Insu Cases
3. Eternal Gardens vs. Philam Life
Facts:
-Respondent Philam life entered into an agreement
denominated as Creditor Group Life Policy with petitioner
Eternal Gardens.
- Under the policy, the clients of Eternal who purchased
burial lots from it on installment basis would be insured by
Philamlife
-The policy was to be effective for a period of one year,
renewable on a yearly basis.
-Eternal was required under the policy to submit to Philamlife
a list of all new lot purchasers, together with a copy of the
application of each purchaser, and the amounts of the
respective unpaid balances of all insured lot purchasers
-Eternal complied by submitting a letter dtd 12.29.1982
containing a list of insurable balances of its lot buyers for
10.1982
- One of those included in the list as "new business" was a
certain John Chuang. On 8.2.1984 Chuang died.
-Eternal sent a letter to Philamlife, which served as an
insurance claim for Chuangs death.
-In reply, Philamlife wrote Eternal a letter requiring Eternal to
submit additional requirements which Eternal complied with.
-Eternal transmitted the documents which Philamlife
received on 11.15.1984
-After more than a year, Philamlife had not furnished Eternal
with any reply to the latters insurance claim
-This prompted Eternal to make a demand for payment which
Philam life denied.
-Consequently, Eternal filed a case for collection against
Philamlife.
Issue:
May the inaction of the insurer on the insurance application
be considered as an approval of the application?
Ruling:
Yes.
-As earlier stated, Philamlife and Eternal entered into an
agreement denominated as Creditor Group Life Policy
- In the policy, it is provided that xxx 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 xxx
-An examination of the above provision would show
ambiguity between its two sentences. The first sentence
appears to state that the insurance coverage of the clients
of Eternal already became effective upon contracting a
loan with Eternal while the second sentence appears to
require Philamlife to approve the insurance contract
before the same can become effective.
-It must be remembered that an insurance contract is a
contract of adhesion which must be construed liberally in
favor of the insured and strictly against the insurer
-Clearly, the vague contractual provision, in Creditor
Group Life Policy must be construed in favor of the
insured and in favor of the effectivity of the insurance
contract
-the mere inaction of the insurer on the insurance
application must not work to prejudice the insured; it
cannot be interpreted as a termination of the insurance
contract. The termination of the insurance contract by the
insurer must be explicit and unambiguous.
4. Calanoc vs. CA
Facts:
-Melencio Basilio was a watchman of the Manila Auto
Supply
-He secured a life insurance policy from the Philam life to
which was attached a supplementary contract covering
death by accident
- he died of a gunshot wound on the occasion of a robbery
committed in the house of Atty. Ojeda
- Virginia Calanoc, the widow, was paid the sum of P2,000,
face value of the policy, but when she demanded the
payment of the additional sum representing the value of the
supplemental policy, the company refused alleging, as main
defense, that the deceased died because he was murdered
by a person who took part in the commission of the robbery
and while making an arrest as an officer of the law which
contingencies were expressly excluded in the contract and
have the effect of exempting the company from liability
Issue:
WON Philam life, as insurer, is liable for the amount covered
by the supplemental contract
Ruling:
Yes.
- While as a general rule "the parties may limit the coverage
of the policy to certain particular accidents and risks or
causes of loss, and may expressly except other risks or
causes of loss therefrom.
-however, it is to be desired that the terms and phraseology
of the exception clause be clearly expressed so as to be
within the easy grasp and understanding of the insured, for if
the terms are doubtful or obscure the same must of
necessity be interpreted or resolved against the one who has
caused the obscurity.
-the circumstances unfolded in the present case do not
warrant the finding that the death of the unfortunate victim
comes within the purview of the exception clause of the
supplementary policy and, hence, do not exempt the
company from liability.
5. Biagtan vs. Insular life
Facts:
- Juan S. Biagtan was insured with defendant InsularLife
for 5k and under a a supplementary contract denominated
"Accidental Benefit Clause" for additional sum of 5k if the
death of the insured is a result of an accident.
-However, the clause also provides that it would not apply
where the death resulted from an injury intentionally
afflicted by another party.
-One night, while the insurance policy is still in effect, a
band of robbers entered the house of the insured.
- that in committing the robbery, the robbers, on reaching
the staircase landing on the second floor they suddenly
met a person near the door of one of the rooms who
turned out to be the insured who received thrusts from
their sharp-pointed instruments, causing wounds resulting
to his death.
-Plaintiffs, as beneficiaries of the insured, filed a claim
under the policy
-he insurance company paid the basic amount of
P5,000.00 but refused to pay the additional sum of
P5,000.00 under the accidental death benefit clause on
the ground that the insured's death resulted from injuries
intentionally inflicted by third parties and therefore was
not covered.
Issue:
WON the wounds inflicted on the insured, Juan Biagtan, at
the hands of the robbers were inflicted intentionally?
Ruling:
Yes.
-Nine wounds were inflicted upon the deceased, all by
means of thrusts with sharp-pointed instruments wielded
by the robbers. This is a physical fact as to which there is
no dispute. So is the fact that five of those wounds caused
the death of the insured.
- Whether the robbers had the intent to kill or merely to
scare the victim or to ward off any defense he might offer,
it cannot be denied that the act itself of inflicting the
injuries was intentional.
