Insurance (Case Tickler)

1. Enriquez v. Sunlife Insurance, GR 15895, Nov. 1920

2. Insular Life v. Ebrado, GR L-44059, Oct. 1977
3. Filipinas-Compania de Seguros de Nava, GR L-20552, May 1966
4. White Gold Marine Services v. Pioneer Insurance, GR 154514, July 2005
5. Philamcare Health Services Inc. v. CA, GR 125678, March 2002
6. Philippine Heath Care Providers v. CIR, GR 167330, Sept. 2009
7. Rizal Surety and Insurance Co. v. CA, GR 112360, July 2000
8. Blue Cross Health Care v. Olivares, GR 169737, Feb. 2008
9. Fortune Insurance and Surety Co. v. CA, GR 115278, May 1995
10. Gulf Resorts v. Phil. Charter Insurance Corp, GR 155167, May 2005
11. Eternal Gardens Memorial v. Philamlife Insurance, GR 166245, April 2008
12. Manila Bankers Life Insurance v. Aban, GR 175666, July 2013
13. Verendia v. CA, GR 75605, Jan. 1993
14. Gulf Resorts v. PCIC, supra.
15. Philamlife Health Systems v. CA, supra
16. Manila Mahogany Manufacturing Corp. v. CA, GR L-52756, Oct. 1987
17. Federal Express Corp. v. American Home Assurance, GR 150094, Aug. 2004

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Cases
1. Enriquez v. Sunlife Insurance, (GR D:
15895, Nov. 1920)
F:
Sept. 24 1917:Herrer made an
application to SunLifeCo.through its
office in Manila for Life Annuity.
o (2 days later)Herrer paid the
sum of 6k to the companys
manager in its Manila office and
was given a receipt.
Head office gave notice of
acceptance by cable to
Manila.
(On the same date) the
Manila office prepared a
Letter notifying Herrer
that his application has
been accepted and this
was placed in the ordinary
channels of transmission
(but was never actually
mailed and never received
by Herrer)
Doctrine
Laws Governing Insurance
Law on Insurance now found in the
Insurance Code and CC (Expressly
repealed the provisions on the Code
of Commerce on Insurance)
o In matters which are governed
by special laws, any deficiency of
the latter shall be supplied by
the provisions of the CC
Repeal of Commercial Law
left a void (Insurance Act
only deals w/ Life Insurance,
not Life Annuity), so CC
provision on Life Annuity
can be applied
Acceptance made by Letter (When
Perfected)
Acceptance made by letter shall bind
the person making the offer only
from the date it came to his
knowledge.(Art. 1262, CC)

Herrer died on Dec. 20, 1917.

o Plaintiff Enriquez (as
administrator of Herrers
estate)brought this action to
recover the 6k paid by the
 deceased.

I:W/N the insurance contract was

perfected(whether Herrer received
the notice of acceptance of his
application) - NO
NOT perfected because it had NOT
been proved satisfactorily that the
acceptance of the application ever
came to the knowledge of the
applicant - As provided in CC

RE: Kind of Insurance availed by

Herrer and Law that governs
Life Life Insurance
Annuity(Applic
able in this
case)
Governed by Governed by
CC (In Insurance
matters Act
which are
governed by
special laws,
any
deficiency of
the latter
shall be
supplied by
the
provisions of
this Code) -
Insurance
Act only
deals w/ Life
Insurance,
not Life
Annuity
Life Life
annuity is Insurance,
the opposite on the other
of a life hand, the
insurance. insured
during the
In life period of the
annuity, a coverage
big amount makes small
is given to regular
the payments
insurance and upon his
company, death, the
and if after a insurer pays
certain a big
period of amount to
 time the his
insured is beneficiaries
still living, .
he is
entitled to
regular
smaller
amounts for
the rest of
his life.

EX: Pensions

IN THIS CASE:
Applying Art. 1262, CC (On Life
Annuity), acceptance made by letter
shall not bind the person making the
offer except from the time it came to
his knowledge.

