INSURANCE REVIEWER Atty.

Quimson

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Most of the content of this reviewer was taken from the Reviewer of Johnbee Sioson (3-B,1994) edited to inc !de new "!ris#r!dence and s!b"ect matter disc!ssed in c ass$

THE INSURANCE CODE OF 1976

(Presidentia !e"ree No. 1#$%& GENERAL PROVISIONS
Section 1. '(is de"ree s(a )e *no+n as t(e ,Insuran"e Code o- 1./01 What i the !"inci!#e $ehin% in &"ance' Insuran"e is )ased upon t(e prin"ip e o- aiding anot(er -rom a oss "aused )y an un-ortunate e2ent. Ho( o#% i the conce!t o) in &"ance' Very o d. 3ene2o ent so"ieties organi4ed -or t(e purpose o- e5tending aid to t(eir un-ortunate mem)ers -rom a -und "ontri)uted )y a 6 (a2e )een in e5isten"e -rom t(e ear iest times. '(ey e5isted among t(e Egyptians6 t(e C(inese6 t(e 7indus6 t(e Romans6 and are *no+n to (a2e )een esta) is(ed among t(e 8ree*s as ear y as6 )e ie2e it or not6 9 3.C. Ho( %i% in &"ance %e*e#o! in the Phi#i!!ine ' P"e+S!ani h E"a : t(ere +as no insuran"e; e2ery oss +as )orne )y t(e person or t(e -ami y +(o su--ered t(e mis-ortune. S!ani h e"a Insuran"e6 in its present "on"ept6 +as introdu"ed in t(e P(i ippines +(en < oyd=s o<ondon appointed Stra"(man6 >urray ? Co.6 In". as its representati2e (ere. 1,9, <i-e insuran"e +as introdu"ed in t(is "ountry +it( t(e entry o- Sun <i-e Assuran"e o- Canada in t(e o"a insuran"e mar*et. 19-6 . @irst domesti" non: i-e insuran"e "ompany6 t(e Ae* 'ong <in Insuran"e Company6 +as organi4ed 191- . @irst domesti" i-e insuran"e "ompany6 t(e Insu ar <i-e Assuran"e Co.6 <td.6 +as organi4ed 19/9 . Union Insuran"e So"iety o- Canton appointed Russe ? Surgis as its agent in >ani a. '(e )usiness transa"ted t(e P(i ippines +as t(en imited to non- ife ins!rance$ 19/6 . So"ia insuran"e +as esta) is(ed +it( t(e ena"tment o- Common+ea t( A"t no. 10$ +(i"( "reated t(e 8o2ernment Ser2i"e Insuran"e System (8SIS& +(i"( started operations in 1.9/. '(e A"t "o2ers go2=t emp oyees. 1909 8o2ernment agen"y +as -ormed to (and e insuran"e a--airs6 +(ere t(e Insu ar 'reasurer +as appointed "ommissioner e5:o--i"io. 191- Reinsuran"e +as introdu"ed )y t(e Reinsuran"e Company o- t(e Brient +(en it +rote treaties -or )ot( i-e and non i-e. 1911 @irst +or*men=s "ompensation poo +as organi4ed as t(e Roya 8roup In"orporated. 1910 RA 11$1 +as ena"ted +(i"( pro2ided -or t(e organi4ation o- t(e So"ia Se"urity System (SSS& "o2ering emp oyees o- t(e pri2ate se"tor. At present6 t(ere are 19% insuran"e "ompanies registered +it( t(e B--i"e o- t(e Insuran"e Commissioner. B- t(ese6 C are "omposite insuran"e "ompanies (engaged in )ot( i-e and non: i-e insuran"e&6 C9 are i-e insuran"e "ompanies6 1%1 are non: i-e insuran"e "ompanies and # are reinsuran"e "ompanies. Ho( %i% in &"ance #a( %e*e#o! in the Phi#i!!ine ' !uring t(e S!ani h Pe"io%6 t(e a+s on insuran"e +ere -ound in 'it e VII o- 3oo* II and Se"tion III o- 'it e III o- 3oo* III o- t(e Spanis( Code o- Commer"e; and in C(apters II and IV o- 'i e DII o- 3oo* IV o- t(e Spanis( Ci2i Code o- 100. (whew%) !uring t(e A2e"ican Re3i2e6 on !e". 116 1.1#6 t(e P(i <egis ature ena"ted t(e Insuran"e A"t (A"t C#C/&. '(is A"t +(i"( too* e--e"t on Eu y 16 1.1F repea ed t(e pro2isions o- t(e Spanis( Code o- Commer"e on Insuran"e. W(en t(e Ci2i Code o- t(e P(i ippines (RA 90$& too* e--e"t on August 9%6 1.F%6 t(e pro2isions o- t(e Spanis( Ci2i Code o- 100. +ere i*e+ise repea ed. @or Guite a ong time6 t(e Insuran"e A"t +as t(e go2erning a+ on insuran"e in t(e P(i ippines. Bn !e". 106 1./#6 P! $1C +as promu gated6 ordaining and instituting t(e Insuran"e Code o- t(e P(i ippines6 t(ere)y repea ing A"t C#C/. P!=s $96 1C9 and 91/ +ere issued6 amending P! $1C. @ina y P! 1#$% +(i"( too* e--e"t on Eune 116 1./$ "onso idated a insuran"e a+s into a sing e "ode and t(is is +(at +e *no+ no+ as t(e Insuran"e Code o- 1./0.

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What a"e the !"e ent #a( that 3o*e"n in &"ance (a so known as the aws we have to know for e&ams)H '(e a+s +e (a2e to *no+ are6 o- "ourse6 P! 1#$%6 and Arti" es C%11:C%1C6 C%C1:C%C/ and C1$$ o- t(e Ne+ Ci2i Code. What %o the e Ci*i# Co%e P"o*i ion a4' A"t5 6-115 '(e "ontra"t o- insuran"e is go2erned )y spe"ia a+s. >atters not e5press y pro2ided -or in su"( spe"ia a+s s(a )e regu ated )y t(is Code. A"t5 6-165 Any person +(o is -or)idden -rom re"ei2ing any donation under Art. /9. "annot )e named )ene-i"iary o- a i-e insuran"e po i"y )y a person +(o "annot ma*e any donation to (im6 a""ording to said arti" e. A"t5 6-61. '(e a eatory "ontra"t o- i-e annuity )inds t(e de)tor to pay an annua pension or in"ome during t(e i-e o- one or more determinate persons in "onsideration o- a "apita "onsisting o- money or ot(er property6 +(ose o+ners(ip is trans-erred to (im at on"e +it( t(e )urden o- in"ome. A"t5 6-66. '(e annuity may )e "onstituted upon t(e i-e o- t(e person +(o gi2es t(e "apita 6 upon t(at o- a t(ird person6 or upon t(e i2es o- 2arious persons6 a o- +(om must )e i2ing at t(e time t(e annuity is esta) is(ed. It may a so )e "onstituted in -a2or o- t(e person or persons upon +(ose i-e or i2es t(e "ontra"t is entered into6 or in -a2or o- anot(er or ot(er persons. A"t5 6-6/5 <i-e annuity s(a )e 2oid i- "onstituted upon t(e i-e o- a person +(o +as a ready dead at t(e time t(e "ontra"t +as entered into6 or +(o +as at t(e t(at time su--ering -rom an i ness +(i"( "aused (is deat( +it(in t+enty days -o o+ing said date. A"t5 6-60. '(e a"* o- payment o- t(e in"ome due does not aut(ori4e t(e re"ipient o- t(e i-e annuity to demand t(e reim)ursement o- t(e "apita or to reta*e possession o- t(e property a ienated6 un ess t(ere is a stipu ation to t(e "ontrary; (e s(a (a2e on y a rig(t Iudi"ia y to " aim t(e payment o- t(e in"ome in arrears and to reGuire a se"urity -or t(e -uture in"ome6 un ess t(ere is a stipu ation to t(e "ontrary. A"t5 6-61. '(e in"ome "orresponding to t(e year in +(i"( t(e person enIoying it dies s(a )e pain in proportion to t(e days during +(i"( (e i2ed; i- t(e in"ome s(ou d )e paid )y insta ments in ad2an"e6 t(e +(o e amount o- t(e insta ment +(i"( )egan to run during (is i-e s(a )e paid. A"t5 6-66. 7e +(o "onstitutes an annuity )y gratuitous tit e upon (is property6 may pro2ide at t(e time t(e annuity is esta) is(ed t(at t(e same s(a not )e su)Ie"t to e5e"ution or atta"(ment on a""ount o- t(e o) igations o- t(e re"ipient o- t(e annuity. I- t(e annuity +as "onstituted in -raud o- "reditors6 t(e atter may as* -or e5e"ution or atta"(ment o- t(e property. A"t5 6-67. No annuity s(a )e " aimed +it(out -irst pro2ing t(e e5isten"e o- t(e person upon +(ose i-e t(e annuity is "onstituted. What i o i2!o"tant a$o&t the Ci*i# Co%e P"o*i ion ' Atty. Quimson ne2er -ai s to as* a)out A"t5 6-16. A"e the"e !ecia# #a( that 3o*e"n in &"ance' Aes6 )ut Atty. Quimson did not te us to oo* t(em up. 7o+e2er6 -or re-eren"e t(ey areJ 1. Re2ised 8SIS A"t o- 1.// (P! 11#$6 as amended& C. So"ia Se"urity A"t o- 1.F# ( RA 11$16 (as amended& 9. '(e Property Insuran"e <a+ ( RA $F$6 as amended )y P! C#F& #. Repu) i" A"t No. #0.0 F. EB CF%; and $. RA 9F.1 Ho( %o (e con t"&e the !"o*i ion o) the In &"ance Co%e 7IC8' Sin"e our present IC is )ased main y on t(e Insuran"e A"t6 +(i"( in turn +as ta*en 2er)atim -rom t(e a+ o- Ca i-ornia (e5"ept -or C(ap V6 +(i"( +as ta*en -rom t(e a+ o- NA&6 t(e "ourts s(ou d -o o+ in -undamenta

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points6 at east6 t(e "onstru"tion p a"ed )y Ca i-ornia Courts on Ca i-ornia a+ (and t(e "onstru"tion p a"ed )y t(e NA Courts on NA a+&. '(is is in a""ordan"e +it( t(e +e sett ed ru e in statutory "onstru"tion t(at +(en a statute (as )een adopted -rom some ot(er state or "ountry6 and said statute (as pre2ious y )een "onstrued )y t(e "ourts osu"( state or "ountry6 t(e statute is usua y deemed to (a2e )een adopted +it( t(e "onstru"tion so gi2en. Ca e 9 718 Con tantino *5 A ia Li)e ,7 PHIL 60, Fact 9 Appea "onso idates t+o "ases. Asia i-e insuran"e Company (A<IC& +as in"orporated in !e a+are. @or t(e sum o- 1/F.%# as annua premium du y paid to A<IC6 it issued Po i"y No. .9.1C +(ere)y it insured t(e i-e o- Ar"adio Constantino -or C% years -or P9' +it( Pa4 Constantino as )ene-i"iary. o @irst premium "o2ered t(e period up to Sept. C$6 1.#C. No -urt(er premiums +ere paid a-ter t(e -irst premium and Ar"adio died on Sept. CC6 1.##.

!ue to Eap o""upation6 A<IC " osed its )ran"( o--i"e in >ani a -rom Ean. C 1.#C:1.#F. Bn Aug. 16 1.906 A<IC issued Po i"y no. /01#F "o2ering t(e i2es o- Spouses 'omas Rui4 and Agustina Pera ta -or t(e sum o- P9' -or C% years. '(e annua premium stipu ated +as regu ar y paid -rom Aug. 16 1.90 up to and in" uding Sept. 9%6 1.#%. o E--e"ti2e Aug. 16 1.#16 t(e mode o- payment +as "(anged -rom annua y to Guarter y and su"( Guarter y premiums +ere paid unti No2. 106 1.#1. o <ast payment "o2ered t(e period unti Ean. 916 1.#C. o 'omas Rui4 died on @e). 1$6 1.#F +it( Agustina Pera ta as (is )ene-i"iary. !ue to Eap o""upation6 it )e"ame impossi) e and i ega -or t(e insured to dea +it( A<IC. Aside -rom t(is t(e insured )orro+ed -rom t(e po i"y PC9#.%% su"( t(at t(e "as( surrender 2a ue o- t(e po i"y +as su--i"ient to maintain t(e po i"y in -or"e on y up to Sept. /6 1.#C. 3ot( po i"ies "ontained t(is pro2isionJ ' #remi!ms are d!e in advance and an( !n#!nct!a it( in makin) s!ch #a(ment sha ca!se this #o ic( to a#se !n ess and e&ce#t as ke#t in force b( the )race #eriod condition$ Pa4 Constantino and Agustina Pera ta " aim as )ene-i"iaries6 t(at t(ey are entit ed to re"ei2e t(e pro"eeds o- t(e po i"ies ess a sums due -or premiums in arrears. '(ey a so a ege t(at non:payment ot(e premiums +ere "aused )y t(e " osing o- A<IC=s o--i"es during t(e +ar and t(e impossi) e "ir"umstan"es )y t(e +ar6 t(ere-ore6 t(ey s(ou d )e e5"used and t(e po i"ies s(ou d not )e -or-eited. <o+er "ourt ru ed in -a2or o- A<IC.

I &e9 >ay a )ene-i"iary in a i-e insuran"e po i"y re"o2er t(e amount t(ereo- a t(oug( t(e insured died a-ter repeated y -ai ing to pay t(e stipu ated premiums6 su"( -ai ure )eing "aused )y +arH He#%9 NO5 !ue to t(e e5press terms o- t(e po i"y6 non:payment o- t(e premium produ"es its a2oidan"e. In 8 araga 2. Sun <i-e6 it +as (e d t(at a i-e po i"y +as a2oided )e"ause t(e premium (ad not )een paid +it(in t(e time -i5ed; sin"e )y its e5press terms6 non:payment o- any premium +(en due or +it(in t(e 91 day gra"e period ipso -a"t "aused t(e po i"y to apse. W(en t(e i-e insuran"e po i"y pro2ides t(at non:payment o- premiums +i "ause its -or-eiture6 +ar does NB' e5"use non:payment and does not a2oid -or-eiture. Essentia y6 t(e reason +(y pun"tua payments are important is t(at t(e insurer "a "u ates on t(e )asis o- t(e prompt payments. Bt(er+ise6 ma u ugi si a. It s(ou d )e noted t(at t(e parties "ontra"ted not on y as to pea"e time "onditions )ut a so as to +ar: time "onditions sin"e t(e po i"ies "ontained pro2isions app i"a) e e5press y to +artime days. '(e ogi"a in-eren"e t(ere-ore is t(at t(e parties "ontemp ated t(e uninterrupted operation o- t(e "ontra"t e2en iarmed "on- i"t s(ou d ensue. 768 In &#a" Li)e *5 E$"a%o ,- SCRA 1,1

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Fact 9 3uena2entura E)rado +as issued )y Insu ar <i-e Assuran"e Co. a +(o e i-e p an -or PF600C.%% +it( a rider -or A""identa !eat( 3ene-its -or t(e same amount. E)rado designated Carponia E)rado as t(e re2o"a) e )ene-i"iary in (is po i"y6 re-erring to (er as (is +i-e. E)rado died +(en (e +as a""identa y (it )y a -a ing )ran"( o- tree. Insurer )y 2irtue o- t(e "ontra"t +as ia) e -or 116/#F./96 and Carponia -i ed (er " aim6 a t(oug( s(e admitted t(at s(e and t(e insured +ere mere y i2ing as (us)and and +i-e +it(out t(e )ene-it omarriage. Pas"ua a E)rado a so -i ed (er " aim as t(e +ido+ o- t(e de"eased insured. Insu ar i-e -i ed an interp eader "ase and t(e o+er "ourt -ound in -a2or o- Pas"ua a. I &e9 3et+een Carponia and Pas"ua a6 +(o is entit ed to t(e pro"eedsH

He#%9 Pa c&a#a5 It is Guite un-ortunate t(at t(e Insuran"e A"t or our o+n Insuran"e Code does not "ontain a spe"i-i" pro2ision gross y reso utory o- t(e prime Guestion at (and. Rat(er6 t(e genera ru es o- "i2i a+ s(ou d )e app ied to reso 2e t(is 2oid in t(e insuran"e a+. Art. C%11 o- t(e NCC statesJ *he contract of ins!rance is )overned b( s#ecia aws$ Matters not e&#ress ( #rovided for in s!ch s#ecia aws sha be re)! ated b( this +ode$ W(en not ot(er+ise spe"i-i"a y pro2ided -or in t(e insuran"e a+6 t(e "ontra"t o- i-e insuran"e is go2erned )y t(e genera ru es o- "i2i a+ regu ating "ontra"ts. Under Art. C%1C6 NCCJ 'n( #erson who is forbidden from receivin) an( donation !nder 'rt$ ,39 cannot be named beneficiar( of a ife ins!rance #o ic( b( a #erson who cannot make an( donation to him, accordin) to said artic e. Under Art. /9.6 donations )et+een persons +(o +ere gui ty o- adu tery or "on"u)inage at t(e time o- t(e donation s(a )e 2oid. In essen"e6 a i-e insuran"e po i"y is no di--erent -rom "i2i donations inso-ar as t(e )ene-i"iary is "on"erned. 3ot( are -ounded on t(e same "onsideration o- i)era ity. A )ene-i"iary is i*e a donee )e"ause -rom t(e premiums o- t(e po i"y +(i"( t(e insured pays6 t(e )ene-i"iary +i re"ei2e t(e pro"eeds or pro-its osaid insuran"e. As a "onseGuen"e6 t(e pros"ription in Art. /9. s(ou d eGua y operate in i-e insuran"e "ontra"ts. '(ere-ore6 sin"e "ommon: a+ spouses are )arred -rom re"ei2ing donations6 t(ey are i*e+ise )arred -rom re"ei2ing pro"eeds o- a i-e insuran"e "ontra"t. 7/8 :&a Chee Gan *5 La( Union Roc; 9, PHIL ,1 Fact 9 Qua C(ee 8an6 a mer"(ant6 o+ned # +are(ouses in A )ay +(i"( +ere used -or t(e storage or "opra and (emp in +(i"( t(e appe e dea s +it( e5" usi2e y. '(e +are(ouses toget(er +it( t(e "ontents +ere insured +it( <a+ Union sin"e 1.9/ and t(e oss made paya) e to PN3 as mortgagee o- t(e (emp and "opra. A -ire o- undetermined "ause )ro*e out in Eu y C16 1.#% and asted -or a most 1 +(o e +ee*. 3odegas 16 96 and # in" uding t(e mer"(andise stored +ere destroyed "omp ete y. Insured t(en in-ormed insurer o- t(e un-ortunate e2ent and su)mitted t(e "orresponding -ire " aims6 +(i"( +ere ater redu"ed to P9/%'. Insurer re-used to pay " aiming 2io ations o- t(e +arranties and "onditions6 -i ing o- -raudu ent " aims and t(at t(e -ire (ad )een de i)erate y "aused )y t(e insured. Insured -i ed an a"tion )e-ore C@I +(i"( rendered a de"ision in -a2or o- t(e insured.

I &e an% Re o#&tion 9 (1) -./ the #o icies sho! d be avoided for the reason that there was a breach of warrant($ Under t(e >emorandum o- Warranty6 t(ere s(ou d )e no ess t(an 1 (ydrant -or ea"( 1F% -eet o- e5terna +a measurements o- t(e "ompound6 and sin"e )odegas insured (ad an e5terna +a per meter o- 1$#% -eet6 t(e insured s(ou d (a2e 11 (ydrants in t(e "ompound. 3ut (e on y (ad C.

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E2en so6 t(e insurer is )arred )y estoppe to " aim 2io ation o- t(e -ire (ydrants +arranty6 )e"ause *no+ing t(at t(e num)er o- (ydrants it demanded ne2er e5isted -rom t(e 2ery )eginning6 appe ant ne2ert(e ess issued t(e po i"ies su)Ie"t to su"( +arranty and re"ei2ed t(e "orresponding premiums. '(e insuran"e "ompany +as a+are6 e2en )e-ore t(e po i"ies +ere issued6 t(at in t(e premises t(ere +ere on y C (ydrants and C ot(ers +ere o+ned )y t(e >uni"ipa ity6 "ontrary to t(e reGuirements o- t(e +arranties in Guestion. It s(ou d )e " ose to "onni2ing at -raud upon t(e insured to a o+ t(e insurer to " aim no+ as 2oid t(e po i"ies it issued to t(e insured6 +it(out +arning (im o- t(e -ata de-e"t6 o- +(i"( t(e insurer +as in-ormed6 and a-ter it (ad mis ed t(e insured into )e ie2ing t(at t(e po i"ies +ere e--e"ti2e. A""dg to Ameri"an Eurispruden"eJ It is a +e :sett ed ru e t(at t(e insurer at t(e time o- t(e issuan"e o- a po i"y (as t(e *no+ edge o- e5isting -a"ts6 +(i"( i- insisted on6 +ou d in2a idate t(e "ontra"t -rom its 2ery in"eption6 su"( *no+ edge "onstitutes a +ai2er o- "onditions in t(e "ontra"t in"onsistent +it( *no+n -a"ts6 and t(e insurer is stopped t(erea-ter -rom asserting t(e )rea"( o- su"( "onditions. '(e reason -or t(e ru e isJ 'o a o+ a "ompany to a""ept one=s money -or a po i"y o- insuran"e +(i"( it *no+s to )e 2oid and o- no e--e"t6 t(oug( it *no+s as it must t(at t(e insured )e ie2es it to )e 2a id and )inding is so "ontrary to t(e di"tates o- (onesty and -air dea ing6 as so " ose y re ated to positi2e -raud6 as to )e a)(orrent to -air:minded men. It +ou d )e to a o+ t(e "ompany to treat t(e po i"y as 2a id ong enoug( to get t(e premium on it6 and ea2e it at i)erty to repudiate it t(e ne5t moment. >oreo2er6 ta*ing into a""ount t(e +e :*no+n ru e t(at am)iguities or o)s"urities must stri"t y )e interpreted against t(e party t(at "ause t(em6 t(e memorandum o- +arranty in2o*ed )y t(e insurer )ars t(e atter -rom Guestioning t(e e5isten"e o- t(e app ian"es "a ed -or6 sin"e its initia e5pression ,t(e undernoted app ian"es -or t(e e5tin"tion o- -ire )eing *ept on t(e premises insured (ere)y..1 admits o- t(e interpretation as an admission o- t(e e5isten"e o- su"( app ian"es +(i"( insurer "annot no+ "ontradi"t6 s(ou d t(e paro e e2iden"e app y. (0) -./ the ins!red vio ated the hem# warrant( #rovision a)ainst the stora)e of )aso ine since ins!red admitted there were 31 cans of )aso ine in Bode)a 0 which was a se#arate str!ct!re and not affected b( the fire$ It is +e to note t(at gaso ine is not spe"i-i"a y mentioned among t(e pro(i)ited arti" es isted in t(e so: "a ed (emp +arranty. '(e " ause re ied upon )y t(e insurer spea*s o- ,oi s1. Brdinari y6 oi s mean u)ri"ants and not gaso ine or *erosene. 7ere again6 )y reason o- t(e e5" usi2e "ontro o- t(e insuran"e "ompany o2er t(e terms o- t(e "ontra"t6 t(e am)iguity must )e (e d stri"t y against t(e insurer and i)era y in -a2or o- t(e insured6 spe"ia y to a2oid a -or-eiture. @urt(ermore6 t(e gaso ine *ept +as on y in"identa to t(e insured=s )usiness. It is a +e sett ed ru e t(at *eeping o- in- amma) e oi s in t(e premises t(oug( pro(i)ited )y t(e po i"y does NB' 2oid it i- su"( *eeping is in"identa to t(e )usiness. A so6 t(e (emp +arranty -or)ade t(e storage on y in t(e )ui ding to +(i"( t(e insuran"e app ies6 andKor in any )ui ding "ommuni"ating t(ere+it(; and it is undisputed t(at no gaso ine +as stored in t(e )urnt )odegas and t(at 3odega No. C +(i"( +as +(ere t(e gaso ine +as -ound stood iso ated -rom t(e ot(er )odegas. 708 T4 *5 Fi#i!ina Co2!a<ia %e Se3&"o 17 SCRA /60 Fact 9 'y +as emp oyed as a me"(ani" operator )y 3raod+ay Cotton @a"tory at 8ra"e Par*6 Ca oo"an. In 1.F96 (e too* persona a""ident po i"ies -rom / insuran"e "ompanies ($ de-endants&6 on di--erent dates6 e--e"ti2e -or 1C mos. Bn !e". C#. 1.F96 a -ire )ro*e out in t(e -a"tory +ere 'y +as +or*ing. A (e2y o)Ie"t -e on (is (and +(en (e +as trying to put out t(e -ire. @rom !e". 1.F9 to @e). $6 1.F# 'y re"ei2ed treatment at t(e Nat= Brt(opedi" 7ospita -or si5 isted inIuries. '(e attending surgeon "erti-ied t(at t(ese inIuries +ou d "ause t(e temporary tota disa)i ity o'y=s e-t (and. Insuran"e "ompanies re-used to pay 'y=s " aim -or "ompensation under t(e po i"ies )y reason o- said disa)i ity o- (is e-t (and. 'y -i ed a "omp aint in t(e muni"ipa "ourt +(o de"ided in (is -a2or.

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C@I re2ersed on t(e ground t(at under t(e uni-orm terms o- t(e po i"ies6 partia disa)i ity due to oss oeit(er (and o- t(e insured6 to )e "ompensa) e must )e t(e resu t o- amputation. &e9 WBN 'y s(ou d )e indemni-ied under (is a""ident po i"ies.

He#%5 NO5 SC a ready ru ed in t(e "ase o- 'y 2. @NSI t(at +ere t(e insuran"e po i"ies de-ine partia disa)i ity as oss o- eit(er (and )y amputation t(roug( t(e )ones o- t(e +rist6 t(e insured "annot re"o2er under said po i"ies -or temporary disa)i ity o- (is e-t (and "aused )y t(e -ra"tures o- some -ingers. '(e pro2ision is " ear enoug( to in-orm t(e party entering into t(at "ontra"t t(at t(e oss to )e "onsidered a disa)i ity entit ed to indemnity6 must )e se2eran"e or amputation o- t(e a--e"ted mem)er o- t(e )ody o- t(e insured. In t(e +ords o- Atty. QuimsonJ A)a gago pa a siya6 Sina)i ng oss )y amputation6 pinagpipi itan pa nyang -ra"ture ang ang *ai angan. 718 De# Ro a"io *5 E=&ita$#e In &"ance 11, PHIL /09 Fact 9 EGuita) e Insuran"e issued a i-e Insuran"e po i"y to de Rosario )inding itse - to pay P16%%% to P96%%% as indemnity. !e Rosario died in a )oating a""ident. '(e (eirs -i ed a " aim and EGuita) e paid t(em P16%%%. '(e (eir -i ed a "omp aint -or re"o2ery o- t(e )a an"e o- PC6%%%6 " aiming t(at t(e insurere s(ou d pay (im P96%%% as stated in t(e po i"y. I &e9 WBN t(e (eir is entit ed to re"o2er P96%%%.

He#%9 >ES5 8enera y a""epted prin"ip es or ru ing on insuran"e6 enun"iate t(at +(ere t(ere is an am)iguity +it( respe"t to t(e terms and "onditions o- t(e po i"y6 t(e same s(a )e reso 2ed against t(e one responsi) e t(ereo-. '(e insured (as itt e6 i- any6 parti"ipation in t(e preparation o- t(e po i"y. '(e interpretation oo)s"ure stipu ations in a "ontra"t s(ou d not -a2or t(e party +(o "ause t(e o)s"urity. 768 ?i a2i L&2$e" *5 Ca!ita# In &"ance 16/ Phi# 1-77 Fact 9 >isamis um)er insured it=s motor "ar -or P1#' +it( Capita Insuran"e. '(e po i"y stipu ated t(at t(e insured may aut(ori4e t(e repair o- t(e 2e(i" e ne"essitated )y damage and t(e ia)i ity o- t(e insured is imited to 1F%. Car met an a""ident and +as repaired )y >orosi >otors at a tota "ost o- P9%C.C/. >isamis made a report o- t(e a""ident to Capita +(o re-used to pay t(e "ost o- t(e repairs. I &e9 WBN t(e insurer is ia) e -or t(e tota amount o- t(e repair.

He#%9 NO5 '(e insuran"e po i"y stipu ated t(at i- it is t(e insured +(o aut(ori4ed t(e repair6 t(e ia)i ity o- t(e insurer is imited to 1F%. '(e itera meaning o- t(e stipu ation must "ontro 6 it )eing t(e a"tua "ontra"t6 e5press y and p ain y pro2ided -or in t(e po i"y.

778 Ve"en%ia *5 CA 617 SCRA 199/ Fact 9

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@ide ity and Surety Insuran"e Company (@ide ity& issued @ire Insuran"e Po i"y No. @:100/$ e--e"ti2e )et+een Eune C96 1.0% and Eune C96 1.01 "o2ering Ra-ae (Re5& VerendiaLs residentia in t(e amount oP90F6%%%.%%. !esignated as )ene-i"iary +as t(e >onte de Piedad ? Sa2ings 3an*. Verendia a so insured t(e same )ui ding +it( t+o ot(er "ompanies6 name y6 '(e Country 3an*ers Insuran"e -or PF$6%%%.%% and '(e !e2e opment Insuran"e -or P#%%6%%%.%%. W(i e t(e t(ree -ire insuran"e po i"ies +ere in -or"e6 t(e insured property +as "omp ete y destroyed )y -ire. @ide ity appraised t(e damage amounting to 90F6%%% +(en it +as a""ording y in-ormed o- t(e oss. !espite demands6 @ide ity re-used payment under its po i"y6 t(us prompting Verendia to -i e a "omp aint -or t(e re"o2ery o- 90F6%%% @ide ity6 a2erred t(at t(e po i"y +as a2oided )y reason o- o2er:insuran"e6 t(at Verendia ma i"ious y represented t(at t(e )ui ding at t(e time o- t(e -ire +as eased under a "ontra"t e5e"uted on Eune CF6 1.0% to a "ertain Ro)erto 8ar"ia6 +(en a"tua y it +as a >ar"e o 8ar"ia +(o +as t(e essee.

I &e9 WBN Verendia "an " aim on t(e insuran"e despite t(e misrepresentation as to t(e essee and t(e o2erinsuran"e. He#%9 NOPE5 '(e "ontra"t o- ease upon +(i"( Verendia re ies to support (is " aim -or insuran"e )ene-its6 +as entered into )et+een (im and one Ro)ert 8ar"ia6 a "oup e o- days a-ter t(e e--e"ti2ity o- t(e insuran"e po i"y. W(en t(e rented residentia )ui ding +as ra4ed to t(e ground6 it appears t(at Ro)ert 8ar"ia +as sti +it(in t(e premises. 7o+e2er6 a""ording to t(e in2estigation )y t(e po i"e6 t(e )ui ding appeared to (a2e Mno o""upantsM and t(at >r. Ro)erto 8ar"ia +as Mrenting on t(e ot(erside o- said "ompoundM '(ese pie"es oe2iden"e )e ie VerendiaLs un"orro)orated testimony t(at >ar"e o 8ar"ia +(om (e "onsidered as t(e rea essee6 +as o""upying t(e )ui ding +(en it +as )urned. Ironi"a y6 during t(e tria 6 Verendia admitted t(at it +as not Ro)ert 8ar"ia +(o signed t(e ease "ontra"t )ut it +as >ar"e o 8ar"ia "ousin o- Ro)ert6 +(o (ad a so )een paying t(e renta s a t(e +(i e. Verendia6 (o+e2er6 -ai ed to e5p ain +(y >ar"e o (ad to sign (is "ousinLs name +(en (e in -a"t (e +as paying -or t(e rent and +(y (e (Verendia& (imse -6 t(e essor6 a o+ed su"( a ruse. @ide ityLs "on" usions on t(ese pro2en -a"ts appear6 t(ere-ore6 to (a2e su--i"ient )asesJ Verendia "on"o"ted t(e ease "ontra"t to de- e"t responsi)i ity -or t(e -ire to+ards an a eged M esseeM6 in- ated t(e 2a ue o- t(e property )y t(e a eged mont( y renta o- P$6F%%& +(en in -a"t6 t(e Pro2in"ia Assessor o- Ri4a (ad assessed t(e propertyLs -air mar*et 2a ue to )e on y P#%69%%.%%6 insured t(e same property +it( t+o ot(er insuran"e "ompanies -or a tota "o2erage o- around P.%%6%%%6 and "reated a dead:end -or t(e adIuster )y t(e disappearan"e o- Ro)ert 8ar"ia. 3asi"a y a "ontra"t o- indemnity6 an insuran"e "ontra"t is t(e a+ )et+een t(e parties. Its terms and "onditions "onstitute t(e measure o- t(e insurerLs ia)i ity and "omp ian"e t(ere+it( is a "ondition pre"edent to t(e insuredLs rig(t to re"o2ery -rom t(e. As it is a so a "ontra"t o- ad(esion6 an insuran"e "ontra"t s(ou d )e i)era y "onstrued in -a2or o- t(e insured and stri"t y against t(e insurer "ompany +(i"( usua y prepares it . Considering6 (o+e2er6 t(e -oregoing dis"ussion pointing to t(e -a"t t(at Verendia used a -a se ease "ontra"t to support (is " aim under @ire Insuran"e Po i"y6 t(e terms o- t(e po i"y s(ou d )e stri"t y "onstrued against t(e insured. Verendia -ai ed to i2e )y t(e terms o- t(e po i"y6 spe"i-i"a y Se"tion 19 t(ereo- +(i"( is e5pressed in terms t(at are " ear and unam)iguous6 t(at a )ene-its under t(e po i"y s(a )e -or-eited Mif the c aim be in an( res#ect fra!d! ent, or if an( fa se dec aration be made or !sed in s!##ort thereof, or if an( fra!d! ent means or devises are !sed b( the 2ns!red or an(one actin) in his beha f to obtain an( benefit !nder the #o ic(M. Verendia6 (a2ing presented a -a se de" aration to support (is " aim -or )ene-its in t(e -orm o- a -raudu ent ease "ontra"t6 (e -or-eited a )ene-its t(erein )y 2irtue o- Se"tion 19 o- t(e po i"y in t(e a)sen"e o- proo- t(at @ide ity +ai2ed su"( pro2ision '(ere is a so no reason to "on" ude t(at )y su)mitting t(e su)rogation re"eipt as e2iden"e in "ourt6 @ide ity )ound itse - to a Mmutua agreementM to sett e VerendiaLs " aims in "onsideration o- t(e amount oP1#C6$0F.//. W(i e t(e said re"eipt appears to (a2e )een a -i ed:up -orm o- @ide ity6 no representati2e o@ide ity (ad signed it. It is e2en in"omp ete as t(e ) an* spa"es -or a +itness and (is address are not -i ed up. >ore signi-i"ant y6 t(e same re"eipt states t(at Verendia (ad re"ei2ed t(e a-oresaid amount. 7o+e2er6 t(at Verendia (ad not re"ei2ed t(e amount stated t(erein6 is pro2en )y t(e -a"t t(at Verendia (imse - -i ed

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t(e "omp aint -or t(e -u amount o- P90F6%%%.%% stated in t(e po i"y. It mig(t )e t(at t(ere (ad )een e--orts to sett e VerendiaLs " aims6 )ut sure y6 t(e su)rogation re"eipt )y itse - does not pro2e t(at a sett ement (ad )een arri2ed at and en-or"ed. '(us6 to interpret @ide ityLs presentation o- t(e su)rogation re"eipt in e2iden"e as indi"ati2e o- its a""ession to its MtermsM is not on y +anting in rationa )asis )ut +ou d )e su)stituting t(e +i o- t(e Court -or t(at o- t(e parties

Section 65 W(ene2er used in t(is Code6 t(e -o o+ing terms s(a (a2e t(e respe"ti2e meanings (ereina-ter set -ort( or indi"ated6 un ess t(e "onte5t ot(er+ise reGuiresJ (1& A ,Contra"t o- Insuran"e1 is an agreement +(ere)y one underta*es -or a "onsideration to indemni-y anot(er against oss6 damage or ia)i ity arising -rom an un*no+n or "ontingent e2ent. A "ontra"t o- suretys(ip s(a )e deemed to )e an insuran"e "ontra"t6 +it(in t(e meaning o- t(is Code6 on y i- made )y a surety +(o or +(i"(6 as su"(6 is doing an insuran"e )usiness as (ereina-ter pro2ided. (C& '(e term ,doing an insuran"e )usiness1 or ,transa"ting an insuran"e )usiness1 +it(ing t(e meaning o- t(is Code6 s(a in" udeJ (a& >a*ing or proposing to ma*e6 as insurer6 any insuran"e "ontra"t; ()& >a*ing6 or proposing to ma*e6 as surety6 any "ontra"t o- suretys(ip as a 2o"ation and not as mere y in"identa to any ot(er egitimate )usiness or a"ti2ity o- t(e surety; ("& !oing any *ind o- )usiness in" uding a reinsuran"e )usiness6 spe"i-i"a y re"ogni4ed as "onstituting t(e doing o- an insuran"e )usiness +it(in t(e meaning o- t(is Code; (d& !oing or proposing to do any )usiness in su)stan"e eGui2a ent to any o- t(e -oregoing in a manner designed to e2ade t(e pro2isions o- t(is "ode. In t(e app i"ation o- t(e pro2isions o- t(is Code6 t(e -a"t t(at no pro-it is deri2ed -rom t(e ma*ing o- insuran"e "ontra"ts6 agreements or transa"tions or t(at no separate or distin"t "onsideration is re"ei2ed t(ere-or6 s(a not )e deemed "on" usi2e to s(o+ t(at t(e ma*ing t(ereo- does not "onstitute t(e doing or transa"ting o- an insuran"e )usiness. (9& As used in t(is Code6 t(e term ,Commissioner1 means t(e ,Insuran"e Commissioner.1 I the %e)inition o) a cont"act o) in &"ance &n%e" Sec5 6 &))icient' !e <eon )e ie2es t(at it is not. 7e opines t(at t(e de-inition does Not in" ude <i-e insuran"e +(i"( is a "ontra"t upon a "ondition rat(er t(an a "ontra"t to indemni-y -or nor re"o2ery "an -u y repay a )ene-i"iary -or t(e oss o- i-e +(i"( is )eyond pe"uniary 2a ue. A )etter de-inition (e t(in*s6 is t(at o- Van"e +(o said t(at a , contract of ins!rance is an a)reement b( which one #art(, for a consideration, #romises to #a( mone( or its e3!iva ent, or to do some act va !ab e to the ins!red or his nominee, !#on the ha##enin) of a oss, dama)e, iabi it( or disabi it( arisin) from an !nknown or contin)ent event$4 What a"e the cha"acte"i tic o) an in &"ance cont"act' A "ontra"t o- insuran"e (as t(e -o o+ing "(ara"teristi"sJ 1. Con en &a# per-e"ted )y t(e meeting o- t(e minds o- t(e parties

2. 3. 4. 5. 6. 7.