-It should be noted that the exception in the accidental
benefit clause invoked by the appellant does not speak of
the purpose whether homicidal or not of a third party in
causing the injuries, but only of the fact that such injuries
have been "intentionally" inflicted this obviously to
distinguish them from injuries which, although received at
the hands of a third party, are purely accidental.
-But where a gang of robbers enter a house and coming face
to face with the owner, even if unexpectedly, stab him
repeatedly, it is contrary to all reason and logic to say that
his injuries are not intentionally inflicted, regardless of
whether they prove fatal or not. As it was, in the present
case they did prove fatal, and the robbers have been
accused and convicted of the crime of robbery with
homicide.
-"intentional" implies the exercise of the reasoning faculties,
consciousness and volition.
6. Sun Insu vs. CA
Facts:
- Petitioner, Sun Insurance, issued Personal Accident Policy
to Felix Lim.
-At the night of insured's death, he was with his secretary.
-According to her, Lim was in a happy mood (but not drunk)
and was playing with his handgun, from which he had
previously removed the magazine.
-As she watched television, he stood in front of her and
pointed the gun at her. She pushed it aside and said it might
he loaded. He assured her it was not and then pointed it to
his temple.
- The next moment there was an explosion and Lim slumped
to the floor. He was dead before he fell
-As beneficiary, his wife Nerissa Lim sought payment on the
policy but her claim was rejected.
-The petitioner agreed that there was no suicide. It argued,
however that there was no accident either.
Issue:
WON the death of the insured is accidental to enable the
beneficiary to claim on the policy?
Ruling:
Yes.
-An accident is an event which happens without any
human agency or, if happening through human agency,
an event which, under the circumstances, is unusual to
and not expected by the person to whom it happens. It
has also been defined as an injury which happens by
reason of some violence or casualty to the injured without
his design, consent, or voluntary co-operation.
-In light of these definitions, the Court is convinced that
the incident that resulted in Lim's death was indeed an
accident.
-Accident insurance policies were never intended to
reward the insured for his tendency to show off or for his
miscalculations. They were intended to provide for
contingencies.
-To repeat, the parties agree that Lim did not commit
suicide. Nevertheless, the petitioner contends that the
insured willfully exposed himself to needless peril and
thus removed himself from the coverage of the insurance
policy.
-Lim was unquestionably negligent and that negligence
cost him his own life. But it should not prevent his widow
from recovering from the insurance policy he obtained
precisely against accident. There is nothing in the policy
that relieves the insurer of the responsibility to pay the
indemnity agreed upon if the insured is shown to have
contributed to his own accident. Indeed, most accdents
are caused by negligence.
7. Grepalife vs. CA & Ngo Hing

Facts:
-Ngo Hing filed an application with Grepalife for a twenty-
year endownment policy on the life of his one-year old
daughter Helen Go
-Respondent supplied data with Lapulapu Mondragon,
Branch Manager of Grepalife
-Ngo Hing paid the annual premium
- Upon the payment of the insurance premuim, the binding
deposit receipt was issued
- petitioner Mondragon handwrote at the bottom of the back
page of the application form his strong recommendation for
the approval of the insurance application
-Mondragon received a letter from Pacific Life disapproving
the insurance application
- The letter stated that the said life insurance application for
20-year endowment plan is not available for minors below
seven years old, but Pacific Life can consider the same under
the Juvenile Triple Action Plan
-The non-acceptance of the insurance plan by Pacific Life was
allegedly not communicated by petitioner Mondragon to
private respondent Ngo Hing
- Mondragon wrote back Pacific Life again strongly
recommending the approval of the 20-year endowment
insurance plan to children
- Helen Go died of influenza
-private respondent sought the payment of the proceeds of
the insurance, but having failed in his effort, he filed the
action for the recovery of the same
Issue:
1. WON the binding deposit receipt constituted a temporary
contract of the life insurance
2. WON Ngo Hing concealed the state of health and physical
condition of Helen Go
Ruling:
1. No.
-binding deposit receipt in question is merely an
acknowledgment, on behalf of the company, that the
latters branch office had received from the applicant the
insurance premium and had accepted the application
subject for processing by the insurance company; and that
the latter will either approve or reject the same on the
basis of whether or not the applicant is insurable on
standard rates.
- Grepalife disapproved the insurance application in
question on the ground that it is not offering the twenty-
year endowment insurance policy to children less than
seven years of age. What it offered instead is another plan
known as the Juvenile Triple Action, which private
respondent failed to accept.
-We are not impressed with private respondent's
contention that failure of petitioner Mondragon to
communicate to him the rejection of the insurance
application would not have any adverse effect on the
allegedly perfected temporary contract
2. Yes.
-private respondent had deliberately concealed the state
of health and physical condition of his daughter Helen Go.
When private respondent supplied the required essential
data for the insurance application form, he was fully
aware that his one-year old daughter is typically a
mongoloid child. Such a congenital physical defect could
never be ensconced nor disguised. Nonetheless, private
respondent, in apparent bad faith, withheld the fact
material to the risk to be assumed by the insurance
company. As an insurance agent of Pacific Life, he ought
to know, as he surely must have known, his duty and
responsibility to supply such a material fact. Had he
divulged said significant fact in the insurance application
form. Pacific Life would have verified the same and would
have had no choice but to disapprove the application
outright.