2. Insular Life v. Ebrado, (GR L- D:

44059, Oct. 1977)
F:Ebrado was issued by The Life
Assurance Co., whole-life plan for
P5,882 with a rider for Accidental
Death for the same amount.
o Ebrado designated Carponia
Ebrado as the revocable
beneficiary in his policy as his
wife. (In truth, she was a
common-law wife and they had 2
children)
Buenaventura died(Hit by a falling
branch of a tree.
o The insurance company was then
liable to pay P11,745.73
(representing the face value of
the policy +addtl. benefits for
accidental death and other costs)
Carponiafiled with the insurer a
claim for the proceeds of the policy
as she was the designated
beneficiary.
o She admits however, that she and
the deceased only lived as
husband and wife without the
benefit of marriage.
Pascuala Vda. De Ebrado also filed
her claim as the widow of the
deceased.
Laws Governing Insurance
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.
Life Insurance Policy and Donation
(Similar)
Life insurance policy is no different
from a civil donation insofar as the
beneficiary is concerned.
o Both are founded upon the same
consideration: Liberality.
o As a consequence, the
proscription in Art. 739, CC
should equally operate in life
insurance contracts.
The ff. donations shall be
void:
1. Those made between
persons who were guilty of
adultery orconcubinage at
the time of donation;
2. Those made between
persons found guilty of the
same criminaloffense, in
consideration thereof;
3. Those made to a public
officer or his wife,
 o Asserts that she is entitled to the
insurance proceeds and not the
common-law wife.
Insurer: In doubt as to whom the
proceeds should be paid, he commenced
an action for interpleader.
TC: Disqualified Carponia from
becoming the beneficiary of the insured.
I:W/N a common-law wife named as
beneficiary in the life insurance
policy of a legally married man
canclaim the proceeds in case of
death of the latter - NO (Carponia
disqualified to be a beneficiary. Proceeds
shall go to estate of Ebrado)
H:
Insurance Act (RA 2327, as
amended) or even the Insurance
Code (PD 612, as amended) does not
contain any specific provision grossly
resolutory of the question at hand.
Sec. 50, Insurance Act: the
insurance shall be applied exclusively
to the proper interest of the person
in whose name it is made
o The word interest does not
refer to the beneficiary but only
to the insured because insurance
is personal in character.
o Otherwise, the prohibitory laws
against illicit relationships will be
rendered nugatory, as they can
easily be circumvented by modes
of insurance.
Art. 2011, NCC: The contract of
insurance is governed by special
laws. Matters not expressly
provided for in such special laws
shall be regulated by this Code.
o Thus, 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.
Art. 2012, NCC: any person who is
descendants orascendants
by reason of his office.
Insurance Policy shall not benefit
common law sps.
Policy considerations and dictates of
morality rightly justify the institution
of a barrier between common law
spouses in property relations since it
ultimately encroaches upon the
nuptial and filial rights of the
legitimate family.
o The impediments imposed upon
married couple should likewise be
imposed upon extra-marital
relationship.
o If legitimate relationship is
circumscribed by these legal
disabilities, with more reason
should an illicit relationship be
restricted by these disabilities.
Crim. Conviction of Adultery/
Concubinage NOT necessary before
Art. 739 be applicable
A conviction for adultery or
concubinage need not be exacted
before the disabilities mentioned in
Article 739 may effectuate.
The guilt of the donee may be
proved by preponderance of
evidence in the same action
(Last par. of Art. 739)
 forbidden from receiving any
donation under Art. 739 cannot be
named beneficiary of a life insurance
policy by the person who cannot
make a donation to him.
o Common-law spouses are,
definitely, barred from
receiving donations from each
other.
o Art. 739, NCC: Donation shall
be void if made between persons
who were guilty of adultery or
concubinage at the time of
donation.
3. Filipinas-Compania de Seguros de
Nava (GR L-20552, May 1966)
F:
1. (Before the war) Nava obtained 18
Insurance Policies from Filipinas
Life Assurance Co.
IPs contain a Loan Clause (w/c
allows I/ed to borrow money from
I/er, AFTER 3Y from approval of
policy)
2. Navaapplied for a P5k loan.
Filipinas Life refused (After war,
Insurance Comm. required
insurance companies to withhold
payments on premiums, made
during Jap. occupation, bec. it
shall be subject to currency
adjustments)
3. Nava:
Haw Pia v. China Banking:
Establishing and recognizing the
relationship of D/or and C/or with
respect to payments in fiat
currency made during the Jap.
occupation on pre-war obligations
- Fil. Life still refused (Not
applicable when they relate to
life-insurance policies)
Filed for rescission of the 18
policies and for refund of
premiums paid
CFI: Ruled in favor of Nava
CA: Affirmed.
D:
Laws Governing Insurance
Insurance Law does not contain an
express provision as to what the
court should do in cases of rescission
of aninsurance policy[under Sec. 69];
hence, the provision that should
apply is that embodied in [Art. 1295]
Old CC.
Insured is Debtor of the Insurer
Petitioners maintain that the Haw Pia
case did not settle the question of the
valuation of premium payments in
Jap. military notes during the war on
life insurance policies bec. the
insured is by no means a debtor of
the insurer, noris the insurer his
creditor, considering that there is
absolutely no obligation on hispart to
pay the premiums.
COURT: There is no merit in this
contention. A life insurancepolicy
involves a contractual oblig. wherein
the insured becomes duty boundto
pay the premiums agreed upon, lest
he runs the risk of having his
insurancepolicy lapse if he fails to
pay such premiums.
The fact that the insurance
policycontains an automatic
premium payment clause cannot
divest such policy of
itscontractual nature, for the
result of such failure would only
be for him to pay laterthe
premium plus the corresponding
interest depending upon the
 Before SC, Filipinas Life argued condition of thepolicy.
that even if Nava is entitled, he is In effect, therefore, the payment
only entitled to recover the cash of premiums on the life
surrender value (He had fully insurance policieswere made by
enjoyed the protection of the a debtor to a creditor.
insurance on his life during the
period of the policies)
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I: W/N Nava is only entitled to cash
surrender value - NO
Argument had no basis.
o Considering that our Insurance
Law does not contain an express
provision as to what the court
should do in cases of rescission of
an insurance policy, the provision
that should apply is that
embodied in Ar. 1225 of the old
Civil Code, provides that on
matters which are not governed
by special laws the provisions of
said Code shall supplement its
deficiency.
o Art. 1295, OCC1