Vo#&nta"4 it is not "ompu sory and t(e parties may in"orporate su"( terms and "onditions as t(ey may deem "on2enient +(i"( +i )e )inding pro2ided t(ey are not against t(e a+ or pu) i" po i"y A#eato"4 depends upon some "ontingent e2ent E@ec&te% as to t(e insured a-ter t(e payment o- t(e premium E@ec&to"4 as to t(e insurer as it is not e5e"uted unti payment -or a oss Con%itiona# su)Ie"t to "onditions t(e prin"ipa one o- +(i"( is t(e (appening o- t(e e2ent insured against Pe" ona# ea"( party in t(e "ontra"t (a2e in 2ie+ t(e "(ara"ter6 "redit and "ondu"t o- t(e ot(er

What a"e the e#e2ent o) an in &"ance cont"act'

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<i*e any ot(er "ontra"t6 an insuran"e "ontra"t must (a2e "onsent o- t(e parties6 o)Ie"t and "ause or "onsideration. '(e parties +(o gi2e t(eir "onsent in t(is "ontra"t are t(e insurer and insured. '(e o)Ie"t ot(e "ontra"t is t(e trans-erring or distri)uting o- t(e ris* o- oss6 damage6 ia)i ity or disa)i ity -rom t(e insured to t(e insurer. '(e "ause or "onsideration o- t(e "ontra"t is t(e premium +(i"( t(e insured pays t(e insurer. What i an a%%itiona# e#e2ent o) an in &"ance cont"act' Insura) e Interest. '(is means t(at t(e insured possesses an interest o- some *ind sus"epti) e ope"uniary estimation. Ho( a"e in &"ance cont"act c#a i)ie%' Insuran"e "ontra"ts are " assi-ied as -o o+sH 1& <i-e insuran"e "ontra"ts a& Indi2idua (Se"tions 1/.:1096 CC/& )& 8roup <i-e (Se"tions F% and CC0& "& Industria <i-e (Se"tions CC.:C91& C& Non:<i-e Insuran"e Contra"ts a& >arine (Se"tions ..:1$$& )& @ire (Se"tions 1$/:1/9& "& Casua ty (Se"tion 1/#& 9& Contra"ts o- Suretys(ip and )onding (Se"tions 1/F:1/0& Ho( a"e in &"ance cont"act con t"&e%' Am)iguities or o)s"urities must )e stri"t y interpreted against t(e party t(at "aused t(em. As t(e insuran"e po i"y is prepared so e y )y t(e insurer6 t(e am)iguities s(a )e "onstrued against it and in -a2or o- t(e insured. (Qua C(ee 8an& What %oe the te"2 A%oin3 in &"ance $& ine B inc#&%e' '(e term ,doing an insuran"e )usiness or ,transa"ting an insuran"e )usiness1 in" udesJ a& >a*ing or proposing to ma*e6 as insurer6 any insuran"e "ontra"t; )& >a*ing6 or proposing to ma*e6 as surety6 any "ontra"t o- suretys(ip as a 2o"ation and not as mere y in"identa to any ot(er egitimate )usiness or a"ti2ity o- t(e surety; "& !oing any *ind o- )usiness in" uding a reinsuran"e )usiness6 spe"i-i"a y re"ogni4ed as "onstituting t(e doing o- an insuran"e )usiness +it(in t(e meaning o- t(is Code; d& !oing or proposing to do any )usiness in su)stan"e eGui2a ent to any o- t(e -oregoing in a manner designed to e2ade t(e pro2isions o- t(is "ode. Doe the )act that no !"o)it (a %e"i*e% )"o2 the t"an action no" a e!a"ate con i%e"ation "ecei*e% the"e)o"e 2ean that no in &"ance $& ine (a t"an acte%' No. @a"t t(at no pro-it is deri2ed -rom t(e "ontra"t or transa"tion or t(at no separate or dire"t "onsideration is re"ei2ed -or su"( "ontra"t or transa"tion is NB' deemed "on" usi2e to s(o+ t(at no insuran"e )usiness +as transa"ted. Wi## an4 &"et4 hi! a3"ee2ent a2o&nt to an in &"ance cont"act' No. In order -or a suretys(ip agreement to "ome under t(e pur2ie+ o- t(e Insuran"e Code6 t(e Surety underta*ing to ensure t(e per-orman"e o- t(e o) igations must )e registered +it( t(e Insuran"e Commissioner and must (a2e )een issued )y t(e atter +it( a "erti-i"ate o- aut(ority. @urt(ermore6 t(e person a"ting as a surety is (a)itua y engaged as su"( -or a i2e i(ood. Ca e 9 7,8 Phi#a2#i)e *5 An a#%o 6/0 SCRA 1-9 Fact 9

Ramon >. Paterno sent a etter:"omp aint to t(e Insuran"e Commissioner a eging "ertain pro) ems en"ountered )y agents6 super2isors6 managers and pu) i" "onsumers o- t(e P(i am i-e as a resu t o"ertain pra"ti"es )y said "ompany. Commissioner reGuested petitioner Rodrigo de os Reyes6 in (is "apa"ity as P(i am i-eLs president6 to "omment on respondent PaternoLs etter.

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'(e "omp aint prays t(at pro2isions on "(arges and -ees stated in t(e Contra"t o- Agen"y e5e"uted )et+een P(i am i-e and its agents6 as +e as t(e imp ementing pro2isions as pu) is(ed in t(e agentsL (and)oo*6 agen"y )u etins and "ir"u ars6 )e de" ared as nu and 2oid. 7e a so as*ed t(at t(e amounts osu"( "(arges and -ees a ready dedu"ted and "o e"ted )y P(i am i-e in "onne"tion t(ere+it( )e reim)ursed to t(e agents6 +it( interest at t(e pre2ai ing rate re"*oned -rom t(e date +(en t(ey +ere dedu"ted >anue Brtega6 P(i am i-eLs Senior Assistant Vi"e:President and E5e"uti2e Assistant to t(e President6 as*ed t(at t(e Commissioner -irst ru e on t(e Guestions o- t(e Iurisdi"tion o- t(e Insuran"e Commissioner o2er t(e su)Ie"t matter o- t(e etters:"omp aint and t(e ega standing o- Paterno. Insuran"e Commissioner set t(e "ase -or (earing and sent su)poena to t(e o--i"ers o- P(i am i-e. Brtega -i ed a motion to Guas( t(e su)poena a eging t(at t(e Insuran"e "ompany (as no Iurisdi"tion o2er t(e su)Ie"t matter o- t(e "ase and t(at t(ere is no "omp aint su--i"ient in -orm and "ontents (as )een -i ed. '(e motion to Guas( +as denied.

I &e9 WBN t(e insuran"e "ommissioner (ad Iurisdi"tion o2er t(e ega ity o- t(e Contra"t o- Agen"y )et+een P(i am i-e and its agents. He#%9 NoC it %oe not ha*e D&"i %iction5 '(e genera regu atory aut(ority o- t(e Insuran"e Commissioner is des"ri)ed in Se"tion #1# o- t(e Insuran"e Code6 to +itJ 5*he 2ns!rance +ommissioner sha have the d!t( to see that a aws re atin) to ins!rance, ins!rance com#anies and other ins!rance matters, m!t!a benefit associations and tr!sts for charitab e !ses are faithf! ( e&ec!ted and to #erform the d!ties im#osed !#on him b( this +ode, $ $ $ $5 Bn t(e ot(er (and6 Se"tion #1F pro2idesJ 52n addition to the administrative sanctions #rovided e sewhere in this +ode, the 2ns!rance +ommissioner is hereb( a!thori6ed, at his discretion, to im#ose !#on ins!rance com#anies, their directors and7or officers and7or a)ents, for an( wi f! fai !re or ref!sa to com# ( with, or vio ation of an( #rovision of this +ode, or an( order, instr!ction, re)! ation or r! in) of the 2ns!rance +ommissioner, or an( commission of irre)! arities, and7or cond!ctin) b!siness in an !nsafe or !nso!nd manner as ma( be determined b( the 2ns!rance +ommissioner, the fo owin)8 a) fines not in e&cess of five h!ndred #esos a da(9 and b) s!s#ension, or after d!e hearin), remova of directors and7or officers and7or a)ents$5 A p ain reading o- t(e a)o2e:Guoted pro2isions s(o+ t(at t(e Insuran"e Commissioner (as t(e aut(ority to regu ate t(e )usiness o- insuran"e6 +(i"( is de-ined as -o o+sJ 5(0) *he term :doin) an ins!rance b!siness: or :transactin) an ins!rance b!siness,: within the meanin) of this +ode, sha inc !de (a) makin) or #ro#osin) to make, as ins!rer, an( ins!rance contract9 (b) makin), or #ro#osin) to make, as s!ret(, an( contract of s!ret(shi# as a vocation and not as mere ( incidenta of the s!ret(9 (c) doin) an( kind of b!siness, inc !din) a reins!rance b!siness, s#ecifica ( reco)ni6ed as constit!tin) the doin) of an ins!rance b!siness within the meanin) of this +ode9 (d) doin) or #ro#osin) to do an( b!siness in s!bstance e3!iva ent to an( of the fore)oin) in a manner desi)ned to evade the #rovisions of this +ode$ (2ns!rance +ode, Sec$ 0 ;0<) Sin"e t(e "ontra"t o- agen"y entered into )et+een P(i am i-e and its agents is not in" uded +it(in t(e meaning o- an insuran"e )usiness6 Se"tion C o- t(e Insuran"e Code "annot )e in2o*ed to gi2e Iurisdi"tion o2er t(e same to t(e Insuran"e Commissioner. E5pressio unius est e5" usio a terius. 798 Phi#a2ca"e *5 CA /79 SCRA /16 76--68 Fact 9

Ernani 'rinos6 app ied -or a (ea t( "are "o2erage +it( P(i am"are. In t(e standard app i"ation -orm6 (e ans+ered NB to t(e -o o+ing GuestionJ ,=ave (o! or an( of (o!r fami ( members ever cons! ted or been treated for hi)h b ood #ress!re, heart tro!b e, diabetes, cancer, iver disease, asthma or #e#tic ! cer> (2f ?es, )ive detai s)4

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'(e app i"ation +as appro2ed -or a period o- one year -rom >ar"( 16 1.00 to >ar"( 16 1.0.. 7e +as a issued 7ea t( Care Agreement6 and under su"(6 (e +as entit ed to a2ai o- (ospita i4ation )ene-its6 +(et(er ordinary or emergen"y6 isted t(erein. 7e +as a so entit ed to a2ai o- Mout:patient )ene-itsM su"( as annua p(ysi"a e5aminations6 pre2enti2e (ea t( "are and ot(er out:patient ser2i"es. Upon t(e termination o- t(e agreement6 t(e same +as e5tended -or anot(er year -rom >ar"( 16 1.0. to >ar"( 16 1..%6 t(en -rom >ar"( 16 1..% to Eune 16 1..%. '(e amount o- "o2erage +as in"reased to a ma5imum sum o- P/F6%%%.%% per disa)i ity. !uring t(e period o- (is "o2erage6 Ernani su--ered a (eart atta"* and +as "on-ined at t(e >ani a >edi"a Center (>>C& -or one mont( )eginning >ar"( .6 1..%. W(i e (er (us)and +as in t(e (ospita 6 Eu ita tried to " aim t(e )ene-its under t(e (ea t( "are agreement. 7o+e2er6 P(i am"are denied (er " aim saying t(at t(e 7ea t( Care Agreement +as 2oid. A""ording to P(i am"are6 t(ere +as "on"ea ment regarding ErnaniLs medi"a (istory. o !o"tors at t(e >>C a eged y dis"o2ered at t(e time o- ErnaniLs "on-inement t(at (e +as (ypertensi2e6 dia)eti" and ast(mati"6 "ontrary to (is ans+er in t(e app i"ation -orm. Eu ita (ad no "(oi"e )ut to pay t(e (ospita i4ation e5penses (erse -6 amounting to a)out P/$6%%%.%% A-ter (er (us)and +as dis"(arged -rom t(e >>C6 (e +as attended )y a p(ysi"a t(erapist at (ome. <ater6 (e +as admitted at t(e C(inese 8enera 7ospita (C87&. !ue to -inan"ia di--i"u ties6 Eu ita )roug(t (er (us)and (ome again. In t(e morning o- Apri 196 1..%6 Ernani (ad -e2er and +as -ee ing 2ery +ea*. Eu ita +as "onstrained to )ring (im )a"* to t(e C87 +(ere (e died on t(e same day. Eu ita instituted6 an a"tion -or damages against P(i am"are. S(e as*ed -or reim)ursement o- (er e5penses p us mora damages and attorneyLs -ees. R'C de"ided in -a2or o- Eu ita. CA a--irmed.

I &e an% Re o#&tion 9 @hi amcare bro!)ht the instant #etition for review, raisin) the #rimar( ar)!ment that a hea th care a)reement is not an ins!rance contract9 hence the 5incontestabi it( c a!se5 !nder the 2ns!rance +ode *it e 1, Sec$ 4A does not a## ($ SC (e d t(at in t(e "ase at )ar6 t(e insura) e interest o- respondentLs (us)and in o)taining t(e (ea t( "are agreement +as (is o+n (ea t(. '(e (ea t( "are agreement +as in t(e nature o- non: i-e insuran"e6 +(i"( is primari y a "ontra"t o- indemnity. Bn"e t(e mem)er in"urs (ospita 6 medi"a or any ot(er e5pense arising -rom si"*ness6 inIury or ot(er stipu ated "ontingent6 t(e (ea t( "are pro2ider must pay -or t(e same to t(e e5tent agreed upon under t(e "ontra"t. Under t(e tit e C aim pro"edures o- e5penses6 P(i am"are. (ad 1C mos -rom t(e date o- issuan"e o- t(e Agreement +it(in +(i"( to "ontest t(e mem)ers(ip o- t(e patient i- (e (ad pre2ious ai ment o- ast(ma6 and si5 mont(s -rom t(e issuan"e o- t(e agreement i- t(e patient +as si"* o- dia)etes or (ypertension. '(e periods (a2ing e5pired6 t(e de-ense o- "on"ea ment or misrepresentation no onger ie. @etitioner ar)!es that res#ondent:s h!sband concea ed a materia fact in his a## ication$ 2t a##ears that in the a## ication for hea th covera)e, #etitioners re3!ired res#ondent:s h!sband to si)n an e&#ress a!thori6ation for an( #erson, or)ani6ation or entit( that has an( record or know ed)e of his hea th to f!rnish an( and a information re ative to an( hos#ita i6ation, cons! tation, treatment or an( other medica advice or e&amination$ P(i am"are "annot re y on t(e stipu ation regarding MIn2a idation o- agreementM +(i"( readsJ Bai !re to disc ose or misre#resentation of an( materia information b( the member in the a## ication or medica e&amination, whether intentiona or !nintentiona , sha a!tomatica ( inva idate the ')reement from the ver( be)innin) and iabi it( of @hi amcare sha be imited to ret!rn of a Membershi# Bees #aid$ 'n !ndisc osed or misre#resented information is deemed materia if its reve ation wo! d have res! ted in the dec ination of the a## icant b( @hi amcare or the assessment of a hi)her Membershi# Bee for the benefit or benefits a## ied for$ '(e ans+er assai ed )y petitioner +as in response to t(e Guestion re ating to t(e medi"a (istory o- t(e app i"ant. '(is arge y depends on opinion rat(er t(an -a"t6 espe"ia y "oming -rom respondentLs (us)and +(o +as not a medi"a do"tor. W(ere matters o- opinion or Iudgment are "a ed -or6 ans+ers made in good -ait( and +it(out intent to de"ei2e +i not a2oid a po i"y e2en t(oug( t(ey are untrue. '(us6 (') tho!)h fa se, a re#resentation of the e&#ectation, intention, be ief, o#inion, or "!d)ment of the ins!red wi not avoid the #o ic( if there is no act!a fra!d in ind!cin) the acce#tance of the risk, or its acce#tance at a ower rate of #remi!m, and this is ikewise the r! e a tho!)h the

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statement is materia to the risk, if the statement is obvio!s ( of the fore)oin) character, since in s!ch case the ins!rer is not "!stified in re (in) !#on s!ch statement, b!t is ob i)ated to make f!rther in3!ir($ *here is a c ear distinction between s!ch a case and one in which the ins!red is fra!d! ent ( and intentiona ( states to be tr!e, as a matter of e&#ectation or be ief, that which he then knows, to be act!a ( !ntr!e, or the im#ossibi it( of which is shown b( the facts within his know ed)e, since in s!ch case the intent to deceive the ins!rer is obvio!s and amo!nts to act!a fra!d$ '(e -raudu ent intent on t(e part o- t(e insured must )e esta) is(ed to +arrant res"ission o- t(e insuran"e "ontra"t. Con"ea ment as a de-ense -or t(e (ea t( "are pro2ider or insurer to a2oid ia)i ity is an a--irmati2e de-ense and t(e duty to esta) is( su"( de-ense )y satis-a"tory and "on2in"ing e2iden"e rests upon t(e pro2ider or insurer. In any "ase6 +it( or +it(out t(e aut(ority to in2estigate6 petitioner is ia) e -or " aims made under t(e "ontra"t. 7a2ing assumed a responsi)i ity under t(e agreement6 petitioner is )ound to ans+er t(e same to t(e e5tent agreed upon. In t(e end6 t(e ia)i ity o- t(e (ea t( "are pro2ider atta"(es on"e t(e mem)er is (ospita i4ed -or t(e disease or inIury "o2ered )y t(e agreement or +(ene2er (e a2ai s ot(e "o2ered )ene-its +(i"( (e (as prepaid. Under Se"tion C/ o- t(e Insuran"e Code6 Ma "on"ea ment entit es t(e inIured party to res"ind a "ontra"t oinsuran"e.M '(e rig(t to res"ind s(ou d )e e5er"ised pre2ious to t(e "ommen"ement o- an a"tion on t(e "ontra"t. In t(is "ase6 no res"ission +as made. 3esides6 t(e "an"e ation o- (ea t( "are agreements as in insuran"e po i"ies reGuire t(e "on"urren"e o- t(e -o o+ing "onditionsJ 1. Prior noti"e o- "an"e ation to insured; C. Noti"e must )e )ased on t(e o""urren"e a-ter e--e"ti2e date o- t(e po i"y o- one or more o- t(e grounds mentioned; 9. >ust )e in +riting6 mai ed or de i2ered to t(e insured at t(e address s(o+n in t(e po i"y; #. >ust state t(e grounds re ied upon pro2ided in Se"tion $# o- t(e Insuran"e Code and upon reGuest o- insured6 to -urnis( -a"ts on +(i"( "an"e ation is )ased. None o- t(e a)o2e pre:"onditions +as -u -i ed in t(is "ase. W(en t(e terms o- insuran"e "ontra"t "ontain imitations on ia)i ity6 "ourts s(ou d "onstrue t(em in su"( a +ay as to pre" ude t(e insurer -rom non: "omp ian"e +it( (is o) igation. 3eing a "ontra"t o- ad(esion6 t(e terms o- an insuran"e "ontra"t are to )e "onstrued stri"t y against t(e party +(i"( prepared t(e "ontra"t N t(e insurer. 3y reason o- t(e e5" usi2e "ontro o- t(e insuran"e "ompany o2er t(e terms and p(raseo ogy o- t(e insuran"e "ontra"t6 am)iguity must )e stri"t y interpreted against t(e insurer and i)era y in -a2or o- t(e insured6 espe"ia y to a2oid -or-eiture. '(is is eGua y app i"a) e to 7ea t( Care Agreements. '(e p(raseo ogy used in medi"a or (ospita ser2i"e "ontra"ts6 su"( as t(e one at )ar6 must )e i)era y "onstrued in -a2or o- t(e su)s"ri)er6 and i- dou)t-u or reasona) y sus"epti) e o- t+o interpretations t(e "onstru"tion "on-erring "o2erage is to )e adopted6 and e5" usionary " auses o- dou)t-u import s(ou d )e stri"t y "onstrued against t(e pro2ider.

CHAPTER 1
CONTRACT OF INSURANCE TITLE I . WHAT ?A> EE INSURED
Section /5 Any "ontingent or un*no+n e2ent6 +(et(er past or -uture6 +(i"( may damni-y a person (a2ing an insura) e interest6 or "reate a ia)i ity against (im6 may )e insured against6 su)Ie"t to t(e pro2isions o- t(is "(apter. '(e "onsent o- t(e (us)and is not ne"essary -or t(e 2a idity o- an insuran"e po i"y ta*en out )y t(e married +oman on (er i-e or t(at o- (er "(i dren. Any minor o- t(e age o- eig(teen years or more6 may not+it(standing su"( minority6 "ontra"t -or i-e6 (ea t( and a""ident insuran"e6 +it( any insuran"e "ompany du y aut(ori4ed to do )usiness in t(e P(i ippines6 pro2ided t(e insuran"e is ta*en on (is o+n i-e and t(e )ene-i"iary appointed is t(e minor=s estate or t(e minor=s -at(er6 mot(er6 (us)and6 +i-e6 "(i d6 )rot(er or sister. '(e married +oman or t(e minor (erein a o+ed to ta*e out an insuran"e po i"y may e5er"ise a t(e rig(ts and pri2i eges o- an o+ner under a po i"y.

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A rig(ts6 tit e and interest in t(e po i"y o- insuran"e ta*en out )y an origina o+ner on t(e i-e or (ea t( o- a minor s(a automati"a y 2est in t(e minor upon t(e deat( o- t(e origina o+ner6 un ess ot(er+ise pro2ided in t(e po i"y. What !e"i# o" "i ; 2a4 $e in &"e%' '(e -o o+ing ris*s may )e insuredJ 1. Any "ontingent or un*no+n e2ent +(et(er past or -uture +(i"( may "ause damage to a person (a2ing an insura) e interest; or C. Any "ontingent or un*no+n e2ent6 +(et(er past or -uture6 +(i"( may "reate ia)i ity against t(e person insured. ?a4 a 2a""ie% (o2an ta;e o&t an in &"ance' I) oC on (hat' Aes. A married +oman may ta*e out an insuran"e on (er i-e or t(at o- (er "(i dren e2en +it(out t(e "onsent o- (er (us)and. S(e may i*e+ise ta*e out an insuran"e on t(e i-e o- (er (us)and6 (er parap(erna property6 or on property gi2en to (er )y (er (us)and. ?a4 a 2ino" ta;e o&t an in &"ance' '(ird par o- Se". 9 is no onger app i"a) e6 sin"e t(e age o- maIority is no+ 10 years o d (RA 00%.6 !e". 196 1.0.&. Att4 :&i2 on a ;e% & to #oo; at a )e( !"o*i ion o) #a( (ith "e !ect to thi ection5 What a"e the4' Art. 11/# (NCC&. E5"ept in "ases e5press y spe"i-ied )y t(e a+6 or +(en it is ot(er+ise de" ared )y stipu ation6 or +(en t(e nature o- t(e o) igation reGuires t(e assumption o- ris*6 no person s(a )e responsi) e -or t(ose e2ents +(i"(6 "ou d not )e -oreseen6 or +(i"(6 t(oug( -oreseen6 +ere ine2ita) e. Art. 11% (@C&. '(e spouses retain t(e o+ners(ip6 possession6 administration and enIoyment o- t(eir e5" usi2e properties. Eit(er spouse may during t(e marriage6 trans-er t(e administration o- (is or (er e5" usi2e property to t(e ot(er )y means o- a pu) i" instrument6 +(i"( s(a )e re"orded in t(e registry o- property o- t(e p a"e +(ere t(e property is o"ated. A"t5 1/67 7NCC&. '(e -o o+ing "annot gi2e "onsent to a "ontra"tJ (1& Uneman"ipated minors; (C& Insane or demented persons6 and dea-:mutes +(o do not *no+ (o+ to +rite. A"t5 1/9- 7NCC85 '(e -o o+ing "ontra"ts are 2oida) e or annu a) e6 e2en t(oug( t(ere may (a2e )een no damage to t(e "ontra"ting partiesJ (1& '(ose +(ere one o- t(e parties is in"apa) e o- gi2ing "onsent to a "ontra"t; (C& '(ose +(ere t(e "onsent is 2itiated )y mista*e6 2io en"e6 intimidation6 undue in- uen"e or -raud. '(ese "ontra"ts are )inding6 un ess t(ey are annu ed )y a proper a"tion in "ourt. '(ey are sus"epti) e orati-i"ation. P"o$#e29 ', wanted to o#en a medicina herb sho#$ =e # aced a on) distance #hone ca to *aiwan and ta ked to an e&#orter who wi in) ( a)reed to consi)n severa tons of )insen)s with him on the condition that he wi come and #ick the )oods !#$ ' then sent C of his car)o vesse s to *aiwan$ *he shi#s eft on '!)!st 9$ .n '!)!st 14, ' ins!red the C vesse s a)ainst #eri s of the So!th +hina Sea DEost or /ot Eost4 with B 2ns!rance +o$ -itho!t the know ed)e of both #arties, the shi#s had a read( s!nk on '!)$ 14$ 2s B 2ns!rance +o$ iab e for the shi#s> Aes. '(is is an e5amp e o- a past un*no+n e2ent )e"ause t(e sin*ing o- t(e s(ip is a past e2ent at t(e time t(at t(e po i"y too* e--e"t. '(e "ontra"t is 2a id and 3 Insuran"e Co. is ia) e )e"ause (e agreed to pay e2en t(oug( t(e s(ip )e a ready ost. An insuran"e against an un*no+n past e2ent is pe"u iar on y to 2a"ine insuran"e. 7o+e2er6 Atty. Quimson said in " ass t(at no+adays6 most i- not a insuran"e "ompanies no onger insure a past e2ent sin"e te"(no ogy (as progressed in su"( a manner t(at a s(ip=s "urrent status "an easi y )e *no+n +(i e t(e app i"ation is )eing pro"essed. Ca e5

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INSURANCE REVIEWER Atty. Quimson 71-8 Phi#a2ca"e *5 CA (repeat Case O%.& /79 SCRA /16 Fact 9

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Ernani 'rinos6 app ied -or a (ea t( "are "o2erage +it( P(i am"are. In t(e standard app i"ation -orm6 (e ans+ered NB to t(e -o o+ing GuestionJ ,=ave (o! or an( of (o!r fami ( members ever cons! ted or been treated for hi)h b ood #ress!re, heart tro!b e, diabetes, cancer, iver disease, asthma or #e#tic ! cer> (2f ?es, )ive detai s)4 '(e app i"ation +as appro2ed -or a period o- one year -rom >ar"( 16 1.00 to >ar"( 16 1.0.. 7e +as a issued 7ea t( Care Agreement6 and under su"(6 (e +as entit ed to a2ai o- (ospita i4ation )ene-its6 +(et(er ordinary or emergen"y6 isted t(erein. 7e +as a so entit ed to a2ai o- Mout:patient )ene-itsM su"( as annua p(ysi"a e5aminations6 pre2enti2e (ea t( "are and ot(er out:patient ser2i"es. Upon t(e termination o- t(e agreement6 t(e same +as e5tended -or anot(er year -rom >ar"( 16 1.0. to >ar"( 16 1..%6 t(en -rom >ar"( 16 1..% to Eune 16 1..%. '(e amount o- "o2erage +as in"reased to a ma5imum sum o- P/F6%%%.%% per disa)i ity. !uring t(e period o- (is "o2erage6 Ernani su--ered a (eart atta"* and +as "on-ined at t(e >ani a >edi"a Center (>>C& -or one mont( )eginning >ar"( .6 1..%. W(i e (er (us)and +as in t(e (ospita 6 Eu ita tried to " aim t(e )ene-its under t(e (ea t( "are agreement. 7o+e2er6 P(i am"are denied (er " aim saying t(at t(e 7ea t( Care Agreement +as 2oid. A""ording to P(i am"are6 t(ere +as "on"ea ment regarding ErnaniLs medi"a (istory. o !o"tors at t(e >>C a eged y dis"o2ered at t(e time o- ErnaniLs "on-inement t(at (e +as (ypertensi2e6 dia)eti" and ast(mati"6 "ontrary to (is ans+er in t(e app i"ation -orm. Eu ita (ad no "(oi"e )ut to pay t(e (ospita i4ation e5penses (erse -6 amounting to a)out P/$6%%%.%% A-ter (er (us)and +as dis"(arged -rom t(e >>C6 (e +as attended )y a p(ysi"a t(erapist at (ome. <ater6 (e +as admitted at t(e C(inese 8enera 7ospita (C87&. !ue to -inan"ia di--i"u ties6 Eu ita )roug(t (er (us)and (ome again. In t(e morning o- Apri 196 1..%6 Ernani (ad -e2er and +as -ee ing 2ery +ea*. Eu ita +as "onstrained to )ring (im )a"* to t(e C87 +(ere (e died on t(e same day. Eu ita instituted6 an a"tion -or damages against P(i am"are. S(e as*ed -or reim)ursement o- (er e5penses p us mora damages and attorneyLs -ees. R'C de"ided in -a2or o- Eu ita. CA a--irmed.

I &e an% Re o#&tion 9 @hi amcare bro!)ht the instant #etition for review, raisin) the #rimar( ar)!ment that a hea th care a)reement is not an ins!rance contract9 hence the 5incontestabi it( c a!se5 !nder the 2ns!rance +ode *it e 1, Sec$ 4A does not a## ($ SC (e d t(at in t(e "ase at )ar6 t(e insura) e interest o- respondentLs (us)and in o)taining t(e (ea t( "are agreement +as (is o+n (ea t(. '(e (ea t( "are agreement +as in t(e nature o- non: i-e insuran"e6 +(i"( is primari y a "ontra"t o- indemnity. Bn"e t(e mem)er in"urs (ospita 6 medi"a or any ot(er e5pense arising -rom si"*ness6 inIury or ot(er stipu ated "ontingent6 t(e (ea t( "are pro2ider must pay -or t(e same to t(e e5tent agreed upon under t(e "ontra"t. Under t(e tit e C aim pro"edures o- e5penses6 P(i am"are. (ad 1C mos -rom t(e date o- issuan"e o- t(e Agreement +it(in +(i"( to "ontest t(e mem)ers(ip o- t(e patient i- (e (ad pre2ious ai ment o- ast(ma6 and si5 mont(s -rom t(e issuan"e o- t(e agreement i- t(e patient +as si"* o- dia)etes or (ypertension. '(e periods (a2ing e5pired6 t(e de-ense o- "on"ea ment or misrepresentation no onger ie. @etitioner ar)!es that res#ondent:s h!sband concea ed a materia fact in his a## ication$ 2t a##ears that in the a## ication for hea th covera)e, #etitioners re3!ired res#ondent:s h!sband to si)n an e&#ress a!thori6ation for an( #erson, or)ani6ation or entit( that has an( record or know ed)e of his hea th to f!rnish an( and a information re ative to an( hos#ita i6ation, cons! tation, treatment or an( other medica advice or e&amination$ P(i am"are "annot re y on t(e stipu ation regarding MIn2a idation o- agreementM +(i"( readsJ Bai !re to disc ose or misre#resentation of an( materia information b( the member in the a## ication or medica e&amination, whether intentiona or !nintentiona , sha a!tomatica ( inva idate the ')reement from the ver( be)innin) and iabi it( of @hi amcare sha be imited to ret!rn of a Membershi# Bees #aid$ 'n !ndisc osed or misre#resented information is deemed

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materia if its reve ation wo! d have res! ted in the dec ination of the a## icant b( @hi amcare or the assessment of a hi)her Membershi# Bee for the benefit or benefits a## ied for$ '(e ans+er assai ed )y petitioner +as in response to t(e Guestion re ating to t(e medi"a (istory o- t(e app i"ant. '(is arge y depends on opinion rat(er t(an -a"t6 espe"ia y "oming -rom respondentLs (us)and +(o +as not a medi"a do"tor. W(ere matters o- opinion or Iudgment are "a ed -or6 ans+ers made in good -ait( and +it(out intent to de"ei2e +i not a2oid a po i"y e2en t(oug( t(ey are untrue. '(us6 (') tho!)h fa se, a re#resentation of the e&#ectation, intention, be ief, o#inion, or "!d)ment of the ins!red wi not avoid the #o ic( if there is no act!a fra!d in ind!cin) the acce#tance of the risk, or its acce#tance at a ower rate of #remi!m, and this is ikewise the r! e a tho!)h the statement is materia to the risk, if the statement is obvio!s ( of the fore)oin) character, since in s!ch case the ins!rer is not "!stified in re (in) !#on s!ch statement, b!t is ob i)ated to make f!rther in3!ir($ *here is a c ear distinction between s!ch a case and one in which the ins!red is fra!d! ent ( and intentiona ( states to be tr!e, as a matter of e&#ectation or be ief, that which he then knows, to be act!a ( !ntr!e, or the im#ossibi it( of which is shown b( the facts within his know ed)e, since in s!ch case the intent to deceive the ins!rer is obvio!s and amo!nts to act!a fra!d$ '(e -raudu ent intent on t(e part o- t(e insured must )e esta) is(ed to +arrant res"ission o- t(e insuran"e "ontra"t. Con"ea ment as a de-ense -or t(e (ea t( "are pro2ider or insurer to a2oid ia)i ity is an a--irmati2e de-ense and t(e duty to esta) is( su"( de-ense )y satis-a"tory and "on2in"ing e2iden"e rests upon t(e pro2ider or insurer. In any "ase6 +it( or +it(out t(e aut(ority to in2estigate6 petitioner is ia) e -or " aims made under t(e "ontra"t. 7a2ing assumed a responsi)i ity under t(e agreement6 petitioner is )ound to ans+er t(e same to t(e e5tent agreed upon. In t(e end6 t(e ia)i ity o- t(e (ea t( "are pro2ider atta"(es on"e t(e mem)er is (ospita i4ed -or t(e disease or inIury "o2ered )y t(e agreement or +(ene2er (e a2ai s ot(e "o2ered )ene-its +(i"( (e (as prepaid. Under Se"tion C/ o- t(e Insuran"e Code6 Ma "on"ea ment entit es t(e inIured party to res"ind a "ontra"t oinsuran"e.M '(e rig(t to res"ind s(ou d )e e5er"ised pre2ious to t(e "ommen"ement o- an a"tion on t(e "ontra"t. In t(is "ase6 no res"ission +as made. 3esides6 t(e "an"e ation o- (ea t( "are agreements as in insuran"e po i"ies reGuire t(e "on"urren"e o- t(e -o o+ing "onditionsJ 1. Prior noti"e o- "an"e ation to insured; C. Noti"e must )e )ased on t(e o""urren"e a-ter e--e"ti2e date o- t(e po i"y o- one or more o- t(e grounds mentioned; 9. >ust )e in +riting6 mai ed or de i2ered to t(e insured at t(e address s(o+n in t(e po i"y; #. >ust state t(e grounds re ied upon pro2ided in Se"tion $# o- t(e Insuran"e Code and upon reGuest o- insured6 to -urnis( -a"ts on +(i"( "an"e ation is )ased. None o- t(e a)o2e pre:"onditions +as -u -i ed in t(is "ase. W(en t(e terms o- insuran"e "ontra"t "ontain imitations on ia)i ity6 "ourts s(ou d "onstrue t(em in su"( a +ay as to pre" ude t(e insurer -rom non: "omp ian"e +it( (is o) igation. 3eing a "ontra"t o- ad(esion6 t(e terms o- an insuran"e "ontra"t are to )e "onstrued stri"t y against t(e party +(i"( prepared t(e "ontra"t N t(e insurer. 3y reason o- t(e e5" usi2e "ontro o- t(e insuran"e "ompany o2er t(e terms and p(raseo ogy o- t(e insuran"e "ontra"t6 am)iguity must )e stri"t y interpreted against t(e insurer and i)era y in -a2or o- t(e insured6 espe"ia y to a2oid -or-eiture. '(is is eGua y app i"a) e to 7ea t( Care Agreements. '(e p(raseo ogy used in medi"a or (ospita ser2i"e "ontra"ts6 su"( as t(e one at )ar6 must )e i)era y "onstrued in -a2or o- t(e su)s"ri)er6 and i- dou)t-u or reasona) y sus"epti) e o- t+o interpretations t(e "onstru"tion "on-erring "o2erage is to )e adopted6 and e5" usionary " auses o- dou)t-u import s(ou d )e stri"t y "onstrued against t(e pro2ider.

Section 05 '(e pre"eding se"tion does not aut(ori4e an insuran"e -or or against t(e dra+ing oany ottery6 or -or against any "(an"e or ti"*et in a ottery dra+ing a pri4e. I a cont"act o) in &"ance a (a3e"in3 o" 3a2$#in3 cont"act' NB. A "ontra"t o- insuran"e is a "ontra"t o- indemnity and not a +agering or gam) ing "ontra"t. A t(oug( it is true t(at an insuran"e "ontra"t is a so )ased on a "ontingen"y6 it is not a "ontra"t o- "(an"e.

What i the conce!t o) a #otte"4' '(e term , ottery1 e5tends to a s"(emes -or t(e distri)ution o- pri4es )y "(an"e6 su"( as po i"y p aying6 gi-t e5(i)ition6 pri4e "on"erts6 ra-- es at -airs6 et". and 2arious -orms o- gam) ing.

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What a"e the th"ee e entia# e#e2ent o) #otte"4' Consideration6 pri4es and "(an"e. '(ere is "onsideration o- pri"e aid i- it appears t(at t(e pri4es o--ered )y +(ate2er name t(ey may )e "a ed "ame out o- t(e -und raised )y t(e sa e o- "(an"es among t(e parti"ipants in order to +in t(e pri4es. A"e a## !"iFe e=&i*a#ent to a #otte"4' I- t(e pri4es do not "ome out o- t(e -und or "ontri)utions )y t(e parti"ipants6 no "onsideration (as )een paid and "onseGuent6 t(ere is no ottery. E5J A "ompany6 to promote t(e sa e o- "ertain produ"ts6 resorts to a s"(eme +(i"( en2isions t(e gi2ing a+ay -or -ree o- "ertain pri4es -or t(e pur"(ase o- said produ"ts6 -or t(e parti"ipants are not reGuired to pay more t(an t(e usua pri"e o t(e produ"ts. Can a (ee! ta;e ho#%e" in &"e hi2 e#) a3ain t the )ai#&"e o) hi tic;et to (in' NB. It "annot )e said t(at (e su--ered a , oss1 o- pri4e +(en (e did not +in. '(e -ai ure to +in a pri4e +ou d not damni-y or "reate a ia)i ity against (im. What a"e the %i tinction $et(een an in &"ance cont"act an% a (a3e"in3 cont"act' A "ontra"t o- insuran"e is a "ontra"t o- indemnity and not a +agering6 or gam) ing "ontra"t.(Se". CF& W(ite it is )ased on a "ontingen"y6 it is not a "ontra"t o- "(an"e and is not used -or pro-it. '(e distin"tions are t(e -o o+ingJ In &"ance Cont"act Parties see* to distri)ute oss )y reason omis"(an"e Insured a2oids mis-ortune. 'ends to eGua i4e -ortune. W(at one insured gains is not at t(e e5pense oanot(er insured. '(e entire group o- insureds pro2ides t(roug( t(e premiums paid6 t(e -unds +(i"( ma*e possi) e t(e payment o- a " aims; Pur"(ase o- insuran"e does not "reate a ne+ and non:e5isting ris* o- oss to t(e pur"(aser. In pur"(asing insuran"e6 t(e insurer -a"es an a ready e5isting ris* o- e"onomi" oss. Ga2$#in3 cont"act Parties "ontemp ate gain t(roug( mere "(an"e or t(e o""urren"e o- a "ontingent e2ent. 8am) er "ourts -ortune 'ends to in"rease t(e ineGua ity o- -ortune. Essen"e is +(ate2er one person +ins -rom a +ager is ost )y t(e ot(er +agering party. As soon as a party ma*es a +ager6 (e "reates a ris* o- oss to (imse - +(ere no su"( ris* e5isted pre2ious y.

What a"e the i2i#a"itie $et(een an in &"ance cont"act an% a 3a2$#in3 cont"act' '(ey are simi ar in on y one respe"t. In )ot(6 one party promises to pay a gi2en sum to t(e ot(er upon t(e o""urren"e o- a gi2en -uture e2ent6 t(e promise )eing "ondition upon t(e payment o-6 or agreement to pay6 a stipu ated amount )y t(e ot(er party to t(e "ontra"t. In eit(er "ase6 one party may re"ei2e more6 mu"( more6 t(an (e paid or agreed to pay. P"o$#e2 5 ', B, + and F decided to "oin a b!n)ee "!m#in) com#etition$ *he( contrib!ted @1,GGG each to a f!nd avai ab e for the !se of an( member who is in"!red in the contest$ 2s this ins!rance or )amb in)> '(is is an insuran"e "ontra"t. Ea"( mem)er "ontri)utes to a "ommon -und6 out o- +(i"( one is reim)ursed -or t(e osses t(at (e may su--er. S!##ose ', B, +, and F a)ree that the who e amo!nt of 4* wo! d be )iven to the one who swin)s nearest to the )ro!nd$ 2s this ins!rance or )amb in)> '(is is no+ a gam) ing "ontra"t. '(e parties are no+ "ontemp ating a gain )ased upon un"ertain e2ents.

Section 15 A *inds o- insuran"e are su)Ie"t to t(e pro2isions o- t(is "(apter so -ar as t(e pro2isions "an app y. What i the a!!#ica$i#it4 o) the !"o*i ion o) Cha!te" 1'

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Pro2isions o- C(ap 1 on ,'(e Contra"t o- Insuran"e1 (Se"s 1:.0& are a so app i"a) e to marine Insuran"e (Se"s. ..:1$$&6 @ire insuran"e (Se"s. 1$/:1/9&6 Casua ty Insuran"e (Se". 1/#&6 Suretys(ip (Se"s. 1/F:1/0&6 <i-e Insuran"e (Se"s. 1/.:109&6 and to any ot(er *ind o- insuran"e (Se". C& so -ar as said pro2isions "an app y. >atters not e5press y pro2ided -or in t(e Insuran"e Code and spe"ia a+s are regu ated )y t(e CC. So6 an insuran"e "ontra"t under RA 1$11 (So"ia Se"urity A"t o- 1.F#& s(a )e go2erned primari y )y t(e said a+ and su)sidiari y )y C(ap. 1 o- t(e Insuran"e Code6 and in t(e a)sen"e o- t(e app i"a) e pro2isions in )ot( a+s6 t(e pertinent pro2isions o- t(e CC s(a )e app ied.