8. Enriquez vs. Sunlife
Facts:
- Joaquin Herrer made application to the Sun Life for life
annuity
- Two days later he paid to the manager and was given a
receipt
- The application was immediately forwarded to the HO of
the company
- 11.26.1917 the head office gave notice of acceptance by
cable to Manila
-12.4.1917 policy was issued at Montreal
-12.18.1917 attorney Aurelio A. Torres wrote to the Manila
office of the company stating that Herrer desired to withdraw
his application.
-The following day the local office replied to Mr. Torres,
stating that the policy had been issued, and called attention
to the notification of 11.26.1917.
-letter was received by Mr. Torres on the morning of
12.21.1917.
-Mr. Herrer died on 12.20.1917
-Enriquez is the administrator of the estate of the deceased
Issue:
WON the contract for life annuity was perfected
Ruling:
No.
- In the Civil Code is found article 1262 providing that
"Consent is shown by the concurrence of offer and
acceptance with respect to the thing and the consideration
which are to constitute the contract. An acceptance made by
letter shall not bind the person making the offer except from
the time it came to his knowledge. The contract, in such
case, is presumed to have been entered into at the place
where the offer was made."
-An acceptance of an offer of insurance not actually or
constructively communicated to the proposer does not
make a contract. Only the mailing of acceptance
completes the contract of insurance, as the locus
pnitenti is ended when the acceptance has passed
beyond the control of the party.
- When a letter or other mail matter is addressed and
mailed with postage prepaid there is a rebuttable
presumption of fact that it was received by the addressee
as soon as it could have been transmitted to him in the
ordinary course of the mails. But if any one of these
elemental facts fails to appear, it is fatal to the
presumption
9. DBP vs. CA
Facts:
- Juan B. Dans, together with his wife Candida, his son and
daughter-in-law, applied for a loan with DBP
- As the principal mortgagor, Dans, then 76 years of age,
was advised by DBP to obtain a mortgage redemption
insurance (MRI) with DBP MRI Pool
-The loan was approved and released by DBP
-From the proceeds DBP deducted the MRI premium
-Dans died of cardiac arrest.
-DBP, upon notice, relayed this information to the DBP MRI
Pool
-DBP MRI Pool notified DBP that Dans was not eligible for
MRI coverage, being over the acceptance age limit of 60
years at the time of application
- DBP apprised Candida Dans of the disapproval of her late
husband's MRI application
-DBP offered to refund the premium which the deceased
paid but Candida Dans refused to accept the same,
demanding payment of the face value of the MRI or an
amount equivalent to the loa
Issues:
1. WON there is a contract made between DBP MRI Pool and
the late Juan Dans
2. WON the DBP is liable
Ruling:
1. No.
-Under the insurance contract, the MRI coverage shall take
effect: (1) when the application shall be approved by the
insurance pool; and (2) when the full premium is paid during
the continued good health of the applicant. These two
conditions, being joined conjunctively, must concur.
- the power to approve MRI applications is lodged with the
DBP MRI Pool. The pool, however, did not approve the
application of Dans. There is also no showing that it
accepted the sum of P1,476.00, which DBP credited to its
account with full knowledge that it was payment for Dan's
premium. There was, as a result, no perfected contract of
insurance; hence, the DBP MRI Pool cannot be held liable on
a contract that does not exist.
2. Yes.
-It was DBP, as a matter of policy and practice, that required
Dans, the borrower, to secure MRI coverage.
- Instead of allowing Dans to look for his own insurance
carrier or some other form of insurance policy, DBP
compelled him to apply with the DBP MRI Pool for MRI
coverage
- When Dan's loan was released DBP already deducted from
the proceeds thereof the MRI premium
-In dealing with Dans, DBP was wearing two legal hats: the
first as a lender, and the second as an insurance agent.
-As an insurance agent, DBP made Dans go through the
motion of applying for said insurance, thereby leading him
and his family to believe that they had already fulfilled all
the requirements for the MRI and that the issuance of their
policy was forthcoming. Apparently, DBP had full knowledge
that Dan's application was never going to be approved
-Under Article 1987 of the Civil Code of the Philippines, "the
agent who acts as such is not personally liable to the
party with whom he contracts, unless he expressly binds
himself or exceeds the limits of his authority without
giving such party sufficient notice of his powers."
-The DBP is not authorized to accept applications for MRI
when its clients are more than 60 years of age
- Knowing all the while that Dans was ineligible for MRI
coverage because of his advanced age, DBP exceeded the
scope of its authority when it accepted Dan's application
for MRI by collecting the insurance premium, and
deducting its agent's commission and service fee
-The liability of an agent who exceeds the scope of his
authority depends upon whether the third person is aware
of the limits of the agent's powers. There is no showing
that Dans knew of the limitation on DBP's authority to
solicit applications for MRI.