Haw Pia case applied:

all payments made in fiat currency
during the Japanese occupation in
relation with any contractual
obligation executed before the war
were valid to all intents and
purposes. - So, all payments made
by Nava, before, during and after the
war were considered valid.

Would Impair Contractual Oblig.

Regulation issued by Insurance
Comm. suspend the effectivity of a
provision or clause embodied in a
valid insurancepolicy would infringe
contractual oblig. (Violates Const.)

4. White Gold Marine Services v. D:

Pioneer Insurance (GR 154514,
July 2005)
F:
1. White Gold procured a protection
and indemnity coverage for its
Test of Insurance
The test to determine if a contract is
aninsurance contract or not, depends
on:
1. the nature of the promise,
2. the act required to be performed,

1 ART. 1295. Rescission makes necessary the return of the things which were the
subject-matter of the contract, with their fruits, and of the price paid, with interest
thereon. ...xxx
 vessels from Steamship Mutual
thru Pioneer Insurance and Surety
Corp.
When WG failed to fully pay its
accts., SMUA refused to renew its
coverage.
SMUAfiled a case for the
collection of sum of money to
recover the unpaid balance.
2. WGfiled a complaint w/ the
Insurance Comm. against SMUA and
Pioneer for violating the Insurance
Code2 (Re: Licensing)
IC: Ruled in favor of SMUA and Pioneer
SMUA (No need for license since not
engaged in insurance business)
SMUA: [We are] merely
anassociation of vessel owners
who have come together to
provide mutual protectionagainst
liabilities incidental to
shipowning (A Protection and
Indemnity Club)
Pioneer (Need not obtain another
license asinsurance agent and/or a
broker for Steamship Mutual because
Steamship Mutualwas not engaged in
the insurance business)
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I: W/N SMUA is engaged in
insurance business - YES
A Protection and Indemnity Club" is
a form of insurance against third
party liability, where
the 3rd party is anyone other than the P
& I Club and the members.
o Specifically, it is a mutual
insurance company engaged in
the marine insurance business.
o It maintains a resident agent in
the Phil. (Pioneer) to solicit
insurance and to collect payments
in its behalf.
o Hence, SMUA and Pioneer must
both obtain Cert. of Authority to
engage in insurance business.
. Philamcare Health Services Inc. v.
CA (GR 125678, March 2002)
2 a. SMUA: Secs. 186 & 187; Pioneer: Secs. 299, 300 and 301
and
3. the exact nature of the agreement
in the light of the occurrence,
contingency, or circumstances
under which the performance
becomes requisite.
Itis not by what it is called.
Doing Insurance Business:
See Sec. 2 (b) of Insurance Code
Mutual Insurance Company;
Elucidated:
Relatedly, a mutual insurance
company is a cooperative enterprise
where themembers are both the
insurer and insured.
In it, the members all contribute,
by asystem of premiums or
assessments, to the creation of a
fund from which all lossesand
liabilities are paid, and where
the profits are divided among
themselves, inproportion to their
interest.
Additionally, mutual insurance
associations, or clubs,provide 3
types of coverage, namely:
a. protection and indemnity,
b. war risks, and
c. defense costs.
Regulation by the State is necessary
in an Insurance Contract (Certificate
of Authority):
Since a contract of insurance
involves publicinterest, regulation by
the State is necessary. Thus, no
insurer or insurancecompany is
allowed to engage in the insurance
business without a license or
acertificate of authority from the
Insurance Commission.
D:
Contract of Insurance, Defined