TITLE II . PARTIES TO THE CONTRACT

Section 65 E2ery person6 partners(ip6 asso"iation or "orporation du y aut(ori4ed to transa"t insuran"e )usiness as e se+(ere pro2ided in t(is Code6 may )e an insurer. Who a"e the !a"tie to the cont"act o) in &"ance' '(e In &"e" is t(e party +(o assumes or a""epts t(e ris* o- oss and underta*es -or a "onsideration to indemni-y t(e insured or to pay (im a "ertain sum on t(e (appening o- a spe"i-ied "ontingen"y or e2ent. '(e )usiness o- insuran"e may )e "arried on )y indi2idua s Iust as mu"( as )y "orporations and asso"iations. '(e state itse - may go into insuran"e )usiness. '(e in &"e%6 or t(e se"ond party to t(e "ontra"t6 is t(e person in +(ose -a2or6 t(e "ontra"t is operati2e and +(o is indemni-ied against6 or is to re"ei2e a "ertain sum upon t(e (appening o- a spe"i-ied "ontingen"y or e2ent. 7e is t(e person +(ose oss is t(e o""asion -or t(e payment o- t(e insuran"e pro"eeds )y t(e insurer. I the in &"e% a#(a4 the !e" on to (ho2 the !"ocee% a"e !ai%' No. '(e person paid may )e t(e $ene)icia"4 designated in t(e po i"y. A "ommon e5amp e o- t(is situation is a i-e insuran"e po i"y +(ere t(e pro"eeds are not gi2en to t(e insured )ut to a t(ird party designated )y t(e insured. What i the nat&"e o) the "e#ation hi! $et(een the in &"e" an% the in &"e%' It is t(at o- a "ontingent de)tor and "reditor6 su)Ie"t to t(e "onditions o- t(e po i"y and NB' t(at otrustee and "estui Gue trust. Ho( a"e the te"2 a &"e"C in &"e% an% a &"e% & e% in in &"ance' A""dg to 3 a"*=s <a+6 Insurer is synonymous +it( t(e term ,assurer1 or ,under+riter1. '(e terms ,insured1 and ,assured1 are genera y used inter"(angea) y; )ut stri"t y spea*ing6 t(e term ,in &"e%1 re-ers to t(e o+ner o- t(e property insured or t(e person +(ose i-e is t(e su)Ie"t o- t(e "ontra"t o- insuran"e6 +(i e ,a &"e%1 re-ers to t(e person -or +(ose )ene-it t(e insuran"e is granted. @or e5J A +i-e insures t(e i-e o- (er (us)and -or (er o+n )ene-it. '(e +i-e is t(e assured6 and t(e (us)and t(e insured. '(e +i-e is t(e o+ner o- t(e po i"y )ut s(e is not t(e insured. In property insuran"e6 i*e -ire insuran"e6 t(e insure is a so t(e assured +(ere t(e pro"eeds are paya) e to (im. Assured is a so used sometimes as a synonym o- ,)ene-i"iary.1 '(e $ene)icia"4 is t(e person designated )y t(e terms o- t(e po i"y as t(e one to re"ei2e t(e pro"eeds o- t(e insuran"e. 7e is t(e t(ird party in a "ontra"t o- i-e insuran"e6 +(ose )ene-it t(e po i"y is issued and to +(om t(e oss is paya) e.

Who 2a4 $e an in &"e"' A -oreign or domesti" insuran"e "ompany may transa"t )usiness in t(e P(i ippines )ut must -irst o)tain a "erti-i"ate o- aut(ority -or t(at purpose -rom t(e Insuran"e Commissioner +(o (as t(e dis"retion to re-use to issue su"( "erti-i"ate i- it +i )est promote t(e interests o- t(e peop e o- t(is "ountry. (Se". 10/&

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An indi2idua may a so )e an insurer6 pro2ided (e (o ds a "erti-i"ate o- aut(ority -rom t(e Insuran"e Commissioner6 and pro2ided -urt(er t(at (e is possessed o- t(e "apita assets reGuired o- an insuran"e "orporation doing t(e same *ind o- )usiness in t(e P(i ippines and in2ested in t(e same manner. (Se"s. 10#: 10$& What i an in &"ance co"!o"ation' IC de-ines it as one -ormed or organi4ed to sa2e any person or persons or ot(er "orporations (arm ess -rom oss6 damage6 or ia)i ity arising -rom any un*no+n or -uture or "ontingent e2ent6 or to indemni-y or to "ompensate any person or persons or ot(er "orporations -or any su"( oss6 damage6 or ia)i ity6 or to guarantee t(e per-orman"e o- or "omp ian"e +it( "ontra"tua o) igations or t(e payment o- de)ts o- ot(ers. (Se". 10F& '(e ast part o- t(e statement re-ers to suretys(ip. (Se". 1/F& What %oe the te"2 Ain &"e"B an% Ain &"ance co2!an4B inc#&%e' It in" udes indi2idua s6 partners(ips6 asso"iations or "orporations6 in" uding 8BCC=s or entities6 engaged as prin"ipa s in t(e insuran"e )usiness6 e@ce!t mutua )ene-it asso"iations. It s(a a so in" ude pro-essiona reinsurers as de-ined in Se". C0% (Se". 10#& I the E& ine o) In &"ance a))ecte% (ith !&$#ic inte"e t' Aes. It is t(ere-ore6 su)Ie"t to regu ation and "ontro )y t(e state )y 2irtue o- t(e e5er"ise o- its po i"e po+er or in t(e interest o- pu) i" "on2enien"e and t(e genera good o- t(e peop e. Att45 :&i2 on a ;e% & to #oo; at Sec5 1,0+1,1 )o" the 2eanin3 o) Ain &"e"BC Ain &"ance co2!an4BC an% AIn &"ance co"!o"ationBG an% Sec5 1,7 )o" the ce"ti)icate o) a&tho"it4 "e=&i"e% to t"an act in &"ance $& ine 5 What %o the e ection !"o*i%e' Sec5 1,0. @or t(e purposes o- t(is Code6 t(e term ,in &"e"1 or ,in &"ance co2!an41 s(a in" ude a indi2idua s6 partners(ips6 asso"iations6 or "orporations in" uding go2ernment:o+ned or "ontro ed "orporations or entities6 engaged as prin"ipa s in t(e insuran"e )usiness6 e@ce!tin3 mutua )ene-it asso"iations. Un ess t(e "onte5t ot(er+ise reGuires6 t(e term s(a a so in" ude pro-essiona reinsurers de-ined in Se". C0%. , Do2e tic Co2!an41 s(a in" ude "ompanies -ormed6 organi4ed or e5isting under t(e a+s o- t(e P(i ippines. , Fo"ei3n Co2!an461 +(en used +it(out imitation6 s(a in" ude "ompanies -ormed6 organi4ed6 or e5isting under any +s ot(er t(an t(ose o- t(e P(i ippines. Sec5 1,15 Corporations -ormed or organi4ed to sa2e any person or persons or ot(er "orporations (arm ess -rom oss6 damage6 or ia)i ity arising -rom any un*no+n or -uture or "ontingent e2ent6 or to indemni-y or to "ompensate any person or persons or ot(er "orporations -or any su"( oss6 damage6 or ia)i ity6 or to guarantee t(e per-orman"e o- or "omp ian"e +it( "ontra"tua o) igations or t(e payment ode)ts o- ot(ers s(a )e *no+n as ,in &"ance co"!o"ation 51 '(e pro2isions o- t(e Corporation <a+ s(a app y to a insuran"e "orporations no+ or (erea-ter engaged in )usiness in t(e P(i ippines in so -ar as t(ey do not "on- i"t +it( t(e pro2isions o- t(is "(apter. Sec5 1,75 No insuran"e "ompany s(a transa"t any insuran"e )usiness in t(e P(i ippines unti a-ter it s(a (a2e o)tained a "erti-i"ate o- aut(ority -or t(at purpose -rom t(e Commissioner upon app i"ation t(ere-ore and payment )y t(e "ompany "on"erned o- t(e -ees (ereina-ter pres"ri)ed. '(e Commissioner may re-use to issue a "erti-i"ate o- aut(ority to any insuran"e "ompany i-6 in (is Iudgment6 su"( re-usa +i )est promote t(e interests o- t(e peop e o- t(is "ountry. No su"( "erti-i"ate oaut(ority s(a )e granted to any su"( "ompany unti t(e Commissioner s(a (a2e satis-ied (imse - )y su"( e5amination as (e may ma*e and su"( e2iden"e as (e may reGuire t(at su"( "ompany is Gua i-ied )y t(e a+s o- t(e P(i ippines to transa"t )usiness t(erein6 t(at t(e grant o- su"( aut(ority appears to )e Iusti-ied in t(e ig(t o- o"a e"onomi" reGuirements6 and t(at t(e dire"tion and administration6 as +e as t(e integrity and responsi)i ity o- t(e organi4ers and administrators6 t(e -inan"ia organi4ation and t(e amount o- "apita 6 not+it(standing t(e pro2isions o- se"tion 1006 reasona) y assure t(e sa-ety o- t(e interests o- t(e po i"y(o ders and t(e pu) i". In order to maintain t(e Gua ity o- t(e management o- insuran"e "ompanies and a--ord )etter prote"tion o- po i"y(o ders and t(e pu) i" in genera 6 any person o- good mora "(ara"ter6 unGuestioned integrity and re"ogni4ed "ompeten"e may )e e e"ted or appointed dire"tor or o--i"er o- insuran"e "ompanies. '(e

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Commissioner s(a pres"ri)e t(e Gua i-i"ations o- t(e e5e"uti2e o--i"ers and ot(er *ey o--i"ia s o- insuran"e "ompanies -or t(e purposes o- t(is se"tion. No person s(a "ompany. "on"urrent y )e a dire"tor andKor o--i"er o- an insuran"e "ompany and an adIustment

In"um)ent dire"tors andKor o--i"ers a--e"ted )y t(e a)o2e pro2isions are (ere)y a o+ed to (o d on to t(eir positions unti t(e end o- t(eir terms or t+o years -rom t(e e--e"ti2ity o- t(e !e"ree6 +(i"(e2er is s(orter. 3e-ore issuing su"( "erti-i"ate o- aut(ority6 t(e Commissioner must )e satis-ied t(at t(e name o- t(e "ompany is not t(at o- any ot(er *no+n "ompany transa"ting a simi ar )usiness in t(e P(i ippines6 or a name so simi ar as to )e "a "u ated to mis ead t(e pu) i". Su"( "erti-i"ate o- aut(ority s(a e5pire on t(e ast day o- Eune o- ea"( year and s(a )e rene+ed annua y i- t(e "ompany is "ontinuing to "omp y +it( t(e pro2isions o- t(is Code or t(e "ir"u ars6 instru"tions6 ru ings or de"isions o- t(e Commissioner. E2ery "ompany re"ei2ing any su"( "erti-i"ate o- aut(ority s(a )e su)Ie"t to t(e pro2isions o- t(is Code and ot(er re ated a+s and to t(e Iurisdi"tion and super2ision o- t(e Commissioner. No insuran"e "ompany may )e aut(ori4ed to transa"t in t(e P(i ippines t(e )usiness o- i-e and non: i-e insuran"e "on"urrent y6 un ess spe"i-i"a y aut(ori4ed to do so6 pro2ided (o+e2er6 t(at t(e terms , i-e1 and ,non: i-e1 insuran"e s(a e deemed to in" ude (ea t(6 a""ident and disa)i ity insuran"e. No insurer "ompany s(a (a2e any eGuity in an adIustment "ompany and neit(er s(a "ompany (a2e an eGuity in an insuran"e "ompany. an adIustment

Insuran"e "ompanies and adIustment "ompanies present y a--e"ted )y t(e a)o2e pro2isions s(a (a2e t+o years -rom t(e e--e"ti2ity o- t(e !e"ree +it(in +(i"( to di2est o- t(eir sto"*(o dings.

Section 75 Anyone e5"ept a pu) i" enemy may )e insured. What a"e the "e=&i ite in o"%e" that a !e" on 2a4 $e in &"e% in a contact o) in &"ance' '(ere are 9 reGuisites name yJ "& 7e must )e "ompetent to enter into a "ontra"t. d& 7e must possess an insura) e interest in t(e su)Ie"t o- insuran"e. e& 7e must NB' )e a pu) i" enemy. What i a !&$#ic ene24' It is a nation +it( +(om t(e P(i ippines is at +ar6 and it in" udes e2ery "iti4en or su)Ie"t o- su"( nation. What i the e))ect o) (a" on the e@i tin3 in &"ance cont"act $et(een the Phi#i!!ine an% a citiFen o" &$Dect o) a !&$#ic ene24C (ith "e !ect to !"o!e"t4 in &"ance' Wit( respe"t to property insuran"e6 t(e ru e adopted in t(e P(i is t(at an insuran"e po i"y "eases to )e 2a id and en-or"ea) e as soon as t(e insured )e"omes a pu) i" enemy. What i the e))ect o) (a" on the e@i tin3 in &"ance cont"act $et(een the Phi#i!!ine an% a citiFen o" &$Dect o) a !&$#ic ene24C (ith "e !ect to #i)e in &"ance' '(ree do"trines (a2e arisen. (1) Connectic&t R&#e t(ere are t+o e ements in t(e "onsideration -or +(i"( t(e annua premium is paidJ a. '(e mere prote"tion -or t(e year; and ). '(e pri2i ege o- rene+ing t(e "ontra"t -or ea"( su""eeding year )y paying t(e premium -or t(at year at t(e time agreed upon. A""dg. to t(is 2ie+6 t(e payments o- t(e premiums are a "ondition pre"edent6 t(e non: per-orman"e o- +(i"( (as +(en t(e per-orman"e +ou d )e i ega & ne"essary de-eats t(e rig(t to rene+ t(e "ontra"t.

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(2)

Ne( >o"; R&#e apparent y -o o+ed )y t(e num)er o- de"isions. War )et+een t(e states in +(i"( t(e parties reside mere y suspends t(e "ontra"ts o- i-e insuran"e and t(at upon t(e tender opremiums due )y t(e insured or (is representati2es a-ter t(e +ar (as terminated re2i2es t(e "ontra"t +(i"( )e"omes -u y operati2e. US R&#e de" ared t(e "ontra"t not mere y suspended )ut is a)rogated )y reason o- non:payment opremiums6 sin"e t(e time o- t(e payment is pe"u iar y o- t(e essen"e o- t(e "ontra"t. 7o+e2er6 t(e insured is entit ed to t(e "as( or reser2e 2a ue o- t(e po i"y (i- any& +(i"( is t(e e5"ess o- t(e premiums paid o2er t(e a"tua ris* "arried during t(e years +(en t(e po i"y (ad )een in -or"e.

(3)

We -o o+ t(e US R&#e. P"o$#e25 B is sideswi#ed b( a ba !t vendor$ Beca!se he was #revio!s ( indicted for man( other crimes inc !din) i e)a #ossession of ba ison)s, he was dec ared Metro Mani aHs @!b ic Inem( /o$1$ 2f ' wants to sec!re ins!rance on the ife of B, ma( the ins!rer ref!se on the )ro!nds that B is a #!b ic enem( and therefore ma( not be ins!red !nder Sec$ , of the 2+H NB. Se". / spea*s o- a pu) i" enemy on y in re-eren"e to a nation +it( +(om t(e P(i is at +ar and e2ery "iti4en and or su)Ie"t t(ereo-. Ca e 5 7118 Fi#i!ina Cia %e Se3&"o *5 Ch"i te"n H&en)e#% H Co5 ,- PHIL 10 Fact 9 B"t. 16 1.#16 !omesti" Corp C(ristern6 a-ter payment o- t(e premium6 o)tained -rom @i ipinas6 -ire po i"y no. C.999 -or P1%%' "o2ering mer"(andise "ontained in a )ui ding o"ated in 3inondo. Bn @e). C/6 1.#C6 during t(e Eap o""upation6 t(e )ui ding and t(e insured mer"(andise +ere )urned. C(ristern su)mitted to @i ipinas its " aim. Sa 2aged goods +ere so d and t(e tota oss o- C(ristern +as P.C'. @i ipinas denied ia)i ity on t(e ground t(at C(ristern +as an enemy "orp and "annot )e insured. I &e9 WBN @i ipinas is ia) e to C(ristern6 7uen-e d ? Co.

He#%9 NO5 >aIority o- t(e sto"*(o ders o- C(ristern +ere 8erman su)Ie"ts. '(is )eing so6 SC ru ed t(at said "orporation )e"ame an enemy "orporation upon t(e +ar )et+een t(e US and 8ermany. '(e P(i Insuran"e <a+ in Se". 0 pro2ides t(at anyone e5"ept a pu) i" enemy may )e insured. It stands to reason t(at an insuran"e po i"y "eases to )e a o+a) e as soon as an insured )e"omes a pu) i" enemy. '(e purpose o- t(e +ar is to "ripp e t(e po+er ad e5(aust t(e resour"es o- t(e enemy6 and it is in"onsistent t(at one "ountry s(ou d destroy its enemy property and repay in insuran"e t(e 2a ue o- +(at (as )een so destroyed6 or t(at it s(ou d in su"( manner in"rease t(e resour"es o- t(e enemy or render it aid. A indi2idua s +(o "ompose t(e )e igerent po+ers6 e5ist as to ea"( ot(er6 in a state o- utter e5" usion and are pu) i" enemies. C(ristern (a2ing )e"ome an enemy "orporation on !e". 1%. 1.#16 t(e insuran"e po i"y issued in (is -a2or on B"t. 16 1.#1 )y @i ipinas (ad "eased to )e 2a id and en-or"ea) e6 and sin"e t(e insured goods +ere )urned a-ter !e". 1%6 1.#16 and during t(e +ar6 C(ristern +as NB' entit ed to any indemnity under said po i"y -rom @i ipinas. E ementary ru es o- Iusti"e reGuire t(at t(e premium paid )y C(ristern -or t(e period "o2ered )y t(e po i"y -rom !e". 1%6 1.#1 s(ou d )e returned )y @i ipinas.

Section ,5 Un ess t(e po i"y ot(er+ise pro2ides6 +(ere a mortgagor o- t(e property e--e"ts insuran"e in (is o+n name pro2iding t(at a oss s(a )e paya) e to t(e mortgagee6 or assigns a po i"y o- insuran"e to a mortgagee6 t(e insuran"e is deemed to )e upon t(e interest o- t(e

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mortgagor6 +(o does not "ease to )e a party to t(e origina "ontra"t6 and any a"t o- (is6 prior to t(e oss6 +(i"( +ou d ot(er+ise a2oid t(e insuran"e6 +i (a2e t(e same e--e"t6 a t(oug( t(e property is in t(e (ands o- t(e mortgagee6 )ut any a"t +(i"(6 under t(e "ontra"t o- insuran"e6 is to )e per-ormed )y t(e mortgagor6 may )e per-ormed )y t(e mortgagee t(erein named6 +it( t(e same e--e"t as i- it (ad )een per-ormed )y t(e mortgagor. I it a#"i3ht i) $oth the 2o"t3a3o" an% the 2o"t3a3e in &"e the a2e !"o!e"t4' AES. '(e mortgagor and t(e mortgagee (a2e ea"( an insura) e interest in t(e property mortgaged6 and t(is interest is separate and distin"t -rom t(e ot(er. ConseGuent y6 insuran"e ta*en )y one in (is o+n name on y and in (is -a2or a one does not inure to t(e )ene-it o- t(e ot(er. And in "ase )ot( o- t(em ta*e out separate insuran"e po i"ies on t(e same property6 or one po i"y "o2ering t(eir respe"ti2e interests6 t(e same is not open to t(e o)Ie"tion t(at t(ere is dou) e insuran"e. What i the e@tent o) the in &"a$#e inte"e t o) the 2o"t3a3o"' '(e mortgagor o- t(e property6 as o+ner (as an insura) e interest to t(e e5tent o- t(e 2a ue o- t(e property6 e2en i- t(e mortgage de)t is eGua to su"( 2a ue. '(e reason is t(at t(e oss or destru"tion o- t(e property insured +i NB' e5tinguis( t(e mortgage de)t. What i the e@tent o) the in &"a$#e inte"e t o) the 2o"t3a3ee' '(e mortgagee or (is assignee (as an insura) e interest in t(e mortgaged property to t(e e5tent o- t(e de)t se"ured6 su"( interest "ontinues unti t(e mortgage de)t is e5tinguis(ed. U! to (hat e@tent can each "eco*e"' '(e mortgagor "annot re"o2er upon t(e insuran"e )eyond t(e -u amount o- t(e oss6 and t(e mortgagee "annot re"o2er in e5"ess o- t(e "redit at t(e time o- t(e oss. Un%e" Sec5 ,C (hat a"e the e))ect o) in &"ance (hen the 2o"t3a3o" e))ect in &"ance in hi o(n na2e an% !"o*i%e that the #o $e !a4a$#e to the 2o"t3a3ee' '(e ega e--e"ts o- t(is areJ (1& '(e "ontra"t is deemed to )e upon t(e interest o- t(e mortgagor6 (en"e (e does NB' "ease to )e a party to t(e "ontra"t; (C& Any a"tion o- t(e mortgage prior to t(e oss +(i"( +ou d ot(er+ise a2oid t(e insuran"e a--e"ts t(e mortgagee e2en i- t(e property is in t(e (ands o- t(e mortgagee; (9& Any a"t +(i"( under t(e "ontra"t o- insuran"e is to )e per-ormed )y t(e mortgagor6 may )e per-ormed )y t(e mortgagee; (#& In "ase o- oss6 t(e mortgagee is entit ed to t(e pro"eeds to t(e e5tent o- (is "redit; and (F& Upon re"o2ery )y t(e mortgagee to t(e e5tent o- (is "redit6 t(e de)t is e5tinguis(ed. What i the e))ect i) the 2o"t3a3ee e))ect in &"ance on $eha#) o) the 2o"t3a3o"' Pra"ti"a y t(e same ru es app y. Upon t(e destru"tion o- t(e property6 t(en t(e mortgagee is entit ed to re"ei2e t(e pro"eeds eGua to t(e amount o- t(e mortgage "redit. Su"( payment operates to dis"(arge t(e de)t. Att45 :&i2 on (ant & to #oo; at A"t5 6167 CC5 What %oe it a4' Art. C1C/. '(e mortgage e5tends to t(e natura a""ession6 to t(e impro2ements6 gro+ing -ruits6 and t(e rents or in"ome not yet re"ei2ed +(en t(e o) igation )e"omes due6 and to t(e amount o- t(e indemnity granted or o+ing to t(e proprietor -rom t(e insurers o- t(e property mortgaged6 or in 2irtue o- e5propriation -or pu) i" use6 +it( t(e de" arations6 amp i-i"ations and imitations esta) is(ed )y a+6 +(et(er t(e estate remains in t(e possession o- t(e mortgagor6 or it passes into t(e (ands o- a t(ird person.

P"o$#e2 5 ' is the owner of a ho!se worth 1G* which he mort)a)ed to B to sec!re a oan of C*$ -hat is the ins!rab e interests of each> Insura) e interest o- A6 mortgagor is P1%'6 +(i e t(e insura) e interest o- 36 mortgagee is PF'. ' ins!red for 1M her ho!se with the #o ic( #rovidin) that the oss sha be #a(ab e to B$ *he ho!se was mort)a)ed to B as sec!rit( for a oan of @,CG*$ 2t was tota ( destro(ed b( accidenta fire$ -ho ma( recover on the #o ic(>

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36 t(e mortgagee may re"ei2e t(e 1> )ut is entit ed on y to t(e e5tent o- (is "redit o- P/F%'6 and (e s(a (o d as trustee -or A6 mortgagor6 t(e e5"ess o- PCF%'. S!##osin) before the fire occ!rred B had a read( been #aid, who, if at a , wi receive the #roceeds> A +i re"ei2e t(e pro"eeds. '(e reason is t(at A e--e"ted t(e insuran"e in (is o+n name and (e did NB' "ease to )e a party to t(e "ontra"t a t(oug( it +as pro2ided t(at t(e indemnity )e paid to 3. S!##ose it was B, mort)a)ee who ins!red the ho!se for 1M$ 2f the oss occ!rred before B was #aid who is entit ed to receive the #roceeds> 3. 3ut 3 "an on y re"o2er P/F%'6 t(e amount o- (er "redit. -hat if the oss occ!rred after B was #aid, can he sti receive the #roceeds> No. Upon payment o- t(e de)t6 3 ost (is insura) e interest in t(e property. -i ' )et the #roceeds> No. 3e"ause A +as ne2er a party to t(e "ontra"t. It is important to note t(at it +as 36 mortgagee +(o e--e"ted t(e insuran"e. Ca e 9 7168 San ?i3&e# E"e(e"4 *5 La( Union Roc; In &"ance Co2!an4 0- PHIL 670 Fact 9 Bn Ean. 1C6 1.106 !unn mortgaged a par"e o- and to S>3 to se"ure a de)t o- 1%'. >ortgage "ontra"t stated t(at !unn +as to (a2e t(e property insured at (is o+n e5pense6 aut(ori4ing S>3 to "(oose t(e insurers and to re"ei2e t(e pro"eeds t(ereo- and retain so mu"( o- t(e pro"eeds as +ou d "o2er t(e mortgage de)t. !unn i*e+ise aut(ori4ed S>3 to ta*e out t(e insuran"e po i"y -or (im.

3rias6 S>3=s genera manager6 approa"(ed <a+ Union -or insuran"e to t(e e5tent o- 1F' upon t(e property. In t(e app i"ation6 3rias stated t(at S>3=s interest in t(e property +as mere y t(at o- a mortgagee. <a+ Union6 not +anting to issue a po i"y -or t(e entire amount6 issued one -or P/6F%% and pro"ured anot(er po i"y o- eGua amount -rom @i ipinas Cia de Seguros. 3ot( po i"ies +ere issued in t(e name oS>3 on y and "ontained no re-eren"e to any ot(er interests in t(e propty. 3ot( po i"ies reGuired assignments to )e appro2ed and noted on t(e po i"y. Premiums +ere paid )y S>3 and "(arged to !unn. A year ater6 t(e po i"ies +ere rene+ed. In 1.1/6 !unn so d t(e property to 7arding6 )ut no assignment o- t(e po i"ies +as made to t(e atter. Property +as destroyed )y -ire. S>3 -i ed an a"tion in "ourt to re"o2er on t(e po i"ies. 7arding +as made a de-endant )e"ause )y 2irtue o- t(e sa e6 (e )e"ame t(e o+ner o- t(e property6 a t(oug( t(e po i"ies +ere issued in S>3=s name. S>3 soug(t to re"o2er t(e pro"eeds to t(e e5tent o- its mortgage "redit +it( t(e )a an"e to go to 7arding. Insuran"e Companies "ontended t(at t(ey +ere not ia) e to 7arding )e"ause t(eir ia)i ity under t(e po i"ies +as imited to t(e insura) e interests o- S>3 on y. S>3 e2entua y rea"(ed a sett ement +it( t(e insuran"e "ompanies and +as paid t(e )a an"e o- it=s mortgage "redit. 7arding +as e-t to -end -or (imse -. 'ria "ourt ru ed against 7arding. 7en"e t(e appea . &e9 WBN t(e insuran"e "ompanies are ia) e to 7arding -or t(e )a an"e o- t(e pro"eeds o- t(e C po i"ies.

He#%9 NOPE5 Under t(e Insuran"e A"t6 t(e measure o- insura) e interest in t(e property is t(e e5tent to +(i"( t(e insured mig(t )e damini-ied )y t(e oss or inIury t(ereo-. A so it is pro2ided in t(e IA t(at t(e insuran"e s(a )e app ied e5" usi2e y to t(e proper interest o- t(e person in +(ose name it is made. Undou)ted y6 S>3 as t(e mortgagee o- t(e property6 (ad an insura) e interest t(erein; )ut it "ou d NB'6 an any e2ent6 re"o2er upon t(e t+o po i"ies an amount in e5"ess o- its mortgage "redit. 3y 2irtue o- t(e Insuran"e A"t6 neit(er !unn nor 7arding "ou d (a2e re"o2ered -rom t(e t+o po i"ies. Wit( respe"t to 7arding6 +(en (e a"Guired t(e property6 no "(ange or assignment o- t(e po i"ies (ad )een

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underta*en. '(e po i"ies mig(t (a2e )een +orded di--erent y so as to prote"t t(e o+ner6 )ut t(is +as not done. I- t(e +ording (ad )eenJ ,@a(ab e to SMB, mort)a)ee, as its interests ma( a##ear, remainder to whomsoever, d!rin) the contin!ance of the risk, ma( become owner of the interest ins!red4 6 it +ou d (a2e pro2ed an intention to insure t(e entire interest in t(e property6 NB' mere y S>3=s and +ou d (a2e s(o+n to +(om t(e money6 in "ase o- oss6 s(ou d )e paid. Un-ortunate y6 t(is +as not +(at +as stated in t(e po i"ies. I- during t(e negotiation -or t(e po i"ies6 t(e parties (ad agreed t(at e2en t(e o+ner=s interest +ou d )e "o2ered )y t(e po i"ies6 and t(e po i"ies (ad inad2ertent y )een +ritten in t(e -orm in +(i"( t(ey +ere e2entua y issued6 t(e o+er "ourt +ou d (a2e )een a) e to order t(at t(e "ontra"t )e re-ormed to gi2e e--e"t to t(em in t(e sense t(at t(e parties intended to )e )ound. 7o+e2er6 t(ere is no " ear and satis-a"tory proot(at t(e po i"ies -ai ed to re- e"t t(e rea agreement )et+een t(e parties t(at +ou d Iusti-y t(e re-ormation ot(ese t+o "ontra"ts. 71/8 Sa&"a I2!o"t E@!o"t Co5 *5 Phi#i!!ine Inte"nationa# S&"et4 11, PHIL 11Fact 9 Bn !e". C$6 1.FC6 Saura mortgaged to PN3 its registered par"e o- and in !a2ao to se"ure t(e payment o- a promissory note o- PC/'. A )ui ding o- strong materia s +(i"( +as a so o+ned )y Saura6 +as ere"ted on t(e par"e o- and and t(e )ui ding (ad a +ays )een "o2ered )y insuran"e e2en )e-ore t(e e5e"ution o- t(e mortgage "ontra"t. Pursuant to t(e mortgage agreement +(i"( reGuired Saura to insure t(e )ui ding and its "ontents6 it o)tained a -ire insuran"e -or PC.' -rom PISC -or a period o- 1 year starting B"t. C6 1.F#.

'(e mortgage a so reGuired Saura to endorse t(e insuran"e po i"y to PN3. '(e memo statedJ Eoss if an(, #a(ab e to @/J as their interest ma( a##ear, s!b"ect to the terms, conditions and warranties of this #o ic($ '(e po i"y +as de i2ered to PN3 )y Saura. Bn B"t. 1F6 1.F#6 )are y 19 days a-ter t(e issuan"e o- t(e -ire insuran"e6 PISC "an"e ed t(e same6 e--e"ti2e as o- t(e date o- issue. Noti"e o- t(e "an"e ation +as sent to PN3 in +riting and +as re"ei2ed )y t(e )an* on No2. 06 1.F#. Bn Apr. $6 1.FF6 t(e )ui ding and its "ontents +ort( P#6$0F +ere )urned. Bn Apri 116 1.0F6 Saura -i ed a " aim +it( PISC and mortgagee )an*. Upon presentation o- noti"e o- oss +it( PN36 Saura earned -or t(e -irst time t(at t(e po i"y (ad )een pre2ious y "an"e ed )y PISC6 +(en Saura=s -o der in t(e )an*=s -i e +as opened and t(e noti"e o- t(e "an"e ation )y PISC +as -ound. &e9 WBN t(ere +as proper "an"e ation o- t(e po i"yH

He#%5 NO5 '(e po i"y in Guestion does NB' pro2ide -or t(e noti"e o- "an"e ation6 its -orm or period. '(e Insuran"e <a+ does not i*e+ise pro2ide -or su"( noti"e. '(is )eing t(e "ase6 it de2o 2es upon t(e Court to app y t(e genera y a""epted prin"ip es o- insuran"e6 regarding "an"e ation o- t(e insuran"e po i"y )y t(e insurer. A"tua noti"e o- "an"e ation in a " ear and uneGui2o"a manner6 pre-era) y in +riting s(ou d )e gi2en )y t(e insurer to t(e insured so t(at t(e atter mig(t )e gi2en an opportunity to o)tain ot(er insuran"e -or (is o+n prote"tion. '(e noti"e s(ou d )e persona to t(e insurer and not to andKor t(roug( any unaut(ori4ed person )y t(e po i"y. 3ot( t(e PSIC and t(e PN3 -ai ed6 +itting y or un+itting y to noti-y Saura o- t(e "an"e ation made. '(e insurer "ontends t(at it ga2e noti"e to PN3 as mortgagee o- t(e property and t(at +as a ready su)stantia "omp ian"e +it( its duty to noti-y t(e insured o- t(e "an"e ation o- t(e po i"y. 3ut noti"e to t(e )an*6 as -ar as Saura (erein is "on"erned6 is not e--e"ti2e noti"e. PISC is t(en ordered to pay Saura PC.'6 t(e amount in2o 2ed in t(e po i"y su)Ie"t matter o- t(is "ase. 7108 Pa#i#ieo *5 Co io 97 PHIL 919 Fact 9

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Bn !e". 106 1.F16 Pa i eo o)tained -rom Cosio a oan o- P1C'. 'o se"ure payment6 Cosio reGuired Pa i eo to sign a do"ument *no+n as ,"onditiona sa e o- residentia )ui ding16 purporting to "on2ey to Cosio6 +it( a rig(t to repur"(ase (on t(e part o- Pa i eo&6 a t+o:story )ui ding o- strong materia s )e onging to Pa i eo. A-ter e5e"ution o- t(e do"ument6 Cosio insured t(e )ui ding against -ire +it( Asso"iated Insuran"e ? Surety Co. (Asso"iated& -or 1F'. '(e insuran"e po i"y +as issued in t(e name o- Cosio. '(e )ui ding +as part y destroyed )y -ire and a-ter proper demand6 Cosio +as a) e to "o e"t -rom t(e insuran"e "ompany an indemnity o- P1961%/. Pa i eo demanded -rom Cosio t(at s(e )e "redited +it( t(e ne"essary amount to pay (er o) igation out ot(e insuran"e pro"eeds6 )ut Cosio re-used to do so. 'ria Court -ound t(at t(e de)t (ad an unpaid )a an"e o- P1C'. It de" ared t(e o) igation o- Pa i eo to Cosio -u y "ompensated )y 2irtue o- t(e pro"eeds "o e"ted )y Cosio and -urt(er (e d t(at t(e e5"ess oP161%/ (1961%/ 1C6%%%& )e re-unded to Pa i eo

I &e9 WBN t(e tria "ourt +as Iusti-ied in "onsidering t(e o) igation o- Pa i eo -u y "ompensated )y t(e insuran"e amount t(at Cosio +as a) e to "o e"t -rom Asso"iated6 and WBN t(e tria "ourt +as "orre"t in reGuiring Cosio to re-und t(e e5"ess o- P161%/ to Pa i eo. He#%5 NO an% NO5 '(e ru e is t(at ,+(ere a mortgagee6 independent y o- t(e mortgagor6 insures t(e mortgaged property in (is o+n name and -or (is o+n interest6 (e is entit ed to t(e insuran"e pro"eeds in "ase o- oss6 )ut in su"( "ase6 (e is not a o+ed to retain (is " aim against t(e mortgagor6 )ut is passed )y su)rogation to t(e insurer to t(e e5tent o- t(e money paid.1 '(e o+er "ourt erred in de" aring t(at t(e pro"eeds o- t(e insuran"e ta*en out )y Cosio on t(e property insured to t(e )ene-it o- Pa i eo and in ordering t(e -ormer to de i2er to t(e atter6 t(e di--eren"e )et+een t(e inde)tedness and t(e amount o- insuran"e re"ei2ed )y Cosio. In t(e ig(t o- t(is ru ing6 t(e "orre"t so ution +ou d )e t(at t(e pro"eeds o- t(e Insuran"e )e de i2ered to Cosio6 )ut (er " aim against Pa i eo s(ou d )e "onsidered assigned to t(e insuran"e "ompany +(o is deemed su)rogated to t(e rig(ts o- Cosio to t(e e5tent o- t(e money paid as indemnity. 7118 G"e!a#i)e *5 CA /16 SCRA 677 Fact 9

A "ontra"t o- group i-e insuran"e +as e5e"uted )et+een 8repa i-e and !3P. 8repa i-e agreed to insure t(e i2es o- e igi) e (ousing oan mortgagors o- !3P. !r. Wi -redo <euterio6 a p(ysi"ian and a (ousing de)tor o- !3P app ied -or mem)ers(ip in t(e group i-e insuran"e p an. In an app i"ation -orm6 !r. <euterio ans+ered Guestions "on"erning (is (ea t( stating t(at (e is in good (ea t( and (as ne2er "onsu ted a p(ysi"ian -or or a (eart "ondition6 (ig( ) ood pressure6 "an"er6 dia)etes6 ung6 *idney or stoma"( disorder or any ot(er p(ysi"a impairment. 8repa i-e issued t(e insuran"e "o2erage o- !r. <euterio6 to t(e e5tent o- (is !3P mortgage inde)tedness amounting to eig(ty:si5 t(ousand6 t+o (undred (P0$6C%%.%%& pesos. !r. <euterio died due to Mmassi2e "ere)ra (emorr(age.M ConseGuent y6 !3P su)mitted a deat( " aim to 8repa i-e. 8repa i-e denied t(e " aim a eging t(at !r. <euterio +as not p(ysi"a y (ea t(y +(en (e app ied -or an insuran"e "o2erage and insisted t(at !r. <euterio did not dis" ose t(at (e (ad )een su--ering -rom (ypertension6 +(i"( "aused (is deat(. A eged y6 su"( non:dis" osure "onstituted "on"ea ment t(at Iusti-ied t(e denia o- t(e " aim. '(e +ido+ o- t(e ate !r. <euterio6 -i ed a "omp aint against 8repa i-e -or MSpe"i-i" Per-orman"e +it( !amages.M !uring t(e tria 6 !r. 7ernando >eIia6 +(o issued t(e deat( "erti-i"ate6 +as "a ed to testi-y. !r. >eIia=s -indings6 )ased part y -rom t(e in-ormation gi2en )y t(e +ido+6 stated t(at !r. <euterio "omp ained o- (eada"(es presuma) y due to (ig( ) ood pressure. '(e in-eren"e +as not "on" usi2e )e"ause !r. <euterio +as not autopsied6 (en"e6 ot(er "auses +ere not ru ed out. R'C ru ed in -a2or o- +ido+ and against 8repa i-e. 8repa i-e appea ed "ontending t(at t(e +i-e +as not t(e proper party in interest to -i e t(e suit6 sin"e it is !3P +(o insured t(e i-e o- !r. <euterio.

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&e9 WBN t(e +ido+ is t(e rea party in interest6 (not !3P& and (as ega standing to -i e t(e suit.