10. Insular Life vs. Ebrado
Facts:
-Buenaventura Cristor Ebrado was issued by the Life
Assurance with a rider for accidental death
-He designated CarpionaT. Ebrado as the revocable
beneficiary
-Buenaventura C. Ebrado died when he was hit by a
failing branch of a tree
-Carponia T. Ebrado filed with the insurer a claim for the
proceeds of the Policy as the designated beneficiary
therein
- she admits 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, not the common-law wife, Carponia T. Ebrado
-in doubt to whom insurance shall be paid, Insular
commence an action for interpleader

Issue:
WON a common-law-wife named as a beneficiary can claim
the proceeds of the insurance
Ruling:
No.
- 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. 4 Common-law
spouses are, definitely, barred from receiving donations from
each other
-In essence, a life insurance policy is no different from a civil
donation insofar as the beneficiary is concerned. Both are
founded upon the same consideration: liberality.
- As a consequence, the proscription in Article 739 of the
new Civil Code should equally operate in life insurance
contracts.
-If legitimate relationship is circumscribed by these legal
disabilities, with more reason should an illicit relationship be
restricted by these disabilities.
11. Maramag vs. Maramag
Facts:
-petitioners were the legitimate wife and children of Loreto
Maramag, while respondents were Loretos illegitimate
family
-Loreto Maramag procured an insurance with Insular life and
Grepa life
-In both policies, he designated his common-law-wife Eva
Maramag and their illegitimate children as beneficiaries
-Upon his death, the beneficiaries claim for the proceeds of
the policy
-Eva was also the suspect in the killing of Loreto
-the designation of Eva and her children was contested by
Vicenta Maramag, the legitimate wife
----> Insular life: Eva's designation as beneficiary is
revoked due to the fact that she is the suspect in his
killing
----> Grepalife: Eva is disqualified because of concubinage
Issue:
WON the illegitimate children can claim under the policies
Ruling:
Yes.
- under Sec. 53 thereof that the insurance proceeds shall
be applied exclusively to the proper interest of the person
in whose name or for whose benefit it is made, unless
otherwise specified in the policy.
-Since the defendants are the ones named as the primary
beneficiary in the insurances taken by the deceased and
there is no showing that herein plaintiffs were also
included as beneficiary therein the insurance proceeds
shall exclusively be paid to them. This is because the
beneficiary has a vested right to the indemnity, unless the
insured reserves the right to change the beneficiary
- proceeds of an insurance policy belong exclusively to the
beneficiary and not to the estate of the person whose life
was insured, and that such proceeds are the separate and
individual property of the beneficiary and not of the heirs
of the person whose life was insured
-However, one of the named beneficiary in the insurances
taken by the insured is his concubine Eva. Any person who
is forbidden from receiving any donation under Article 739
cannot be named beneficiary of a life insurance policy of
the person who cannot make any donation to him. If a
concubine is made the beneficiary, it is believed that the
insurance contract will still remain valid, but the indemnity
must go to the legal heirs and not to the concubine
- the only persons entitled to claim the insurance
proceeds are either the insured, if still alive; or the
beneficiary, if the insured is already deceased, upon the
maturation of the policy. The exception to this rule is a
situation where the insurance contract was intended to
benefit third persons who are not parties to the same in the
form of favorable stipulations or indemnity
-Petitioners are third parties to the insurance contracts with
Insular and Grepalife and, thus, are not entitled to the
proceeds thereof.
-Accordingly, respondents Insular and Grepalife have no
legal obligation to turn over the insurance proceeds to
petitioners.
-The revocation of Eva as a beneficiary in one policy and her
disqualification as such in another are of no moment
considering that the designation of the illegitimate children
as beneficiaries in Loretos insurance policies remains valid.
-Because no legal proscription exists in naming as
beneficiaries the children of illicit relationships by the
insured, the shares of Eva in the insurance proceeds,
whether forfeited by the court in view of the prohibition on
donations under Article 739 of the Civil Code or by the
insurers themselves for reasons based on the insurance
contracts, must be awarded to the said illegitimate children,
the designated beneficiaries, to the exclusion of petitioners.
12. Sps. Cha vs. CA
Facts:
-Spouses Nilo Cha and Stella Uy-Cha, as lessees, entered into
a lease contract with private respondent CKS Devt
Corporation for 1 yr with a stipulation not to insure against
fire the chattels, merchandise, textiles, goods and effects
placed at any stall or store or space in the leased premises
without first obtaining the written consent and approval of
the lessor
- Notwithstanding the above stipulation in the lease contract,
the Cha spouses insured against loss by fire the merchandise
inside the leased premises with United Insurance without
the written consent of private respondent CKS
- On the day that the lease contract was to expire, fire
broke out inside the leased premises
-When CKS learned of the insurance earlier procured by
the Cha spouses it wrote the insurer a demand letter
asking that the proceeds of the insurance contract be
paid directly to CKS, based on its lease contract with the
Cha spouses
-United refused to pay CKS. Hence, the latter filed a
complaint against the Cha spouses and United.
Issue:
WON the lease contract eneterd into between Sps Cha
and CKS is valid insofar as it provides that any fire
insurance policy entered into by the lessee over the
merchandise inside the lease premises is deemed
assigned or transferred to the lessor if said policy is
obtained without the prior written consent of the latter
Ruling:
No.
