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MANILA LAW COLLEGE

Sales St., Sta. Cruz, Manila

CASE DIGESTS OF CURRENT JURISPRUDENCE IN


INSURANCE LAW

Presented to

ATTY. GIDEON PEÑA

By

MA. FLORINA G. GUZMAN-CUREG

MLC 3A-1

October 2018
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MANULIFE PHILIPPINES, INC VS. HERMENEGILDA YBAÑEZ

G.R NO. 204736, November 28, 2016

Facts:

The petitioner filed a complaint for rescission of insurance


contract against the respondent and the BPI Family before the RTC
purporting that the Insurance Policy Nos. 6066517-1 8 and 6300532-6
9 which was issued in favor of the insured (Dr. Gumersindo Solidum
Ybañez) were void because of the concealment or misrepresentation
of material facts in his application for life insurance. The latter died
and it was stated in his death certificate dated on November 17, 2003
that the insured (Gumersindo) had Hepatocellular CA., Crd Stage 4,
secondary to Uric Acid Nephropathy.

The petitioner insurance conducted an investigation and


concluded that the insured (Gumersindo) concealed or
misrepresented material facts when the insured entered into the
insurance contract. Manulife denied the death claims and refunded
the premiums in the insurance policy which was paid by the insured.
However, the respondent contented that it is the agent of the
Manulife company, Elvira Monteclaros, assured the insured, and the
latter herself filled up all in the questionnaire and the insured
(Gumersindo) merely affixes his signature in the policy.

The RTC dismissed the case because Manulife’s complaint for


rescission has no merit because it failed to prove that the insured
(Gumersindo) had committed concealment or misrepresentation.

The CA affirmed the RTC and ruled that the claim of the
petitioner has no basis. Also, in the absence of authentication by a
competent witness, the alleged CDH medical records of the insured
are deemed hearsay. Hence, inadmissible.

Issue:
Whether the CA erred in affirming the decision of the RTC in
dismissing Manulife’s complaint for rescission of insurance contracts
for failure to prove concealment on the part of the insured.
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Held:
No, the CA did not err in affirming the decision of the RTC in
dismissing Manulife’s complaint for rescission of insurance contracts
for failure to prove concealment on the part of the insured.
The law provides that intentional or fraudulent omission, on
the part of one insured, to communicate information of matters
proving or tending to prove the falsity of a warranty, entitles the
insurer to rescind. Also, the fraudulent intent on the part of the
insured must be established to entitle the insurer to rescind the
contract. Here, there is absence of authentication by a competent
witness with regard to the CDH medical records of the insured which
was rendered inadmissible for being hearsay. Hence, the Court of
Appeals was correct in affirming the decision of the Regional Trial
Court for dismissing the complaint of the petitioner insurance
company.
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STRONGHOLD INSURANCE COMPANY, INC.


VS.
INTERPACIFIC CONTAINER SERVICES and GLORIA DEE
CHONG
G.R. NO. 194328, July 1, 2015
Facts:
Respondent Gloria Dee Chong is the owner of the Fuso truck
with Plate No. PWH 512. The vehicle was insured by petitioner
Stronghold Insurance Company under Commercial Vehicle Policy
No. 279675.3 The comprehensive motor car insurance policy for
Pl5,306.45 undertook to indemnify the insured against loss or
damage to the car and death or injury caused to third persons by
reason of accident.
While the policy was in effect, the vehicle figured in an accident
along National Highway in Brgy. Palihan, Hermosa, Bataan resulting
in the death of four (4) persons while seriously injuring three (3)
others. Two (2) vehicles were also heavily damaged as a result of the
accident. Pursuant to the provisions of the insurance contract,
respondent Chong filed a claim for the recovery of the proceeds of
her policy in the amount of ₱550,000.00.
The claim was, however, denied by the insurance company on
the ground that at the time the accident took place the driver of the
insured vehicle was heavily drunk as shown in the Pagpapatunay
issued by Barangay Chairman Rafael Torres and the Medico Legal
Certificate which was signed by a certain Dr. Ferdinand Bautista.
The denial of the claim prompted respondents to initiate an
action for the recovery of sum of money against petitioner before the
RTC of Caloocan City, Branch 130. In their Complaint docketed as
Civil Case No. C-18278, respondents alleged that their claim was
unjustly denied by the insurance company. They argued that there
was no sufficient proof to support the claim of the petitioner that the
driver was drunk at the time of the incident underscoring the lack of
mention of such crucial fact in the police blotter report documenting
the incident. For lack of justifiable reasons to avoid the policy,
respondents insisted that petitioner is liable to deliver their claim
pursuant to the terms of the insurance contract.
RTC rendered a Decision in favor of the respondents thereby
ordering the petitioner to deliver the amount of ₱550,000.00
representing the proceeds of the insurance contract. According to the
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court a quo, petitioner failed to prove by prima facie evidence that