He#%9 >ES5 8repa i-e a eges t(at t(e "omp aint +as instituted )y t(e +ido+ o- !r. <euterio6 not t(e rea party in interest6 (en"e t(e tria "ourt a"Guired no Iurisdi"tion o2er t(e "ase. It argues t(at +(en t(e Court o- Appea s a--irmed t(e tria "ourt=s Iudgment6 8repa i-e +as (e d ia) e to pay t(e pro"eeds o- insuran"e "ontra"t in -a2or o- !3P6 t(e indispensa) e party +(o +as not Ioined in t(e suit. 'o reso 2e t(e issue6 +e must "onsider t(e insura) e interest in mortgaged properties and t(e parties to t(is type o- "ontra"t. '(e rationa e o- a group insuran"e po i"y o- mortgagors6 ot(er+ise *no+n as t(e Mmortgage redemption insuran"e6M is a de2i"e -or t(e prote"tion o- )ot( t(e mortgagee and t(e mortgagor. Bn t(e part o- t(e mortgagee6 it (as to enter into su"( -orm o- "ontra"t so t(at in t(e e2ent o- t(e une5pe"ted demise o- t(e mortgagor during t(e su)sisten"e o- t(e mortgage "ontra"t6 t(e pro"eeds -rom su"( insuran"e +i )e app ied to t(e payment o- t(e mortgage de)t6 t(ere)y re ie2ing t(e (eirs o- t(e mortgagor -rom paying t(e o) igation. In a simi ar 2ein6 amp e prote"tion is gi2en to t(e mortgagor under su"( a "on"ept so t(at in t(e e2ent odeat(; t(e mortgage o) igation +i )e e5tinguis(ed )y t(e app i"ation o- t(e insuran"e pro"eeds to t(e mortgage inde)tedness. ConseGuent y6 +(ere t(e mortgagor pays t(e insuran"e premium under t(e group insuran"e po i"y6 ma*ing t(e oss paya) e to t(e mortgagee6 t(e insuran"e is on t(e mortgagor=s interest6 and t(e mortgagor "ontinues to )e a party to t(e "ontra"t. In t(is type o- po i"y insuran"e6 t(e mortgagee is simp y an appointee o- t(e insuran"e -und6 su"( oss:paya) e " ause does not ma*e t(e mortgagee a party to t(e "ontra"t. '(e insured pri2ate respondent did not "ede to t(e mortgagee a (is rig(ts or interests in t(e insuran"e6 t(e po i"y stating t(atJ 52n the event of the debtorHs death before his indebtedness with the +reditor ;FB@< sha have been f! ( #aid, an amo!nt to #a( the o!tstandin) indebtedness sha first be #aid to the creditor and the ba ance of s!m ass!red, if there is an(, sha then be #aid to the beneficiar(7ies desi)nated b( the debtor$5 W(en !3P su)mitted t(e insuran"e " aim against petitioner6 t(e atter denied payment t(ereo-6 interposing t(e de-ense o- "on"ea ment "ommitted )y t(e insured. '(erea-ter6 !3P "o e"ted t(e de)t -rom t(e mortgagor and too* t(e ne"essary a"tion o- -ore" osure on t(e residentia ot o- pri2ate respondent And sin"e a po i"y o- insuran"e upon i-e or (ea t( may pass )y trans-er6 +i or su""ession to any person6 +(et(er (e (as an insura) e interest or not6 and su"( person may re"o2er it +(ate2er t(e insured mig(t (a2e re"o2ered6 1# t(e +ido+ o- t(e de"edent !r. <euterio may -i e t(e suit against t(e insurer6 8repa i-e. As to t(e Guestion o- +(et(er t(ere +as "on"ea ment6 CA (e d as a--irmed )y t(e SC t(at "ontrary to 8repa i-e=s a egations6 t(ere +as no su--i"ient proo- t(at t(e insured (ad su--ered -rom (ypertension. Aside -rom t(e statement o- t(e insured=s +ido+ +(o +as not e2en sure i- t(e medi"ines ta*en )y !r. <euterio +ere -or (ypertension6 t(e appe ant (ad not pro2en nor produ"ed any +itness +(o "ou d attest to !r. <euterio=s medi"a (istory. '(e -raudu ent intent on t(e part o- t(e insured must )e esta) is(ed to entit e t(e insurer to res"ind t(e "ontra"t. >isrepresentation as a de-ense o- t(e insurer to a2oid ia)i ity is an a--irmati2e de-ense and t(e duty to esta) is( su"( de-ense )y satis-a"tory and "on2in"ing e2iden"e rests upon t(e insurer. In t(e "ase at )ar6 t(e petitioner -ai ed to " ear y and satis-a"tori y esta) is( its de-ense6 and is t(ere-ore ia) e to pay t(e pro"eeds o- t(e insuran"e

Section 95 I- an insurer assents to t(e trans-er o- an insuran"e -rom a mortgagor to a mortgagee6 and6 at t(e time o- (is assent6 imposes -urt(er o) igations on t(e assignee6 ma*ing a ne+ "ontra"t +it( (im6 t(e a"ts o- t(e mortgagor "annot a--e"t t(e rig(ts o- said assignee. What %oe thi !"o*i ion a4' Under t(is se"tion6 +(ere an insurer assents to t(e trans-er o- an insuran"e -rom a >ortgagor (>or& to a >ortgage (>ee&6 and at t(e time o- (is assent t(e insurer imposes -urt(er o) igation on t(e >ee6 a ne+ and distin"t "onsideration passed -rom t(e >ee to t(e insurer6 and a ne+ "ontra"t is "reated )et+een t(em. '(e a"ts o- t(e >or "annot anymore a--e"t t(e rig(ts o- t(e >ee. What i the i3ni)icance o) thi !"o*i ion'

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Remem)er +e said in Se". 0 t(at a a"ts o- t(e mortgagor a--e"ts t(e mortgageeH We 6 t(is pro2ision pro2ides t(e e5"eption to t(e ru e.

TITLE III . INSURAELE INTEREST

Section 1-5 E2ery person (as an insura) e interest in t(e i-e and (ea t(J (a& B- (imse -6 o- (is spouse and o- (is "(i dren; ()& B- any person on +(om (e depends +(o y in part -or edu"ation or support6 or in +(om (e (as a pe"uniary interest; ("& B- any person under a ega o) igation to (im -or t(e payment o- money6 or respe"ting property or ser2i"es6 B- +(i"( deat( or i ness mig(t de ay or pre2ent t(e per-orman"e; and (d& B- any person upon +(ose i-e any estate or interest 2ested in (im depends. Wh4 i thi ection i2!o"tant' Bt(er t(an it dis"usses t(e "on"ept o- keyman insurance6 Atty. Quimsons as*ed t(is in a past mid:term e5am6 as*ing t(e students to Quote t(e pro2ision. What i in &"a$#e inte"e t' Insura) e interest is one t(e most )asi" o- a reGuirements in insuran"e. In genera 6 a person is deemed to (a2e insura) e interest in t(e su)Ie"t matter insured +(ere (e (a a re ation or "onne"tion +it( or "on"ern in it t(at (e +i deri2e pe"uniary )ene-it or ad2antage -rom its preser2ation and +i su--er pe"uniary oss or damage -rom its destru"tion6 termination or inIury )y t(e (appening o- t(e e2ent insured against. Wh4 2& t the"e $e an in &"a$#e inte"e t' It is essentia -or 2a idity and en-or"ea)i ity o- t(e "ontra"t or po i"y. A po i"y issued to a person +it(out interest in t(e su)Ie"t matter is a mere +ager po i"y or "ontra"t. When i the"e in &"a$#e inte"e t in #i)e in &"ance' In i-e insuran"e6 Insura) e interest e5ists +(ere t(ere is reasona) e ground -ounded on t(e re ations ot(e parties +(et(er pe"uniary6 "ontra"tua or )y ) ood or a--inity6 and to e5pe"t some )ene-it or ad2antage -rom t(e "ontinuan"e o- t(e i-e o- t(e insured. P"o$#e25 ' takes an ins!rance #o ic( on his ife and names his friend K as beneficiar(, and another ins!rance on the ife of ? in consideration of D ove and affection4 with ' as a beneficiar($ -hich of the two ins!rances, if an(, is va id and which, if an(, is void> '(e Insuran"e ta*en on A on (is i-e is VA<I!6 )e"ause t(e )ene-i"iary need not (a2e an insura) e interest in t(e i-e o- t(e insured. It must )e t(e one insuring +(o (as an insura) e interest in t(e i-e o- t(e person (e is insuring6 and o- "ourse6 it goes +it(out saying t(at one (as an insura) e interest in (is o+n i-e and (ea t(. BN t(e ot(er (and6 t(e insuran"e ta*en )y A on t(e i-e o- A is VBI! )e"ause , o2e and a--e"tion -or t(e insured1 n t(e part o- t(e person insuring is NB' su--i"ient ground to Gua i-y as insura) e interest.

Ca e 9 7168 Co#5 C5 Ca t"o *5 In &"ance Co22i GR5 11,/6C Fe$5 16C 19,1 ione"

Fact 9 Castro app ied -or insuran"e on t(e i-e o- (is dri2er. Bn t(e )asis o- su"( app i"ation6 Insu ar <i-e issued po i"y No. .9#.#9 e--e"ti2e Eu y 106 1./.. '(e po i"y app ied -or and issued +as on a C%:yr endo+ment p an -or t(e sum o- PCF' +it( dou) e indemnity in "ase o- a""identa deat(. Castro paid t(e -irst Guarter y premium o- P9%...F. A)out 9 mont(s ater6 on B"t. 1$6 1.F.6 t(e insured dri2er +as a eged y s(ot to deat( )y un*no+n persons. ((mmmP sounds -is(yP&

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Castro t(en -i ed a " aim -or t(e tota )ene-its o- F%' under t(e po i"y. Insu ar i-e denied t(e " aim on t(e ground t(at t(e po i"y +as VBI!. Insu ar instead re-unded to Castro t(e premiums (e (ad paid. &e9 WBN Castro (as an insura) e interest in (is dri2er.

He#%9 NO5 '(e reGuirement o- insura) e interest to support a "ontra"t o- insuran"e is )ased upon "onsideration opu) i" po i"y +(i"( renders +ager po i"ies INVA<I!. 'o sustain a "ontra"t o- t(is "(ara"ter it must appear t(at t(ere is a rea "on"ern in t(e i-e o- t(e party +(ose deat( +ou d )e t(e "ause o- su)stantia oss to t(ose +(o are named as a )ene-i"iary. >ere re ations(ip o- un" e and nep(e+6 e2!#o4e" an% e2!#o4ee is NB' su--i"ient to pro2ide an insura) e interest on t(e i-e o- t(e insured. It must )e s(o+n t(at t(e destru"tion o- t(e i-e o- t(e insured +ou d "ause pe"uniary oss to t(e "omp ainant. '(is6 Castro -ai ed to pro2e. 7178 Linco#n Nationa# Li)e *5 San I&an CA GR /01,,+,,C No*5 67C 1971 Fact 9 An emp oyer insured t(e i-e o- t(e emp oyee +it( t+o insuran"e "ompanies. '(e insuran"e tota ed C%%' and t(e on y )ene-i"iaries +ere t(e emp oyer and (is +i-e. A se2ered (ead +as ater -ound6 purported y t(at o- t(e insured emp oyee. '(e insuran"e "ompanies re-used to pay on t(e ground t(at t(e emp oyer (ad no insura) e interest in t(e i-e o- t(e emp oyee. I &e9 WBN t(e emp oyer "an re"o2er t(e pro"eeds o- a i-e insuran"e po i"y o- (is emp oyee.

He#%5 NOPE5 '(e insured +as a tenant in a "o"onut and o+ned )y t(e emp oyer and (is earning +ere )are y t(at o- a -arm a)orer. It +as esta) is(ed t(at t(e insured "ou d not (a2e a--orded t(e insuran"e po i"ies dra+n on (is i-e. >any more po i"ies +ere -ound to (a2e )een issued +it( t(e emp oyeeKtenant as insured and t(e emp oyer and (is +i-e as )ene-i"iaries. '(e po i"ies +ere a so -ound to (a2e )een a"Guired in Gui"* su""ession. It +as -ound t(at t(e 2arious posta money orders issued in payment o- t(e premiums +ere made )y t(e emp oyer. It appears t(at6 )ased on t(e "ir"umstan"es and e2iden"e6 t(e insuran"e +as rea y ta*en out )y t(e emp oyer. 71,8 Ge"cio *5 S&n Li)e 0, PHIL 1/ Fact 9 Sun i-e issued a i-e insuran"e po i"y to 8er"io6 t(e -ormer agreeing to insure t(e i-e o- 8er"io -or C' to )e paid to (im on @e). 16 1.9% or i- (e s(ou d die )e-ore said date6 t(en to (is +i-e Andrea6 s(ou d s(e sur2i2e (im; ot(er+ise to t(e e5e"utor6 administrator o- 8er"io. '(e po i"y did not in" ude any pro2ision reser2ing to 8er"io t(e rig(t to "(ange t(e )ene-i"iary. '(e +i-e +as "on2i"ted o- adu tery and a de"ree o- di2or"e +as issued. 8er"io noti-ied Sun i-e t(at (e (ad re2o*ed (is donation in -a2or o- Andrea and t(at (e (ad designated (is present +i-e Ade a as (is )ene-i"iary. Sun i-e re-used to "(ange t(e )ene-i"iary. I &e9 WBN 8er"io may "(ange t(e )ene-i"iary in t(e po i"y.

He#%5 NO5 I- t(e po i"y "ontains no pro2ision aut(ori4ing a "(ange o- )ene-i"iary +it(out t(e )ene-i"iary=s "onsent6 t(e insured "annot ma*e su"( "(ange. It is (e d t(at a i-e insuran"e po i"y o- a (us)and made paya) e to (is +i-e as a )ene-i"iary is t(e separate property o- t(e )ene-i"iary and )eyond t(e "ontro o- t(e (us)and. (NB'EJ t(is "ase is )ased on t(e o d ru e under t(e Insuran"e A"t&

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Court a so (e d t(at t(e designation o- a )ene-i"iary t(at is origina y 2a id does NB' render it in2a id dut to a su)seGuent "essation o- t(e interests )et+een t(e )ene-i"iary and insured. 7198 E# O"iente *5 Po a%a 16 PHIL 107 719/18 Fact 9

E Briente in order to prote"t itse - against t(e oss t(at it mig(t su--er )y reason o- t(e deat( o- its manager6 A. Ve (agen6 +(o (ad (ad more t(an t(irty:-i2e (9F& years o- e5perien"e in t(e manu-a"ture o"igars in t(e P(i ippines6 pro"ured -rom t(e >anu-a"turers <i-e Insuran"e Co.6 o- 'oronto6 Canada6 t(ru its o"a agent E. E. E ser6 an insuran"e po i"y on t(e i-e o- t(e said A. Ve (agen -or t(e sum o- QF%6%%%6 United States "urren"y designating itse - as t(e )ene-i"iary. E Briente paid -or t(e premiums due t(ereon and "(arged as e5penses o- its )usiness a t(e said premiums and dedu"ted t(e same -rom its gross in"omes as reported in its annua in"ome ta5 returns6 +(i"( dedu"tions +ere a o+ed upon a s(o+ing t(at su"( premiums +ere egitimate e5penses o- its )usiness. Upon t(e deat( o- A. Ve (agen in 1.C.6 t(e E Briente re"ei2ed a t(e pro"eeds o- t(e said i-e insuran"e po i"y6 toget(er +it( t(e interests and t(e di2idends a""ruing t(ereon6 aggregating P1%#6.F/.00 CIR assessed E Briente -or de-i"ien"y ta5es )e"ause E Briente did not in" ude as in"ome t(e pro"eeds re"ei2ed -rom t(e insuran"e.

I &e9 WBN t(e pro"eeds o- insuran"e ta*en )y a "orporation on t(e i-e o- an important o--i"ia to indemni-y it against oss in "ase o- (is deat(6 are ta5a) e as in"ome under t(e P(i ippine In"ome 'a5 <a+ He#%9 NOT TAJAELE5 In C(apter I o- t(e 'a5 Code6 is to )e -ound se"tion # +(i"( pro2ides t(at6 M*he fo owin) incomes sha be e&em#t from the #rovisions of this aw8 (a) *he #roceeds of ife ins!rance #o icies #aid to beneficiaries !#on the death of the ins!red $ $ $M Se"tion 1%6 as amended6 in C(apter II Bn Corporations6 pro2ides t(at6 M *here sha be evied, assessed, co ected, and #aid ann!a ( !#on the tota net income received in the #recedin) ca endar (ear from a so!rces b( ever( cor#oration $ $ $a ta& of three #er cent!m !#on s!ch income $ $ .M Se"tion 11 in t(e same "(apter6 pro2ides t(e e5emptions under t(e a+6 )ut neit(er (ere nor in any ot(er se"tion is re-eren"e made to t(e pro2isions o- se"tion # in C(apter I. Under t(e 2ie+ +e ta*e o- t(e "ase6 it is su--i"ient -or our purposes to dire"t attention to t(e anoma ous and 2ague "ondition o- t(e a+. It is "ertain t(at t(e pro"eeds o- i-e insuran"e po i"ies paid to indi2idua )ene-i"iaries upon t(e deat( o- t(e insured are e5empt. It is not so "ertain t(at t(e pro"eeds o- i-e insuran"e po i"ies paid to "orporate )ene-i"iaries upon t(e deat( o- t(e insured are i*e+ise e5empt. 3ut at east6 it may )e said t(at t(e a+ is inde-inite in p(raseo ogy and does not permit us uneGui2o"a y to (o d t(at t(e pro"eeds o- i-e insuran"e po i"ies re"ei2ed )y "orporations "onstitute in"ome +(i"( is ta5a) e It +i )e re"a ed t(at E Briente6 too* out t(e insuran"e on t(e i-e o- its manager6 +(o (ad (ad more t(an t(irty:-i2e yearsL e5perien"e in t(e manu-a"ture o- "igars in t(e P(i ippines6 to prote"t itse - against t(e oss it mig(t su--er )y reason o- t(e deat( o- its manager. We do not )e ie2e t(at t(is -a"t signi-ies t(at +(en t(e p ainti-- re"ei2ed P1%#6.F/.00 -rom t(e insuran"e on t(e i-e o- its manager6 it t(ere)y rea i4ed a net pro-it in t(is amount. It is true t(at t(e In"ome 'a5 <a+6 in e5empting indi2idua )ene-i"iaries6 spea*s o- t(e pro"eeds o- i-e insuran"e po i"ies as in"ome6 )ut t(is is a 2ery s ig(t indi"ation o- egis ati2e intention. In rea ity6 +(at t(e p ainti-- re"ei2ed +as in t(e nature o- an indemnity -or t(e oss +(i"( it a"tua y su--ered )e"ause o- t(e deat( o- its manager. 76-8 Phi#a2ca"e *5 CA (repeat Case O %.& /79 SCRA /16 Fact 9

Ernani 'rinos6 app ied -or a (ea t( "are "o2erage +it( P(i am"are. In t(e standard app i"ation -orm6 (e ans+ered NB to t(e -o o+ing GuestionJ ,=ave (o! or an( of (o!r fami ( members ever cons! ted or been treated for hi)h b ood #ress!re, heart tro!b e, diabetes, cancer, iver disease, asthma or #e#tic ! cer> (2f ?es, )ive detai s)4 '(e app i"ation +as appro2ed -or a period o- one year -rom >ar"( 16 1.00 to >ar"( 16 1.0.. 7e +as a issued 7ea t( Care Agreement6 and under su"(6 (e +as entit ed to a2ai o- (ospita i4ation )ene-its6

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+(et(er ordinary or emergen"y6 isted t(erein. 7e +as a so entit ed to a2ai o- Mout:patient )ene-itsM su"( as annua p(ysi"a e5aminations6 pre2enti2e (ea t( "are and ot(er out:patient ser2i"es. Upon t(e termination o- t(e agreement6 t(e same +as e5tended -or anot(er year -rom >ar"( 16 1.0. to >ar"( 16 1..%6 t(en -rom >ar"( 16 1..% to Eune 16 1..%. '(e amount o- "o2erage +as in"reased to a ma5imum sum o- P/F6%%%.%% per disa)i ity. !uring t(e period o- (is "o2erage6 Ernani su--ered a (eart atta"* and +as "on-ined at t(e >ani a >edi"a Center (>>C& -or one mont( )eginning >ar"( .6 1..%. W(i e (er (us)and +as in t(e (ospita 6 Eu ita tried to " aim t(e )ene-its under t(e (ea t( "are agreement. 7o+e2er6 P(i am"are denied (er " aim saying t(at t(e 7ea t( Care Agreement +as 2oid. A""ording to P(i am"are6 t(ere +as "on"ea ment regarding ErnaniLs medi"a (istory. o !o"tors at t(e >>C a eged y dis"o2ered at t(e time o- ErnaniLs "on-inement t(at (e +as (ypertensi2e6 dia)eti" and ast(mati"6 "ontrary to (is ans+er in t(e app i"ation -orm. Eu ita (ad no "(oi"e )ut to pay t(e (ospita i4ation e5penses (erse -6 amounting to a)out P/$6%%%.%% A-ter (er (us)and +as dis"(arged -rom t(e >>C6 (e +as attended )y a p(ysi"a t(erapist at (ome. <ater6 (e +as admitted at t(e C(inese 8enera 7ospita (C87&. !ue to -inan"ia di--i"u ties6 Eu ita )roug(t (er (us)and (ome again. In t(e morning o- Apri 196 1..%6 Ernani (ad -e2er and +as -ee ing 2ery +ea*. Eu ita +as "onstrained to )ring (im )a"* to t(e C87 +(ere (e died on t(e same day. Eu ita instituted6 an a"tion -or damages against P(i am"are. S(e as*ed -or reim)ursement o- (er e5penses p us mora damages and attorneyLs -ees. R'C de"ided in -a2or o- Eu ita. CA a--irmed.

I &e an% Re o#&tion 9 @hi amcare bro!)ht the instant #etition for review, raisin) the #rimar( ar)!ment that a hea th care a)reement is not an ins!rance contract9 hence the 5incontestabi it( c a!se5 !nder the 2ns!rance +ode *it e 1, Sec$ 4A does not a## ($ SC (e d t(at in t(e "ase at )ar6 t(e insura) e interest o- respondentLs (us)and in o)taining t(e (ea t( "are agreement +as (is o+n (ea t(. '(e (ea t( "are agreement +as in t(e nature o- non: i-e insuran"e6 +(i"( is primari y a "ontra"t o- indemnity. Bn"e t(e mem)er in"urs (ospita 6 medi"a or any ot(er e5pense arising -rom si"*ness6 inIury or ot(er stipu ated "ontingent6 t(e (ea t( "are pro2ider must pay -or t(e same to t(e e5tent agreed upon under t(e "ontra"t. Under t(e tit e C aim pro"edures o- e5penses6 P(i am"are. (ad 1C mos -rom t(e date o- issuan"e o- t(e Agreement +it(in +(i"( to "ontest t(e mem)ers(ip o- t(e patient i- (e (ad pre2ious ai ment o- ast(ma6 and si5 mont(s -rom t(e issuan"e o- t(e agreement i- t(e patient +as si"* o- dia)etes or (ypertension. '(e periods (a2ing e5pired6 t(e de-ense o- "on"ea ment or misrepresentation no onger ie. @etitioner ar)!es that res#ondent:s h!sband concea ed a materia fact in his a## ication$ 2t a##ears that in the a## ication for hea th covera)e, #etitioners re3!ired res#ondent:s h!sband to si)n an e&#ress a!thori6ation for an( #erson, or)ani6ation or entit( that has an( record or know ed)e of his hea th to f!rnish an( and a information re ative to an( hos#ita i6ation, cons! tation, treatment or an( other medica advice or e&amination$ P(i am"are "annot re y on t(e stipu ation regarding MIn2a idation o- agreementM +(i"( readsJ Bai !re to disc ose or misre#resentation of an( materia information b( the member in the a## ication or medica e&amination, whether intentiona or !nintentiona , sha a!tomatica ( inva idate the ')reement from the ver( be)innin) and iabi it( of @hi amcare sha be imited to ret!rn of a Membershi# Bees #aid$ 'n !ndisc osed or misre#resented information is deemed materia if its reve ation wo! d have res! ted in the dec ination of the a## icant b( @hi amcare or the assessment of a hi)her Membershi# Bee for the benefit or benefits a## ied for$ '(e ans+er assai ed )y petitioner +as in response to t(e Guestion re ating to t(e medi"a (istory o- t(e app i"ant. '(is arge y depends on opinion rat(er t(an -a"t6 espe"ia y "oming -rom respondentLs (us)and +(o +as not a medi"a do"tor. W(ere matters o- opinion or Iudgment are "a ed -or6 ans+ers made in good -ait( and +it(out intent to de"ei2e +i not a2oid a po i"y e2en t(oug( t(ey are untrue. '(us6 (') tho!)h fa se, a re#resentation of the e&#ectation, intention, be ief, o#inion, or "!d)ment of the ins!red wi not avoid the #o ic( if there is no act!a fra!d in ind!cin) the acce#tance of the risk, or its acce#tance at a ower rate of #remi!m, and this is ikewise the r! e a tho!)h the statement is materia to the risk, if the statement is obvio!s ( of the fore)oin) character, since in s!ch case the ins!rer is not "!stified in re (in) !#on s!ch statement, b!t is ob i)ated to make f!rther

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in3!ir($ *here is a c ear distinction between s!ch a case and one in which the ins!red is fra!d! ent ( and intentiona ( states to be tr!e, as a matter of e&#ectation or be ief, that which he then knows, to be act!a ( !ntr!e, or the im#ossibi it( of which is shown b( the facts within his know ed)e, since in s!ch case the intent to deceive the ins!rer is obvio!s and amo!nts to act!a fra!d$ '(e -raudu ent intent on t(e part o- t(e insured must )e esta) is(ed to +arrant res"ission o- t(e insuran"e "ontra"t. Con"ea ment as a de-ense -or t(e (ea t( "are pro2ider or insurer to a2oid ia)i ity is an a--irmati2e de-ense and t(e duty to esta) is( su"( de-ense )y satis-a"tory and "on2in"ing e2iden"e rests upon t(e pro2ider or insurer. In any "ase6 +it( or +it(out t(e aut(ority to in2estigate6 petitioner is ia) e -or " aims made under t(e "ontra"t. 7a2ing assumed a responsi)i ity under t(e agreement6 petitioner is )ound to ans+er t(e same to t(e e5tent agreed upon. In t(e end6 t(e ia)i ity o- t(e (ea t( "are pro2ider atta"(es on"e t(e mem)er is (ospita i4ed -or t(e disease or inIury "o2ered )y t(e agreement or +(ene2er (e a2ai s ot(e "o2ered )ene-its +(i"( (e (as prepaid. Under Se"tion C/ o- t(e Insuran"e Code6 Ma "on"ea ment entit es t(e inIured party to res"ind a "ontra"t oinsuran"e.M '(e rig(t to res"ind s(ou d )e e5er"ised pre2ious to t(e "ommen"ement o- an a"tion on t(e "ontra"t. In t(is "ase6 no res"ission +as made. 3esides6 t(e "an"e ation o- (ea t( "are agreements as in insuran"e po i"ies reGuire t(e "on"urren"e o- t(e -o o+ing "onditionsJ 1. Prior noti"e o- "an"e ation to insured; C. Noti"e must )e )ased on t(e o""urren"e a-ter e--e"ti2e date o- t(e po i"y o- one or more o- t(e grounds mentioned; 9. >ust )e in +riting6 mai ed or de i2ered to t(e insured at t(e address s(o+n in t(e po i"y; #. >ust state t(e grounds re ied upon pro2ided in Se"tion $# o- t(e Insuran"e Code and upon reGuest o- insured6 to -urnis( -a"ts on +(i"( "an"e ation is )ased. None o- t(e a)o2e pre:"onditions +as -u -i ed in t(is "ase. W(en t(e terms o- insuran"e "ontra"t "ontain imitations on ia)i ity6 "ourts s(ou d "onstrue t(em in su"( a +ay as to pre" ude t(e insurer -rom non: "omp ian"e +it( (is o) igation. 3eing a "ontra"t o- ad(esion6 t(e terms o- an insuran"e "ontra"t are to )e "onstrued stri"t y against t(e party +(i"( prepared t(e "ontra"t N t(e insurer. 3y reason o- t(e e5" usi2e "ontro o- t(e insuran"e "ompany o2er t(e terms and p(raseo ogy o- t(e insuran"e "ontra"t6 am)iguity must )e stri"t y interpreted against t(e insurer and i)era y in -a2or o- t(e insured6 espe"ia y to a2oid -or-eiture. '(is is eGua y app i"a) e to 7ea t( Care Agreements. '(e p(raseo ogy used in medi"a or (ospita ser2i"e "ontra"ts6 su"( as t(e one at )ar6 must )e i)era y "onstrued in -a2or o- t(e su)s"ri)er6 and i- dou)t-u or reasona) y sus"epti) e o- t+o interpretations t(e "onstru"tion "on-erring "o2erage is to )e adopted6 and e5" usionary " auses o- dou)t-u import s(ou d )e stri"t y "onstrued against t(e pro2ider.

Section 115 '(e insured s(a (a2e t(e rig(t to "(ange t(e )ene-i"iary (e designated in t(e po i"y6 un ess (e (as e5press y +ai2ed (is rig(t in t(e said po i"y. What i a $ene)icia"4' A )ene-i"iary is a person +(et(er natura or Iuridi"a -or +(ose )ene-it t(e po i"y is issued and is t(e re"ipient o- t(e pro"eeds in t(e insuran"e. Who can $e a $ene)icia"4' Any person in genera "an )e a )ene-i"iary. A"e the"e an4 e@ce!tion ' Aes. '(e on y persons disGua i-ied -rom )eing a )ene-i"iary are t(ose not Gua i-ied to re"ei2e donations under Art. /9.. '(ey "annot )e named )ene-i"iaries o- a i-e insuran"e po i"y )y t(e person +(o "annot ma*e any donation to (im. In ca e o) a%&#te"4C conc&$ina3e %oe the %i =&a#i)ication e@ten% to the i##e3iti2ate chi#%"en' NB. '(e disGua i-i"ation does not e5tend to t(e "(i dren6 and as su"(6 t(ey may )e made )ene-i"iaries. What i the o#% "&#e "e3a"%in3 "e*oca$i#it4 o) %e i3nation o) $ene)icia"4 a en&nciate% in the ca e o) Ge"cio *5 S&n#i)e' '(e B<! ru e isJ W(en t(e insured did NB' e5press y reser2e (is rig(t to re2o*e t(e designation o- (is )ene-i"iary6 su"( designation is irre2o"a) e and (e "annot "(ange (is )ene-i"iary +it(out t(e "onsent o- t(e atter.

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What i the c&""ent "&#e' '(e ru e no+ isJ '(e insured (as t(e po+er to re2o*e t(e designation o- t(e )ene-i"iary e2en +it(out t(e "onsent o- t(e atter6 +(et(er or not su"( po+er is reser2ed in t(e po i"y. Su"( rig(t must )e e5er"ised spe"i-i"a y in t(e manner set -ort( in t(e po i"y or "ontra"t. It is o- "ourse6 e5tinguis(ed at (is deat( and CANNB' )e e5er"ised )y (is persona representati2es or assignees. Un%e" the c&""ent "&#eC (hen %oe the in &"e% #o e the "i3ht to chan3e the $ene)icia"4' W(en t(e rig(t to "(ange t(e )ene-i"iary is e5press y +ai2ed in t(e po i"y6 t(e insured (as no po+er to ma*e su"( "(ange +it(out t(e "onsent o- t(e )ene-i"iary. What i) the $ene)icia"4 %ie $e)o"e the in &"e% an% the in &"e% %i% not chan3e the %e i3nationC (ho 3et the !"ocee% ' '(ere is a di2ergen"e o- opinion6 )ut t(e genera trend is to gi2e it to t(e estate of the beneficiary. What a"e the othe" !"o*i ion o) #a( that Att45 :&i2 on "e=&i"e% & to "ea%' A"t5 6-16C CC. Any person +(o is -or)idden -rom re"ei2ing any donation under Art. /9. "annot )e named a )ene-i"iary o- a i-e insuran"e po i"y )y t(e person +(o "annot ma*e any donation to (im6 a""ording to said arti" e. A"t5 7/9. '(e -o o+ing donations s(a )e 2oidJ (1& '(ose made )et+een persons +(o +ere gui ty o- adu tery or "on"u)inage at t(e time o- t(e donation; (C& '(ose made )et+een persons -ound gui ty o- t(e same "rimina o--ense6 in "onsideration t(ereo-; (9& '(ose made to a pu) i" o--i"er6 or (is +i-e6 des"endants and as"endants )y reason o- (is o--i"e.R L'tt($ M!imson said that the desi)nation of the #!b ic officer MNS* be b( reason of his office and /.* a #!b ic officers are dis3!a ified from bein) beneficiaries of a ife ins!rance #o ic(, as on) as the desi)nation was not made in consideration of an act done b( the #!b ic officer b( reason of his office in favor of the ins!red$ A"t5 0/C FC. '(e termination o- su)seGuent marriage produ"es t(e -o o+ing e--e"tsJ 555. (#& '(e inno"ent spouse may re2o*e t(e designation o- t(e ot(er spouse +(o a"ted in )ad -ait( as a )ene-i"iary in any insuran"e po i"y e2en i- su"( designation )e stipu ated as irre2o"a) e. A"t5 60C FC. A-ter t(e -ina ity o- t(e de"ree o- ega separation6 t(e inno"ent spouse may re2o*e t(e designation o- t(e o--ending spouse as )ene-i"iary in any insuran"e po i"y. '(e re2o"ation o- or "(ange in t(e designation o- t(e insuran"e )ene-i"iary s(a ta*e e--e"t upon +ritten noti-i"ation to t(e insured. A"t5 1-C FC. '(e e--e"ts pro2ided -or )y paragrap( (#& o- Art. #9 555 s(a a so app y in t(e proper "ases to marriages +(i"( are de" ared 2oid a) initio or annu ed )y -ina Iudgment under Art. #% ? #F. P"o$#e2 5 @ao and Jane are h!sband and wife$ Jef and Jo"o are a so h!sband and wife ((iheeO)$ Jef and Jane en)a)ed in ad! tero!s re ations$ Jef sec!red a ife ins!rance #o ic( and named Jane as beneficiar($ -hen Jef dies, who wi )et the ins!rance #roceeds> EoIo. Eane "annot )e named as a )ene-i"iary in a i-e insuran"e po i"y )e"ause s(e is -or)idden )y a+ to re"ei2e a donation -rom Ee- sin"e t(ey +ere )ot( gui ty o- adu tery. @ao and Jane are h!sband and wife$ Jef and Jo"o are a so h!sband and wife$ Jane en)a)ed in ad! tero!s re aions with Pan$ Jef sec!red a ife ins!rance and named Jane as beneficiar($ -hen Jef dies, who wi )et the ins!rance #roceeds> Eane. '(e a+ pro(i)its t(e situation +(erein a person +(o is -or)idden -rom re"ei2ing a donation under Art. /9. is named a )ene-i"iary o- a i-e insuran"e po i"y )y t(e person +(o "annot ma*e any donation to (im6 a""ording to said arti" e. In ot(er +ords6 not+it(standing t(e -a"t t(at Eane is gui ty o- adu tery6 Eane "an sti )e a )ene-i"iary o- Ee- sin"e t(e a+ pro2ides t(at Eane "annot )e a )ene-i"iary o- a i-e insuran"e

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po i"y i- t(e person +(o names (er as )ene-i"iary is -or)idden to gi2e (er a donation under Art. /9.. Art. /9. is t(ere-ore not app i"a) e in t(e situation at )ar. @ao and Jane are h!sband and wife$ Jef and Jo"o are a so h!sband and wife$ Jef has a conc!bine named Ma!i *a( or$ Jef thereafter sec!red a ife ins!rance #o ic( and named Jane as beneficiar($ -hen Jef dies, who wi )et the ins!rance #roceeds> Eane. '(e a+ on y pro(i)its t(e situation +(erein a person +(o is -or)idden -rom re"ei2ing a donation under Art. /9. is named a )ene-i"iary o- a i-e insuran"e po i"y )y t(e person +(o "annot ma*e any donation to (im6 a""ording to said arti" e. Not+it(standing t(at Ee- is gui ty o- "on"u)inage6 Eane "an sti )e a )ene-i"iary. Sin"e Eane is not t(e "on"u)ine6 Art. /9. +i not app y and Ee- is not -or)idden -rom gi2ing a donation to Eane. @ao and Jane are h!sband and wife$ Jef and Jo"o are a so h!sband and wife$ Jane en)a)es in ad! tero!s re ations with Pan$ Jef has a conc!bine named Ma!i *a( or$ Jef thereafter sec!res a ife ins!rance #o ic( and names Jane as a beneficiar($ -henJef dies, who wi )et the ins!rance #roceeds> Eane. '(e a+ on y pro(i)its t(e situation +(erein a person +(o is -or)idden -rom re"ei2ing a donation under Art. /9. is named a )ene-i"iary o- a i-e insuran"e po i"y )y t(e person +(o "annot ma*e any donation to (im6 a""ording to said arti" e. Not+it(standing t(at )ot( parties are gui ty o- adu tery and "on"u)inage respe"ti2e y6 t(ey are not -or)idden )e"ause Ee- is not t(e one engaged in an adu terous re ations(ip +it( Eane6 and s(e is not t(e "on"u)ine o- Ee-. Art. /9. does not app y. @ao and Jane are h!sband and wife$ Jef and Jo"o are a so h!sband and wife$ Jef and @ao become overs$ Jef thereafter sec!res a ife ins!rance #o ic( and names @ao as his beneficiar($ -hen Jef dies who wi )et the ins!rance #roceeds> Pao. Sin"e t(ere is no a+ pro(i)iting Ee- -rom donating to Pao6 )e"ause )ot( o- t(em are neit(er gui ty oadu tery nor "on"u)inage6 t(en t(e on y so ution to t(is pro) em is to "onsider t(e designation o- t(e )ene-i"iary as a "ontra"t +(i"( is 2a id and )inding )et+een t(e insurer and t(e insured. Fisc aimer8 'n( resemb ance to rea and ivin) #ersons are #!re ( coincidenta $ =ahahaha$$ ri)ht$ Ca e 5 7618 In &#a" Li)e *5 E$"a%o (re#eated case Q case R0) ,- SCRA 1,1 Fact 9 3uena2entura E)rado +as issued )y Insu ar <i-e Assuran"e Co. a +(o e i-e p an -or PF600C.%% +it( a rider -or A""identa !eat( 3ene-its -or t(e same amount. E)rado designated Carponia E)rado as t(e re2o"a) e )ene-i"iary in (is po i"y6 re-erring to (er as (is +i-e. E)rado died +(en (e +as a""identa y (it )y a -a ing )ran"( o- tree. Insurer )y 2irtue o- t(e "ontra"t +as ia) e -or 116/#F./96 and Carponia -i ed (er " aim6 a t(oug( s(e admitted t(at s(e and t(e insured +ere mere y i2ing as (us)and and +i-e +it(out t(e )ene-it omarriage. Pas"ua a E)rado a so -i ed (er " aim as t(e +ido+ o- t(e de"eased insured. Insu ar i-e -i ed an interp eader "ase and t(e o+er "ourt -ound in -a2or o- Pas"ua a. I &e9 3et+een Carponia and Pas"ua a6 +(o is entit ed to t(e pro"eedsH

He#%9 Pa c&a#a5 It is Guite un-ortunate t(at t(e Insuran"e A"t or our o+n Insuran"e Code does not "ontain a spe"i-i" pro2ision gross y reso utory o- t(e prime Guestion at (and. Rat(er6 t(e genera ru es o- "i2i a+ s(ou d )e app ied to reso 2e t(is 2oid in t(e insuran"e a+. Art. C%11 o- t(e NCC statesJ *he contract of ins!rance is )overned b( s#ecia aws$ Matters not e&#ress ( #rovided for in s!ch s#ecia aws sha be re)! ated b( this +ode$ W(en not ot(er+ise spe"i-i"a y pro2ided -or in t(e insuran"e a+6 t(e "ontra"t o- i-e insuran"e is go2erned )y t(e genera ru es o- "i2i a+ regu ating "ontra"ts. Under Art. C%1C6 NCCJ 'n( #erson who is forbidden from receivin) an( donation !nder 'rt$ ,39 cannot be named beneficiar( of a ife ins!rance #o ic( b( a #erson who cannot make an( donation to him, accordin)

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to said artic e. Under Art. /9.6 donations )et+een persons +(o +ere gui ty o- adu tery or "on"u)inage at t(e time o- t(e donation s(a )e 2oid. In essen"e6 a i-e insuran"e po i"y is no di--erent -rom "i2i donations inso-ar as t(e )ene-i"iary is "on"erned. 3ot( are -ounded on t(e same "onsideration o- i)era ity. A )ene-i"iary is i*e a donee )e"ause -rom t(e premiums o- t(e po i"y +(i"( t(e insured pays6 t(e )ene-i"iary +i re"ei2e t(e pro"eeds or pro-its osaid insuran"e. As a "onseGuen"e6 t(e pros"ription in Art. /9. s(ou d eGua y operate in i-e insuran"e "ontra"ts. '(ere-ore6 sin"e "ommon: a+ spouses are )arred -rom re"ei2ing donations6 t(ey are i*e+ise )arred -rom re"ei2ing pro"eeds o- a i-e insuran"e "ontra"t. 7668 So&the" L&Fon E2!#o4eeK A 96 PHIL ,/ ociation *5 Go#!eo

Fact 9 S<EA is "omposed o- a)orers and emp oyees o- t(e <'3C and 3'C (no+ 3<'3 Co.&6 and one o- its purposes is mutua aid o- its mem)ers and t(eir dependents in "ase o- deat(. Roman Con"ep"ion +as a mem)er unti (is deat( in 1.F%.