- basic in the law on contracts that the stipulations
contained in a contract cannot be contrary to law, morals,
good customs, public order or public policy
-A non-life insurance policy such as the fire insurance
policy taken by petitioner-spouses over their merchandise
is primarily a contract of indemnity
- Insurable interest in the property insured must exist at
the time the insurance takes effect and at the time the
loss occurs
-The basis of such requirement of insurable interest in
property insured is based on sound public policy: to
prevent a person from taking out an insurance policy on
property upon which he has no insurable interest and
collecting the proceeds of said policy in case of loss of the
property.
-In the present case, it cannot be denied that CKS has no
insurable interest in the goods and merchandise inside the
leased premises
-Therefore, respondent CKS cannot, under the Insurance
Code a special law be validly a beneficiary of the fire
insurance policy taken by the petitioner-spouses over their
merchandise
-This insurable interest over said merchandise remains with
the insured, the Cha spouses.
-The automatic assignment of the policy to CKS under the
provision of the lease contract previously quoted is void for
being contrary to law and/or public policy.
13. RCBC vs. CA and Goyu & Sons
Facts:
-GOYU applied for credit facilities and accommodations with
RCBC
- After due evaluation, RCBC, thru its key officials
recommended the approval of its application
- A credit facility was initially granted
-As security for its credit facilities with RCBC, GOYU executed
two real estate mortgages and two chattel mortgages in
favor of RCBC
-Under each of these four mortgage contracts, GOYU
committed itself to insure the mortgaged property with an
insurance company approved by RCBC, and subsequently, to
endorse and deliver the insurance polices to RCBC.
-GOYU obtained in its name a total of ten insurance policies
from Malyan Insurance (MICO)
- Alchester Insurance, the insurance agent where GOYU
obtained the Malayan insurance policies, issued nine
endorsements in favor of RCBC seemingly upon instructions
of GOYU
-Subsequently, one of GOYU's factory buildings was gutted
by fire
- Consequently, GOYU submitted its claim for indemnity on
account of the loss insured against.
- MICO denied the claim on the ground that the insurance
policies were either attached pursuant to writs of
attachments/garnishments issued by various courts or
that the insurance proceeds were also claimed by other
creditors of GOYU alleging better rights to the proceeds
than the insured
- GOYU filed a complaint for specific performance
-RCBC, one of GOYU's creditors, also filed with MICO its
formal claim over the proceeds of the insurance policies,
but said claims were also denied for the same reasons
that MICO denied GOYU's claims
Issue:
WON RCBC, as mortgagee, has any right over the
insurance policies taken by GOYU, the mortgagor, in case
of the occurrence of loss.
Ruling:
-It is settled that a mortgagor and a mortgagee have
separated and distinct insurable interests in the same
mortgaged property, such that each one of them may
insure the same property for his own sole benefit. There
is no question that GOYU could insure the mortgaged
property for its own exclusive benefit
-In the present case, although it appears that GOYU
obtained the subject insurance policies naming itself as
the sole payee, the intentions of the parties as shown by
their contemporaneous acts, must be given due
consideration in order to better serve the interest of
justice and equity.
-RCBC, in good faith, relied upon the endorsement
documents sent to it as this was only pursuant to the
stipulation in the mortgage contracts.
-GOYU failed to seasonably repudiate the authority of the
person or persons who prepared such endorsements. Over
and above this, GOYU continued, in the meantime, to
enjoy the benefits of the credit facilities extended to it by
RCBC.
- If there had not been actually an implied ratification of said
endorsements by virtue of GOYU's inaction in this case,
GOYU is at the very least estopped from assailing their
operative effects
-To permit GOYU to capitalize on its non-confirmation of
these endorsements while it continued to enjoy the benefits
of the credit facilities of RCBC which believed in good faith
that there was due endorsement pursuant to their mortgage
contracts, is to countenance grave contravention of public
policy, fair dealing, good faith, and justice.
14. Armando Geagonia vs. CA and Country Bakers Insurance
Corp
Facts:
- petitioner is the owner of Norman's Mart located in the
public market of San Francisco, Agusan del Sur
- he obtained from the private respondent fire insurance for
100k covering stock-in-trade consisting principally of dry
goods such as RTW's
- petitioner declared in the policy that Mercantile Insurance
Co., Inc. was the co-insurer for 50k
-The policy contained the following condition:
(3) the insured shall give notice to the Company of
any insurance or insurances already affected, or which may
subsequently be effected, covering any of the property or
properties consisting of stocks in trade, goods in process
and/or inventories only hereby insured, and unless such
notice be given and the particulars of such insurance or
insurances be stated therein or endorsed in this policy
pursuant to Section 50 of the Insurance Code, by or on
behalf of the Company before the occurrence of any loss or
damage, all benefits under this policy shall be deemed
forfeited, provided however, that this condition shall not
apply when the total insurance or insurances in force at the
time of the loss or damage is not more than P200,000.00.
- fire of accidental origin broke out at around 7:30 p.m. at
the public market
- petitioner's insured stock-in-trade were completely
destroyed prompting him to file with the private
respondent a claim under the policy
- private respondent denied the claim because it found
that at the time of the loss the petitioner's stocks-in-trade
were likewise covered by 2 fire insurance policies for 100k
each issued by Phil First insurance Co (PFIC)
-these policies indicate that the insured was "Messrs.