F:
1. Ernani Trinosapplied for a health
care coverage with Philam.
He answered no to a question
asking if he or his family
members were treated to heart
trouble, asthma, diabetes, etc.
The application was approved for
1 year.
He was also given hospitalization
benefits and out-patient benefits.
After the period expired, he was
given an expanded coverage for
P75k.
2. (During the period) he suffered
from heart attack andconfined at
MMC.
Wife tried to claim the benefits -
Philam DENIED(Trinos concealed
his medical history by answering
no to the aforementioned
question).
She had to pay for the hospital
bills (P76k)
Trinosdied.
3. Wifefiled a case for the collection of
the amount + damages.
RTC: Ruled in favor of Wife (Awarded
P76k for the bills and P40 for damages)
CA: Affirmed w/ mod (Deleted damages)
Philam argues
It is not an insurance company
(under by Insurance Comm)
BUT a Health Maintenance Org
(under DOH)
Claimed that its Health Care
Agreementgrants benefit only
when the insured is alive during
the 1-year duration. It
contended that there was no
indemnification unlike in
insurance contracts.
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I: W/N Philams Health Care
Agreement is an insurance contract -
YES
Philamcare is liable.
See Sec. 2 (1), Insurance Code
Elements of a Contract of Insurance
1. The insured has an insurable
interest;
2. The insuredis subject to a risk of
loss by the happening of the
designated peril;
3. The insurerassumes the risk;
4. Such assumption of risk is part of a
general scheme to distribute actual
losses among a large group of persons
bearing a similar risk; and
5. In consideration of the insurer's
promise, the insured pays a premium.
Insurable Interest
See Sec. 10, Insurance Code
Exception to the Rule that
Concealment Avoid Policy
Where matters of opinion or
judgment arecalled for, answers
made in good faith and without intent
to deceive will not avoid a policy
even though they are untrue.
Although false, a representation of
the expectation, intention, belief,
opinion, or judgment of the
insured will not avoid the policy if
there is no actual fraud in
inducing the acceptance of the
risk, or its acceptance at a lower
rate of premium, and this is
likewise the rule although the
statement is material to the risk, if
the statement is obviously of the
foregoing character, since in such
case the insurer is not justified in
relying upon such statement, but
is obligated to make further
inquiry.
Rescission of Contract of Insurance
When (See Sec. 27, Insurance Code)
Cancellation of health care
agreements as in insurance
policies require the concurrence
of the ff. conditions:
1. Prior notice of cancellation to
insured;
2. Notice must be based onthe
occurrence after effective date of
the policy of one or more of the
 Health Care Agreement is an
Insurance Contract because all
elements are present:
a. Insurable interest (Trinos health)
b. Subject (Expenses)
c. Premiums paid
d. Rsik-distribution scheme
e. Insurer assumes risk (Health care
must pay for expenses)
groundsmentioned;
3. Must be in writing, mailed or
delivered to the insured at the
addressshown in the policy; 4. Must
state the grounds relied upon
provided in Sec. 64, Insurance
Code and upon request of insured,
to furnish facts on
whichcancellation is based.

The health care agreement was in

the nature ofnon-life insurance,
which is primarily a contract of
indemnity.
o Once the memberincurs hospital,
medical or any other expense
arising from sickness, injury or
otherstipulated contingent, the
health care provider must pay for
the same to the extentagreed
upon under the contract.

RE: Concealment
No concealment since the
representation was based on his
opisnion and Philamcare did not
make any further inquiry but just
relied on the opinsion.
o Assuming there was concealment,
Insurer is entitled to rescind, but
no rescission was made.

. Philippine Health Care Providers D:

v. CIR (GR 167330, Sept. 2009)
F:
1. CIR wrote a demand letter to
PhilHealth(for the payment of
deficiency taxes).
Doc. Stamp Tax was imposed on
PhilHealths mems (pursuant to
Sec. 185, 1997 Tax Code)
Sec. 185: On all policies of
insurance or obligations made by
corps. transacting in the business
of insurance must pay a DST of
50c on each P4 of the premium
charged.
Doing Insurance Business:
See Sec. 2 (b) of Insurance Code
Exception to the element of risk(In
doing insurance business):
Principal object and purpose test:
provides that if the assumption of
risk and indemnification of loss are
the principal object and purpose
of the org. (not merely incidental to
it), then it is in the business of
insurance.
o If merely incidental=>Not
insurance business

PhilHealth:
It is not an insurance company but
merely a Health Maintenance Org.
(So, not subject to DST)
Due to CIRs inaction, it brought the
 case to CTA.

CTA: Cancelled DST payment

CA: Ruled in favor of PhilHealth
(Agreement was in the nature of a non-
life insurance - subj. to DST)
--------------------------------------------------
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Ruling: Affirmed CA
I: W/N PhilHealth Providers is an
insurance company - NO
PhilHealth is NOT an insurance
company (So, not subj. to DST).
o It provides preventive, diagnostic,
and curative medical services for
its enrolled mems. (who pay
annual membership fees)

o Medical services will be

dispensed to mems by accredited
practitioners or hospitals, w/c are
then paid by PhilHealth.

o Principal object and purpose

test: provides that if the
assumption of risk and
indemnification of loss are the
principal object and purpose of
the org. (not merely incidental to
it), then it is in the business of
insurance.