In 1.#.6 S<EA adopted a reso ution pro2iding t(atJ ' member ma(, if he chooses, #!t down his common aw wife and7or chi dren he had with her as his beneficiaries9 and s!ch #erson so named b( the member wi be the so e #ersons to be reco)ni6ed b( SEI' re)ardin) c aims for condo ence contrib!tions$ Roman isted as (is )ene-i"iaries AGui ina >a o es and t(eir # "(i dren. A-ter (is deat(6 S<EA +as a) e to "o e"t 2o untary "ontri)ution -rom its mem)ers amounting to PC6C%F. '(ree sets o- " aimants to t(e amount presented t(emse 2es to t(e asso"iation name yJ o Euanita 8o peo6 ega +i-e6 and (er "(i dren o AGui ina >a o es6 t(e "ommon a+ +i-e6 and (er "(i dren o E sie 7i")an6 anot(er "ommon a+ +i-e o- Roman6 and (er "(i d. S<EA t(en -i ed an a"tion -or interp eader against t(e 9 "on- i"ting " aimants. 'ria "ourt rendered a de"ision de" aring >a o es and (er "(i dren t(e so e )ene-i"iaries o- t(e amount "iting !e Va 2. !e Va . Bn y 8o peo appea ed. S(e argues t(atJ o '(e insuran"e "ode does not app y sin"e t(e asso"iation is not an insuran"e "ompany )ut a mutua )ene-it asso"iation. o '(e stipu ation )et+een S<EA and Roman +as 2oid -or )eing "ontrary to a+6 pu) i" mora s and pu) i" po i"y6 pursuant to Art. /9. o- t(e CC ( donations )et+een persons gui ty o- "on"u)inage at t(e time o- donation are 2oid& &e9 WBN 8o peo6 t(e ega +i-e is entit ed to t(e amount.

He#%9 NO5 @irst o- a 6 t(e o+er "ourt did not "onsider t(e asso"iation as a regu ar insuran"e "ompany6 )ut mere y ru ed t(at t(e deat( )ene-it in Guestion is ana ogous to insuran"e. 3esides6 e2en t(e Administrati2e Code des"ri)es a mutua )ene-it "ompany as one +(i"( pro2ides any met(od o- i-e insuran"e among its mem)ers out o- dues or assessments "o e"ted -rom its mem)ers(ip. Se"ond y6 +it(out "onsidering t(e intimation in t(e )rie- -or >a o es t(at 8o peo6 )y (er si en"e and a"tions (ad a"Guies"ed in t(e i i"it re ations )et+een (er (us)and and >a o es6 8o peo=s argument +ou d "ertain y NB' app y to t(e "(i dren o- >a o es i*e+ise named )ene-i"iaries )y t(e de"eased. As a matter o-a"t6 t(e NCC re"ogni4es "ertain su""essiona rig(ts o- i egitimate "(i dren. 76/8 Na"io *5 Phi#a2#i)e In &"ance Co2!an4 6- SCRA 0/0 Fact 9 >rs. Nario app ied -or and +as issued a i-e Insuran"e po i"y (no. F%9$1/& )y P7I<A><I@E under a C%:yr endo+ment p ant6 +it( a -a"e 2a ue o- F'. 7er (us)and !e -in and t(eir uneman"ipated son Ernesto +ere (er re2o"a) e )ene-i"iaries.

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>rs. Nario t(en app ied -or a oan on t(e a)o2e po i"y +it( P7I<A><I@E +K" s(e is entit ed to as po i"y (o der6 a-ter t(e po i"y (as )een in -or"e -or 9 years. '(e purpose o- su"( oan +as -or t(e s"(oo e5penses o- Ernesto. '(e app i"ation )ore t(e +ritten signature and "onsent o- !e -in in C "apa"ities o As one o- t(e irre2o"a) e )ene-i"iaries o- t(e po i"y o As -at(er:guardian o- Ernesto and a so t(e ega administrator o- t(e minor=s properties pursuant to Art. 9C% o- t(e CC. P7I<A><I@E denied t(e oan app i"ation "ontending t(at +ritten "onsent o- t(e minor son must not on y )e gi2en )y (is -at(er as ega guardian )ut it must a so )e aut(ori4ed )y t(e "ourt in a "ompetent guardians(ip pro"eeding. >rs. Nario t(en signi-ied (er de"ision to surrender (er po i"y and demand its "as( 2a ue +(i"( t(en amounted to P FC%. P7I<A><I@E a so denied t(e surrender o- t(e po i"y on t(e same ground as t(at gi2en in disappro2ing t(e oan app i"ation. >rs. Nario sued P7I<A><I@E praying t(at t(e atter grant t(eir oan app i"ation andKor a""ept t(e surrender o- said po i"y in e5"(ange -or its "as( 2a ue. P7I<A><I@E "ontends t(at t(e oan app i"ation and t(e surrender o- t(e po i"y in2o 2ed a"ts o- disposition and a ienation o- t(e property rig(ts o- t(e minor6 said a"ts are not +it(in t(e po+er o- administrator granted under Art. 9C% in re ation to art. 9C$ CC6 (en"e "ourt aut(ority is reGuired. &e9 WBN P7I<A><I@E +as Iusti-ied in re-using to grant t(e oan app i"ation and t(e surrender o- t(e po i"y.

He#%9 >ES5 SC agreed +it( t(e tria "ourt t(at t(e 2ested interest or rig(t o- t(e )ene-i"iaries in t(e po i"y s(ou d )e measured on its -u -a"e 2a ue and not on its "as( surrender 2a ue6 -or in "ase o- deat( o- t(e insured6 said )ene-i"iaries are paid on t(e )asis o- its -a"e 2a ue and in "ase t(e insured s(ou d dis"ontinue paying premiums6 t(e )ene-i"iaries may "ontinue paying it and are entit ed to automati" e5tended term or paid:up insuran"e options and t(at said 2ested rig(t under t(e po i"y "annot )e di2isi) e at any gi2en time. SC a so agreed +it( 'C t(at t(e said a"ts ( oan app and surrender& "onstitute a"ts o- disposition or a ienation o- property rig(ts and not mere y management or administration )e"ause t(ey in2o 2e t(e in"urring or termination o- "ontra"tua o) igations. Under t(e a+s (CC and ru es o- Court& '(e -at(er is "onstituted as t(e minor=s ega administrator o- t(e propty6 and +(en t(e propty o- t(e "(i d is +ort( more t(an PC' (as in t(e "ase at )ar6 t(e minor=s propty +as +ort( C6F%% (is S s(are as )ene-i"iary&6 t(e -at(er a must -i e a petition -or guardians(ip and post a guardians(ip )ond. In t(e "ase at )ar6 t(e -at(er did not -i e any petition -or guardians(ip nor post a guardians(ip )ond6 and as su"( "annot possi) y e5er"ise t(e po+ers 2ested on (im as ega administrator ot(e minor=s property. '(e "onsent gi2e -or and in )e(a - o- t(e son +it(out prior "ourt aut(ori4ation to t(e oan app i"ation and t(e surrender +as insufficient and ineffective and P7I<A><I@E +as Iusti-ied in disappro2ing t(e said app i"ations. Assuming t(at t(e propty o- t(e +ard +as ess t(an C'6 t(e e--e"t +ou d )e t(e same6 sin"e t(e parents +ou d on y )e e5empted -rom -i ing a )ond and Iudi"ia aut(ori4ation6 )ut t(eir a"ts as ega administrators are on y imited to a"ts o- management or administration and not to a"ts o- en"um)ran"e or disposition. 7608 Vi##an&e*a *5 O"o ,1 PHIL 060 Fact 9 West Coast <i-e Insuran"e Company issued t+o po i"ies o- insuran"e on t(e i-e o- Esperan4a Vi anue2a6 one -or C'6 maturing Apri 16 1.#9; and ot(er -or 9' maturing >ar. 916 1.#9.

In )ot( po i"ies6 West agreed to pay C' eit(er to Esperan4a i- sti i2ing on Apr 16 1.#9; or to )ene-i"iary 3arto ome Vi anue2a6 or t(e -at(er o- t(e insured immediate y upon re"eipt o- t(e proo- o- deat( oEsperan4a. '(e po i"y a so ga2e (er t(e rig(t to "(ange t(e )ene-i"iary. In 1.#%6 3arto ome died6 and (e +as su)stituted as )ene-i"iary under t(e po i"ies )y >ariano6 Esparan4a=s )rot(er.

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Esperan4a died in 1.## +it(out (a2ing "o e"ted t(e insuran"e pro"eeds. Ad2erse " aims -or t(e pro"eeds +ere presented )y t(e estate o- Esperan4a on one (and and )y >ariano on t(e ot(er. C@I (e d t(at t(e estate o- Esperan4a +as entit ed to t(e pro"eeds to t(e e5" usion o- t(e )ene-i"iary. &e9 WBN t(e )ene-i"iary is entit ed to t(e pro"eeds.

He#%9 NO5 Under t(e po i"ies6 t(e insurer o) igated itse - to pay t(e insuran"e pro"eeds toJ (1& t(e insured i- t(e atter i2ed on t(e dates o- maturity; or (C& t(e )ene-i"iary i- t(e insured died during t(e "ontinuan"e o- t(e po i"ies. '(e -irst "ontingen"y e5" udes t(e se"ond6 and 2i"e 2ersa. In ot(er +ords6 as t(e insured Esperan4a +as i2ing on Apri 1 and >ar"( 916 1.#96 t(e pro"eeds are paya) e e5" usi2e y to (er or to (er estate un ess s(e (ad )e-ore (er deat( ot(er+ise assigned t(e matured po i"ies. '(e )ene-i"iary "ou d )e entit ed to said pro"eeds on y in de-au t o- t(e -irst "ontingen"y. 'o sustain t(e )ene-i"iary=s " aim +ou d )e to a toget(er e iminate -rom t(e po i"ies t(e "ondition t(at t(e insurer ,agrees to pay to t(e insured i- i2ing.1 '(is "on" usion ta ies +it( Ameri"an Aut(orities +(o say t(atJ '(e interest o- t(e insured in t(e pro"eeds o- t(e insuran"e depends upon (is sur2i2a o- t(e e5piration o- t(e endo+ment period. Upon t(e insured=s deat(6 +it(in t(e period6 t(e )ene-i"iary +i ta*e6 as against t(e persona representati2es t(e endo+ment period6 t(e )ene-its are paya) e to (im or to (is assignee6 not+it(standing a )ene-i"iary is designated in t(e po i"y. (AmEur and Cou"( Cy" opedia o- Insuran"e <a+& 7618 Phi#a2#i)e *5 Pine%a 171 SCRA 016 Fact 9 Bn Ean. 1F 1.$96 !imayuga pro"essed an ordinary i-e insuran"e po i"y -rom P(i am i-e and designated (is +i-e and "(i dren as irre2o"a) e )ene-i"iaries. Bn @e). CC6 1.0%6 !imayuga -i ed a petition in "ourt to amend t(e designation o- t(e )ene-i"iaries in (is po i"y -rom irre2o"a) e to re2o"a) e. <o+er Court granted t(e petition. I &e9 WBN t(e "ourt erred in granting !imayuga=s petition.

He#%9 >ES5 Under t(e Insuran"e A"t6 t(e )ene-i"iary designated in a i-e insuran"e "ontra"t "annot )e "(anged +it(out t(e "onsent o- t(e )ene-i"iary )e"ause (e (as a 2ested interest in t(e po i"y. '(e po i"y "ontra"t states t(at t(e designation o- t(e )ene-i"iaries is irre2o"a) e. '(ere-ore6 )ased on t(e said pro2ision o- t(e "ontra"t6 not to mention t(e a+ t(en app i"a) e6 it is on y +it( t(e "onsent o- a t(e )ene-i"iaries t(at any "(ange or amendment in t(e poi"y may )e ega y and 2a id y e--e"ted. '(e "ontra"t )et+een t(e parties is t(e a+ )inding on t(em. (*his case r! e is no on)er contro in) !nder the 2ns!rance +ode$) 7668 SSS *5 Da*ao 17 SCRA ,6/ Fact 9 !a2a" +as an SSS mem)er6 and designated Cande aria !a2a"6 (is a eged +i-e6 as (is )ene-i"iary. W(en (e died6 )ot( (is -irst +i-e6 <ourdes and (is se"ond +i-e6 Cande aria -i ed " aims -or t(e deat( )ene-its. !ue to t(e "on- i"ting " aims6 t(e SSS -i ed a petition praying t(at )ot( o- t(em )e reGuired to interp ead and itigate t(e "on- i"ting " aims. '(e deat( )ene-its +ere a+arded to Cande aria !a2a". I &e9 W(o is entit ed to t(e SSS )ene-itsH

He#%9 Can%e#a"ia5 Under t(e SSS A"t6 t(e )ene-i"iary as re"orded )y t(e emp oyee=s emp oyer is t(e one entit ed to t(e deat( )ene-its6 (en"e t(ey s(ou d go to Cande aria. <ourdes "ontends t(at t(e designation made in t(e person o- Cande aria +(o is party in a )igamous marriage is nu and 2oid -or )eing against Art. /9. o- t(e

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CC. SC (e d t(at t(e disGua i-i"ation mentioned in Art. /9. is NB' app i"a) e to Cande aria6 )e"ause s(e +as not gui ty o- "on"u)inage 6 t(ere )ieing NB proo- t(at s(e (ad a"tua *no+ edge o- t(e pre2ious marriage o(er (us)and. 7678 In Re9 ?a"io Chan#ion3co 79 SCRA /60 Fact 9 Atty. C(ang iong"o6 an atty o- t(e SC and a 8SIS mem)er6 died a) intestate. 7e -ai ed or o2er oo*ed to state in (is app i"ation -or mem)ers(ip +it( t(e 8SIS t(e )ene-i"iary or )ene-i"iaries o- (is retirement )ene-its s(ou d (e die )e-ore t(e retirement. I &e9 W(o +i )ene-it -rom t(e pro"eedsH

He#%9 '(e retirement )ene-its s(a a""rue to (is estate and )e distri)uted among (is ega (eirs in a""ordan"e +it( t(e a+ on intestate su""ession6 as in t(e "ase o- a i-e insuran"e po i"y i- NB )ene-i"iary is named in t(e insuran"e po i"y. 76,8 V%a5 De Con &e3"a *5 GSIS /7 SCRA /11 Fact 9 Eose Consuegra +as emp oyed as a s(op -oreman o- t(e B--i"e o- t(e !istri"t Engineer in Surigao !e Norte. W(en (e +as sti a i2e6 (e "ontra"ted t+o marriagesJ o @irst Rosario !ia4; C "(i dren T Eose Consuegra Er. and Pedro )ut )ot( prede"eased (im o Cnd 3asi ia 3erdin; / "(i dren. (this was contracted in JB whi e the first marria)e s!bsisted) 3eing a 8SIS mem)er +(en (e died6 t(e pro"eeds o- (is i-e insuran"e +ere paid )y t(e 8SIS to 3erdin and (er "(i dren +(o +ere t(e )ene-i"iaries named in t(e po i"y. Sin"e (e +as in t(e go2=t ser2i"e -or CC.F%C0 years6 (e +as entit ed to retirement insuran"e )ene-its6 -or +(i"( no )ene-i"iary +as designated. 3ot( -ami ies -i ed t(eir " aims +it( t(e 8SIS6 +(i"( ru ed t(at t(e ega (eirs +ere !ia4 +(o is entit ed to one:(a - or 0K1$ o- t(e retirement )ene-its and 3erdin and (er "(i dren +ere entit ed to t(e remaining (a -6 ea"( to re"ei2e an eGua s(are o- 1K1$. 3erdin +ent to C@I on appea . C@I a--irmed 8SIS de"ision. I &e9 'o +(om s(ou d t(e retirement insuran"e )ene-its )e paidH

He#%9 Eoth )a2i#ie a"e entit#e% to ha#) o) the "eti"e2ent $ene)it 5 '(e )ene-i"iary named in t(e i-e insuran"e does NB' automati"a y )e"ome t(e )ene-i"iary in t(e retirement insuran"e. W(en Consuegra6 during t(e ear y part o- 1.#96 or )e-ore 1.#96 designated (is )ene-i"iaries in (is i-e insuran"e6 (e "ou d NB' (a2e intended t(ose )ene-i"iaries o- (is i-e insuran"e as a so t(e )ene-i"iaries o- (is retirement insuran"e )e"ause t(e pro2isions on retirement insuran"e under t(e 8SIS "ame a)out on y +(en CA 10$ +as amended )y RA $$% on Eune 106 1.F1. Se". 11()& " ear y indi"ates t(at t(ere is need -or t(e emp oyee to -i e an app i"ation -or retirement insuran"e )ene-its +(en (e )e"omes a 8SIS mem)er and to state (is )ene-i"iary. '(e i-e insuran"e and t(e retirement insuran"e are t+o separate and distin"t systems o- )ene-its paid out -rom C separate and distin"t -unds. In "ase o- -ai ure to name a )ene-i"iary in an insuran"e po i"y6 t(e pro"eeds +i a""rue to t(e estate ot(e insured. And +(en t(ere e5ists t+o marriages6 ea"( -ami y +i )e entit ed to one:(a - o- t(e estate. 7698 Ge"cio *5 S&n Li)e (re#eat, case R1A) 0, PHIL 1/ Fact 9

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Sun i-e issued a i-e insuran"e po i"y to 8er"io6 t(e -ormer agreeing to insure t(e i-e o- 8er"io -or C' to )e paid to (im on @e). 16 1.9% or i- (e s(ou d die )e-ore said date6 t(en to (is +i-e Andrea6 s(ou d s(e sur2i2e (im; ot(er+ise to t(e e5e"utor6 administrator o- 8er"io. '(e po i"y did not in" ude any pro2ision reser2ing to 8er"io t(e rig(t to "(ange t(e )ene-i"iary. '(e +i-e +as "on2i"ted o- adu tery and a de"ree o- di2or"e +as issued. 8er"io noti-ied Sun i-e t(at (e (ad re2o*ed (is donation in -a2or o- Andrea and t(at (e (ad designated (is present +i-e Ade a as (is )ene-i"iary. Sun i-e re-used to "(ange t(e )ene-i"iary. &e9 WBN 8er"io may "(ange t(e )ene-i"iary in t(e po i"y.

He#%5 NO5 I- t(e po i"y "ontains no pro2ision aut(ori4ing a "(ange o- )ene-i"iary +it(out t(e )ene-i"iary=s "onsent6 t(e insured "annot ma*e su"( "(ange. It is (e d t(at a i-e insuran"e po i"y o- a (us)and made paya) e to (is +i-e as a )ene-i"iary is t(e separate property o- t(e )ene-i"iary and )eyond t(e "ontro o- t(e (us)and. (NB'EJ t(is "ase is )ased on t(e o d ru e under t(e Insuran"e A"t& Court a so (e d t(at t(e designation o- a )ene-i"iary t(at is origina y 2a id does NB' render it in2a id dut to a su)seGuent "essation o- t(e interests )et+een t(e )ene-i"iary and insured.

Section 165 '(e interest o- a )ene-i"iary in a i-e insuran"e po i"y s(a )e -or-eited +(en t(e )ene-i"iary is t(e prin"ipa 6 a""omp i"e or a""essory in +i -u y )ringing a)out t(e deat( o- t(e insured; in +(i"( e2ent6 t(e nearest re ati2e o- t(e insured s(a re"ei2e t(e pro"eeds o- said insuran"e i- not ot(er+ise Gua i-ied. Who a"e the Anea"e t "e#ati*e B 2entione% he"e' '(ose re ated to t(e de"edent in t(e order mentioned under t(e ru es o- intestate su""ession su"( asJ (t(e order o- t(e -o o+ing re ati2es are as -o o+s& 1. '(e egitimate "(i dren; C. '(e -at(er and mot(er6 i- i2ing; 9. '(e grand-at(er and grandmot(er; or as"endants nearest in degree6 i- i2ing; #. '(e i egitimate "(i dren; F. '(e sur2i2ing spouse; and $. '(e "o atera re ati2es6 to +itJ a. 3rot(ers and sisters o- t(e -u ) ood; ). 3rot(ers and sisters o- t(e (a -:) ood; and ". Nep(e+s and nie"es /. In de-au t o- t(e a)o2e6 t(e S'A'E s(a )e entit ed to re"ei2e t(e insuran"e pro"eeds.

P"o$#e29 + ark is ins!red$ =is nearest re atives are8 1) 'nakin, the e)itimate chi d 2) Jor-e and S( a, the e)itimate father and mother 3) Eo o and Eo a, )randfather and )randmother (or ascendants in the nearest de)ree) 4) Bastardo, the i e)itimate chi d C) Eois Eane, the s!rvivin) s#o!se 1) +o atera re atives to wit8 a) S!(a, brother of f! b ood b) ' f, brother of ha f b ood c) /e#, ne#hew -hat if a of the above are nowhere to be fo!nd> '(en t(e State o- Urypton is entit ed to t(e pro"eeds. S!##ose that Eois Eane masterminded a # an to ki + ark and 'nakin carried it o!t$ 'nakin and Eois were convicted of m!rder$ =owever, the( are a so instit!ted as beneficiaries in the ins!rance #o ic( of + ark, and

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the #roceeds are the on ( #ro#erties avai ab e for distrib!tion to the heirs$ 2n case a three are convicted who )ets the #roceeds> Sin"e Ana*in6 t(e egitimate "(i d and <ois6 t(e sur2i2ing spouse are no onger entit ed to t(e pro"eeds6 t(en -o o+ing t(e ru es on intestate su""ession6 t(e pro"eeds must )e di2ided )et+een t(e egitimate parents (Eor:e and Uy a& +(o get S o- t(e pro"eeds and t(e I egitimate "(i d (3astardo& +(o gets t(e ot(er (a -. Same facts above, b!t it was on ( Eois Eane who was instit!ted as beneficiar($ 2s 'nakin sti entit ed to the ins!rance #roceeds> At -irst g an"e t(e ans+er mig(t )e AES6 )e"ause a""ording to Se"tion 1C6 it is on y t(e interest o- t(e )ene-i"iary +(i"( is -or-eited6 and sin"e Ana*in +as not instituted as )ene-i"iaries6 t(en (is interest is sti inta"t. 7BWEVER6 t(ere is a pro2iso in Se". 1C6 +(i"( statesJ 1 the nearest re ative of the ins!red sha received the #roceeds of said ins!rance if not otherwise 3!a ified4 . >eaning6 in order to -ind out i- Ana*in is Gua i-ied6 re-eren"e must )e made to a+s o- su""ession. A""ording to Art. 1%C# o- t(e CC6 t(e pro2isions re ating to in"apa"ity )y +i are eGua y app i"a) e to intestate su""ession; and a""ording to Art. 1%9C (C&6 any person +(o (as )een "on2i"ted o- an attempt against t(e i-e o- t(e testator is in"apa) e o- su""eeding )y reason o- unworthiness. 7en"e6 t(e "orre"t ans+er to t(is pro) em is NB. Ana*in is not entit ed to t(e pro"eeds and su)seGuent y t(e insuran"e pro"eeds +i )e di2ided as pro2ided -or in t(e -irst ans+er. 2n case 'nakin and Eois are not convicted, b!t both are instit!ted as beneficiaries of + ark, can the( sti co ect the #roceeds> '(ere is no a+ or Iurispruden"e t(at treats o- t(is situation. 7o+e2er6 Atty. Quimson said in " ass t(at t(ere must )e a conviction )e-ore Se". 1C "an operate to disGua i-y or -or-eit t(e interests o- Ana*in and <ois. Se". 1C spea*s o- ,prin"ipa s6 a""omp i"e or a""essory16 and t(ere must t(ere-ore )e a "on2i"tion ot(e )ene-i"iaries as eit(er o- t(e t(ree to t(e "rime against t(e insured. S!##ose 'nakin and Eois are not convicted and the( are not instit!ted as beneficiaries of + ark, can the( now co ect the #roceeds> In t(is "ase6 Se". 1C is no onger t(e re e2ant pro2ision6 )ut Art. 1%9C (C& o- t(e CC. 7o+e2er6 it is su)mitted ()y Eo(n3ee Sioson& t(at t(ere must )e a -ina "on2i"tion in order -or Art. 1%9C to app y6 i.e.6 to )ar Ana*in and <ois -rom "o e"ting on t(e ground o- un+ort(iness. @urt(ermore6 Art. 1%9# saysJ In order to Iudge t(e "apa"ity o- t(e (eir6 de2isee or egatee6 (is Gua i-i"ations at t(e time o- t(e deat( o- t(e de"edent s(a )e t(e "riterion. In "ases -a ing under Nos. C6 9 ? F o- Art. 1%9C6 it s(a )e ne"essary to +ait unti -ina Iudgment is rendered. I e Friver, Beatri& Siddo T .-Ren 2shi are a creditors of Bi $ ' three are instit!ted as beneficiaries of Bi $ I e fai s to 3!a if( since she is Bi Hs conc!bine$ Beatri& on the other hand, ea)er to c aim the ins!rance #roceeds, !sed the DC #oint e&# odin) heart techni3!e4 she earned from @ai Mei, ki in) Bi $ .-Ren now c aims the #roceeds of the ins!rance$ =owever, her c aim is o##osed b( BB, Bi Hs e)itimate da!)hter who contends that accordin) to Sec$ 10, it is the nearest re ative who sho! d )et the #roceeds, meanin) her$ Between BB and .-Ren, who is entit ed to )et the #roceeds> B:Ren Is(i gets t(e pro"eeds )e"ause it +as stipu ated in t(e "ontra"t o- insuran"e (2 think sheH !se it to s!r)ica ( )raft her sca # back since it was s iced b( Beatri& !sin) a =atori =an6o Sword). Remem)er t(at t(e insuran"e "ontra"t is t(e a+ )et+een t(e parties and (en"e it must )e -o o+ed )y t(e insuran"e "ompany. Se". 1C BN<A app ies i- t(ere is NB stipu ation in t(e "ontra"t o- insuran"e as to +(o are t(e ot(er )ene-i"iaries o- t(e pro"eeds.(+!e Si Bi so!ndtrackO)

Section 1/5 E2ery interest in property6 +(et(er rea or persona 6 or any re ation t(ereto6 or ia)i ity in respe"t t(ereo-6 o- su"( nature t(at a "ontemp ated peri mig(t dire"t y damni-y t(e insured6 is an insura) e interest. What i the i2!o"tance o) thi !"o*i ion' It de-ines insura) e interest in PRBPER'A .

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Ca e 9 7/-8 Ha"*a"%ian Co##e3e *5 Co&nt"4 Ean;e" In &"ance Co"!5 1 CARA 6 Fact 9 7ar2ardian is a -ami y "orporation6 t(e sto"*(o ders o- +(i"( are I de-onso Aap6 Virginia Uing Aap and t(eir "(i dren. Prior to Aug. .6 1./.6 an agent o- Country 3an*ers proposed to 7ar2ardian to insure its s"(oo )ui ding. A t(oug( at -irst re u"tant6 7ar2ardian agreed. Country 3an*s sent an inspe"tor to inspe"t t(e s"(oo )ui ding and agreed to insure t(e same -or PF%%6%%% -or +(i"( 7ar2ardian paid an annua premium o- PC6F%%.

Bn Aug. .6 1./.6 Country 3an*ers issued to 7ar2ardian a -ire insuran"e po i"y. Bn >ar"( 1C6 1.0%6 (39 da(s before 2 was bornO hehehehe )during t(e e--e"ti2ity o- said insuran"e po i"y6 t(e insured property +as tota y )urned rendering it a tota oss. A " aim +as made )y p ainti-- upon de-endant )ut de-endant denied it "ontending t(at p ainti-- (ad no insura) e interest o2er t(e )ui ding "onstru"ted on t(e pie"e o- and in t(e name o- t(e ate I de-onso Aap as o+ner. It +as "ontended t(at )ot( t(e ot and t(e )ui ding +ere o+ned )y I de-onso Aap and NB' )y t(e 7ar2ardian Co eges. &e9 WBN 7ar2ardian "o eges (as a rig(t to t(e pro"eeds.

He#%9 Ha"*a"%ian ha a "i3ht to the !"ocee% 5 Regard ess o- t(e nature o- t(e tit e o- t(e insured or e2en i- (e did not (a2e tit e to t(e property insured6 t(e "ontra"t o- -ire insuran"e s(ou d sti )e up(e d i- (is interest in or (is re ation to t(e property is su"( t(at (e +i )e )ene-ited in its "ontinued e5isten"e or su--er a dire"t pe"uniary oss -rom its destru"tion or inIury. '(e test in determining insura) e interest in property is +(et(er one +i deri2e pe"uniary )ene-it or ad2antage -rom its preser2ation6 or +i su--er pe"uniary oss or damage -rom its destru"tion6 termination or inIury )y t(e (appening o- t(e e2ent insured against. 7ere 7ar2ardian +as not on y in possession o- t(e )ui ding )ut +as in -a"t using t(e same -or se2era years +it( t(e *no+ edge and "onsent o- I de-onso Aap. It is reasona) y -air to assume t(at (ad t(e )ui ding not )een )urned6 7ar2ardian +ou d (a2e )een a o+ed t(e "ontinued use o- t(e same as t(e site o- its operation as an edu"ationa institution. 7ar2ardian t(ere-ore +ou d (a2e )een dire"t y )ene-ited )y t(e preser2ation o- t(e property6 and "ertain y su--ered a pe"uniary oss )y its )eing )urned.

Section 105 An insura) e ineters in property may "onsist inJ (a& An e5isting interest; ()& An in"(oate interest -ounded on an e5isting interest; or ("& An e5pe"tan"y6 "oup ed +it( an e5isting interest in t(at out o- +(i"( t(e e5pe"tan"y arises. What i e@i tin3 inte"e t' E5isting interest in property is t(e ega or eGuita) e tit e on t(e property. What i an inchoate inte"e t' It is an interest +(i"( (as not yet ripened6 su"( as t(e interest o- a sto"*(o der in t(e property o- t(e "orporation +(i"( (e o+ns sto"*s. In (hat ;in% o) e@!ectanc4 2a4 in &"a$#e inte"e t con i t' '(e e5pe"tan"y >US' )e "oup ed +it( an e5isting interest in t(at6 out o- +(i"( su"( e5pe"tan"y arises. E5amp es +ou d )eJ a -armer insuring -uture "rops t(at (e +i gro+ on (is and6 or a +or*man insuring t(e )ui ding +(i"( (e +as "ontra"ted to repair. Ca e 9 7/18 S&te" *5 Union S&"et4 11 OG 19-1

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Fact 9

Suter6 t(e managing partner o- >or"oin Co.6 insured t+o Iu*e )o5es +it( Union Surety -or P#6%%%. (btw, si(a din (!n) sa *a& 0 diba> ?!n) #inakasa an (!n) #artner ni(an) si S#iri)>) Su)seGuent y6 t(e t+o Iu*e )o5es +ere destroyed )y -ire. Suter no+ " aims -rom Union Surety6 t(e atter denying t(e " aims on t(e grounds t(atJ o '(e properties +ere a eged y o2er2a uedC it (a2ing )een pro2en t(at t(e Iu*e )o5es "ost on y P//#.%% o Suter (ad no insura) e interest sin"e t(e properties insured )e ong to >or"oin Co.

I &e an% Re o#&tion 9 (1) -hether or not the "!ke bo&es were overva !ed$ No. W(i e a"Guisition "ost is on y P//#.%%6 t(is does not in" ude ta5es6 -reig(t insuran"e6 s(ipping "ost6 and ot(er impro2ements made t(ereon. '(e 2a ue o- t(e property is determine at t(e time it +as insured and not t(e time it +as a"Guired. (0) -./ S!ter had ins!rab e interest$ AES6 Suter (ad insura) e interest. '(e test -or insura) e interest in property is +(et(er or not t(e insured +i )ene-it in t(e property=s reser2ation or "ontinued e5isten"e6 or su--er a dire"t pe"uniary oss in its destru"tion. Suter6 )eing t(e managing partner +i " ear y )ene-it in t(e Iu*e )o5es= preser2ation and +ou d a so )e a--e"ted )y its destru"tion. 7/68 T"a%e" In &"ance an% S&"et4 Co5 *5 Go#an3co 91 PHIL ,66 Fact 9 A de"ision +as rendred in Ci2i Case No. $9%$ granting 8o ang"o t(e rig(t to "o e"t renta s -rom a )ui ding in Sta. Cru46 >ani a.

8o ang"o t(en soug(t -ire insuran"e -rom 'raders. 3e-ore t(e po i"y +as issued6 8o ang"o made a -u and " ear e5posa o- (is interests in t(e premises6 i.e. t(at (e +as not t(e o+ner. '(e -ire po i"y t(at de-endant issued "o2ered on y a o- 8o ang"o=s interest in t(e premises and (is rig(t to "o e"t t(e renta s. '(e )ui ding )urned do+n in a -ire and 8o ang"o soug(t to "o e"t -rom 'raders. 'raders denied any ia)i ity on t(e ground t(at sin"e 8o ang"o +as not t(e o+ner o- t(e premises t(en (e (ad no insura) e interest in t(e same and "onseGuent y6 (e "ou d not "o e"t t(e insuran"e pro"eeds. &e9 WBN p ainti-- "an " aim t(e insuran"e pro"eeds.

He#%5 >ES5 3ot( at t(e time o- t(e issuan"e o- t(e po i"y and at t(e time o- t(e -ire6 p ainti-- 8o ang"o +as in ega possession o- t(e premises6 "o e"ting renta s -rom its o""upant. It seems p ain t(at i- t(e premises +ere destroyed as t(ey +ere6 )y -ire6 8o ang"o +ou d )e6 as (e +as6 dire"t y damni-ied t(ere)y; and (en"e (e (ad an insura) e interest t(erein. 7//8 Lenith In &"ance Co"!o"ation *5 The In &"ance Co22i ,7 OG 6609 Fact 9 ion

Venit( entered into an insuran"e "ontra"t6 denominated as EGuipment @ oater Po i"y "o2ering a Uato 3a"(oe in" uding its a""essories and appurtenan"es t(ereo-6 -rom oss o- damage. Comp ainant paid t(e stipu ated premiums t(ere-ore. Wit(in t(e period o- e--e"ti2ity o- t(e po i"y6 t(e t+o pie"es o- (ydrau i" +(ee gear pumps6 +(i"( are "onsidered appurtenan"es andKor parts atta"(ed to andKor insta ed in t(e Uato 3A"(oe +ere ost6 sto en andKor i ega y deta"(ed )y un*no+n t(ie2es or ma e-a"tors !espite repeated assuran"es )y Venit(=s so i"iting agent6 it re-used and -ai ed to sett e and pay "omp ainant=s insuran"e " aim.

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Comp ainant see*s not on y t(e payment o- said insuran"e " aim o- /%' p us ega interest6 atty=s -ees6 and itigation e5penses6 )ut a so t(e re2o"ation or "an"e ation o- t(e i"ense o- Venit( to do insuran"e )usiness. Venit( on t(e ot(er (and "ontends t(atJ o Comp ainant is not t(e rea party in interest sin"e t(e po i"y "arries +it( it a designated oss payee6 t(e 3A @inan"e Corp o '(e po i"y insures against oss or damage "aused )y -ire and ig(tning6 et"6 +(i e t(e-t or ro))ery is NB' insured against in t(e po i"y6 it not (a2ing )een e5press y mentioned o <oss ne2ert(e ess is e5" uded under t(e e5"eption o- ,in-ide ity e5" usion1 )y t(e operator +(o e-t it unguarded6 unattended and deserted +(i e entrusted to (im6 and -or -ai ure to gi2e time y noti"e o- oss o Comp ainant andKor 3A @inan"e is gui ty o- "on"ea ment and misrepresentation at t(e time t(ey se"ured t(e po i"y6 )e"ause at t(e time it )e"ame operati2e6 t(e "omp ainant +as NB' yet t(e o+ner o- t(e property insured6 t(e property sti (ot (a2ing )een de i2ered to (im6 and 3A -inan"e (ad no insura) e interest yet6 (en"e-ort(6 t(e "ontra"t o- insuran"e +as VBI! A3 INI'IB -or a"* o- insura) e interest at t(e time t(e insuran"e too* e--e"t.

I &e an% Re o#&tion 9 (1) -./ the oss thro!)h theft or robber( c aimed is within the covera)e of the #o ic($ '(e Insuran"e Commissioner6 as reiterated )y t(e SC6 -ound -or t(e "omp ainant in t(is +iseJ W(i e t(e po i"y enumerated t(e ris*s "o2ered6 it does NB'6 (o+e2er6 in its e5press terms6 imit "ompensa)i ity to t(at stated in t(e enumeration. '(e enumerated ris*s e5" uded did not in" ude t(e-t or ro))ery "ommitted or perpetrated )y an unidenti-ied "u prit6 (en"e t(e "omp ainant=s " aim -or damages is "ompensa) e. '(e -oregoing po i"y is supported )y t(e ong time (onored do"trine o- ,"ontra pro-erentemJ +(i"( pro2ides t(atJ ,any am)iguity in t(e po i"y s(a )e reso 2ed in -a2or o- t(e insured and against t(e insurer1. '(is is true )e"ause insuran"e "ontra"ts are essentia y "ontra"ts o- ad(esion and app i"ants -or insuran"e (a2e no "(oi"e )ut to a""ept t(e terms and "onditions in t(e po i"y e2en i- t(ey are not in -u a""ord t(ere+it(. (0) -./ the com# ainant was with ins!rab e interest therein when the said #o ic( contract was #roc!red$ '(e "omp ainant (as insura) e interest in t(e insured property at t(e time o- t(e pro"urement o- t(e insuran"e po i"y. As t(e CC pro2ides6 ,t(e "ontra"t o- sa e is per-e"ted at t(e moment t(ere is a meeting ominds upon t(e t(ing +(i"( is t(e o)Ie"t o- t(e "ontra"t and upon t(e pri"e61 and Se". 1F o- t(e IC a o+s t(e insuran"e o- a mere "ontingent or e5pe"tant interest in anyt(ing i- t(e same is -ounded on an a"tua rig(t to t(e t(ing6 or upon any 2a id "ontra"t. As t(is is t(e "ase6 mere possession o- an eGuita) e tit e6 i*e t(at pertaining to t(e )uyer6 gi2es rise to insura) e interest in t(e property in +(i"( su"( tit e in(eres. @urt(ermore6 "onsidering t(at Venit(=s agent (ad )een -u y apprised o- t(e "ir"umstan"es prior to t(e a"tua issuan"e o- t(e po i"y and t(e endorsement6 it "annot no+ a ege t(at "omp ainant (as no insura) e interest on t(e property insured. Venit( is no+ pre" uded )y t(e eGuita) e prin"ip e o- estoppe -rom impugning and dis(onoring t(e 2ery insuran"e po i"y "ontra"t it issued and t(e endorsement and in"rease in t(e "o2erage made t(roug( its du y aut(ori4ed agent. 7/08 Fi#i!ino ?e"chant *5 CA 179 SCRA 6/, Fact 9

'(e C(ao 'ie* Seng a "onsignee o- t(e s(ipment o- -is(mea oaded on )oard t(e 2esse SS 3ougain2i e and un oaded at t(e Port o- >ani a on or a)out !e"em)er 116 1./$ and see*s to re"o2er -rom @i ipino t(e amount o- PF16F$0.$C representing damages to said s(ipment +(i"( (as )een insured )y @i ipino. @i ipino )roug(t a t(ird party "omp aint against Compagnie >aritime !es C(argeurs Reunis andKor E. Ra4on6 In". see*ing Iudgment against t(e t(ird party de-endants in "ase Iudgment is rendered against it. It appears -rom t(e e2iden"e presented t(at C(ao insured said s(ipment +it( @i ipino -or t(e sum oPC$/6$F9.F. -or t(e goods des"ri)ed as $%% metri" tons o- -is(mea in gunny )ags o- .% *i os ea"( -rom 3ang*o*6 '(ai and to >ani a against a ris*s under +are(ouse to +are(ouse terms. A"tua y6 +(at +as imported +as F...#% metri" tons not $%% tons at Q9.F.#C a ton.

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'(e -is(mea in $$$ gunny )ags +ere un oaded -rom t(e s(ip on !e"em)er 116 1./$ at >ani a unto t(e arrastre "ontra"tor E. Ra4on6 In". and @i ipino=s sur2eyor as"ertained and "erti-ied t(at in su"( dis"(arge 1%F )ags +ere in )ad order "ondition as Ioint y sur2eyed )y t(e s(ipLs agent and t(e arrastre "ontra"tor. 3ased on said "omputation t(e C(ao made a -orma " aim against t(e @i ipino -or PF16F$0.$C. A -orma " aim statement +as a so presented )y t(e p ainti-- against t(e 2esse 6 )ut t(e @i ipino re-used to pay t(e " aim.