Discount Mart (Mr. Armando Geagonia, Prop.)" with a
mortgage clause reading:
MORTGAGE: Loss, if any shall be payable to Messrs.
Cebu Tesing Textiles,
-The basis of the private respondent's denial was the
petitioner's alleged violation of Condition 3 of the policy.
-Insu Commissioner: petitioner did not violate condition 3
as he had no knowledge of the existence of the 2 fire
insurance policies obtained from PFIC, that it was Cebu
Tessing that procured the the PFIC policies without
informing him or securing his consent.
-CA: reversed the decision of the Insurance Commission
because it found that the petitioner knew of the existence
of the two other policies issued by the PFIC
Issue:
WON the non-disclosure of other insurance policies violate
condition 3 of the policy, so as to deny Geagonia from
recovering on the policy
Ruling:
-We agree with the CA that the petitioner knew of the
prior policies issued by the PFIC
-His letter to the private respondent conclusively proves
his knowledge
-Condition 3 of the private respondent's Policy is a
condition which is not proscribed by law.
-its incorporation in the policy is allowed by Section 75 of
the Insurance Code which provides that "[a] policy may
declare that a violation of specified provisions thereof
shall avoid it, otherwise the breach of an immaterial
provision does not avoid the policy."
-It is commonly known as the additional or "other insurance"
clause and has been upheld as valid and as a warranty that
no other insurance exists. Its violation would thus avoid the
policy.
- However, in order to constitute a violation, the other
insurance must be upon same subject matter, the same
interest therein, and the same risk
-As to a mortgaged property, the mortgagor and the
mortgagee have each an independent insurable interest
therein and both interests may be one policy, or each may
take out a separate policy covering his interest, either at the
same or at separate times.
-the mortgagor's insurable interest covers the full value of
the mortgaged property, even though the mortgage debt is
equivalent to the full value of the property. 19 The
mortgagee's insurable interest is to the extent of the debt,
since the property is relied upon as security thereof, and in
insuring he is not insuring the property but his interest or
lien thereon. His insurable interest is prima facie the value
mortgaged and extends only to the amount of the debt, not
exceeding the value of the mortgaged property
-A mortgagor may, however, take out insurance for the
benefit of the mortgagee, which is the usual practice. The
mortgagee may be made the beneficial payee in several
ways
-He may become the assignee of the policy with the consent
of the insurer; or the mere pledgee without such consent; or
the original policy may contain a mortgage clause;
-The fire insurance policies issued by the PFIC name the
petitioner as the assured a simple loss payable clause, not a
standard mortgage clause.
-It is a cardinal rule on insurance that a policy or insurance
contract is to be interpreted liberally in favor of the insured
and strictly against the company, the reason being,
undoubtedly, to afford the greatest protection which the
insured was endeavoring to secure when he applied for
insurance.
-With these principles in mind, we are of the opinion that
Condition 3 of the subject policy is not totally free from
ambiguity and must, perforce, be meticulously analyzed.
Such analysis leads us to conclude that (a) the prohibition
applies only to double insurance, and (b) the nullity of the
policy shall only be to the extent exceeding P200,000.00
of the total policies obtained.
-A double insurance exists where the same person is
insured by several insurers separately in respect of the
same subject and interest. As earlier stated, the insurable
interests of a mortgagor and a mortgagee on the
mortgaged property are distinct and separate. Since the
two policies of the PFIC do not cover the same interest as
that covered by the policy of the private respondent, no
double insurance exists.
-The non-disclosure then of the former policies was not
fatal to the petitioner's right to recover on the private
respondent's policy.
15. Grepalife vs. CA and Medarda Leuterio
Facts:
-A contract of group life insurance was executed between
petitioner Grepalife abd DBP
- Grepalife agreed to insure the lives of eligible housing
loan mortgagors of DBP
-Dr. Wilfredo Leuterio, a physician and a housing debtor of
DBP applied for membership in the group life insurance
plan.
-in the application form, Dr. Leuterio answered "NO" to
certain questions regarding his health
- Grepalife issued Certificate No. B-18558, as insurance
coverage of Dr. Leuterio, to the extent of his DBP
mortgage indebtedness
-Dr. Leuterio died due to "massive cerebral hemorrhage.
- Consequently, DBP submitted a death claim to Grepalife.
- Grepalife denied the claim alleging that Dr. Leuterio was
not physically healthy when he applied for an insurance
coverage
- Grepalife insisted that Dr. Leuterio did not disclose he had
been suffering from hypertension, which caused his death
-Allegedly, such non-disclosure constituted concealment that
justified the denial of the claim.
- the widow of the late Dr. Leuterio, respondent Medarda V.
Leuterio, filed a complaint with the RTC against Grepalife for
"Specific Performance with Damages."
-TC rendered decision in favor of the widow and against
Grepalife
-CA affirmed TC's decision
Isssues:
1. WON DBP has insurable interest
2. WON Grepalife should be held liable
Ruling:
1. Yes
-The rationale of a group insurance policy of mortgagors,
otherwise known as the "mortgage redemption insurance," is
a device for the protection of both the mortgagee and the
mortgagor.