IN THIS CASE:
PhilHealth is merely a health care
provider whose primary purpose is
to provide medical services to its
subscribers by providing them w/
physicians and hospital services at a
lower price.

The incidental presence of risk is

not sufficient to make it an insurance
company.

. Rizal Surety and Insurance Co. v. D:

CA(GR 112360, July 2000)
F:
1. Rizal Surety issued a fire insurance
policy on bldgs. owned by Transworld
Knitting Mills.
It covered property stored in the
premises occupied by them
forming part of the bldg.. situated
Contract of Adhesion
Art. 1377, CC: The interpretation of
obscure words or stipulations in a
contractshall not favor the party who
caused the obscurity
Landicho v. GSIS: The 'terms in
an insurance policy, which are
ambiguous,equivocal, or
 w/in own compd.
It includes a 4-span bldg.
(containing fun and amusement
machines and spare parts)
2. A fire broke out partly damaging the
4-span bldg. (the 2-storey bldg.,
allegedly called its annex, was also
damaged)
Transworld claimed for
insurance (annex an integral part
of the 4-span bldg)
Rizal Suretyargues that the fire
insurance covers only the 4-span
bldg.. (NOT the 2-storey annex)
TC: Ruled in favor of Transworld
CA: Affirmed w/ Mod. (To include
another insurance co.)
Insurance Co. v. Vda De
I:W/N the 2-storey annex is included
in the fire insurance policy -
YES(Coverage includes the 2-storey
annex)
H:
Policy includes the 2-storey bldg.
The policy did not limit its coverage
to the 4-span bldg
Stipulation under the policy
includes:
o Areas occupied by
Transworld; and
o Areas forming part of the
bldg. (including the 2-storey
bldg.)
2-storey bldg. was NOT merely an
annex.
Adjusters and Surveyors Co.
even attested (in a letter) that it
was adjoined and interconnected
w/ the 1st span of the area and so
it forms an integral part of the
bldg.
2-storey bldg. also already existing
when the insurance was constituted.
If it was not included, it should
have been specifically stated in
the policy.
RE: Interpretation of Contracts
uncertain x x x are to be
construed strictly and most
strongly against the insurer, and
liberally in favor of the insured so
as to effect thedominant purpose
of indemnity or payment to the
insured, especially where
forfeiture is involved.
o Reason:
a. Insured usually has no
voice in the selection or
arrangement of the
wordsemployed; and
b. Language of the
contract is selected by
experts and legal
advisersof the insurance
company.
Songco: This rigid application of
the rule on ambiguities has
become necessary inview of
current business practices.
o Nowadays monopolies,
cartels and concentration
of capital (endowed
withoverwhelming economic
power) manage to impose
upon parties dealingwith them
cunningly prepared
'agreements' that the weaker
party may notchange one,
o [Weaker partys] participation
in the 'agreement' being
reduced to thealternative to
'take it or leave it'
'contractsby adherence', in
contrast tothose entered
intoby parties bargaining on
an equal footing.
o [Contracts of adhesion],of
which policiesof insurance
and international bills of
lading are prime example,call
for greater strictness and
vigilance on the part of courts
of justice with aview to
protecting the weaker party
from abuses and imposition,
andprevent their becoming
traps for the unwary.
 Bec. of the doubt in what portions of
the bldg. is insured, Court brought
up Art. 1377, CC.

IN THIS CASE:
o The Fire Insurance Policy
Contract shall be resolved against
Rizal Surety (whose lawyer/ mngr.
drafted the contract)

o Reason: See cases in doctrine

. Blue Cross Health Care v.
Olivares (GR 169737, Feb. 2008)
F:
1. Olivaresapplied for a health care
program w/ Blue Cross (covering Oct.
2002-2003)
All amts. were paid in full
Agreement stipulated that
ailments due to pre-existing
conditions were excluded
from the coverage
2. (Less than 2 mos. after) She suffered a
strokeand was admitted to Medical City
(one of the hospitals accredited by Blue
Cross)
Blue Cross refused to pay the
bills.
Sps. Olivares were prompted to
pay so they filed a case against
Blue Cross
I: W/N Olivares is excluded from the
coverage of the health care
agreement - NO
Blue Cross was NOT able to prove
that the stroke was caused by a pre-
existing condition.
D:
Contract of Adhesion
Citing Philamcare 2002 doctrine:
Health care agreement is in the
nature of a non-life insurance.
Rule in insurance
contracts:When the terms
contain limitations on liability =
they should be construed strictly
against the insurer.
These are contracts of adhesion
the terms of which must be
interpreted and enforced strictly
against the insurer which
prepared the contract. (This
doctrine is equally applicable to
health care agreements)
Limitations of liability(on the part of
the insurer or health care provider)
must be construed in such a way
as to preclude it from evading its
obligations.
Accordingly, they should be
scrutinized by the courts with
extreme jealousy and care and
with a jaundiced eye