I &e H Re o#&tion 9 Bi i#ino contends that an 5a risks5 marine #o ic( has a technica meanin) in ins!rance in that before a c aim can be com#ensab e it is essentia that there m!st be 5some fort!it(,5 5cas!a t(5 or 5accidenta ca!se5 to which the a e)ed oss is attrib!tab e and the fai !re of herein #rivate res#ondent, !#on whom a( the b!rden, to add!ce evidence showin) that the a e)ed oss to the car)o in 3!estion was d!e to a fort!ito!s event #rec !des his ri)ht to recover from the ins!rance #o ic($ SC did not up(o d t(is "ontention. An Ma ris*s po i"yM s(ou d )e read itera y as meaning a ris*s +(atsoe2er and "o2ering a osses )y an a""identa "ause o- any *ind. '(e terms Ma""identM and Ma""identa M6 as used in insuran"e "ontra"ts6 (a2e not a"Guired any te"(ni"a meaning. '(ey are "onstrued )y t(e "ourts in t(eir ordinary and "ommon a""eptan"e. '(us6 t(e terms (a2e )een ta*en to mean t(at +(i"( (appens )y "(an"e or -ortuitous y6 +it(out intention and design6 and +(i"( is une5pe"ted6 unusua and un-oreseen. An a""ident is an e2ent t(at ta*es p a"e +it(out oneLs -oresig(t or e5pe"tation; an e2ent t(at pro"eeds -rom an un*no+n "ause6 or is an unusua e--e"t o- a *no+n "ause and6 t(ere-ore6 not e5pe"ted. Co2erage under an Ma ris*sM pro2ision o- a marine insuran"e po i"y "reates a spe"ia type o- insuran"e +(i"( e5tends "o2erage to ris*s not usua y "ontemp ated and a2oids putting upon t(e insured t(e )urden oesta) is(ing t(at t(e oss +as due to t(e peri -a ing +it(in t(e po i"yLs "o2erage; t(e insurer "an a2oid "o2erage upon demonstrating t(at a spe"i-i" pro2ision e5press y e5" udes t(e oss -rom "o2erage. A marine insuran"e po i"y pro2iding t(at t(e insuran"e +as to )e Magainst a ris*sM must )e "onstrued as "reating a spe"ia insuran"e and e5tending to ot(er ris*s t(an are usua y "ontemp ated6 and "o2ers a osses e5"ept su"( as arise -rom t(e -raud o- t(e insured. '(e )urden o- t(e insured6 t(ere-ore6 is to pro2e mere y t(at t(e goods (e transported (a2e )een ost6 destroyed or deteriorated. '(erea-ter6 t(e )urden is s(i-ted to t(e insurer to pro2e t(at t(e oss +as due to e5"epted peri s. 'o impose on t(e insured t(e )urden o- pro2ing t(e pre"ise "ause o- t(e oss or damage +ou d )e in"onsistent +it( t(e )road prote"ti2e purpose o- Ma ris*sM insuran"e. In t(e present "ase6 t(ere )eing no s(o+ing t(at t(e oss +as "aused )y any o- t(e e5"epted peri s6 t(e insurer is ia) e under t(e po i"y Bi i#ino contends that +hao does not have ins!rab e interest, bein) on ( a consi)nee of the )oods$ Anent t(e issue o- insura) e interest6 SC up(e d t(e ru ing o- t(e CA t(at C(ao6 as "onsignee o- t(e goods in transit under an in2oi"e "ontaining t(e terms under MC ? @ >ani a6M (as insura) e interest in said goods. Se"tion 19 o- t(e Insuran"e Code de-ines insura) e interest in property as e2ery interest in property6 +(et(er rea or persona 6 or any re ation t(ereto6 or ia)i ity in respe"t t(ereo-6 o- su"( nature t(at a "ontemp ated peri mig(t dire"t y damni-y t(e insured. In prin"ip e6 anyone (as an insura) e interest in property +(o deri2es a )ene-it -rom its e5isten"e or +ou d su--er oss -rom its destru"tion +(et(er (e (as or (as not any tit e in6 or ien upon or possession o- t(e property. Insura) e interest in property may "onsist in (a& an e5isting interest; ()& an in"(oate interest -ounded on an e5isting interest; or ("& an e5pe"tan"y6 "oup ed +it( an e5isting interest in t(at out o- +(i"( t(e e5pe"tan"y arises. C(ao6 as 2endeeK"onsignee o- t(e goods in transit (as su"( e5isting interest t(erein as may )e t(e su)Ie"t o- a 2a id "ontra"t o- insuran"e. 7is interest o2er t(e goods is )ased on t(e per-e"ted "ontra"t osa e. '(e per-e"ted "ontra"t o- sa e )et+een (im and t(e s(ipper o- t(e goods operates to 2est in (im an eGuita) e tit e e2en )e-ore de i2ery or )e-ore (e per-ormed t(e "onditions o- t(e sa e. '(e "ontra"t os(ipment6 +(et(er under @.B.3.6 C.I.@.6 or C. ? @. as in t(is "ase6 is immateria in t(e determination o- +(et(er t(e 2endee (as an insura) e interest or not in t(e goods in transit. '(e per-e"ted "ontra"t o- sa e e2en +it(out de i2ery 2ests in t(e 2endee an eGuita) e tit e6 an e5isting interest o2er t(e goods su--i"ient to )e t(e su)Ie"t o- insuran"e

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Section 115 A "arrier or depository o- any *ind (as an insura) e interest in a t(ing (e d )y (im as su"(6 to t(e e5tent o- (is ia)i ity )ut not to e5"eed t(e 2a ue t(ereo-.

What i the "ea on )o" thi !"o*i ion' '(e oss o- t(e t(ing may ma*e t(e "arrier or depositary ia) e to t(e o+ner o- t(e goods6 to t(e e5tent ot(e 2a ue o- t(e goods6 and t(e a+ t(ere-ore a o+s su"( a "arrier or depositary to insure (is possi) e ia)i ity t(ere-or. P"o$#e25 M7P Mar( Jane, a common carrier, ins!red @eter @arkerHs )oods, va !ed at 1M with '$M'? 2ns!rance +om#an( for 0M$ *he vesse was hit b( i)htnin), ca!)ht fire, and sank$ Mar( Jane is now c aimin) 0M from '$M'? beca!se the #o ic( stated that the oss d!e to i)htnin) is com#ensab e$ '$M'? denies iabi it( on the )ro!nd that8 (1) Mar( Jane is not the owner of the )oods and therefore has no ins!rab e interest9 and (0) Mar( Jane cannot c aim more than the va !e of the )oods ost$ Fecide$ A""ording to Se". 1F6 a "arrier (as insura) e interest in a t(ing (e d )y (im as su"(. 7en"e6 >ary Eane (as insura) e interest o2er t(e goods o- Peter Par*er. 7o+e2er6 t(e same pro2ision a so states t(at su"( insura) e interest is on y up to t(e e5tent o- (is ia)i ity and not to e5"eed t(e 2a ue o- t(e t(ing. Sin"e t(e 2a ue o- t(e goods is on y 1>6 t(en >ary Eane "an on y "o e"t 1>. Ca e9 7/18 Lo!eF *5 De# Ro a"io 00 PHIL 9, Fact 9 3enita !e Rosario is t(e o+ner o- a )onded +are(ouse in >ani a +(ere "opra and ot(er mer"(andise are deposited. Among t(ose +(o (ad "opra deposited in t(e +are(ouse +as @roi an <ope46 t(e o+ner o- 1# +are(ouse re"eipts +it( a de" ared 2a ue o- P1%/6..%.#% in (is name. !e Rosario se"ured insuran"e on t(e +are(ouse and its "ontents +it( F di--erent insuran"e "ompanies in t(e amount o- P#%#60%%. A po i"ies +ere in t(e name o- !e Rosario6 e5"ept -or one (+it( Nat= Insuran"e Co.& -or #%'6 in -a2or oCompania Copra de 'aya)as. '(e +are(ouse and its "ontents +ere destroyed )y -ire. W(en 3ayne6 a -ire oss adIuster6 -ai ed to e--e"t a sett ement )et+een t(e Insuran"e "ompanies and !e Rosario6 t(e atter aut(ori4ed Atty. @is(er to negotiate +it( t(e Companies. An agreement +as rea"(ed to su)mit t(e matter to ar)itration. '(e " aims )y di--erent peop e +(o (ad stored "opra in t(e +are(ouse +ere sett ed +it( t(e e5"eption o- @rio an <ope4. A "ase +as -i ed in C@I )y <ope4. '(e "ourt a+arded (im t(e sum o- P006#.C.C1 +it( ega interest. I &e9 WBN !e Rosario a"ted as t(e agent o- <ope4 in ta*ing out t(e insuran"e on t(e "ontents o- t(e +are(ouse or +(et(er s(e a"ted as t(e reinsurer o- t(e "opra. He#%9 She acte% a the a3ent o) Lo!eF5 '(e agen"y "an )e dedu"ed -rom t(e +are(ouse re"eipts6 t(e insuran"e po i"ies and t(e "ir"umstan"es surrounding t(e transa"tion. Under any aspe"t6 !e Rosario is ia) e. '(e a+ is t(at a po i"y e--e"ted )y a )ai ee and "o2ering )y its terms in (is o+n property and property (e d in trust6 inures6 in t(e e2ent o- oss6 eGua y and proportionate y to t(e )ene-it o- a o+ners o- t(e property insured. E2en i- one se"ured insuran"e "o2ering (is o+n goods and goods stored +it( (im6 and e2en i- t(e o+ner o- t(e stored goods did not reGuest or *no+ t(e insuran"e6 and did not rati-y it )e-ore t(e payment o- t(e oss6 it (as )een (e d )y a reputa) e "ourt t(at t(e +are(ouseman is ia) e to t(e o+ner o- su"( stored goods -or (is s(are. In a "ase o- "ontri)uting po i"ies6 adIustments o- oss made )y an e5pert or )y a )oard o- ar)itrators may )e su)mitted to t(e "ourt NB' as e2iden"e o- t(e -a"ts stated t(erein6 or as o) igatory6 )ut -or t(e purpose oassisting t(e "ourt in "a "u ating t(e amount o- ia)i ity.

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Section 165 A mere "ontingent or e5pe"tant interest in anyt(ing6 not -ounded on an a"tua rig(t to t(e t(ing6 nor upon any 2a id "ontra"t -or it6 is not insura) e. What %oe thi ection 2ean' >ere (ope or e5pe"tation o- )ene-it +(i"( may )e -rustrated )y t(e (appening o- some e2ent un"oup ed +it( any present ega rig(t +i not support a "ontra"t o- insuran"e. E@a2!#e 9 A son "annot insure t(e property o- (is -at(er +(i"( (e e5pe"ts to in(erit -rom t(e atter6 or a (us)and insuring t(e parap(erna property o- (is +i-e; t(e reason )eing6 t(eir interest is mere y an e5pe"tan"y oin(eriting6 and t(e rig(ts to su""ession are transmitted on y -rom t(e moment o- t(e deat( o- t(e de"edent. Section 175 '(e measure o- an insura) e interest in t(e property is t(e e5tent to +(i"( t(e insured mig(t )e damni-ied )y oss or inIury t(ereo-. P"o$#e2 5 ' ins!red his #ro#ert( va !ed at @1GG,GGG for @10G,GGG$ ' s!ffered a tota oss$ =ow m!ch is he entit ed to recover> A is entit ed to re"o2er on y t(e 2a ue o- (is oss +(i"( is 1%%' and not 1C%' )e"ause it is against pu) i" po i"y to pro-it -rom a oss. -hat if the one who ca!sed the dama)e, B #aid ' @AG,GGG> -hat is the iabi it( of the 2ns!rance +om#an(> '(e insuran"e " aim is redu"ed in t(e same amount o- 0%'. Anyt(ing t(at redu"es or diminis(es t(e oss6 redu"es and diminis(ed t(e amount +(i"( t(e insurer is )ound to pay. 7en"e t(e insurer is ia)i e -or C%'. Nnder a b!i din) contract, ' constr!cted a ho!se in '(a a ' aban) for 4M for U who made an advance #a(ment of 1M, the ba ance to be #aid !#on de iver of the ho!se on '!)$ 13, 1993$ ' finished the ho!se on J! ( 13, 1993 so he ins!red the ho!se a)ainst fire for 4M$ Before de iver( of the ho!se in '!)!st, the ho!se b!rned down$ -hat is the e&tent of the ins!rab e interest of '> It is sti #>6 not+it(standing t(e -a"t t(at (e (as re"ei2ed -rom V 1> as ad2an"e payment. '(e reason +(y (e is entit ed to t(e +(o e #> is6 (e (as to rep a"e t(e (ouse destroyed +it( anot(er (ouse +ort( #> as per t(e "ontra"t6 not one 2a ued at on y 9>. In ot(er +ords6 #> +as t(e e5tent to +(i"( A +as damni-ied )y t(e oss o- t(e (ouse.

Ca e 9 7/68 San ?i3&e# E"e(e"4 *5 La( Union Roc; In &"ance Co2!an4 (repeat "ase O1C& 0- PHIL 670 Fact 9 Bn Ean. 1C6 1.106 !unn mortgaged a par"e o- and to S>3 to se"ure a de)t o- 1%'. >ortgage "ontra"t stated t(at !unn +as to (a2e t(e property insured at (is o+n e5pense6 aut(ori4ing S>3 to "(oose t(e insurers and to re"ei2e t(e pro"eeds t(ereo- and retain so mu"( o- t(e pro"eeds as +ou d "o2er t(e mortgage de)t. !unn i*e+ise aut(ori4ed S>3 to ta*e out t(e insuran"e po i"y -or (im. 3rias6 S>3=s genera manager6 approa"(ed <a+ Union -or insuran"e to t(e e5tent o- 1F' upon t(e property. In t(e app i"ation6 3rias stated t(at S>3=s interest in t(e property +as mere y t(at o- a mortgagee. <a+ Union6 not +anting to issue a po i"y -or t(e entire amount6 issued one -or P/6F%% and pro"ured anot(er po i"y o- eGua amount -rom @i ipinas Cia de Seguros. 3ot( po i"ies +ere issued in t(e name oS>3 on y and "ontained no re-eren"e to any ot(er interests in t(e propty. 3ot( po i"ies reGuired assignments to )e appro2ed and noted on t(e po i"y. Premiums +ere paid )y S>3 and "(arged to !unn. A year ater6 t(e po i"ies +ere rene+ed. In 1.1/6 !unn so d t(e property to 7arding6 )ut no assignment o- t(e po i"ies +as made to t(e atter.

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Property +as destroyed )y -ire. S>3 -i ed an a"tion in "ourt to re"o2er on t(e po i"ies. 7arding +as made a de-endant )e"ause )y 2irtue o- t(e sa e6 (e )e"ame t(e o+ner o- t(e property6 a t(oug( t(e po i"ies +ere issued in S>3=s name. S>3 soug(t to re"o2er t(e pro"eeds to t(e e5tent o- its mortgage "redit +it( t(e )a an"e to go to 7arding. Insuran"e Companies "ontended t(at t(ey +ere not ia) e to 7arding )e"ause t(eir ia)i ity under t(e po i"ies +as imited to t(e insura) e interests o- S>3 on y. S>3 e2entua y rea"(ed a sett ement +it( t(e insuran"e "ompanies and +as paid t(e )a an"e o- it=s mortgage "redit. 7arding +as e-t to -end -or (imse -. 'ria "ourt ru ed against 7arding. 7en"e t(e appea . &e9 WBN t(e insuran"e "ompanies are ia) e to 7arding -or t(e )a an"e o- t(e pro"eeds o- t(e C po i"ies.

He#%9 NOPE5 Under t(e Insuran"e A"t6 t(e measure o- insura) e interest in t(e property is t(e e5tent to +(i"( t(e insured mig(t )e damini-ied )y t(e oss or inIury t(ereo-. A so it is pro2ided in t(e IA t(at t(e insuran"e s(a )e app ied e5" usi2e y to t(e proper interest o- t(e person in +(ose name it is made. Undou)ted y6 S>3 as t(e mortgagee o- t(e property6 (ad an insura) e interest t(erein; )ut it "ou d NB'6 an any e2ent6 re"o2er upon t(e t+o po i"ies an amount in e5"ess o- its mortgage "redit. 3y 2irtue o- t(e Insuran"e A"t6 neit(er !unn nor 7arding "ou d (a2e re"o2ered -rom t(e t+o po i"ies. Wit( respe"t to 7arding6 +(en (e a"Guired t(e property6 no "(ange or assignment o- t(e po i"ies (ad )een underta*en. '(e po i"ies mig(t (a2e )een +orded di--erent y so as to prote"t t(e o+ner6 )ut t(is +as not done. I- t(e +ording (ad )eenJ ,@a(ab e to SMB, mort)a)ee, as its interests ma( a##ear, remainder to whomsoever, d!rin) the contin!ance of the risk, ma( become owner of the interest ins!red4 6 it +ou d (a2e pro2ed an intention to insure t(e entire interest in t(e property6 NB' mere y S>3=s and +ou d (a2e s(o+n to +(om t(e money6 in "ase o- oss6 s(ou d )e paid. Un-ortunate y6 t(is +as not +(at +as stated in t(e po i"ies. I- during t(e negotiation -or t(e po i"ies6 t(e parties (ad agreed t(at e2en t(e o+ner=s interest +ou d )e "o2ered )y t(e po i"ies6 and t(e po i"ies (ad inad2ertent y )een +ritten in t(e -orm in +(i"( t(ey +ere e2entua y issued6 t(e o+er "ourt +ou d (a2e )een a) e to order t(at t(e "ontra"t )e re-ormed to gi2e e--e"t to t(em in t(e sense t(at t(e parties intended to )e )ound. 7o+e2er6 t(ere is no " ear and satis-a"tory proot(at t(e po i"ies -ai ed to re- e"t t(e rea agreement )et+een t(e parties t(at +ou d Iusti-y t(e re-ormation ot(ese t+o "ontra"ts. 7/78 An3 Ma >& *5 Phoeni@ A 1 CARA 7-0 &"ance

Fact 9 Ang Ua Au (ad a pie"e o- property in (is possession. 7e insured it +it( P(oeni5. '(e property +as ost6 so Ang Ua Au soug(t to " aim t(e pro"eeds. P(oeni5 denied ia)i ity on t(e ground t(at Ang +as not t(e o+ner )ut a mere possessor and as su"(6 (ad no insura) e interest o2er t(e property. I &e9 WBN a mere possessor (as insura) e interest o2er t(e property.

He#%9 >e 5 A person (a2ing a mere rig(t or possession o- property may insure it to its -u 2a ue and in (is o+n name6 e2en +(en (e is not responsi) e -or its sa-e*eeping. '(e reason is t(at e2en i- a person is NB' interested in t(e sa-ety and preser2ation o- materia in (is possession )e"ause t(ey )e ong to 9 rd parties6 said person sti (as insura) e interest6 )e"ause (e stands eit(er to )ene-it -rom t(eir "ontinued e5isten"e or to )e preIudi"ed )y t(eir destru"tion. 7/,8 Cha *5 Cha 677 SCRA 69- 719978 Fact 9

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Spouses Ni o C(a and Ste a Uy:C(a6 as essees6 entered into a ease "ontra"t +it( CUS !e2e opment Corporation (CUS&6 as essor. Bne o- t(e stipu ations o- t(e one (1& year ease "ontra"t statesJ 51A$ $ $ $ *he EISSII sha not ins!re a)ainst fire the chatte s, merchandise, te&ti es, )oods and effects # aced at an( sta or store or s#ace in the eased #remises witho!t first obtainin) the written consent and a##rova of the EISS.R$ 2f the EISSII obtain(s) the ins!rance thereof witho!t the consent of the EISS.R then the #o ic( is deemed assi)ned and transferred to the EISS.R for its own benefit9 $ $ $5 Not+it(standing t(e a)o2e stipu ation6 t(e C(a spouses insured against oss )y -ire t(eir mer"(andise inside t(e eased premises -or @i2e 7undred '(ousand (PF%%6%%%.%%& +it( t(e United Insuran"e +it(out t(e +ritten "onsent CUS. Bn t(e day t(at t(e ease "ontra"t +as to e5pire6 -ire )ro*e out inside t(e eased premises. W(en CUS earned o- t(e insuran"e ear ier pro"ured )y t(e C(a spouses (+it(out its "onsent&6 it +rote t(e United a demand etter as*ing t(at t(e pro"eeds o- t(e insuran"e "ontra"t ()et+een t(e C(a spouses and United& )e paid dire"t y to CUS6 )ased on its ease "ontra"t +it( t(e C(a spouses. United re-used to pay CUS6 a eging t(at t(e atter (ad no insura) e interest. 7en"e6 t(e atter -i ed a "omp aint against t(e C(a spouses and United. &e9 WBN CUS "an " aim t(e pro"eeds o- t(e -ire insuran"e.

He#%9 NO5 CMS ha no in &"a$#e inte"e t5 Se". 10 o- t(e Insuran"e Code pro2idesJ 5Sec$ 1A$ /o contract or #o ic( of ins!rance on #ro#ert( sha be enforceab e e&ce#t for the benefit of some #erson havin) an ins!rab e interest in the #ro#ert( ins!red$5 A non: i-e insuran"e po i"y su"( as t(e -ire insuran"e po i"y ta*en )y petitioner:spouses o2er t(eir mer"(andise is primari y a "ontra"t o- indemnity. Insura) e interest in t(e property insured must e5ist at t(e time t(e insuran"e ta*es e--e"t and at t(e time t(e oss o""urs. '(e )asis o- su"( reGuirement o- insura) e interest in property insured is )ased on sound pu) i" po i"yJ to pre2ent a person -rom ta*ing out an insuran"e po i"y on property upon +(i"( (e (as no insura) e interest and "o e"ting t(e pro"eeds o- said po i"y in "ase o- oss o- t(e property. In t(e present "ase6 it "annot )e denied t(at CUS (as no insura) e interest in t(e goods and mer"(andise inside t(e eased premises under t(e pro2isions o- Se"tion 1/ o- t(e Insuran"e Code +(i"( pro2ideJ 5Section 1,$ *he meas!re of an ins!rab e interest in #ro#ert( is the e&tent to which the ins!red mi)ht be damnified b( oss of in"!r( thereof$5 '(ere-ore6 CUS "annot6 under t(e Insuran"e Code N a spe"ia a+ N )e 2a id y a )ene-i"iary o- t(e -ire insuran"e po i"y ta*en )y t(e petitioner:spouses o2er t(eir mer"(andise. '(is insura) e interest o2er said mer"(andise remains +it( t(e insured6 t(e C(a spouses. '(e automati" assignment o- t(e po i"y to CUS under t(e pro2ision o- t(e ease "ontra"t pre2ious y Guoted is 2oid -or )eing "ontrary to a+ andKor pu) i" po i"y. '(e pro"eeds o- t(e -ire insuran"e po i"y t(us rig(t-u y )e ong to t(e spouses Ni o C(a and Ste a Uy: C(a ((erein "o:petitioners&. '(e insurer (United& "annot )e "ompe ed to pay t(e pro"eeds o- t(e -ire insuran"e po i"y to a person (CUS& +(o (as no insura) e interest in t(e property insured.

Section 1,5 No "ontra"t or po i"y o- insuran"e on property s(a )e en-or"ea) e e5"ept -or t(e )ene-it o- some person (a2ing an insura) e interest in t(e property insured. Si2!#i)ie%C the !"o*i ion tate that' NB insura) e interest T NB "ontra"t o- Insuran"e. Ca e 9 7/98 Sha"&)) an% Co5 *5 Ea#oi e Fi"e In &"ance Co5 60 SCRA 61, Fact 9 S(aru-- and Es*ena4i +ere doing )usiness under t(e -irm name S(aru-- and Co.

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'(ey insured t(eir mer"(andise +it( 3a oise. <ater on6 S(aru-- and Es*ena4i entered into a "ontra"t opartners(ip and t(ere)y "(anged t(e -irm name to S(aru-- and Es*ena4i. '(e mer"(andise insured +as su)seGuent y destroyed )y -ire. S(aru-- and Es*ena4i -i ed t(eir " aim against t(e insuran"e "ompany. 3a oise re-used to pay on t(e ground t(at t(e po i"y +as issued in t(e name o- S(aru-- and Co. and not S(aru-- and Es*ena4i. &e9 WBN t(e partners(ip "an " aim t(e pro"eeds o- t(e po i"y.

He#%9 >UP5 '(e su)seGuent partners(ip did not a ter t(e "omposition o- t(e -irm. '(e peop e in2o 2ed are a"tua y t(e same. @urt(ermore6 su"( "(ange o- -irm name +as not made to de-raud t(e insuran"e "ompany or some ot(er person. 70-8 Ga"cia *5 Hon3Mon3 Fi"e an% ?a"ine In &"ance Co5 01 PHIL 166 Fact 9 8ar"ia (ad (is mer"(andise insured )y 7ong*ong @ire and >arine Insuran"e Co. '(e insuran"e "ompany (o+e2er made a mista*e and issued a po i"y "o2ering t(e )ui ding +(ere t(e mer"(andise +as stored. ('(e )ui ding +as not o+ned )y 8ar"ia& '(e po i"y +as +ritten in Eng is(6 o- +(i"( 8ar"ia +as ignorant6 so (e "ou d not (a2e noti"ed t(e error ot(e insuran"e "ompany. Said po i"y +as ater on assigned )y 8ar"ia to PN3 to se"ure a oan. PN3 a"*no+ edged re"eipt o- said po i"y6 re-erring to it as a po i"y "o2ering t(e mer"(andise. '(e insuran"e "ompany made t(e ne"essary endorsements to PN3. '(e )ui ding +(i"( (oused t(e mer"(andise +as ater ra4ed )y -ire. '(e insuran"e "ompany re-used to pay due to t(e -a"t t(at t(e po i"y indi"ates insuran"e on t(e )ui ding and not on t(e mer"(andise. I &e9 WBN 8ar"ia "an "o e"t.

He#%9 >ES5 '(e de-ense o- t(e insurer is pure y te"(ni"a . '(e mista*e +as o)2ious y on t(e part o- t(e insurer +(en it issued a +rong po i"y. It "annot deny su"( a egation due to t(e -a"t t(at it e2en "on-irmed +it( PN3 t(e nature o- said po i"y +(en it +as endorsed. 8ar"ia "ou d not (a2e noti"ed t(e mista*e due to (is ignoran"e o- t(e Eng is( anguage.

Section 195 An interest in property insured must e5ist +(en t(e insuran"e ta*es e--e"t6 and +(en t(e oss o""urs6 )ut need not e5ist in t(e meantime; and interest in t(e i-e or (ea t( o- a person insured must e5ist +(en t(e insuran"e ta*es e--e"t6 )ut need not e5ist t(erea-ter or +(en t(e oss o""urs. When 2& t in &"a$#e inte"e t e@i t' In "ase o- #i)e in &"ance at t(e time t(e insuran"e ta*es e--e"t. In "ase o- !"o!e"t4 in &"ance6 at t(e time t(e insuran"e ta*es e--e"t AN! at t(e time o- t(e oss6 )ut it need not e5ist in t(e meantime. P"o$#e25 Beatri& ins!red her ho!se for 1*$ 't that time, she was the owner of the ho!se$ F!rin) the effectivit( of the #o ic(, she so d the ho!se to Bi for 0*, b!t did not transfer the #o ic($ Beca!se of the effects of Sec$ 0G, the ins!rance was s!s#ended$ ' week ater, Beatri& rea i6ed how m!ch she missed the ho!se and bo!)ht it from Bi for 3*$ *he ne&t da(, the ho!se b!rned down$ 2s the 2ns!rer iab e notwithstandin) the transfer of interest from Beatri& to Bi d!rin) the effectivit( of the #o ic(> Aes. 3eatri5 (ad insura) e interest on t(e (ouse as s(e +as t(e o+ner at t(e time t(e insuran"e too* e--e"t. S(e a so (ad insura) e interest on t(e (ouse at t(e time o- t(e oss sin"e s(e (ad a ready rea"Guired it -rom 3i . '(e a+ says 3eatri5 need not (a2e insura) e interest in t(e meantime6 or during t(e inter2ening period )et+een t(e time o- e--e"ti2ity o- t(e insuran"e6 and t(e time o- t(e oss. '(ere-ore6 not+it(standing

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t(e o+ners(ip o- 3i during t(e inter2ening period6 as 3eatri5 (ad insura) e interest at t(e t+o points in time reGuired )y a+6 t(en t(e insurer is ia) e. Ca e 9 7018 Tai Ton3 Ch&a Che H Co5 *5 In &"ance Co22i 11, SCRA /66 ion

Fact 9 Pa omo o)tained a oan -rom 'aitong -or 1%%'. 'o se"ure t(is6 (e mortgaged a par"e o- and +it( a )ui ding. 'aitong insured t(e mortgaged property +it( 'ra2e ers >u ti:Indemnity Corp -or 1%%'. '(e insured property +as ra4ed )y -ire. 'aitong " aimed t(e pro"eeds -rom t(e insuran"e "ompany. 'ra2e ers re-used to pay6 " aiming t(at 'aitong (ad no more insura) e interest in t(e property sin"e Pa omo (ad a eged y paid t(e mortgaged de)t a ready. I &e9 WBN 'aitong "an "o e"t t(e pro"eeds.

He#%9 >e 5 '(e a egation o- t(e insuran"e "ompany t(at t(e de)t (ad a ready )een paid +as NB' pro2ed. 'aitong on t(e ot(er (and presented e2iden"e6 name y t(e "ontra"t o- mortgage +(i"( does not appear to (a2e )een "an"e ed or re eased.

Section 6-5 E5"ept in t(e "ases spe"i-ied in t(e ne5t -our se"tions6 and in t(e "ases o- i-e6 a""ident and (ea t( insuran"e6 a "(ange o- interest in any part o- a t(ing insured6 una""ompanied )y a "orresponding "(ange o- interest in t(e insuran"e6 suspends t(e insuran"e to an eGui2a ent e5tent6 unti t(e interests in t(e t(ing and t(e interest in t(e insuran"e are 2ested in t(e same person. What i the 3ene"a# "&#e e2$o%ie% in thi ection' '(e 8enera Ru e is t(at t(e mere trans-er o- t(e t(ing insured does not trans-er t(e po i"y )ut suspends it unti t(e same person )e"omes t(e o+ner o- )ot( t(e po i"y and t(e t(ing insured. '(e term , chan3e o) inte"e tB in t(is se"tion means a)so ute trans-er o- t(e property insured su"( as t(e "on2eyan"e o- t(e property insured )y means o- an a)so ute deed o- sa e. What a"e the e@ce!tion to the 3ene"a# "&#e' '(e e5"eptions6 +(ere a "(ange o- interest does NB' suspend t(e insuran"e areJ 1. <i-e6 (ea t( and a""ident insuran"e (Se". C%& 2. C(ange o- interest in t(e t(ing insured o""urs a)te" t(e inIury +(i"( resu ts in a oss (Se". C1& 9. C(ange o- interest in one or more o- se2era t(ings separate y insured )y one po i"y (Se". CC& #. C(ange o- interest )y +i or su""ession on t(e deat( o- t(e insured (Se". C9& F. 'rans-er o- interest )y one o- se2era partners6 Ioint o+ners or o+ners in "ommon +(o are Ioint y insured6 to t(e ot(er (Se". C#& What i the "ea on )o" thi !"o*i ion & !en%in3 the in &"ance in ca e o) chan3e o) inte"e t' '(e o)Ie"t o- t(e pro2ision is to pro2ide against "(anges +(i"( mig(t supp y a moti2e to destroy t(e property6 or mig(t essen t(e interest o- t(e insurer in prote"ting and guarding it. Ca e9 7068 Each"ach *5 E"iti h A2e"ican In &"ance Co5 17 PHIL 111 Fact 9 3a"(ra"( insured properties o- its genera -urniture s(op +it( 3ritis(. '(e properties +ere su)seGuent y destroyed )y -ire. 3a"(ra"( " aims -rom t(e insuran"e "ompany. '(e " aim +as denied on t(e -- groundsJ o '(e po i"y +as a eged y -or-eited )e"ause t(e insured stored 2arnis(es and paints +it(in t(e premises; o Insured stored gaso ine in t(e )ui ding; and

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3a"(ra"( e5e"uted a "(atte mortgage on t(e properties insured +it(out t(e "onsent o- t(e insured.

&e9 WBN 3a"(ra"( "an " aim t(e pro"eeds o- t(e po i"y.

He#%9 >e 5 '(e po i"y +as NB' -or-eited due to t(e strong paints and 2arnis(es. '(ere +as no e5press pro2ision pertaining to it and t(ese paints and 2arnis(es are in"identa to t(e )usiness o- t(e insured to *eep t(e -urniture in a sa ea) e "ondition. '(e gaso ine stored +it(in t(e premises +as in t(e reser2oir o- t(e "ar and t(us does not 2io ate any pro2ision in t(e po i"y. '(ere is no e5press pro(i)ition against t(e e5e"ution o- a "(atte mortgage on t(e property insured. 70/8 San ?i3&e# E"e(e"4 *5 La( Union Roc; In &"ance Co2!an4 (repeat "ase O1C& 0- PHIL 670 Fact 9 Bn Ean. 1C6 1.106 !unn mortgaged a par"e o- and to S>3 to se"ure a de)t o- 1%'. >ortgage "ontra"t stated t(at !unn +as to (a2e t(e property insured at (is o+n e5pense6 aut(ori4ing S>3 to "(oose t(e insurers and to re"ei2e t(e pro"eeds t(ereo- and retain so mu"( o- t(e pro"eeds as +ou d "o2er t(e mortgage de)t. !unn i*e+ise aut(ori4ed S>3 to ta*e out t(e insuran"e po i"y -or (im. 3rias6 S>3=s genera manager6 approa"(ed <a+ Union -or insuran"e to t(e e5tent o- 1F' upon t(e property. In t(e app i"ation6 3rias stated t(at S>3=s interest in t(e property +as mere y t(at o- a mortgagee. <a+ Union6 not +anting to issue a po i"y -or t(e entire amount6 issued one -or P/6F%% and pro"ured anot(er po i"y o- eGua amount -rom @i ipinas Cia de Seguros. 3ot( po i"ies +ere issued in t(e name oS>3 on y and "ontained no re-eren"e to any ot(er interests in t(e propty. 3ot( po i"ies reGuired assignments to )e appro2ed and noted on t(e po i"y. Premiums +ere paid )y S>3 and "(arged to !unn. A year ater6 t(e po i"ies +ere rene+ed. In 1.1/6 !unn so d t(e property to 7arding6 )ut no assignment o- t(e po i"ies +as made to t(e atter. Property +as destroyed )y -ire. S>3 -i ed an a"tion in "ourt to re"o2er on t(e po i"ies. 7arding +as made a de-endant )e"ause )y 2irtue o- t(e sa e6 (e )e"ame t(e o+ner o- t(e property6 a t(oug( t(e po i"ies +ere issued in S>3=s name. S>3 soug(t to re"o2er t(e pro"eeds to t(e e5tent o- its mortgage "redit +it( t(e )a an"e to go to 7arding. Insuran"e Companies "ontended t(at t(ey +ere not ia) e to 7arding )e"ause t(eir ia)i ity under t(e po i"ies +as imited to t(e insura) e interests o- S>3 on y. S>3 e2entua y rea"(ed a sett ement +it( t(e insuran"e "ompanies and +as paid t(e )a an"e o- it=s mortgage "redit. 7arding +as e-t to -end -or (imse -. 'ria "ourt ru ed against 7arding. 7en"e t(e appea . I &e9 WBN t(e insuran"e "ompanies are ia) e to 7arding -or t(e )a an"e o- t(e pro"eeds o- t(e C po i"ies.

He#%9 NOPE5 Under t(e Insuran"e A"t6 t(e measure o- insura) e interest in t(e property is t(e e5tent to +(i"( t(e insured mig(t )e damini-ied )y t(e oss or inIury t(ereo-. A so it is pro2ided in t(e IA t(at t(e insuran"e s(a )e app ied e5" usi2e y to t(e proper interest o- t(e person in +(ose name it is made. Undou)ted y6 S>3 as t(e mortgagee o- t(e property6 (ad an insura) e interest t(erein; )ut it "ou d NB'6 an any e2ent6 re"o2er upon t(e t+o po i"ies an amount in e5"ess o- its mortgage "redit. 3y 2irtue o- t(e Insuran"e A"t6 neit(er !unn nor 7arding "ou d (a2e re"o2ered -rom t(e t+o po i"ies. Wit( respe"t to 7arding6 +(en (e a"Guired t(e property6 no "(ange or assignment o- t(e po i"ies (ad )een underta*en. '(e po i"ies mig(t (a2e )een +orded di--erent y so as to prote"t t(e o+ner6 )ut t(is +as not done. I- t(e +ording (ad )eenJ ,@a(ab e to SMB, mort)a)ee, as its interests ma( a##ear, remainder to whomsoever, d!rin) the contin!ance of the risk, ma( become owner of the interest ins!red4 6 it +ou d (a2e pro2ed an intention to insure t(e entire interest in t(e property6 NB' mere y S>3=s and +ou d (a2e s(o+n to +(om t(e money6 in "ase o- oss6 s(ou d )e paid. Un-ortunate y6 t(is +as not +(at +as stated in t(e po i"ies.

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I- during t(e negotiation -or t(e po i"ies6 t(e parties (ad agreed t(at e2en t(e o+ner=s interest +ou d )e "o2ered )y t(e po i"ies6 and t(e po i"ies (ad inad2ertent y )een +ritten in t(e -orm in +(i"( t(ey +ere e2entua y issued6 t(e o+er "ourt +ou d (a2e )een a) e to order t(at t(e "ontra"t )e re-ormed to gi2e e--e"t to t(em in t(e sense t(at t(e parties intended to )e )ound. 7o+e2er6 t(ere is no " ear and satis-a"tory proot(at t(e po i"ies -ai ed to re- e"t t(e rea agreement )et+een t(e parties t(at +ou d Iusti-y t(e re-ormation ot(ese t+o "ontra"ts.

Section 615 A "(ange o- interest in a t(ing insured6 a-ter t(e o""urren"e o- an inIury +(i"( resu ts in a oss6 does not a--e"t t(e rig(t o- t(e insured to indemnity -or t(e oss. P"o$#e29 ' ins!red his ho!se for 1G*$ .n '!)$ 1G, 0GG4, the ho!se was #artia ( dama)ed b( fire$ .n '!)$ 1C, 0GG4, he so d the same ho!se so #artia ( dama)ed to +$ +an ' co ect on the ins!rance after se in) the ho!se> Aes. '(e "(ange o- interest +as made a)te" t(e o""urren"e o- t(e inIury +(i"( resu ted in a partia oss. Upon t(e o""urren"e o- t(e ris* insured against6 t(e ia)i ity o- t(e insurer )e"ame -i5ed and -rom t(at day on+ard6 (e )e"ame duty )ound to indemni-y A -or (is oss.

Section 665 A "(ange in interest in one or more o- se2era distin"t t(ings6 separate y insured )y one po i"y6 does not a2oid t(e insuran"e as to t(e ot(ers. P"o$#e25 ' is the owner of a Bero6a and a +ivic$ =e ins!res the Bero6a for 0GG* and the +ivic for 1CG* !nder a sin) e #o ic( for which he #aid a tota #remi!m of 0G*$ 2f he se s the Bero6a witho!t the ins!rerHs consent, is the ins!rer iab e in case the +ivic is ost> Aes. Sin"e t(e 2e(i" es are separate y insured. Under Se". CC6 t(e sa e o- one distin"t t(ing does NB' a2oid t(e insuran"e as to t(e ot(ers. ' is the owner of a Bero6a and a +ivic$ =e ins!red the Bero6a and the +ivic for 3CG* !nder a sin) e #o ic( for which he #aid a #remi!m of 0G*$ 2n case he se s the Bero6a witho!t the ins!rerHs consent, is the ins!rer iab e in case the +ivic is ost> NB. Sin"e t(e t+o "ars are not separate y 2a ued in t(e po i"y and t(e premium +as meant to "o2er )ot( 2e(i" es. In t(is "ase6 t(e sa e o- one t(ing a--e"ts t(e insuran"e o- t(e ot(ers.

Section 6/5 A "(ange o- interest6 )y +i or su""ession on t(e deat( o- t(e insured6 does not a2oid t(e insuran"e; and (is interest in t(e insuran"e passes to t(e person ta*ing (is interest in t(e t(ing insured. P"o$#e25 ' ins!res his ni#a h!t, his on ( #ro#ert($ =e has no com#! sor( heirs$ =e instit!tes B as his !niversa heir$ *hereafter, ' dies and B inherits the h!t$ 2f the h!t b!rns down can B co ect> Aes. Se". C9 says so.