- On the part of the mortgagee, it has to enter into such form
of contract so that in the event of the unexpected demise of
the mortgagor during the subsistence of the mortgage
contract, the proceeds from such insurance will be applied to
the payment of the mortgage debt, thereby relieving the
heirs of the mortgagor from paying the obligation
-In a similar vein, ample protection is given to the mortgagor
under such a concept so that in the event of death; the
mortgage obligation will be extinguished by the application
of the insurance proceeds to the mortgage indebtedness.
-Consequently, where the mortgagor pays the insurance
premium under the group insurance policy, making the loss
payable to the mortgagee, the insurance is on the
mortgagors interest, and the mortgagor continues to be a
party to the contract. In this type of policy insurance, the
mortgagee is simply an appointee of the insurance fund,
such loss-payable clause does not make the mortgagee a
party to the contract.
-The insured private respondent did not cede to the
mortgagee all his rights or interests in the insurance, the
policy stating that: In the event of the debtors death
before his indebtedness with the Creditor [DBP] shall have
been fully paid, an amount to pay the outstanding
indebtedness shall first be paid to the creditor and the
balance of sum assured, if there is any, shall then be paid
to the beneficiary/ies designated by the debtor.
-When DBP submitted the insurance claim against
petitioner, the latter denied payment thereof, interposing
the defense of concealment committed by the insured.
Thereafter, DBP collected the debt from the mortgagor
and took the necessary action of foreclosure on the
residential lot of private respondent.
2. Yes
-Petitioner claims that there was no evidence as to the
amount of Dr. Leuterios outstanding indebtedness to DBP
at the time of the mortgagors death. Hence, for private
respondents failure to establish the same, the action for
specific performance should be dismissed. Petitioners
claim is without merit. A life insurance policy is a valued
policy. Unless the interest of a person insured is
susceptible of exact pecuniary measurement, the measure
of indemnity under a policy of insurance upon life or
health is the sum fixed in the policy.
-Grepalife failed to establish that there was concealment
made by the insured, hence, it cannot refuse payment of
the claim
-fraudulent intent on the part of the insured must be
established to entitle the insurer to rescind the contract.
Misrepresentation as a defense of the insurer to avoid
liability is an affirmative defense and the duty to establish
such defense by satisfactory and convincing evidence rests
upon the insurer
- In private respondents memorandum, she states that DBP
foreclosed in 1995 their residential lot, in satisfaction of
mortgagors outstanding loan. Considering this supervening
event, the insurance proceeds shall inure to the benefit of
the heirs of the deceased person or his beneficiaries. Equity
dictates that DBP should not unjustly enrich itself at the
expense of another (Nemo cum alterius detrimenio protest).
Hence, it cannot collect the insurance proceeds, after it
already foreclosed on the mortgage. The proceeds now
rightly belong to Dr. Leuterios heirs represented by his
widow, herein private respondent Medarda Leuterio.
16. Ang Ka Yu vs. Phoenix Assurance Ltd
Facts:
-Ang Ka Yu, herein petitioner, was engaged in the business of
dyeing and washing clothes.
-Thiswould require his clients to deliver and deposit to the
petitioner such clothes that would require hisservice.
-He acquired from Phoenix Assurance Co. Ltd., herein
respondent, a policy insuring theeffects of his business.
-When the clothes he had in his possession were lost, Ang Ka
Yu sought to recover from Phoenix Assurance.
-However, the latter refused the claim and denied liability on
theground that the petitioner was a mere possessor of said
items, andtherefore did not have anyinsurable interest to the
same.
Issue:
WON the petitioner, allegedly being a mere possessor, has
an insurable interest in the property of concern
Ruling:
Yes.
-A person to whom clothes are delivered for dyeing or
washing has insurable interest on such clothes, because
destruction of the textiles will mean pecuniary loss to him
as he will be deprived ofthe compensation he would be
entitled to for dyeing the same, not to mention his
pecuniary liabilityfor labour and expenses.
-A person who is interested in the safety and preservation
of materials in his possession belonging to third parties
because he stands either to benefit from their continued
existence or to be prejudiced by their destruction, has an
insurable interest thereon which is not necessarily limited
to the extent ofhis liability to the owners thereof.
-A person having mere right of possession of property may
insure it to its full value and in his own name, even when
he is not responsible for its safekeeping.
17. Malayan insurance vs. Phil First Insurance Co. (PFIC)
and Reputable Forwarders Services
Facts:
-Wyeth Philippines and respondent Reputable Forwarder
Services had been annually executing a contract of
carriage, whereby the latter undertook to transport and
deliver the formers products to its customers, dealers or
salesmen
- Wyeth procured Marine Policy from respondent PFIC to
secure its interest over its own products.
- PFIC thereby insured Wyeths nutritional, pharmaceutical
and other products usual or incidental to the insureds
business while the same were being transported or
shipped in the Philippines
-The policy covers all risks of direct physical loss or
damage from any external cause, if by land, and provides
a limit of 6M per any one land vehicle.
-on 12.1.1993, Wyeth executed its annual contract of
carriage with Reputable. It turned out, however, that the
contract was not signed by Wyeths representative/s.