Merely speculated that the

doctors report would be adverse
to that of Olivares (Since Olivares
refused to allow her Dr. to
present her reportinvoking
physician-patient privilege) - A
disputable presumption under
Rule 131, RoC

RE: Interpretation of Contracts

Insurance policy must be construed
strictly against the Insurer (See
doctrine)
. Fortune Insurance and Surety Co. D:
 v. CA (GR 115278, May 1995)
F:
1. Producers Bankobtained a Money,
Security, and Payroll Robbery policy
from Fortune Insurance
2. An armored car of Producers Bank
was robbed (while in the process of
transferring cash of P725k under
custody of its teller) - while in Taft Ave.
Driver and the guard (along w/ some
others) were charged w/ violation
ofAnti-Highway Robbery Law - an
inside job
Contract of Adhesion (Rule NOT
applied when there is no ambiguity
in interpretation)
A contract of insurance is a
contract of adhesion, thus any
ambiguity should be resolved strictly
against the insurer or construed
liberally in favor of the insured.
Limitations of liability should
be regarded with extremejealousy
and must be construedin such a
way, as to prevent the insurer
from non-compliancewith its
obligation.

2. PB made demands for Fortune to pay

the amt. of loss
BUT Fortune refused since the loss is
EXCLUDED from the coverage of the
insurance policy w/c states:
(b) any loss caused by any
dishonest, fraudulent or criminal
act of the insured or any officer,
employee, partner, director, trustee
or authorized representative of the
Insured whether acting alone or in
conjunction with others

PB:
Driver and guardnot its officer,
employee, trustee or authorized
representative at the time of the
robbery:
o Driver (assigned by PRC
Management Systems with
Producers by virtue of an
Agreement)
o Guard (assigned by Unicorn
Security Services, Inc. to
Producers by virtue of a contract
of Security Service)
TC: In favor of PB
CA: Affirmed

I: W/N Fortune is liable - NO

RE: Interpretation of Contracts

Theft / Robbery Insurance (entered
by parties) is a Casualty Insurance3
IC contains no other provisions

3 Sec. 174. Casualty insurance is insurance covering loss or liability arising from
accident or mishap, excluding certain types of loss which by law or custom are
considered as falling exclusively within the scope of insurance such as fire or
marine.
 applicable to casualty insurance
or to theft/ robbery insurance in
particular - So, rights and obligs.
determined by the contract of
parties.

In theft, robbery insurance, the

opportunity to defraud the
insurer (the moral hazard) is so
greatthat insurers have found it
necessary to fill up their policies
w/ countless restrictions - to
reduce the hazard.

A contract of insurance is a
contract of adhesion (See
doctrine)

However, if the terms of the

contract are clear and
unambiguous, there is no room
for construction and such terms
cannot be enlarged or diminished
by judicial construction.

IN THIS CASE
The term employee and
authorized rep should be given the
meaning as understood in common
speech.
Driver and Sec. guard are
considered authorized rep. of
PB(bec. they were entrusted w/
the duty to safely transfer the
money) - So, w/in the
contemplation of the general
exception clause.

It is the intention of Fortuneto

exclude from protection coverage
losses arising from dishonest,
fraudulent, or criminal acts of
persons granted or having
unrestricted access to Producers'
money or payroll

0. Gulf Resorts v. Phil. Charter D:

Insurance Corp (GR 155167, May Contract of Adhesion (Rule NOT
2005)
It includes, but is not limited to, employer's liability insurance, public liability
insurance, motor vehicle liability insurance, plate glass insurance, burglary and
theft insurance, personal accident and health insurance as written by non-life
insurance companies, and other substantially similar kinds of insurance.
F:
1. Gulf Resorts is the owner of the
Plaza Resort(La Union)
It had its properties in the resort
insured originally w/American
Home Assurance Company
(AHAC).
o (In the first 4 policies issued) the
risks of loss from earthquake
shock was extendedonly to GRs
2 swimming pools.
GR agreed to insure with Phil
Charter Insurancethe properties
covered by the AHACpolicy(Provided
that the policy wording and rates in
said policy be copied in the policy to
be issued by Phil Charter).
applied when insured knows the
terms of the contract)
A contract of adhesion is one
wherein a party, usually a
corporation, prepares the
stipulations in the contract, while the
other party merely affixes his
signature or his "adhesion" thereto.
Courts have held that in these
contracts, parties do not bargain
on equal footing (weaker party's
participation reduced to the
alternative to take it or leave it.
Thus, these contracts are viewed
as traps for the weaker party
whom the courts of justice must
protect)- SO, resolved against
insurer

2. Phil Charter issued a policy to When to apply the rule on adhesion:

GR(for P10.7M)
Total premium:P45k.
GRpaid only P393 as premium
against earthquake shock (ES).
3. Earthquake struck Luzon and affected
GRs properties.
GR claimed for insurance.
PCI denied claim(Policy only
covers the2 swimming pools of
the resort).
Only when the contract is one-sided
and weaker party was left at the
mercy of thedrafter of the contract.
When NOT to apply the rule on
adhesion
When the parties are completely
aware of the provisions of the
contract and had a share in drafting
the same.