Section 605 A trans-er o- interest )y one o- se2era partners6 Ioint o+ners6 or o+ners in "ommon6 +(o are Ioint y insured6 to t(e ot(ers6 does not a2oid t(e insuran"e6 e2en t(oug( it (as )een agreed t(at t(e insuran"e s(a "ease upon t(e a ienation o- t(e t(ing insured. What %oe thi ection !"o*i%e' It pro2ides t(at a trans-er o- interest in t(e insured property )y a partner6 Ioint o+ner6 or o+ner in "ommon to t(e ot(ers +(o are Ioint y insured6 +i NB' a2oid t(e insuran"e. '(e ru e is t(e same e2en it(ere is a stipu ation t(at t(e insuran"e +i "ease upon t(e a ienation o- t( t(ing insured. What i the "ea on )o" the "&#e'

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'(e under ying prin"ip e is t(at ea"( partner6 or o+ner or o+ner in "ommon is interested in t(e +(o e property and (a4ard is NB' in"reased )e"ause t(e pur"(asing partner (as a"Guired a greater interest in t(e property )y a trans-er o- (is "o:partner=s "(are. In ot(er +ords6 t(e trans-er does not a--e"t t(e ris* )e"ause NB NEW PAR'A is )roug(t into t(e "ontra"tua re ations(ip +it( t(e insurer. I the"e an e@ce!tion to the "&#e' Aes. I- t(e po i"y "ontains t(e stipu ation t(at ,in case of ANY sa e or transfer or chan)e of tit e of an( #ro#ert( ins!red b( this com#an(, or of an( !ndivided interest therein, s!ch ins!rance wi be void and cease$4 What i the e))ect i) the a#e (a 2a%e to a t"an3e"' A t(e more6 t(e "ontra"t +i )e a2oided )e"ause t(e ris* is a ready a--e"ted sin"e a ne+ party is )roug(t into t(e "ontra"t o- insuran"e. 7o+e2er6 su"( sa e to a stranger ends t(e "ontra"t o- insuran"e on y a to the inte"e t o) the t"an )e"o" and does NB' a--e"t t(e insuran"e o- t(e ot(er partners6 Ioint o+ners or o+ners in "ommon. P"o$#e2 5 ' fire ins!rance #o ic( was iss!ed b( S#iderman 2ns!rance +o$ to @eter, MJ, and =arr(, who are #artners$ =arr( so d his interest to Foc .ck$ 2n case of fire is the ins!rer iab e to Foc .ck> NB6 sin"e !o" B"* is a stranger.(B!rthermore arch-enem( si(a ni s#idermanOhehehe) insurer is ia) e to Peter and >E +(ose insuran"e +as not a--e"ted )y t(e sa e o- 7arry. 2f !sin) the same facts, =arr( se s to @eter$ 2s the ins!rer iab e to @eter> Aes. Peter is a partner. -hat m!st the ins!rer do to avoid the #o ic(> Spiderman Insuran"e Co. must stipu ate in t(e po i"y t(at ,any sa e o- t(e property or any interest t(erein a2oids t(e po i"y.1 '(is is t(e on y +ay t(e insurer "annot )e (e d ia) e. 7o+e2er6 t(e

Section 615 E2ery stipu ation in a po i"y o- insuran"e -or t(e payment o- oss +(et(er t(e person insured (as or t(e payment o- oss +(et(er t(e person insured (as or (as not any interest in t(e property insured6 or t(at t(e po i"y s(a )e re"ei2ed as proo- o- su"( interest6 and e2ery po i"y e5e"uted )y +ay o- gaming or +agering6 is 2oid. Thi 1. C. ection a*oi% t(o t4!e o) ti!&#ation in an in &"ance !o#ic45 What a"e the4' Stipu ation -or t(e payment o- oss WBN t(e person insured (as any interest in t(e su)Ie"t matter ot(e insuran"e (e5"eptionJ i-e insuran"e& Stipu ation t(at t(e po i"y +i )e re"ei2ed as proo- o- insura) e interest

What i the "ea on )o" *oi%in3 &ch ti!&#ation ' As to t(e 1st stipu ation6 +e must remem)er t(at insura) e interest is a reGuisite o- a 2a id "ontra"t oinsuran"e. <a"* o- t(is reGuisite a2oids t(e "ontra"t. As to t(e Cnd stipu ation6 t(e a+ permits t(e insurer to s(o+ a"* o- insura) e interest on t(e part o- t(e insured6 e2en a-ter t(e issuan"e o- a po i"y o- insuran"e to a2oid ia)i ity. (Se". 09&

TITLE IV . CONCEAL?ENT
Section 665 A neg e"t to "ommuni"ate t(at +(i"( a party *no+s and oug(t to "ommuni"ate is "a ed a "on"ea ment. What a"e the )o&" !"i2a"4 conce"n o) !a"tie to an in &"ance cont"act' In ma*ing a "ontra"t so (ig( y a eatory su"( as t(at o- insuran"e6 t(e parties (a2e -our primary "on"erns to +itJ

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'(e "orre"t estimation o- t(e ris* +(i"( ena) es t(e insurer to de"ide +(et(er (e is +i ing to assume it6 and i- so6 at +(at rate or premium; '(e pre"ise de imitation o- t(e ris* +(i"( determines t(e e5tent o- t(e "ontingent duty to pay underta*en )y t(e insurer; Su"( "ontro o- t(e ris* a-ter it is assumed as +i ena) e t(e insurer to guard against t(e in"rease ot(e ris* )e"ause o- "(ange in "onditions; and !etermining +(et(er a oss o""urred6 and i- so6 t(e amount o- su"( oss.

What i concea#2ent' Con"ea ment is a neg e"t to "ommuni"ate t(at +(i"( a party *no+s and oug(t to "ommuni"ate. What a"e the "e=&i ite o) concea#2ent' '(ere "an )e no "on"ea ment un essJ 1& A party *no+s t(e -a"t +(i"( (e neg e"ts to "ommuni"ate or dis" ose to t(e ot(er; C& Su"( party "on"ea ing duty )ound to dis" ose su"( -a"t to t(e ot(er 9& Su"( party "on"ea ing ma*es no +arranty o- t(e -a"t "on"ea ed; and #& '(e ot(er party (as no means o- as"ertaining t(e -a"t "on"ea ed

Section 675 A "on"ea ment +(et(er intentiona or unintentiona entit es t(e inIured party to res"ind a "ontra"t o- insuran"e. What i the e))ect o) concea#2ent' As a ru e6 -ai ure on t(e part o- t(e insured to dis" ose "onditions a--e"ting t(e ris* o- +(i"( (e is a+are6 ma*es t(e "ontra"t 2oida) e at t(e insured=s option. '(e reason is t(at insuran"e po i"ies are traditiona y "ontra"ts !berrime fidae6 t(at is6 "ontra"ts o- t(e outmost good -ait(. '(is do"trine is essentia on a""ount ot(e -a"t t(at t(e -u "ir"umstan"es o- t(e su)Ie"t:matter o- insuran"e are6 as a ru e6 *no+n to t(e insured on y6 and t(e insurer6 in de"iding +(et(er or not to a""ept a ris*6 must re y primari y upon t(e in-ormation supp ied to (im )y t(e appe ant. In o"%e" to "e cin% a cont"act on the 3"o&n% o) concea#2entC 2& t the in &"e" !"o*e )"a&%' NB. Under Se". C/6 t(e insurer need not pro2e -raud in order to res"ind a "ontra"t on t(e ground o"on"ea ment. '(e duty o- "ommuni"ation is independent o- t(e intention and is 2io ated )y t(e -a"t o"on"ea ment6 e2en +(en t(ere is no intention to de"ei2e. Se". C/ pro2ides t(at t(e e--e"t o- "on"ea ment is t(e same regard ess o- +(et(er t(e "on"ea ment is intentiona or unintentiona . Wh4 %oe the #a( 2a;e no %i tinction $et(een inte"nationa# an% &nintentiona# concea#2ent' 3e"ause you (a2e to pro2e -raud. And i- you (a2e to pro2e -raud6 you (a2e to pro2e intention to de"ei2e. And it is so (ard to pro2e intention to de"ei2e )e"ause +e are not mind:readers. What i the "ea on $ehin% Sec5 67' '(e reason )e(ind t(e Se". is t(at in "ases o- "on"ea ment6 t(e insurer is mis ed or de"ei2ed into a""epting t(e ris* 6 or a""epting it at t(e rate o- premium agreed upon. '(e insurer6 re ying upon t(e )e iet(at t(e insured +i dis" ose e2ery materia -a"t +it(in (is a"tua or presumed *no+ edge6 is mis ed into a )e ie- t(at t(e "ir"umstan"e +it((e d does NB' e5ist6 and (e is t(ere)y indu"ed to estimate t(e ris* upon a -a se )asis. What i the c"ite"ion then i) (e (e"e to a!!#4 Sec5 67' We must as* ourse 2es t(e GuestionJ Was t(e insurer mis ed or de"ei2ing into entering a "ontra"t o) igation or in -i5ing t(e premium o- insuran"e )y t(e +it((o ding o- materia in-ormation or -a"ts +it(in t(e insured=s *no+ edge or presumed *no+ edgeH '(e app i"ation o- Se" C/6 ne"essari y depends on t(e ans+er to t(is Guestion. P"o$#e2 5 2n his a## ication for ife ins!rance, ' did not revea the fact that he was s!fferin) from a certain ai ment$ 2s there concea ment if the ai ment was not materia to the contract> W(et(er or not A +as a+are o- t(e ai ment6 t(ere is no "on"ea ment i- t(e ai ment is not materia to t(e "ontra"t.

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INSURANCE REVIEWER Atty. Quimson Same facts as above b!t the ai ment is materia to the contract$ 2s there concea ment>

page F9

AES. '(ere is "on"ea ment. 7o+e2er6 +e "an distinguis(. I- A6 +as a+are o- t(e ai ment6 )ut (onest y )e ie2ed t(at it +as not materia 6 t(e "on"ea ment is not -raudu ent or intentiona . 3ut i- A +as a+are o- t(e materia ity o- t(e ai ment6 t(ere is -raudu ent "on"ea ment. Ne2ert(e ess6 t(e e--e"t is t(e same. It entit es t(e insurer to res"ind t(e "ontra"t. Ca e 9 7008 A"3ente *5 We t Coa t Li)e In &"ance Co5 11 PHIL 761 Fact 9 A Ioint i-e insuran"e po i"y +as issued to 3ernardo Argente and (is +i-e Vi"enta upon payment opremium6 )y West Coast. Bn No2. 106 1.CF6 during t(e e--e"ti2ity o- t(e po i"y6 Vi"enta died o- "ere)ra apop e5y. '(erea-ter6 3ernardo " aimed payment )ut +as re-used. It is admitted t(at in t(e >edi"a E5aminer=s report6 Vi"enta6 in response to t(e Guestion as*ed )y t(e medi"a e5aminer6 (er rep ies +ere as -o o+sJ o ,7o+ -reGuent y do you use )eer6 +ine6 spirits and ot(er into5i"antsH1 s(e ans+ered ,)eer on y in sma Guantities1. o ,W(at p(ysi"ian (a2e you "onsu ted or )een treated )y +it(in t(e ast F years and -or +(at i ness or ai mentH1 s(e ans+ered ,none1 It is (o+e2er6 not disputed t(at in 1.C#6 Vi"enta +as ta*en to a (ospita -or +(at +as -irst diagnosed as a "o(o ism and ater "(anged to mani":depressi2e psy"(osis and t(en again "(anged to ps"y(onuerosis. I &e9 WBN on t(e )ais o- t(e misrepresentations o- Vi"enta6 3ernardo is )arred -rom re"o2ery.

He#%9 >ES5 '(e "ourt -ound t(at t(e representations made )y Vi"enta in (is app i"ation -or i-e insuran"e +ere -a se +it( respe"t to (er state o- (ea t( and t(at s(e *ne+ and +as a+are t(at t(e representations so made )y (er +ere -a se. In an a"tion on a i-e insuran"e po i"y +(ere t(e e2iden"e "on" usi2e y s(o+s t(at t(e ans+ers to Guestions "on"erning diseases +ere untrue6 t(e trut( or -a sity o- t(e ans+er )e"omes t(e determining -a"tor. I- t(e po i"y +as pro"ured )y -raudu ent misrepresentations6 t(e "ontra"t o- insuran"e apparent y set -ort( t(erein +as ne2er ega y e5istent. It "an )e -air y assumed t(at (ad t(e true -a"ts )een dis" osed )y t(e insured6 t(e insuran"e +ou d ne2er (a2e )een granted. 7018 >& Pan3 Chen3 *5 CA 1-1 PHIL 19/Fact 9 Au Pang Eng o)tained a i-e insuran"e po i"y naming (is )rot(er Au Pang C(eng as )ene-i"iary. Eng su)seGuent y died o- medu ary "ar"inoma6 8rade #6 ad2an"ed and esser "ur2ature. C(eng " aims t(e pro"eeds o- t(e po i"y. Insuran"e "o. re-used payment on t(e ground t(at t(e po i"y +as 2oid due to t(e "on"ea ment. I &e9 WBN t(e po i"y is 2oid.

He#%9 >ES5 In t(e app i"ation -or t(e po i"y6 Eng +as as*ed +(et(er (e (ad )een i or (ad "onsu ted a do"tor due to symptoms or i nesses enumerated in t(e Guestionnaire. 7e ans+ered , No16 +(en in -a"t (e +as (ospita i4ed se2en mont(s prior to (is app i"ation -or t(e said po i"y. 7068 Sat&"nino *5 Phi#a2#i)e 7 SCRA /16 Fact 9

C mont(s prior to t(e insuran"e o- t(e po i"y6 Saturnino +as operated on -or "an"er6 in2o 2ing "omp ete remo2a o- t(e rig(t )reast6 in" uding t(e pe"tora mus" es and t(e g ands6 -ound in t(e rig(t armpit.

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Not+it(standing t(e -a"t o- (er operation6 Saturnino did not ma*e a dis" osure t(ereo- in (er app i"ation -or insuran"e. S(e stated t(erein t(at s(e did not (a2e6 nor (ad s(e e2er (ad6 among ot(ers isted in t(e app i"ation6 "an"er or ot(er tumors; t(at s(e (ad not "onsu ted any p(ysi"ian6 undergone any operation or su--ered any inIury +it(in t(e pre"eding F years. S(e a so stated t(at s(e (ad ne2er )een treated -or6 nor did s(e e2er (a2e any i ness or disease pe"u iar to (er se56 parti"u ar y o- t(e )reast6 o2aries6 uterus and menstrua disorders. '(e app i"ation a so re"ited t(at t(e de" arations o- Saturnino "onstituted a -urt(er )asis -or t(e issuan"e o- t(e po i"y. &e9 WBN t(e insured made su"( -a se representation o- materia -a"ts as to a2oid t(e po i"y.

He#%9 >ES5 '(ere "an )e no dispute t(at t(e in-ormation gi2en )y (er in t(e app i"ation -or insuran"e +as -a se6 name y6 t(at s(e ne2er (ad "an"er or tumors or "onsu ted any p(ysi"ian or undergone any operation +it(in t(e pre"eding period o- F years. '(e Guestion to determine isJ Are t(e -a"ts t(en -a se y represented materia H '(e Insuran"e <a+ pro2ides t(at ,materia ity is to )e determined not )y t(e e2ent6 )ut so e y )y t(e pro)a) e and reasona) e in- uen"e o- t(e -a"ts upon t(e party to +(om t(e "ommuni"ation is due6 in -orming (is estimate o- t(e proposed "ontra"t6 or ma*ing (is inGuiries. '(e "ontention o- appe ants is t(at t(e -a"ts su)Ie"t o- t(e representation +ere not materia in 2ie+ ot(e non:medi"a nature o- t(e insuran"e app ied -or6 +(i"( does a+ay +it( t(e usua reGuirement o- medi"a e5amination )e-ore t(e po i"y is issued. '(e "ontention is +it(out merit. I- anyt(ing6 t(e +ai2er o- medi"a e5amination renders e2en more materia t(e in-ormation reGuired o- t(e app i"ant "on"erning pre2ious "ondition o- (ea t( and diseases su--ered6 -or su"( in-ormation ne"essari y "onstitutes an important -a"tor +(i"( t(e insurer ta*es into "onsideration in de"iding +(et(er to issue t(e po i"y or not. Appe ants a so "ontend t(at t(ere +as no -raudu ent "on"ea ment o- t(e trut( inasmu"( as t(e insured (erse - did not *no+6 sin"e (er do"tor ne2er to d (er6 t(at t(e disease -or +(i"( s(e (ad )een operated on +as "an"er. In t(e -irst p a"e6 "on"ea ment o- t(e -a"t o- t(e operation itse - +as -raudu ent6 as t(ere "ou d not (a2e )een any mista*e a)out it6 no matter +(at t(e ai ment. Se"ond y6 in order to a2oid a po i"y6 it is not ne"essary to s(o+ a"tua -raud on t(e part o- t(e insured. In t(is Iurisdi"tion6 "on"ea ment6 +(et(er intentiona or unintentiona entit ed t(e insurer to res"ind t(e "ontra"t o- insuran"e6 "on"ea ment )eing de-ined as ,ne) i)ence to comm!nicate that which a #art( knows and o!)ht to comm!nicate$1 '(e )asis o- t(e ru e 2itiating t(e "ontra"t in "ases o- "on"ea ment is t(at it mis eads or de"ei2es t(e insurer into a""epting t(e ris*6 or a""epting it at a rate o- premium agreed upon. '(e insurer6 re ying upon t(e )e ie- t(at t(e insured +i dis" ose e2ery materia -a"t +it(in (is a"tua or presumed *no+ edge6 is mis ed into a )e ie- t(at t(e "ir"umstan"es +it((e d does not e5ist6 and (e is t(ere)y indu"ed to estimate t(e ris* upon a -a se )asis t(at it does not e5ist. 7078 G"e!a#i)e *5 CA (repeat "ase O1F&

Fact 9 Bn >ar #6 1.F/6 Ngo 7ing -i ed an app i"ation +it( 8repa i-e -or a C%:yr endo+ment po i"y -or PF%' on t(e i-e o- (is 1:yr o d daug(ter 7e en 8o. Upon payment o- t(e insuran"e premium6 a )inding deposit re"eipt +as issued to 7Ing )y t(e )ran"( manager o- t(e insurer in Ce)u. Bn >ay C06 1.F/6 7e en died o- in- uen4a +it( "omp i"ation o- )ron"(o pneumonia. 7ing -i ed a " aim +it( 8repa i-e6 )ut t(e atter denied ia)i ity on t(e ground o- "on"ea ment. I &e9 WBN 8repa i-e is ia) e to 7Ing.

He#%9 NO5 The"e (a concea#2ent5 '(e SC +as o- t(e -irm )e ie- t(at Ngo 7ing (ad de i)erate y "on"ea ed t(e state o- (ea t( and p(ysi"a "ondition o- (is daug(ter 7e en. W(en (e supp ied t(e reGuired essentia data -or t(e insuran"e -orm6 (e +as -u y a+are t(at 7e en +as a mongo oid.

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Su"( a "ongenita de-e"t "ou d not )e ens"on"ed or disguised. Nonet(e ess6 Ngo 7ing6 in apparent gad -ait(6 +it((e d su"( -a"t +(i"( is materia to t(e ris* to )e assumed )y t(e insuran"e "ompany. 7ad (e di2u ged said signi-i"ant -a"t in t(e insuran"e -orm6 8repa i-e +ou d (a2e 2eri-ied t(e same and +ou d (a2e (ad no o)2ious "(oi"e )ut to disappro2e t(e app i"ation outrig(t. Con"ea ment entit es t(e insurer to reso 2e t(e "ontra"t o- insuran"e. 70,8 Hen on *5 Phi#a2#i)e 16 OG 7/6, Fact 9 Ce estino 7enson +as insured )y P(i am i-e in 1.F# upon (is app i"ation or a C%:yr endo+ment i-e po i"y. In 1.FF6 t(e po i"y apsed due to non:payment o- t(e premiums. Upon payment o- t(e premiums due6 t(e po i"y +as reinstated6 )ut in t(e app i"ation -or reinstatement6 7enson did not dis" ose t(e -a"t t(at (e (ad )een pre2ious y diagnosed -or pye onep(ritis6 en arged i2er and (ernia. 7e a so did not dis" ose t(at (e (ad )een e5amined )y a p(ysi"ian. In 1.F$6 7enson died6 and (is )ene-i"iaries= " aim +as reIe"ted )y P(i am i-e on t(e ground o"on"ea ment. '(e "ompany t(en -i ed -or res"ission. 3ene-i"iaries= "ontend t(at t(e intent to "on"ea must )e pro2en to +arrant res"ission. I &e9 WBN t(ere is need to pro2e intent to "on"ea to +arrant res"ission.

He#%9 NO5 Se". C$ pro2ides t(at ,a concea ment whether intentiona or !nintentiona entit es the in"!red #art( to rescind the contract of ins!rance1. And aside -rom t(is6 intent6 )eing a state o- t(e mind is (ard to pro2e. A""ording to Se". 9% o- t(e Insuran"e CodeJ Materia it( is to be determined not b( the event, b!t so e ( b( the #robab e and reasonab e inf !ence of the facts !#on the #art( to whom the comm!nication is d!e, in formin) his estimate of the disadvanta)es of the #ro#osed contract, or in makin) his in3!iries$ In essen"e t(ere-ore6 t(e insured need not (a2e died o- t(e 2ery diseases (e (ad -ai ed to re2ea to t(e insuran"e "ompany. It is su--i"ient t(at (is non:re2e ation (ad mis ed t(e insurer in -orming its estimate o- t(e disad2antages o- t(e proposed po i"y reinstatement or in ma*ing its inGuiries6 in order to entit e t(e atter to res"ind t(e "ontra"t. 7098 So#i2an *5 US Li)e 1-0 PHIL 1-06 Fact 9 US <i-e issued a C%yr endo+ment i-e po i"y on t(e Ioint i2es o- Patri"io So iman and (is +i-e Rosario6 ea"( o- t(em )eing t(e )ene-i"iary o- t(e ot(er. In >ar"( 1.#.6 t(e spouses +ere in-ormed t(at t(e premium -or Ean 1.#. +as sti unpaid not+it(standing t(at t(e 91:day gra"e period (ad a ready e5pired6 and t(ey +ere -urnis(ed at t(e same time ong:-orm (ea t( "erti-i"ates -or t(e reinstatement o- t(e po i"ies. In Apr 1.#.6 t(ey su)mitted t(e (ea t( "erti-i"ates and paid t(e premium due up to said mont(. In Ean. 1.F%6 Rosario died o- a"ute di atation o- t(e (eart6 and t(erea-ter Patri"io -i ed a " aim -or t(e pro"eeds o- t(e insuran"e. US <i-e denied t(e " aim and it -i ed a "ase -or res"ission on t(e ground t(at t(e (ea t( "erti-i"ates -ai ed to dis" ose t(at Rosario (ad )een su--ering -rom )ron"(ia ast(ma -or t(ree years prior to t(e su)mission. Patri"io " aims t(at t(e ans+ers to t(e Guestions in t(e (ea t( "erti-i"ates +ere made )y US <i-e=s agent. I &e9 WBN t(e po i"y "an )e res"inded.

He#%9 >ES5 '(e spouses in a o+ing t(e agent to ans+er some o- t(e ) an*s in t(e "erti-i"ates and a-ter+ards stamping t(eir signature t(ereon are presumed to (a2e at east a"Guies"ed in and appro2ed a t(at (ad )ee stated t(erein in t(eir )e(a -. 71-8 Ea&ti ta *5 Ca!ita# In &"ance 1 CA Re!5 66,

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INSURANCE REVIEWER Atty. Quimson Fact 9 In 1.FC6 a "ontra"t o- insuran"e +as entered )y t(e parties6 upon PI ar 3autista=s (ouse.

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'(e po i"y des"ri)ed t(e )ui ding as ,occ!#ied as dwe in) on (4. '(ere +as a stipu ation to t(e e--e"t t(at any misrepresentation o- materia -a"t or misdes"ription o- t(e property s(a render t(e insurer not ia) e -or its oss. 3e-ore t(e po i"y +as issued (o+e2er6 >anue <eyson6 3autista=s essee6 su) eased t(e ground - oor to BNg6 +(o used it as a -a"tory -or t(e manu-a"ture o- s(oes. A mont( ater6 ru))er (ee s6 so es and "an2ass +ere stored t(erein. Su)seGuent y6 t(e (ouse +as destroyed )y -ire. 3autista -i ed (er " aims +it( Capita Insuran"e6 )ut t(e atter denied (er " aim on t(e ground o- )rea"( o- +arranty. 3autista said t(at t(e statement ,o""upied as d+e ing on y1 +as not (ers6 )ut o- t(e insuran"e agent6 and t(at t(e po i"y +as in Eng is( (+(i"( s(e did not understand& and +as ne2er read to (er. &e9 WBN Capita may res"ind t(e "ontra"t.

He#%9 It can5 3autista +as )ound to *no+ t(e "ontents o- t(e po i"y in a""epting it. In t(e a)sen"e o- -raud6 s(e is presumed to *no+ t(e "ontents o- t(e "ontra"t and to (a2e assented to t(em. @ai ure to read t(e po i"y is neg igen"e6 and t(e insured is regarded as (a2ing assumed t(e ris* o- t(e -a sity or misstatements o- its "ontents. 7118 Gen5 In &"ance H S&"et4 Co"! *5 NG H&a 1-6 PHIL 1117 Fact 9 In 1.FC6 8enera issued a -ire po i"y to Ng 7ua to "o2er t(e "ontents o- t(e Centra Pomade @a"tory o+ned )y (im. '(ere +as a pro2ision in t(e po i"y t(at s(ou d t(ere )e any insuran"e a ready e--e"ted or to )e su)seGuent y pro"ured6 t(e insured s(a gi2e noti"e to t(e insurer. Ng 7ua de" ared t(at t(ere +as non. '(e 2ery ne5t day6 t(e )ui ding and t(e goods stored t(erein )urned. Su)seGuent y6 t(e " aim o- Ng 7ua -or t(e pro"eeds +as denied )y 8enera sin"e it dis"o2ered t(at Ng 7ua (ad o)tained an insuran"e -rom 8enera Indemnity -or t(e same goods and -or t(e same period otime. I &e9 WBN 8enera Insuran"e "an re-use to pay t(e pro"eeds.

He#%9 >e 5 Vio ation o- t(e statement +(i"( is to )e "onsidered a +arranty entit es t(e insurer to res"ind t(e "ontra"t o- insuran"e. Su"( misrepresentation is -ata . 7168 V%a5 De Cani#an3 *5 CA 66/ SCRA 00/ 7199/8 Fact 9 Cani ang "onsu ted !r. C audio and +as diagnosed as su--ering -rom Msinus ta"(y"ardia.M >r. Cani ang "onsu ted t(e same do"tor again on 9 August 1.0C and t(is time +as -ound to (a2e Ma"ute )ron"(itis.M

Bn t(e ne5t day6 # August 1.0C6 Cani ang app ied -or a Mnon:medi"a M insuran"e po i"y +it( 8repa i-e naming (is +i-e6 as (is )ene-i"iary. Cani ang +as issued ordinary i-e insuran"e +it( t(e -a"e 2a ue oP1.6/%%. Bn F August 1.096 Cani ang died o- M"ongesti2e (eart -ai ure6M Manemia6M and M"(roni" anemia.M '(e +i-e as )ene-i"iary6 -i ed a " aim +it( 8repa i-e +(i"( t(e insurer denied on t(e ground t(at t(e insured (ad "on"ea ed materia in-ormation -rom it. Vda Cani ang -i ed a "omp aint +it( t(e Insuran"e Commissioner against 8repa i-e "ontending t(at as -ar as s(e *no+s (er (us)and +as not su--ering -rom any disorder and t(at (e died o- *idney disorder. 8repa i-e +as ordered to pay t(e +ido+ )y t(e Insuran"e Commissioner (o ding t(at t(ere +as no intentiona "on"ea ment on t(e Part o- Cani ang and t(at 8repa i-e (ad +ai2ed its rig(t to inGuire into t(e (ea t( "ondition o- t(e app i"ant )y t(e issuan"e o- t(e po i"y despite t(e a"* o- ans+ers to Msome o- t(e pertinent GuestionsM in t(e insuran"e app i"ation. CA re2ersed.

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&e9 WBN 8repa i-e is ia) e.

He#%9 SC too* note o- t(e -a"t t(at Cani ang -ai ed to dis" ose t(at (at (e (ad t+i"e "onsu ted !r. Wi -redo 3. C audio +(o (ad -ound (im to )e su--ering -rom Msinus ta"(y"ardiaM and Ma"ute )ron"(itis. Under t(e re e2ant pro2isions o- t(e Insuran"e Code6 t(e in-ormation "on"ea ed must )e in-ormation +(i"( t(e "on"ea ing party *ne+ and Moug(t to W(a2eX "ommuni"ateWdX6M t(at is to say6 in-ormation +(i"( +as Mmateria to t(e "ontra"t. '(e in-ormation +(i"( Cani ang -ai ed to dis" ose +as materia to t(e a)i ity o- 8repa i-e to estimate t(e pro)a) e ris* (e presented as a su)Ie"t o- i-e insuran"e. 7ad Cani ang dis" osed (is 2isits to (is do"tor6 t(e diagnosis made and t(e medi"ines pres"ri)ed )y su"( do"tor6 in t(e insuran"e app i"ation6 it may )e reasona) y assumed t(at 8repa i-e +ou d (a2e made -urt(er inGuiries and +ou d (a2e pro)a) y re-used to issue a non:medi"a insuran"e po i"y or6 at t(e 2ery east6 reGuired a (ig(er premium -or t(e same "o2erage. '(e materia ity o- t(e in-ormation +it((e d )y Cani ang -rom 8repa i-e did not depend upon t(e state omind o- Eaime Cani ang. A manLs state o- mind or su)Ie"ti2e )e ie- is not "apa) e o- proo- in our Iudi"ia pro"ess6 e5"ept t(roug( proo- o- e5terna a"ts or -ai ure to a"t -rom +(i"( in-eren"es as to (is su)Ie"ti2e )e ie- may )e reasona) y dra+n. Neit(er does materia ity depend upon t(e a"tua or p(ysi"a e2ents +(i"( ensue. >ateria ity re ates rat(er to t(e Mpro)a) e and reasona) e in- uen"e o- t(e -a"tsM upon t(e party to +(om t(e "ommuni"ation s(ou d (a2e )een made6 in assessing t(e ris* in2o 2ed in ma*ing or omitting to ma*e -urt(er inGuiries and in a""epting t(e app i"ation -or insuran"e; t(at Mpro)a) e and reasona) e in- uen"e o- t(e -a"tsM "on"ea ed must6 o- "ourse6 )e determined o)Ie"ti2e y6 )y t(e Iudge u timate y. SC -ound it di--i"u t to ta*e serious y t(e argument t(at 8repa i-e (ad +ai2ed inGuiry into t(e "on"ea ment )y issuing t(e insuran"e po i"y not+it(standing Cani angLs -ai ure to set out ans+ers to some ot(e Guestions in t(e insuran"e app i"ation. Su"( -ai ure pre"ise y "onstituted "on"ea ment on t(e part oCani ang. PetitionerLs argument6 i- a""epted6 +ou d o)2ious y erase Se"tion C/ -rom t(e Insuran"e Code o1./0.

71/8 S&n Li)e *5 CA 601 SCRA 66, 719918 Fact 9

Bn Apri 1F6 1.0$6 3a"ani pro"ured a i-e insuran"e "ontra"t -or (imse - -rom Sun <i-e. 7e +as issued a i-e insuran"e po i"y +it( dou) e indemnity in "ase o- a""identa deat(. '(e designated )ene-i"iary +as (is mot(er6 3ernarda. Bn Eune C$6 1.0/6 t(e insured died in a p ane "ras(. 3ernarda 3a"ani -i ed a " aim +it( Sun <i-e6 see*ing t(e )ene-its o- t(e insuran"e. Sun <i-e "ondu"ted an in2estigation and its -indings prompted it to reIe"t t(e " aim. Sun <i-e dis"o2ered t(at C +ee*s prior to (is app i"ation6 3a"ani +as e5amined and "on-ined at t(e <ung Center o- t(e P(i ippines6 +(ere (e +as diagnosed -or rena -ai ure. !uring (is "on-inement6 t(e de"eased +as su)Ie"ted to urina ysis6 u tra:sonograp(y and (emato ogy tests. 7e did not re2ea su"( -a"t in (is app i"ation. In its etter6 Sun <i-e in-ormed 3erarda6 t(at t(e insured did not dis" osed materia -a"ts re e2ant to t(e issuan"e o- t(e po i"y6 t(us rendering t(e "ontra"t o- insuran"e 2oida) e. A "(e"* representing t(e tota premiums paid in t(e amount o- P1%61/C.%% +as atta"(ed to said etter. 3ernarda and (er (us)and6 -i ed an a"tion -or spe"i-i" per-orman"e against Sun <i-e. R'C ru ed -or 3ernarda (o ding t(at t(e -a"ts "on"ea ed )y t(e insured +ere made in good -ait( and under t(e )e iet(at t(ey need not )e dis" osed. >oreo2er6 it (e d t(at t(e (ea t( (istory o- t(e insured +as immateria sin"e t(e insuran"e po i"y +as Mnon:medi"a .M CA a--irmed. &e9 WBN t(e )ene-i"iary "an " aim despite t(e "on"ea ment.

He#%9 NOPE5

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INSURANCE REVIEWER Atty. Quimson

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Se"tion C$ o- t(e Insuran"e Code is e5p i"it in reGuiring a party to a "ontra"t o- insuran"e to "ommuni"ate to t(e ot(er6 in good -ait(6 a -a"ts +it(in (is *no+ edge +(i"( are materia to t(e "ontra"t and as to +(i"( (e ma*es no +arranty6 and +(i"( t(e ot(er (as no means o- as"ertaining. >ateria ity is to )e determined not )y t(e e2ent6 )ut so e y )y t(e pro)a) e and reasona) e in- uen"e ot(e -a"ts upon t(e party to +(om "ommuni"ation is due6 in -orming (is estimate o- t(e disad2antages o- t(e proposed "ontra"t or in ma*ing (is inGuiries ('(e Insuran"e Code6 Se" 91& '(e terms o- t(e "ontra"t are " ear. '(e insured is spe"i-i"a y reGuired to dis" ose to t(e insurer matters re ating to (is (ea t(. '(e in-ormation +(i"( t(e insured -ai ed to dis" ose +ere materia and re e2ant to t(e appro2a and t(e issuan"e o- t(e insuran"e po i"y. '(e matters "on"ea ed +ou d (a2e de-inite y a--e"ted petitionerLs a"tion on (is app i"ation6 eit(er )y appro2ing it +it( t(e "orresponding adIustment -or a (ig(er premium or reIe"ting t(e same. >oreo2er6 a dis" osure may (a2e +arranted a medi"a e5amination o- t(e insured )y petitioner in order -or it to reasona) y assess t(e ris* in2o 2ed in a""epting t(e app i"ation. '(us6 Mgood -ait(M is no de-ense in "on"ea ment. '(e insuredLs -ai ure to dis" ose t(e -a"t t(at (e +as (ospita i4ed -or t+o +ee*s prior to -i ing (is app i"ation -or insuran"e6 raises gra2e dou)ts a)out (is )ona-ides. It appears t(at su"( "on"ea ment +as de i)erate on (is part.

Section 6,. Ea"( party to a "ontra"t o- insuran"e must "ommuni"ate to t(e ot(er6 in good -ait(6 a -a"ts +it(in (is *no+ edge +(i"( are materia to t(e "ontra"t and as to +(i"( (e ma*es no +arranty6 and +(i"( t(e ot(er (as not t(e means o- as"ertaining. Acco"%in3 to Sec5 6,C (hat a"e the 2atte" that 2& t $e co22&nicate% $4 the !a"t4 to the othe"' '(is se"tion ma*es it t(e duty o- ea"( party to a "ontra"t o- insuran"e to "ommuni"ate in good -ait( a -a"ts t(at are materia to t(e "ontra"t +it(in (is *no+ edge +(enJ 1. t(e party +it( t(e duty to "ommuni"ate ma*es no +arranty; and C. t(e ot(er party (as no means o- as"ertaining t(e -a"ts An4 e@ce!tion to the %&t4 to co22&nicate' '(ose -a ing under Se". 9%. What i the te t to %ete"2ine (hethe" o" not one 2& t co22&nicate the )act to the othe" !a"t4' '(e test isJ I- t(e app i"ant is a+are o- t(e e5isten"e o- some "ir"umstan"e +(i"( (e *no+s +ou d in- uen"e t(e insurer in a"ting upon (is app i"ation6 8BB! @AI'7 reGuires (im to dis" ose t(at "ir"umstan"e6 t(oug( unas*ed. P"o$#e25 2f ' cons! ted Fr$ B for treatment of s(#hi is and )onorrhea when m!st ' disc ose the fact> 7e must dis" ose su"( -a"t e2en i- not inGuired into6 i- su"( -a"t is materia to t(e ris* assumed )y t(e insurer. In the !"o$#e2 a$o*eC ho( (i## A ;no( i) the )act i 2ate"ia# o" not' '(e -a"t must )e re ated to t(e insuran"e app ied -or. In t(e a)o2e e5amp e6 su"( -a"t is materia in "ases o- i-e or (ea t( insuran"e and may e2en )e materia up to a "ertain e5tent -or a""ident insuran"e. It is -ar:-et"(ed to reGuire dis" osing su"( in-ormation i- (e is app ying -or -ire or marine insuran"e. What i) the in &"e" (ith "ea ona$#e %i#i3ence co&#% ha*e ;no(n o" %i co*e"e% &ch )act )o" hi2 e#)C can the In &"e% $e e@c& e% )o" hi concea#2ent an% %en4 the "e2e%4 o) "e ci ion to the in &"e"' NB. '(e e--e"t o- t(e materia "on"ea ment "annot )e a2oided )y t(e a egation t(at t(e insurer "ou d (a2e *no+n and dis"o2ered a -a"t +(i"( t(e insured (ad "on"ea ed. An a egation i*e t(is imp ies t(at t(ere is an o) igation on t(e part o- t(e insuran"e "ompany to 2eri-y a t(e statements made )y t(e insured in (is app i"ation. No su"( o) igation e5ists on t(e part o- t(e insurer. '(e insurer (as t(e rig(t to re y upon t(e statements o- t(e insured -or (e *no+s t(e -a"ts and t(e insurer does not.

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INSURANCE REVIEWER Atty. Quimson What i %ee2e% 2ate"ia#' See se". 91.

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Att4 :&i2 on a ;e% & to #oo; at Sec5 1-75 What %oe thi !"o*i ion a4' Se". 1%/ pro2ides t(at ,in marine insuran"e ea"( party is )ound to "ommuni"ate6 in addition to +(at is reGuired )y se"tion t+enty:eig(t6 a t(e in-ormation +(i"( (e possesses6 materia to t(e ris*6 e5"ept su"( as is mentioned in Se"tion t(irty6 and to state t(e e5a"t and +(o e trut( in re ation to a matters t(at (e represents6 or upon inGuiry dis" oses or assumes to dis" ose. Ca e 9 7108 Fie#%2anK In &"anc *5 Son3co 61 SCRA 7Fact 9 In 1.$%6 Sam)at6 an agent o- @ie dman=s Insuran"e6 indu"ed Song"o6 a man o- s"ant edu"ation to enter into a "ommon "arrier insuran"e "ontra"t +it( @ie dman. !uring t(e indu"ement6 a son o- Song"o )utted in and said t(at t(ey "ou d not a""ept t(e type oinsuran"e o--ered )e"ause t(eirs +as an o+ner:type Ieepney and not a "ommon "arrier. Sam)at ans+ered t(at it did not matter )e"ause t(e insuran"e "ompany +as not o+ned )y t(e go2ernment and t(ere-ore (ad not(ing to do +it( ru es and regu ations o- t(e atter (@ie dman&. '(e insuran"e +as e5e"uted and appro2ed -or a year -rom Sept. 1.$%:1.$1. It +as rene+ed in 1.$1 -or anot(er year. In B"t. 1.$16 t(e Ieepney "o ided +it( a "ar in 3u a"an and as a resu t6 Son"o died. '(e remaining mem)ers o- t(e -ami y " aimed t(e pro"eeds o- t(e insuran"e +it( t(e "ompany )ut it re-used to pay on t(e ground t(at t(e 2e(i" e +as not a "ommon "arrier. I &e9 WBN t(e Song"os= "an " aim t(e insuran"e pro"eeds despite t(e -a"t t(at t(e 2e(i" e "on"erned +as an o+ner and not a "ommon "arrier. He#%9 >e 5 '(e "ompany is estopped -rom asserting t(at t(e 2e(i" e +as not "o2ered. A-ter it (ad ed @ederi"o Song"o to )e ie2e t(at (e "ou d Gua i-y under t(e "ommon "arrier ia)i ity insuran"e po i"y6 and to enter into a "ontra"t o- insuran"e paying t(e premiums due6 it "ou d not t(erea-ter )e permitted to "(ange its stand to t(e detriment o- t(e (eirs o- t(e insured. It *ne+ a a ong t(at @rederi"o o+ned a pri2ate 2e(i" e. Its agent Sam)at t+i"e e5erted t(e utmost pressure on t(e insured6 a man o- s"ant edu"ation6 and t(e "ompany did not o)Ie"t to t(is.