the driver of the insured vehicle was indeed under the influence of
alcohol at the time of the accident thereby making the avoidance of
the policy unjustified under the circumstances.
On appeal, the Court of Appeals affirmed the findings of the R
TC that there was no violation of the contract of insurance but
deleted the award for exemplary damages. Resonating the ruling of
the trial court, the appellate court dismissed the pieces of evidence
presented by the petitioner as mere hearsay without evidentiary
value.

Issue:
Whether or not the Petitioner is Liable for the Claims of the
Respondents in the Absence of Proof.

Held:
Yes. The petitioner is liable to deliver the Claims of the
respondent.
Contrary to the claim of the petitioner; it miserably failed to
prove the fact of intoxication during the trial. Aside from the Medico
Legal Certificate and the Pagpapatunay, which were stripped of
evidentiary value because of the dubious circumstances under which
they were obtained, the petitioner did not adduce other proof to
justify the avoidance of the policy.
For instance, petitioner could have adduced affidavits of
witnesses who were present at the scene of the accident to attest to
the fact that the driver was intoxicated. It did not. Upon the other
hand, respondents duly established their right to claim the proceeds
of a validly subsisting contract of insurance. Such contract was never
denied.
What further dampens petitioner's position is the absence of the
crucial fact of intoxication in the blotter report which officially
documented the incident. Entries in police records made by a police
officer in the performance of the duty especially enjoined by law are
prima facie evidence of the fact therein stated, and their probative
value may be substantiated or nullified by other competent evidence.
In this case, the lack of statement to the effect that the driver was
under the influence of alcohol in the said report is too significant to
escape the attention of this Court.
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This case involves a contract of insurance, the authenticity and


validity of which was uncontested. In exempting insurers from
liability under the contract, proof thereof must be clear, credible and
convincing.
Fundamental is the rule that the contract is the law between the
parties and, that absent any showing that its provisions are wholly or
in part contrary to law, morals, good customs, public order, or public
policy, it shall be enforced to the letter by the courts.
The instant petition is hereby DENIED.
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JAIME T. GAISANO VS. DEVELOPMENT INSURANCE AND


SURETY CORPORATION
G.R. No. 190702, February 27, 2017

Facts:
Petitioner was the registered owner of a 1992 Mitsubishi
Montero with plate number GTJ-777 (vehicle), while respondent is a
domestic corporation engaged in the insurance business. On
September 27, 1996, respondent issued a comprehensive commercial
vehicle policy to petitioner in the amount of ₱1,500,000.00 over the
vehicle for a period of one year commencing on September 27, 1996
up to September 27, 1997. Respondent also issued two other
commercial vehicle policies to petitioner covering two other motor
vehicles for the same period.
To collect the premiums and other charges on the policies,
respondent's agent, (Trans-Pacific), issued a statement of account to
petitioner's company, Noah's Ark Merchandising (Noah's Ark).
Noah's Ark immediately processed the payments and issued a Far
East Bank check dated September 27, 1996 payable to Trans-Pacific on
the same day. The check bearing the amount of ₱140,893.50
represents payment for the three insurance policies, with ₱55,620.60
for the premium and other charges over the vehicle. However,
nobody from Trans-Pacific picked up the check that day (September
27) because its president and general manager, was celebrating his
birthday. Trans-Pacific informed Noah's Ark that its messenger
would get the check the next day, September 28.
In the evening of September 27, 1996, while under the official
custody of Noah's Ark marketing manager Pacquing as a service
company vehicle, the vehicle was stolen in the vicinity of SM
Megamall at Ortigas, Mandaluyong City. Despite search and retrieval
efforts, the vehicle was not recovered.
Oblivious of the incident, Trans-Pacific picked up the check the
next day, September 28.
On October 1, 1996, Pacquing informed petitioner of the
vehicle's loss. Thereafter, petitioner reported the loss and filed a claim
with respondent for the insurance proceeds of ₱1,500,000.00. After
investigation, respondent denied petitioner's claim on the ground
that there was no insurance contract.
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Petitioner filed a complaint for collection of sum of money and