TC: Ruled in favor of PCI

Insurance Contracts are contracts
of adhesion.
If the language used is
ambiguous, it shall be resolved
against the party responsible ie.
the insurance co. w/c prepared
the contract.
In this case,

I: W/N the policy covers only the 2

swimming pools - YES
Insurance contracts are contracts
of adhesion (See doctrine)
HOWEVER, the Court did NOT
apply the rule on contracts of
adhesion (to interpret strictly
against the insurer) bec.
GRcannot claim that it did not
know the provisions of the policy
- GR was the one who asked PCI
to copy verbatim the provisions of
 its insurance policy w/ AHAC.
AHACpolicy only extends to
o
the 2 swimming pools.
. Eternal Gardens Memorial v.
Philamlife Insurance (GR 166245,
April 2008)
F:
1. PhilamlifeInsuranceentered into a
Creditor Group Life Policy with
EternalGardens Memorial Park
Corp.,
Clients of Eternal(who purchased
burial lots oninstallment
basis)would be insured
byPhilamlife.
Eternal was required underthe
policy to submit:
o A list of all new lot
purchasers,
o A copy of the application of
eachpurchaser and
o Amts of unpaid balances of all
those insured.
2. Eternal filed a claim
w/Philamlife[when John Chuang, one of
the purchasers in the list, died butthe
company denied the claim - alleging
that no application for group
insurance wassubmitted prior to
Chuangs death]
3. Problem arise in the ambiguity of the
2 sentences in a provision in the policy
(Effective date of benefit clause):
- The insurance of any eligible Lot
Purchaser shall be effective on the
date he contracts a loan with the
Assured. However, there shall be no
insurance if the application of the Lot
Purchaser is not approved by the
Company.
1st clause: Insurance coverage
of Eternal mems. effective
upon contracting of loan.
2nd clause: Requires Philamlife
to approve the insurance
contract before it becomes
effective
I: To whom shall the contract be
D:
Contract of Adhesion
A contract of insurance is a
contract of adhesion, thus any
ambiguity should be resolved strictly
against the insurer or construed
liberally in favor of the insured
Insurance contracts arewholly
prepared by the insurer with vast
amounts of experience in theindustry
purposefully used to its advantage.
More often than not,
insurancecontracts are contracts
of adhesion containing technical
terms andconditions of the
industry, confusing if at all
understandable to laypersons,that
are imposed on those who wish to
avail of insurance.
As such,insurance contracts are
imbued with public interest
that must be consideredwhenever
the rights and obligations of the
insurer and the insured are to
bedelineated.
o Hence, in order to protect the
interest of insurance
applicants,insurance
companies must be obligated
to act with haste upon
insuranceapplications, to
either deny or approve the
same, or otherwise be bound
tohonor the application as a
valid, binding, and effective
insurance contract
interpreted in favor of - Eternal
(against Philamlife)
Insurance contract is a contract of
adhesion (See doctrine)

IN THIS CASE:
The rule applies and the vague
provision shall be interpreted in
favor of the Eternal (insured) - That
upon purchase of memorial lots, an
insurance is already created.
2nd sentence is a resolutory
condition w/c would lead to the
cessation of the insurance
contract.
. Manila Bankers Life Insurance v.
Aban (GR 175666, July 2013)
F:
1. Delia Sotero availed a life insurance
policy w/ Manila Bankers (designating
her niece as beneficiary)
When the insurance policy had been
in force for 2Y and 7M, Sotero died.
Niecefiled a claim for the insurance
proceeds
2. Manila Bankers conducted an
investigation and discovered the ff:
a. Sotero did not personally apply
she was illiterate
b. Sotero was sickly since 1990
c. Sotero did not have the financial
capability to pay the premiums
d. Sotero did not sign the July 1993
application
e. Niecewas the one who filed the
application and designated
herself as beneficiary.
3. Manila Bankersdenied the claimand
premiums refunded.
One year later MBaction was filed
for rescission/annulment of the
policy(There was fraud, concealment,
and/or misrepresentation, rendering
the insurance contract voidable)
o MB claims that their insurance
agent connived w/ the Niece
(cousin of her husband) in
committing the fraud.
D:
Contract of Adhesion
A contract of insurance is a
contract of adhesion, thus any
ambiguity should be resolved strictly
against the insurer or construed
liberally in favor of the insured (to
safeguard the latters interest)
Insurers may not be allowed to
delay the payment of claims by
filingfrivolous cases in court,
hoping that the inevitable may be
put off for years (or even
decades) by the pendency of
these unnecessary court cases.
Inthe meantime, they benefit
from collecting the interest
and/or returns onboth the
premiums previously paid by the
insured and the
insuranceproceeds which should
otherwise go to their
beneficiaries.
The business ofinsurance is a
highly regulated commercial
activity in the country, and is
imbued with public interest.