-Nevertheless, it was admittedly signed by Reputables
representatives, the terms thereof faithfully observed by the
parties
-Under the contract, Reputable undertook to answer for "all
risks with respect to the goods and shall be liable to Wyeth
for the loss, destruction, or damage of the goods/products
due to any and all causes whatsoever, including theft,
robbery, flood, storm, earthquakes, lightning, and other force
majeure while the goods/products are in transit and until
actual delivery to the customers, salesmen, and dealers of
Wyeth
-The contract also required Reputable to secure an insurance
policy on Wyeths goods
-Thus, Reputable signed a Special Risk Insurance Policy (SR
Policy) with petitioner Malayan for the amount of 1M.
- during the effectivity of the Marine Policy and SR Policy,
Reputable received from Wyeth 1,000 boxes of Promil infant
formula to be delivered by Reputable to Mercury Drug
- Unfortunately, the truck carrying Wyeths products was
hijacked by about 10 armed men
-PFIC after due investigation and adjustment, and pursuant
to the Marine Policy, paid Wyeth as indemnity
-Philippines First then demanded reimbursement from
Reputable, having been subrogated to the rights of Wyeth by
virtue of the payment. The latter, however, ignored the
demand.
-PFIC instituted an action against Reputable
-PFIC stated tha tReputable is a private corporation engaged
in the business of common carrier
-Reputable claimed that it is a private carrier. It also claimed
that it cannot be made liable under the contract of carriage
with Wyeth since the contract was not signed by Wyeth's
representative and that the cause of the loss is not force
majeure.
-Subsequently, Reputable impleaded Malayan as third-party
defendant in an effort to collect the amount covered in the
SR Policy
- According to Reputable, "it was validly insured with
Malayan for 1M with respect to the lost products under the
latters Insurance Policy and that the SR Policy covered
the risk of robbery or hijacking
-Disclaiming any liability, Malayan argued, among others,
that under Section 5 of the SR Policy, the insurance does
not cover any loss or damage to property which at the
time of the happening of such loss or damage is insured
by any marine policy and that the SR Policy expressly
excluded third-party liability
-TC rendered decision finding Reputable liable to PFIC for
the amount of indemnity it paid to Wyeth. In turn, Malayan
is liable to Reputable to the extent of the policy coverage
Super digest of facts:
Wyeth contracted a contract of carriage with Reputable, a
common carrier for the transport of its goodsand product.
Wyeth insured the goods with PFIC, while Reputable
insured the same goods with Malayan insurance. During
transit, certain goods were lost due to hijacking of 10
armed men. PFIC paid the proceeds to Wyeth, subrogating
the rights of Wyeth to PFIC which filed a claim against
Reputable and Malayan as a 3rd party defendant.
Reputable and Malayan refusedt he claim of PFIC. Malayan
contended that there was double insurance and that the
first insurer, PFIC, should bear all the loss.
Issue:
1. WON Reputable is liable for the loss.
2. WON there is double insurance
3. WON Malayan is solidarily liable with Reputable
Ruling:
1. Yes
-Reputable is bound by the terms of the contract of
carriage.
-The extent of a private carriers obligation is dictated by
the stipulations of a contract it entered into, provided its
stipulations, clauses, terms and conditions are not
contrary to law, morals, good customs, public order, or
public policy against liability to third persons, the liability of the insurer
-Thus, being a private carrier, the extent of Reputables is direct and such third persons can directly sue the
liability is fully governed by the stipulations of the contract insurer. The direct liability of the insurer under indemnity
of carriage, one of which is that it shall be liable to Wyeth for contracts against third party[- ]liability does not mean,
the loss of the goods/products due to any and all causes however, that the insurer can be held solidarily liable with
whatsoever, including theft, robbery and other force majeure the insured and/or the other parties found at fault, since
while the goods/products are in transit and until actual they are being held liable under different obligations. The
delivery to Wyeths customers, salesmen and dealers liability of the insured carrier or vehicle owner is based on
tort, in accordance with the provisions of the Civil Code;
while that of the insurer arises from contract, particularly,
2. No. the insurance policy
-double insurance exists where the same person is insured
by several insurers separately in respect to the same subject
and interest.
-In the present case, while it is true that the Marine Policy
and the SR Policy were both issued over the same subject
matter, i.e. goods belonging to Wyeth, and both covered the
same peril insured against, it is, however, beyond cavil that
the said policies were issued to two different persons or
entities.
-It is undisputed that Wyeth is the recognized insured of PFIC
under its Marine Policy, while Reputable is the recognized
insured of Malayan under the SR Policy.
-The fact that Reputable procured Malayans SR Policy over
the goods of Wyeth pursuant merely to the stipulated
requirement under its contract of carriage with the latter
does not make Reputable a mere agent of Wyeth in
obtaining the said SR Policy.
-The interest of Wyeth over the property subject matter of
both insurance contracts is also different and distinct from
that of Reputables.

3. No.
-Reputable is not solidarily liable with Malayan.
-There is solidary liability only when the obligation expressly
so states, when the law so provides or when the nature of
the obligation so requires
-Where the insurance contract provides for indemnity