damages with the RTC where it sought to collect the insurance
proceeds from respondent. Respondent asserted that the nonpayment
of the premium rendered the policy ineffective. The premium was
received by the respondent only on October 2, 1996, and there was no
known loss covered by the policy to which the payment could be
applied.
The RTC ruled in favor of petitioner. It considered the premium
paid as of September 27, even if the check was received only on
September 28 because (1) respondent's agent, Trans-Pacific,
acknowledged payment of the premium on that date, September 27,
and (2) the check that petitioner issued was honored by respondent
in acknowledgment of the authority of the agent to receive it.
The CA granted respondent's appeal. The CA upheld
respondent's position that an insurance contract becomes valid and
binding only after the premium is paid pursuant to Section 77 of the
Insurance Code. It found that the premium was not yet paid at the
time of the loss on September 27, but only a day after or on
September 28, 1996, when the check was picked up by Trans-Pacific.
It also found that none of the exceptions to Section 77 obtains in this
case. Nevertheless, the CA ordered respondent to return the
premium it received in the amount of ₱55,620.60, with interest at the
rate of 6% per annum from the date of the denial of the claim on
October 9, 1996 until payment.

Issue:
Whether or not there is a binding insurance contract between
petitioner and respondent.

Held:
No. There is no insurance contract between the parties.
Insurance is a contract whereby one undertakes for a
consideration to indemnify another against loss, damage or liability
arising from an unknown or contingent event. Just like any other
contract, it requires a cause or consideration. The consideration is the
premium, which must be paid at the time and in the way and manner
specified in the policy. If not so paid, the policy will lapse and be
forfeited by its own terms. The law, however, limits the parties'
autonomy as to when payment of premium may be made for the
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contract to take effect. The general rule in insurance laws is that


unless the premium is paid, the insurance policy is not valid and
binding. Section 77 of the Insurance Code, applicable at the time of
the issuance of the policy, provides:
Sec. 77. An insurer is entitled to payment of the premium as soon as
the thing insured is exposed to the peril insured against.
Notwithstanding any agreement to the contrary, no policy or contract
of insurance issued by an insurance company is valid and binding
unless and until the premium thereof has been paid, except in the
case of a life or an industrial life policy whenever the grace period
provision applies.
Here, there is no dispute that the check was delivered to and
was accepted by respondent's agent, Trans-Pacific, only on
September 28, 1996. No payment of premium had thus been made at
the time of the loss of the vehicle on September 27, 1996. While
petitioner claims that Trans-Pacific was informed that the check was
ready for pick-up on September 27, 1996, the notice of the availability
of the check, by itself, does not produce the effect of payment of the
premium. Trans-Pacific could not be considered in delay in accepting
the check because when it informed petitioner that it will only be able
to pick-up the check the next day, petitioner did not protest to this,
but instead allowed Trans-Pacific to do so. Thus, at the time of loss,
there was no payment of premium yet to make the insurance policy
effective.
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PIONEER INSURANCE and SURETY CORPORATION


vs.
APL CO. PTE. LTD
G.R. No. 226345, August 2, 2017

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