Problem of interpretation arose in

applying Sec. 484
o MB claims that Sec. 48 does not
 apply bec.
o Contract was entered thru
fraud
o Relied on results of
investigation after after the
claim for insurance proceeds
were filed.

I: W/N the insurance contract shall

be rescinded - NO
Court dismissed the Results and
conclusions(Unilaterally by MB)
after the claim was filed= Self-
serving and may not form the basis of
a cause of action given Sec. 48

Life insurance policies that pass

the statutory two-year period are
essentially treated as legitimate and
beyond question
(INCONTESTABILITY CLAUSE)5
Insurance contracts are
contracts of adhesion- See
doctrine

13.Verendia v. CA (GR 75605, Jan. D:
1993) Contract of Indemnity
F: An insurance contract is the law
1. Rafael Verendia's residential between the parties.
building obtained a fire insurance Its terms and conditions
policy w/ Fidelity and Surety Insurance constitute the measure of the
Company, Country Bankers Insurance insurer's liability and compliance
and Development Insurance (Monte de w/ such terms and conditions is a
Piedad & Savings Bank as beneficiary) condition precedent to the
insured's right to recovery from

4 Sec. 48:Whenever a right to rescind a contract of insurance is given to the

insurerby any provision of this chapter, such right must be exercisedprevious to
the commencement of an action on the contract.

After a policy of life insurance made payable on the death of the insuredshall
have been in force during the lifetime of the insured for a period of two
years from the date of its issue or of its last reinstatement, the insurer
cannot prove that the policy is void ab initio or is rescindible by reason of the
fraudulent concealment or misrepresentation of the insured or his agent.
(INCONTESTABILITY CLAUSE)

5Incontestability Clause: a provision in law that after a policy of lifeinsurance

made payable on the death of the insured shall have been inforce during the lifetime
of the insured for a period of two (2) years from thedate of its issue or of its last
reinstatement, the insurer cannot prove thatthe policy is void ab initio or is
rescindible by reason of fraudulentconcealment or misrepresentation of the insured
or his agent.
2. Sometime thereafter: The building
was completely destroyed by fire
Fidelity refused the claim (There
was a misrepresentation in the
contract since the Lessee was not
Roberto Garcia but Marcelo Garcia)
TC: Ruled in favor of Fidelity
CA: Reversed
the insurer
As it is also a contract of
adhesion, an insurance contract
should be liberally construed in
favor of the insured and strictly
against the insurer company
which usually prepares it

I: W/N Verendia can claim under the

insurance policy NO
Verendia failed to live by the terms
of the policy (Specifically Sec. 13:
that all benefits under the policy
shall be forfeited "If the claim be in
any respect fraudulent, or if any false
declaration be made or used in
support thereof, or if any fraudulent
means or devises are used by the
Insured or anyone acting in his
behalf to obtain any benefit under
the policy".

IN THIS CASE:
Verendia used a false lease contract
to support his claim under Fire
Insurance Policy.

Worse, by presenting a false lease

contract, Verendia, reprehensibly
disregarded the principle that
insurance contracts are uberrimae
fidae and demand the most abundant
good faith
14. Gulf Resorts v. PCIC, supra
H:
In the subject policy, no premium
payments were made with regard to
earthquake shock coverage, except
on the two swimming pools.
There is no mention of any
premium payable for the other
resort properties with regard to
earthquake shock.
15. Philamlife Health Systems v. CA,
supra
D:
Premium
An insurance premium is the
consideration paid an insurer for
undertaking to indemnify the insured
against a specified peril.
In fire, casualty, and marine
insurance, the premium payable
becomes a debt as soon as the
risk attaches
D:
Premium
Athough false, a representation of
the expectation, intention, belief,
opinion, or judgment of the insured
will not avoid the policy if there is no
actual fraud in inducing the
acceptance of the risk, or its
 acceptance at a lower rate of
premium, and this is likewise the
rule although the statement is
material to the risk, if the statement
is obviously of the foregoing
character, since in such case the
insurer is not justified in relying upon
such statement, but is obligated to
make further inquiry.

16. Manila Mahogany Manufacturing D:

Exceptions to the Subrogation Rule
Corp. v. CA (GR L-52756, Oct. 1987)

F:
1.
18. Federal Express Corp. v. American D:
Exceptions to the Subrogation Rule
Home Assurance (GR 150094, Aug.
2004)
F:
1.