary for the validity of

policy taken out by a married woman on her life or that of her

Any minor of the age of eighteen years or more, may, notwith

minority, contract for life, health and accident insurance, with
company duly authorized to do business in the Philippines, pro
insurance is taken on his own life and the beneficiary appointe
minor's estate or the minor's father, mother, husband, wife, ch
sister.

The married woman or the minor herein allowed to take out an

policy may exercise all the rights and privileges of an owner

under a policy.

The fraudulent intent on the part of

the insured must be established to warrant

All rights, title and interest in the policy of insurance taken out by an original
rescission
of the insurance contract.
owner on the life or health of a minor shall automatically vest
in the minor

Concealment
upon the death of the original owner, unless otherwise provided
for in the as a defense for the health care
policy.
provider or insurer to avoid liability is an
affirmative defense and the duty to establish such

In the case at bar, the insurable interest of

defense by satisfactory and convincing evidence

respondent's husband in obtaining the health care

agreement was his own health.

in the nature of non-life insurance, which is

primarily a contract of indemnity

Once the member incurs hospital, medical

or any other expense arising from sickness, injury

rests upon the provider or insurer.

P.D. 612 Insurance Code

Sec. 27
Sec. 27. A concealment whether intentional or unintentional e
injured party to rescind a contract of insurance.

insurance policies require the concurrence of the

or other stipulated contingent, the health care

following conditions: - none of these was made

provider must pay for the same to the extent

1. Prior notice of cancellation to insured;

agreed upon under the contract.

2. Notice must be based on the occurrence after

The answer in response to the question relating

effective date of the policy of one or more of the

to the medical history of the applicant largely

grounds mentioned;

depends on opinion rather than fact, especially

3. Must be in writing, mailed or delivered to the

coming from respondent's husband who was not a

insured at the address shown in the policy;

medical doctor.

4. Must state the grounds relied upon provided in

Where matters of opinion or judgment

Section 64 of the Insurance Code and upon request

are called for, answers made in good faith and

of insured, to furnish facts on which cancellation is

without intent to deceive will not avoid a policy

even though they are untrue.

cancellation of health care agreements as in

based.

When the terms of insurance contract contain

limitations on liability, courts should construe them

in such a way as to preclude the insurer from noncompliance with his obligation.

Being a contract of adhesion, the terms of an

insurance contract are to be construed strictly
against the party which prepared the contract - the
insurer.

(U)nder the title Claim procedures of expenses,

the defendant Philamcare Health Systems Inc. had
twelve months from the date of issuance of the

P.D. 612 Insurance Code

Sec. 10
Sec. 10. Every person has an insurable interest in the life and
(1) of himself, of his spouse and of his children;
(2) of any person on whom he depends wholly or in part for ed
support, or in whom he has a pecuniary interest;
(3) of any person under a legal obligation to him for the paym
respecting property or service, of which death or illness might
prevent the performance; and
(4) of any person upon whose life any estate or interest vested
depends.

Agreement within which to contest the

membership of the patient if he had previous

ailment of asthma, and six months from the

issuance of the agreement if the patient was sick

married to another woman who was still alive)

of diabetes or hypertension. The periods having

expired, the defense of concealment or
misrepresentation no longer lie.
2. YES.

not the legal wife (deceased was previously

health care agreement is in the nature of
a contract of indemnity.

payment should be made to the

party who incurred the expenses