Section 69. An intentiona and -raudu ent omission6 on t(e part o- one insured6 to "ommuni"ate in-ormation o- matters pro2ing or tending to pro2e t(e -a sity o- a +arranty6 entit es t(e insurer to res"ind. What t4!e o) concea#2ent i "e)e""e% to he"e' '(e type o- "on"ea ment re-erred to (ere re ates to t(e Dfa sit( of a warrant(4. Un i*e t(e ordinary "on"ea ment pro2ided -or in Se". C/6 t(e non:dis" osure under t(is se"tion must )e intentional and fraudulent in order t(at t(e "ontra"t may )e res"inded. What i an e@a2!#e o) thi ;in% o) concea#2ent' In e2ery "ontra"t o- marine insuran"e6 t(ere is an imp ied +arranty o- sea+ort(iness o- t(e 2esse . '(e intentiona and -raudu ent omission on t(e part o- t(e insured to "ommuni"ate t(e -a"t t(at (is s(ip is in distress or in spe"ia peri entit es t(e insurer to res"ind )e"ause t(e "on"ea ment re-ers to matters pro2ing or tending to pro2e t(e -a sity o- t(e +arranty t(at t(e s(ip is sea+ort(y.

Section /-. Neit(er party to a "ontra"t o- insuran"e is )ound to "ommuni"ate in-ormation o- t(e matters -o o+ing6 e5"ept in ans+er to t(e inGuiries o- t(e ot(erJ (a& '(ose +(i"( t(e ot(er *no+s; ()& '(ose +(i"(6 in t(e e5er"ise o- ordinary "are6 t(e ot(er oug(t to *no+6 and o- +(i"( t(e -ormer (as no reason to suppose (im ignorant;

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("& '(ose o- +(i"( t(e ot(er +ai2es "ommuni"ation; (d& '(ose +(i"( pro2e or tend to pro2e t(e e5isten"e o- a ris* e5" uded )y a +arranty6 and +(i"( are not ot(er+ise materia ; and (e& '(ose +(i"( re ate to a ris* e5"epted -rom t(e po i"y and +(i"( are not ot(er+ise materia . What i the 3ene"a# "&#e' Communi"ate t(e ne"essary materia -a"ts. What i the e@ce!tion' '(ose pro2ided -or under Se"tion 9%. When (i## the in &"e% $e "e=&i"e% to co22&nicate in)o"2ation co*e"e% $4 Sec5 /- (e&ce#tion to the e&ce#tion)' I- t(e insurer as*s a)out t(em6 t(e insured )e"omes duty )ound to "ommuni"ate su"( in-ormation. Ca e 9 7118 In &#a" Li)e *5 Fe#iciano 7/ PHIL 6-1 Fact 9 E2aristo @e i"iano -i ed an app i"ation +it( Insu ar <i-e upon t(e so i"itation o- one o- its agents. It appears t(at during t(at time6 E2aristo +as a ready su--ering -rom tu)er"u osis. Su"( -a"t appeared during t(e medi"a e5am6 )ut t(e e5aminer and t(e "ompany=s agent ignored it. A-ter t(at6 E2aristo +as made to sign an app i"ation -orm and t(erea-ter t(e ) an* spa"es +ere -i ed )y t(e medi"a e5aminer and t(e agent ma*ing it appear t(at E2aristo +as a -it su)Ie"t o- insuran"e. (E2aristo "ou d not read and understand Eng is(& W(en E2aristo died6 Insu ar i-e re-used to pay t(e pro"eeds )e"ause o- "on"ea ment. I &e9 WBN Insu ar <i-e +as )ound )y t(eir agent=s a"ts.

He#%9 >e 5 '(e insuran"e )usiness (as gro+n so 2ast and u"rati2e +it(in t(e past "entury. No+adays6 e2en peop e o- modest means enter into insuran"e "ontra"ts. Agents +(o so i"it "ontra"ts are paid arge "ommissions on t(e po i"ies se"ured )y t(em. '(ey a"t as genera representati2es o- insuran"e "ompanies. IN t(e "ase at )ar6 t(e true state o- (ea t( o- t(e insured +as "on"ea ed )y t(e agents o- t(e insurer. '(e insurer=s medi"a e5aminer appro2ed t(e app i"ation *no+ing -u y +e t(at t(e app i"ant +as si"*. '(e situation is one in +(i"( o- t+o inno"ent parties must )ear a oss -or (is re ian"e upon a t(ird person. In t(is "ase6 it is t(e one +(o dra-ted and a""epted t(e po i"y and "onsummated t(e "ontra"t. It seems reasona) e t(at as )et+een t(e t+o o- t(em6 t(e one +(o emp oyed and ga2e "(ara"ter to t(e t(ird person as its agent s(ou d )e t(e one to )ear t(e oss. 7en"e6 Insu ar is ia) e to t(e )ene-i"iaries. 7168 In &#a" #i)e *5 Fe#iciano 70 PHIL 06,1 Fact 9 Insu ar i-e -i ed a motion -or re"onsideration o- t(e de"ision in t(e pre"eding "ase. I &e9 WBN Insu ar <i-e +as )ound )y t(eir agent=s a"ts.

He#%9 NO (what the fO>) '(ere +as "o usion )et+een E2aristo and t(e agent and t(e medi"a e5aminer in ma*ing it appear t(at E2aristo +as a -it su)Ie"t -or insuran"e. W(en E2aristo aut(ori4ed t(em to +rite t(e ans+ers -or (im6 (e made t(em (is o+n agents -or t(at purpose and (e +as responsi) e -or t(eir a"ts in t(at "onne"tion. I- t(ey -a si-ied t(e ans+ers -or (im6 (e "ou d not e2ade ia)i ity -or t(e -a si-i"ation. 7e +as not supposed to sign t(e app i"ation in ) an*. 7e *ne+ t(at (is ans+ers +ou d )e t(e )asis -or t(e po i"y6 and +as reGuired +it( (is signature to 2ou"( -or t(eir trut(. '(e Iudgment rendered t(ere-ore in t(e pre"eding "ase is t(us re2ersed6 and Insu ar <i-e is a)so 2ed -rom ia)i ity. (bakit ka(a na)reverse>$$$ the # ot thickensO =mmO$)

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7178 A"ani##a *5 In &#a" LI)e 69 OG No5 0 6/7 Fact 9 In 1.F.6 Eose Arani a app ied -or i-e insuran"e +it( Insu ar. In (is app i"ation6 t(ese C Guestions appearedJ o WBN (e (as su--ered -rom any disease o- t(e *idney and urinary tra"t6 to +(i"( (e ans+ered NB. o WBN (e (as )een "on-ined in a (ospita -or "onsu tation and treatment6 to +(i"( (e ans+ered t(at in 1.#/6 (e +as "on-ined due to in- uen4a. '(e trut( (o+e2er6 +as t(at a -e+ mont(s prior to (is app i"ation6 (e +as "on-ined and treated -or nep(ritis6 a disease o- t(e *idney and urinary tra"t6 and (e +as a""ording y in-ormed o- t(e "ause. W(en Arani a died o- "irr(osis o- t(e i2er6 Insu ar re-used to pay t(e pro"eeds due to "on"ea ment. I &e9 WBN t(e "ontra"t "an )e res"inded.

He#%9 >e 5 I- an ans+er gi2en )y t(e insured to a spe"i-i" Guestion as*ed )y t(e insurer in an app i"ation -or i-e insuran"e turns out to )e -a se6 it is a "on"ea ment o- a materia -a"t +(i"( entit es t(e insurer to res"ind6 e2en i- t(e insured died o- an ai ment +(i"( (as NB "onne"tion +it( t(e spe"i-i" Guestions -a se y ans+ered )y (im. '(is is )e"ause materia ity is to )e determined NB' )y t(e e2ent )ut BN<A )y t(e pro)a) e and reasona) e in- uen"e o- t(e -a"ts upon t(e party to +(om t(e "ommuni"ation is due6 in -orming (is estimate o- t(e disad2antages o- t(e proposed "ontra"t or in ma*ing (is inGuiries.

Section /1. >ateria ity is to )e determined not )y t(e e2ent6 )ut so e y )y t(e pro)a) e and reasona) e in- uen"e o- t(e -a"ts upon t(e party to +(om t(e "ommuni"ation is due6 in -orming (is estimate o- t(e disad2antages o- t(e proposed "ontra"t6 or in ma*ing (is inGuiries.

What i the te t o) 2ate"ia#it4' '(e test is simp yJ I@ t(e *no+ edge o- a -a"t +ou d "ause t(e insurer to reIe"t t(e ris* 6 or to a""ept it on y at a (ig(er premium rate6 t(at -a"t is materia 6 t(oug( it may not e2en remote y "ontri)ute to t(e "ontingen"y upon +(i"( t(e insurer +ou d )e"ome ia) e6 or in any +ise a--e"t t(e ris*. What i the !"inci!a# =&e tion that 2& t $e a ;e%' '(e prin"ipa Guestion in determining +(et(er t(e "on"ea ment is materia isJ -as the ins!rer mis ed or deceived into enterin) a contract, ob i)ation or in fi&in) the #remi!m of ins!rance b( a withho din) of materia information or facts within the ins!redHs act!a or #res!med know ed)e> I- so6 t(en t(e "ontra"t is a2oided6 e2en i- t(e "ause o- t(e oss +(i"( su)seGuent y o""urred )e un"onne"ted +it( t(e -a"t "on"ea ed. Ca e 9 71,8 Sat&"nino *5 Phi#a2#i)e (repeat "ase O#$& 7 SCRA /16 Fact 9 C mont(s prior to t(e insuran"e o- t(e po i"y6 Saturnino +as operated on -or "an"er6 in2o 2ing "omp ete remo2a o- t(e rig(t )reast6 in" uding t(e pe"tora mus" es and t(e g ands6 -ound in t(e rig(t armpit. Not+it(standing t(e -a"t o- (er operation6 Saturnino did not ma*e a dis" osure t(ereo- in (er app i"ation -or insuran"e. S(e stated t(erein t(at s(e did not (a2e6 nor (ad s(e e2er (ad6 among ot(ers isted in t(e app i"ation6 "an"er or ot(er tumors; t(at s(e (ad not "onsu ted any p(ysi"ian6 undergone any operation or su--ered any inIury +it(in t(e pre"eding F years. S(e a so stated t(at s(e (ad ne2er )een treated -or6 nor did s(e e2er (a2e any i ness or disease pe"u iar to (er se56 parti"u ar y o- t(e )reast6 o2aries6 uterus and menstrua disorders. '(e app i"ation a so re"ited t(at t(e de" arations o- Saturnino "onstituted a -urt(er )asis -or t(e issuan"e o- t(e po i"y. I &e9 WBN t(e insured made su"( -a se representation o- materia -a"ts as to a2oid t(e po i"y.

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He#%9 >ES5 '(ere "an )e no dispute t(at t(e in-ormation gi2en )y (er in t(e app i"ation -or insuran"e +as -a se6 name y6 t(at s(e ne2er (ad "an"er or tumors or "onsu ted any p(ysi"ian or undergone any operation +it(in t(e pre"eding period o- F years. '(e Guestion to determine isJ Are t(e -a"ts t(en -a se y represented materia H '(e Insuran"e <a+ pro2ides t(at ,materia ity is to )e determined not )y t(e e2ent6 )ut so e y )y t(e pro)a) e and reasona) e in- uen"e o- t(e -a"ts upon t(e party to +(om t(e "ommuni"ation is due6 in -orming (is estimate o- t(e proposed "ontra"t6 or ma*ing (is inGuiries. '(e "ontention o- appe ants is t(at t(e -a"ts su)Ie"t o- t(e representation +ere not materia in 2ie+ ot(e non:medi"a nature o- t(e insuran"e app ied -or6 +(i"( does a+ay +it( t(e usua reGuirement o- medi"a e5amination )e-ore t(e po i"y is issued. '(e "ontention is +it(out merit. I- anyt(ing6 t(e +ai2er o- medi"a e5amination renders e2en more materia t(e in-ormation reGuired o- t(e app i"ant "on"erning pre2ious "ondition o- (ea t( and diseases su--ered6 -or su"( in-ormation ne"essari y "onstitutes an important -a"tor +(i"( t(e insurer ta*es into "onsideration in de"iding +(et(er to issue t(e po i"y or not. Appe ants a so "ontend t(at t(ere +as no -raudu ent "on"ea ment o- t(e trut( inasmu"( as t(e insured (erse - did not *no+6 sin"e (er do"tor ne2er to d (er6 t(at t(e disease -or +(i"( s(e (ad )een operated on +as "an"er. In t(e -irst p a"e6 "on"ea ment o- t(e -a"t o- t(e operation itse - +as -raudu ent6 as t(ere "ou d not (a2e )een any mista*e a)out it6 no matter +(at t(e ai ment. Se"ond y6 in order to a2oid a po i"y6 it is not ne"essary to s(o+ a"tua -raud on t(e part o- t(e insured. In t(is Iurisdi"tion6 "on"ea ment6 +(et(er intentiona or unintentiona entit ed t(e insurer to res"ind t(e "ontra"t o- insuran"e6 "on"ea ment )eing de-ined as ,ne) i)ence to comm!nicate that which a #art( knows and o!)ht to comm!nicate$1 '(e )asis o- t(e ru e 2itiating t(e "ontra"t in "ases o- "on"ea ment is t(at it mis eads or de"ei2es t(e insurer into a""epting t(e ris*6 or a""epting it at a rate o- premium agreed upon. '(e insurer6 re ying upon t(e )e ie- t(at t(e insured +i dis" ose e2ery materia -a"t +it(in (is a"tua or presumed *no+ edge6 is mis ed into a )e ie- t(at t(e "ir"umstan"es +it((e d does not e5ist6 and (e is t(ere)y indu"ed to estimate t(e ris* upon a -a se )asis t(at it does not e5ist. 7198 Hen on *5 Phi#a2#i)e (repeat "ase O#0& 16 OG 7/6, Fact 9 Ce estino 7enson +as insured )y P(i am i-e in 1.F# upon (is app i"ation or a C%:yr endo+ment i-e po i"y. In 1.FF6 t(e po i"y apsed due to non:payment o- t(e premiums. Upon payment o- t(e premiums due6 t(e po i"y +as reinstated6 )ut in t(e app i"ation -or reinstatement6 7enson did not dis" ose t(e -a"t t(at (e (ad )een pre2ious y diagnosed -or pye onep(ritis6 en arged i2er and (ernia. 7e a so did not dis" ose t(at (e (ad )een e5amined )y a p(ysi"ian. In 1.F$6 7enson died6 and (is )ene-i"iaries= " aim +as reIe"ted )y P(i am i-e on t(e ground o"on"ea ment. '(e "ompany t(en -i ed -or res"ission. 3ene-i"iaries= "ontend t(at t(e intent to "on"ea must )e pro2en to +arrant res"ission. I &e9 WBN t(ere is need to pro2e intent to "on"ea to +arrant res"ission.

He#%9 NO5 Se". C$ pro2ides t(at ,a concea ment whether intentiona or !nintentiona entit es the in"!red #art( to rescind the contract of ins!rance1. And aside -rom t(is6 intent6 )eing a state o- t(e mind is (ard to pro2e. A""ording to Se". 9% o- t(e Insuran"e CodeJ Materia it( is to be determined not b( the event, b!t so e ( b( the #robab e and reasonab e inf !ence of the facts !#on the #art( to whom the comm!nication is d!e, in formin) his estimate of the disadvanta)es of the #ro#osed contract, or in makin) his in3!iries$ In essen"e t(ere-ore6 t(e insured need not (a2e died o- t(e 2ery diseases (e (ad -ai ed to re2ea to t(e insuran"e "ompany. It is su--i"ient t(at (is non:re2e ation (ad mis ed t(e insurer in -orming its estimate o- t(e disad2antages o- t(e proposed po i"y reinstatement or in ma*ing its inGuiries6 in order to entit e t(e atter to res"ind t(e "ontra"t. 76-8 S&n Li)e *5 CA (repeat Case O F9&

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Bn Apri 1F6 1.0$6 3a"ani pro"ured a i-e insuran"e "ontra"t -or (imse - -rom Sun <i-e. 7e +as issued a i-e insuran"e po i"y +it( dou) e indemnity in "ase o- a""identa deat(. '(e designated )ene-i"iary +as (is mot(er6 3ernarda. Bn Eune C$6 1.0/6 t(e insured died in a p ane "ras(. 3ernarda 3a"ani -i ed a " aim +it( Sun <i-e6 see*ing t(e )ene-its o- t(e insuran"e. Sun <i-e "ondu"ted an in2estigation and its -indings prompted it to reIe"t t(e " aim. Sun <i-e dis"o2ered t(at C +ee*s prior to (is app i"ation6 3a"ani +as e5amined and "on-ined at t(e <ung Center o- t(e P(i ippines6 +(ere (e +as diagnosed -or rena -ai ure. !uring (is "on-inement6 t(e de"eased +as su)Ie"ted to urina ysis6 u tra:sonograp(y and (emato ogy tests. 7e did not re2ea su"( -a"t in (is app i"ation. In its etter6 Sun <i-e in-ormed 3erarda6 t(at t(e insured did not dis" osed materia -a"ts re e2ant to t(e issuan"e o- t(e po i"y6 t(us rendering t(e "ontra"t o- insuran"e 2oida) e. A "(e"* representing t(e tota premiums paid in t(e amount o- P1%61/C.%% +as atta"(ed to said etter. 3ernarda and (er (us)and6 -i ed an a"tion -or spe"i-i" per-orman"e against Sun <i-e. R'C ru ed -or 3ernarda (o ding t(at t(e -a"ts "on"ea ed )y t(e insured +ere made in good -ait( and under t(e )e iet(at t(ey need not )e dis" osed. >oreo2er6 it (e d t(at t(e (ea t( (istory o- t(e insured +as immateria sin"e t(e insuran"e po i"y +as Mnon:medi"a .M CA a--irmed. &e9 WBN t(e )ene-i"iary "an " aim despite t(e "on"ea ment.

He#%9 NOPE5 Se"tion C$ o- t(e Insuran"e Code is e5p i"it in reGuiring a party to a "ontra"t o- insuran"e to "ommuni"ate to t(e ot(er6 in good -ait(6 a -a"ts +it(in (is *no+ edge +(i"( are materia to t(e "ontra"t and as to +(i"( (e ma*es no +arranty6 and +(i"( t(e ot(er (as no means o- as"ertaining. >ateria ity is to )e determined not )y t(e e2ent6 )ut so e y )y t(e pro)a) e and reasona) e in- uen"e ot(e -a"ts upon t(e party to +(om "ommuni"ation is due6 in -orming (is estimate o- t(e disad2antages o- t(e proposed "ontra"t or in ma*ing (is inGuiries ('(e Insuran"e Code6 Se" 91& '(e terms o- t(e "ontra"t are " ear. '(e insured is spe"i-i"a y reGuired to dis" ose to t(e insurer matters re ating to (is (ea t(. '(e in-ormation +(i"( t(e insured -ai ed to dis" ose +ere materia and re e2ant to t(e appro2a and t(e issuan"e o- t(e insuran"e po i"y. '(e matters "on"ea ed +ou d (a2e de-inite y a--e"ted petitionerLs a"tion on (is app i"ation6 eit(er )y appro2ing it +it( t(e "orresponding adIustment -or a (ig(er premium or reIe"ting t(e same. >oreo2er6 a dis" osure may (a2e +arranted a medi"a e5amination o- t(e insured )y petitioner in order -or it to reasona) y assess t(e ris* in2o 2ed in a""epting t(e app i"ation. '(us6 Mgood -ait(M is no de-ense in "on"ea ment. '(e insuredLs -ai ure to dis" ose t(e -a"t t(at (e +as (ospita i4ed -or t+o +ee*s prior to -i ing (is app i"ation -or insuran"e6 raises gra2e dou)ts a)out (is )ona-ides. It appears t(at su"( "on"ea ment +as de i)erate on (is part.

Section /6. Ea"( party to a "ontra"t o- insuran"e is )ound to *no+ a t(e genera "auses +(i"( are open to (is inGuiry6 eGua y +it( t(at o- t(e ot(er6 and +(i"( may a--e"t t(e po iti"a or materia peri s "ontemp ated; and a genera usages o- trade. Un%e" thi ectionC (hat i each !a"t4 to a cont"act o) in &"ance $o&n% to ;no(' '(ere are t+o matters t(at ea"( party to a "ontra"t o- insuran"e is )ound to *no+6 name yJ 1. 8enera " auses C. 8enera usages o- trade. A party (o+e2er6 is not )ound to *no+ a t(e " asses o- genera " auses )ut on y su"( 3ene"a# ca& e J a& W(i"( are open to (is inGuiry6 eGua y +it( t(at o- t(e ot(er; )& W(i"( may a--e"t eit(er t(e po iti"a or materia peri s "ontemp ated. What i the i2!o"t o) the a)o"e2entione% "&#e '

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'(e insured need not "ommuni"ate pu) i" e2ents su"( as t(at t(e nation is at +ar6 or +(at t(e a+ is6 or po iti"a "onditions in ot(er "ountries6 t(e sour"es o- t(is in-ormation )eing eGua y open to t(e insurer +(o is a so presumed to *no+ su"( e2ents. <i*e+ise6 t(e insurer is "(arged +it( t(e *no+ edge or genera trade usages and ru es o- na2igation6 *inds o- seasons and a t(e ris*s "onne"ted +it( na2igation.

Section //. '(e rig(t to in-ormation o- materia -a"ts may )e +ai2ed6 eit(er )y t(e terms o- t(e insuran"e or )y neg e"t to ma*e inGuiry as to su"( -a"ts6 +(ere t(ey are distin"t y imp ied in ot(er -a"ts o- +(i"( in-ormation is "ommuni"ated. ?a4 the "i3ht to in)o"2ation $e (ai*e%' Aes. '(e rig(t to in-ormation o- materia -a"ts may )e +ai2ed eit(erJ 1& E5press y6 )y t(e terms o- t(e insuran"e; or C& Imp ied y6 )y neg e"t to ma*e inGuiry as to t(e -a"ts a ready "ommuni"ated. I- t(e app i"ant (as ans+ered t(e Guestioned as*ed in t(e app i"ation6 (e is Iusti-ied in assuming t(at no -urt(er in-ormation is desired. What i an e@a2!#e o) the o!e"ation o) thi !"o*i ion' '(e insurer as*s t(e insured i- (e +as e2er "on-ined in a (ospita -or more t(an a mont( and t(e insured says ,AES1. I- t(e insurer does not inGuire -or t(e "ause o- t(e ong "on-inement6 t(en (e is deemed to (a2e +ai2ed t(e in-ormation. Ca e 9 7618 N3 Gan Lee *5 A ian C"& a%e" LI)e 166 SCRA 61 Fact 9 In 1.$C6 U+on Nam app ied -or a C%yr endo+ment insuran"e on (is i-e +it( (is +i-e6 Ng 8an Vee as t(e )ene-i"iary. 7e stated in (is app i"ation t(at (e +as operated on -or tumor o- t(e stoma"( asso"iated +it( u "er. In 1.$96 U+ong died o- "an"er o- t(e i2er +it( metastasis. Asian re-used to pay on t(e ground o- a se in-ormation. It +as -ound t(at prior to (is app i"ation6 U+ong +as diagnosed to (a2e pepti" u "ers6 and t(at during t(e operation +(at +as remo2ed -rom U+ong=s )ody +as a"tua y a portion o- t(e stoma"( and not tumor. I &e9 WBN t(e "ontra"t may )e res"inded on t(e ground o- t(e imper-e"tion in t(e app i"ation -orm.

He#%9 NO5 U+ong did not (a2e su--i"ient *no+ edge as to distinguis( )et+een a tumor and a pepti" u "er. 7is statement t(ere-ore +as made in good -ait(. Asian s(ou d (a2e made an inGuiry as to t(e i ness and operation o- U+ong +(en it appeared on t(e -a"e o- t(e app i"ation t(at a Guestion appeared to )e imper-e"t y ans+ered. Asian=s -ai ure to inGuire "onstituted a +ai2er o- t(e imper-e"tion in t(e ans+er.

Section /0. In-ormation o- t(e nature or amount o- t(e interest o- one insured need not )e "ommuni"ated un ess in ans+er to an inGuiry6 e5"ept as pres"ri)ed )y se"tion -i-ty:one. What %oe thi !"o*i ion !"o*i%e' Under Se". F1(e&6 it is reGuired t(at a po i"y o- an insuran"e must spe"i-y t(e interest o- t(e insured in t(e property insured6 i- (e is not t(e a$ o#&te o(ne" t(ereo-. So a mortgagee must dis" ose (is parti"u ar interest e2en i- no inGuiry is made )y t(e insurer in re ation t(ereto. Su"( reGuirement is made so t(at t(e insurer may determine t(e e5tent o- t(e insured=s insura) e interest. '(is se"tion t(ere-ore says6 t(at t(ere is NB NEE! to dis" ose t(e interest in t(e property insured i- t(e interest is a$ o#&te. '(e e5"eption o- "ourse is t(e insurer as*s. P"o$#e29

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' fire ins!rance #o ic( was iss!ed in which 2meda (ins!red) was described as the owner of the ins!red residentia #ro#ert($ B!t act!a (, 2me da was on ( )iven the #rivi e)e of occ!#(in) the ho!se rent-free for ife$ 2me da re#resented herse f as owner$ 2s the #o ic( va id> NB. S(e is gui ty o- misrepresentation. S(e s(ou d (a2e dis" osed t(e nature o- (er interest in t(e property in as mu"( as s(e +as not t(e a)so ute o+ner t(ereo-.

Section /1. Neit(er party to a "ontra"t o- insuran"e is )ound to "ommuni"ate6 e2en upon inGuiry6 in-ormation o- (is o+n Iudgment upon t(e matters in Guestion.

To (hat i the %&t4 to %i c#o e con)ine%' '(e duty to dis" ose is "on-ined to )act . '(ere is no duty to dis" ose mere opinion6 spe"u ation6 intention or e5pe"tation. '(is is true e2en i- t(e insured is as*ed. E@a2!#e' 3eatri5 Uiddo +as as*ed )y t(e insurerJ =ow on) do (o! think (o! wi ive> I- 3eatri5 uses t(e F:point e5p oding (eart te"(niGue on t(e insurer6 s(e +i )e "on2i"ted o- murderP. (not t(e point o- t(e arti" e& 7BWEVER6 i- s(e said6 ,'s on) as the moon rises over the )rave of @ai Mei4 and s(e dies t(e ne5t day6 (er error in ans+ering t(at Guestion +(i"( "a ed -or an e5pression o- an opinion does not "onstitute -raud in a+. Att45 :&i2 on a ;e% & to #oo; at Sec5 1-,5 What %oe it a4' Se"tion 1%0 pro2ides t(at ,In marine insuran"e6 in-ormation o- t(e )e ie- or e5pe"tation o- a t(ird person6 in re-eren"e to a materia -a"t6 is materia .1

TITLE V . REPRESENTATION
Section /65 A representation may )e ora or +ritten.

What i a "e!"e entation' A representation is a -a"tua statement made )y t(e insured at t(e time o-6 or prior to6 t(e issuan"e ot(e po i"y to gi2e6 in-ormation to t(e insurer and ot(er+ise indu"e (im to enter into t(e insuran"e "ontra"t. What i the %i))e"ence $et(een a "e!"e entation an% concea#2ent' A concea#2ent is a negati2e a"t6 meaning it is t(e -ai ure to do somet(ing +(i"( is reGuired +(i e "e!"e entation is positi2e a"t as t(e insured 2o unteers su"( -a"ts. Concea#2ent usua y o""urs prior to ma*ing o- t(e insuran"e "ontra"t6 +(i e a "e!"e entation may )e made at t(e time o- t(e issuan"e o- t(e "ontra"t. What i a 2i "e!"e entation' A >isrepresentation is a statementJ 1. As a -a"t o- somet(ing +(i"( is untrue C. W(i"( t(e insured stated +it( *no+ edge t(at it is untrue and +it( an intent to de"ei2e or +(i"( (e states as true +it(out *no+ing it to )e true and +(i"( (as t(e tenden"y to mis ead; and 9. W(ere su"( -a"t in eit(er "ase is materia to t(e ris*. What i the e))ect o) a 2i "e!"e entation' A misrepresentation )y t(e insured renders t(e insuran"e "ontra"t 2oida) e at t(e option o- t(e insurer6 a t(oug( t(e po i"y is not t(ere)y rendered 2oid a) initio. I 2i "e!"e entation 4non42o& (ith concea#2ent' NB. !e <eon )oo* says misrepresentation is an a"ti2e -orm o- "on"ea ment. What i the %&t4 o) the !e" on a!!#4in3 )o" in &"ance' It is duty to gi2e t(e insurer a su"( in-ormation "on"erning t(e ris* as +i )e o- use to t(e atter in estimating its "(ara"ter and in determining +(et(er or not to assume it. '(is in-ormation may )e gi2en

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ora y or +ritten in papers not "onne"ted +it( t(e "ontra"t su"( as in t(e app i"ation or e5aminer=s report. Sometimes6 it may appear on t(e po i"y itse -. Wh4 i &ch in)o"2ation i2!o"tant' '(e in-ormation -orms t(e )asis o- t(e "ontra"t as made. It des"ri)es6 mar*s out and de-ines t(e ris* assumed. 7en"e t(e untrut(-u ness o- any representation +i ne"essari y a2oid t(e "ontra"t. Can 4o& 3i*e an e@a2!#e o) 2i "e!"e entation &ch that the in &"e" a*oi% an4 #ia$i#it4 to the in &"e%' I- t(e insurer +as made to )e ie2e t(at (e +as insuring a )ri"* (ouse +(en in trut( and in -a"t6 t(e (ouse +as made o- nipa6 or +(en t(e insurer insured a man o- t(irty and it turns out t(at t(e man +(o dies +as a 19%.

Section /7. A representation may )e made at t(e time o-6 or )e-ore6 issuan"e o- t(e po i"y. Att45 :&i2 on (ant & to #oo; at Sec5 015 What %oe it a4' Se"tion #1 pro2ides t(at ,A representation may )e a tered or +it(dra+n )e-ore t(e insuran"e is e--e"ted6 )ut not a-ter+ards.1 Section /,. '(e anguage o- a representation is to )e interpreted )y t(e same ru es as t(e anguage o- "ontra"ts in genera .

Ho( a"e 2i "e!"e entation con t"&e%' '(ey are "onstrued i)era y in -a2or o- t(e insured. ?& t the "e!"e entation $e #ite"a##4 t"&e' No. It is su--i"ient t(at t(ey )e su)stantia y true. Ho( can a "e!"e entation $e &$ tantia##4 t"&e an% not #ite"a##4 t"&e' !e <eon "ites t+o e5amp esJ I- one is as*ed i- (e drin*s6 t(e Guestion +i )e "onstrued as re-erring to (a)itua use. So i- you drin* on y +(en t(ere is an o""asion6 t(ey you "an say NB. I- you are as*ed i- you (ad any i nesses6 o"a disease or inIury in any organ6 you "an sti say NB e2en it(ree +ee*s )e-ore you +ere su--ering -rom <3> )e"ause you ate one *aing o- a2o"ados.

Section /9. A representation as to t(e -uture is to )e deemed a promise6 un ess it appears t(at it +as mere y a statement o- )e ie- or e5pe"tation. What a"e the %i))e"ent ;in% o) "e!"e entation ' '(ey may eit(er )eJ 1. Bra or +ritten; C. >ade at t(e time o- t(e issuan"e o- t(e po i"y or )e-ore; 9. A--irmati2e or promissory What i an a))i"2ati*e "e!"e entation' It is any a egation as to t(e e5isten"e or non:e5isten"e o- a -a"t +(en t(e "ontra"t )egins. An e5amp e +ou d )e +(en t(e insured states t(at t(e (ouse su)Ie"t o- t(e insuran"e is used on y -or residentia purposes. What i a !"o2i o"4 "e!"e entation' A promissory representation is any promise to )e -u -i ed a-ter t(e "ontra"t (as "ome into e5isten"e or any statement "on"erning +(at is to (appen during t(e e5isten"e o- t(e insuran"e. What i the nat&"e o) a !"o2i o"4 "e!"e entation' @irst6 it used to indi"ate a paro or ora promise made in "onne"tion +it( t(e insuran"e6 )ut NB' in"orporated in t(e po i"y. '(e non:per-orman"e o- su"( a promise CANNB' )e s(o+n )y t(e insurer in

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de-ense to an a"tion on t(e po i"y6 )ut proo- t(at t(e promise +as made +it( -raudu ent intent and +i ser2e to de-eat t(e insuran"e. Se"ond6 it is an underta*ing )y t(e insured6 inserted in t(e po i"y6 )ut NB' spe"i-i"a y made a +arranty6 is "a ed a promissory representation. It is (o+e2er in su"( a "ase mere y an e5e"utory term o- t(e "ontra"t6 and not proper y a representation. A promissory representation6 is t(ere-ore6 su)stantia y a "ondition or a +arranty. Can 4o& 3i*e e@a2!#e o) !"o2i o"4 "e!"e entation ' 1. An app i"ant -or -ire insuran"e on a )ui ding ora y promised t(at t(e )ui ding +i )e o""upied. C. An app i"ant -or -ire insuran"e on a )ui ding ora y promised to insta t+o -ire e5tinguis(ers +it(in t(e ) dg. 9. A 'V (ostess saying ,Wi )e )a"*.. promise.. sarang(ameda poP1 Doe a )a# e "e!"e entation $a e% on an o!inion o" e@!ectation a*oi% the !o#ic4' I' !EPEN!S. A representation o- an e5pe"tation6 intention6 )e ie- opinion or Iudgment o- t(e insured6 a t(oug( -a se6 +i NB' a2oid t(e po i"y o- insuran"e i- t(ere is NB a"tua -raud in indu"ing t(e a""eptan"e ot(e ris* or its a""eptan"e at a o+er rate o- premium and t(is is i*e+ise t(e ru e a t(oug( t(e statement is materia to t(e ris*. In su"( a "ase6 t(e insurer is not Iusti-ied in re ying upon su"( statement )ut is o) igated to ma*e -urt(er inGuiry. What 2& t the in &"e" then to %o to a*oi% #ia$i#it4' '(e insurer must pro2e $oth t(e materia ity o- t(e insured=s opinion and t(e atter=s intent to de"ei2e. It(e representation is one o- -a"t6 a t(e insurer needs to pro2e is its -a sity and materia ity. '(e intent to de"ei2e is a ready presumed. When i a "e!"e entation %ee2e% a 2e"e e@!"e ion o) o!inion' An ora representation as to a -uture e2ent6 or "ondition o2er +(i"( t(e insured (as no "ontro 6 +it( re-eren"e to property or i-e insured +i )e deemed a mere e5pression o- opinion6 +(i"( +i a2oid a "ontra"t BN<A +(en made in )ad -ait(.

P"o$#e2 5 Mar( a## ied for ins!rance$ -hen asked if she was =2P-#ositive, she said that her bod( was who ( free from the =2P vir!s$ 2f it t!rns o!t that Mar( is wron), is the ins!rer free from iabi it( beca!se of the misre#resentation> No. '(e insurer *no+s t(at t(e insured=s opinion may )e mista*en a-ter a 6 no one "an )e "ertain a)out anyt(ing. '(e insurer s(ou d (a2e su)Ie"ted >ary to a )attery o- tests )e-ore entering into a "ontra"t. John a## ied for a motor vehic e ins!rance$ -hen asked if he knew how to drive, he said D2Hm a ver( )ood driver$4 2t t!rned o!t, he doesnHt know how to drive and after a few min!tes he crashed into the car of 'rvin$ 2s the ins!rer iab e des#ite JohnHs misre#resentation> NB. A an is gui ty o- -raudu ent misrepresentation o- a materia -a"t. 7e s(ou d (a2e dis" osed t(at (e doesn=t *no+ (o+ to dri2e.

Section 0-. A representation "annot Gua i-y an e5press pro2ision in a "ontra"t o- insuran"e6 )ut it may Gua i-y an imp ied +arranty. Wh4 i it that a "e!"e entation cannot =&a#i)4 an e@!"e !"o*i ion in a cont"act o) in &"ance' A representation "annot Gua i-y an e5press pro2ision or an e5press +arranty in a "ontra"t o- insuran"e )e"ause a representation is not a part o- t(e "ontra"t )ut on y a "o atera indu"ement to it. Can 4o& 3i*e t(o e@a2!#e ' 1& I- t(e po i"y e5press y pro2ides t(at t(e (ouse insured is used as a +are(ouse6 any representation made )y t(e insured prior to t(e issuan"e o- t(e po i"y to t(e e--e"t t(at t(e

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(ouse +as used on y as a residen"e is NB' a de-ense in t(e a"tion -or t(e re"o2ery o- t(e amount o- t(e insuran"e.

2)

'(e representation o- t(e insured to t(e e--e"t t(at t(e ast time t(e 2esse +as drydo"*ed +as si5 mont(s ago +ou d NB' Gua i-y t(e imp ied +arranty t(at t(e 2esse is sea+ort(y.

Section 01. A representation may )e a tered or +it(dra+n )e-ore t(e insuran"e is e--e"ted6 )ut not a-ter+ards. What i the "ea on )o" thi !"o*i ion' As representations indu"e t(e insurer in assuming t(e ris* insured against and in issuing t(e insuran"e po i"y6 it is )ut ogi"a t(at representations may not )e a tered or +it(dra+n a-ter t(e insuran"e is a--e"ted.

Section 06. A representation must )e presumed to re-er to t(e date on +(i"( t(e "ontra"t goes into e--e"t. To (hat ti2e %oe "e!"e entation "e)e"' Representations re-er on y to t(e time o- ma*ing t(e "ontra"t. We ear ier said t(at promissory statements o- "onditions t(at e5ist su)seGuent to t(e "omp etion o- t(e "ontra"t are "onditions or +arranties and not representations (See annotations under Se". 9.&. 3ut no+6 +e re-er BN<A to "onditions represented as A<REA!A EDIS'IN8. '(ese "onditions must e5ist during t(e ma*ing o- t(e "ontra"t. When i the"e )a# e "e!"e entation' '(ere is NB -a se representation i- t(e representation +as true at t(e time t(e "ontra"t ta*es e--e"t6 a t(oug( it )e"ame -a se at t(e time it +as made. '(ere is -a se representation i- a t(oug( t(e representation +as true at t(e time it +as made6 it su)seGuent y )e"ame -a se at t(e time t(e "ontra"t too* e--e"t. P"o$#e2 9 ' re#resented that his (acht was in *aiwan when in fact it was in =S$ B!t at the takin) effect of the contract, the (acht had a read( reached the #ort in *aiwan$ -as there fa se re#resentation> NB. A t(oug( t(e representation +as -a se at t(e time it +as made6 it +as a ready true at t(e time +(en t(e "ontra"t too* e--e"t. ' re#resented that his (acht was in *aiwan and in fact it was in *aiwan$ B!t at the takin) effect of the contract the (acht had a read( sai ed to =S and then it was shi#wrecked$ 2s 2ns!rer iab e> NB. 7ere t(ere is -a se representation. '(is time6 t(e representation a t(oug( true +(en made6 su)seGuent y )e"ame -a se at t(e time t(e "ontra"t too* e--e"t. 't the time he a## ied for a ife ins!rance #o ic( on '!) 1G, 0GG4, ' had never s!ffered from an( of the diseases en!merated in the #o ic( b( the ins!rer$ ./ '!)$ 1,, 0GG4, ' became aff icted with an en!merated disease in the #o ic($ Bort!nate (, he com# ete ( recovered$ -hen the #o ic( was de ivered and the first #remi!m #aid on '!)$ 3G, 0GG4, ' did not disc ose his havin) been sick$ 2s there fa se re#resentation> AES. -hen B a## ied for a ife ins!rance #o ic( on /ov$ C, 0GG4, she was asked to state her a)e$ She said that she was 04$ =owever, when the #o ic( was de ivered to her on Fec$ C, 0GG4, she had a read( t!rned 0C$ -hen time to co ect the #roceeds of the ins!rance, the ins!rer denied iabi it( on the )ro!nd of fa se re#resentation, beca!se at the time the #o ic( took effect, B was no on)er 04 (rs o d as she a e)ed$ 2s the ins!rer correct>

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'(e insurer is stupid. '(e trut( o- t(e statement made )y t(e insured at t(e date o- t(e app i"ation o(er age is sure y to )e tested as o- t(e date o- t(e app i"ation. It +ou d e a)surd to say t(at t(is representation +as -ata y -a se )e"ause at t(e time o- t(e a""eptan"e o- t(e app i"ation and t(e "omp etion o- t(e "ontra"t it +as no onger true.

Section 0/5 W(en a person insured (as no persona *no+ edge o- a -a"t6 (e may ne2ert(e ess repeat in-ormation +(i"( (e (as upon t(e su)Ie"t6 and +(i"( (e )e ie2es to )e true6 +it( t(e e5p anation t(at (e does so on t(e in-ormation o- ot(ers; or (e may su)mit t(e in-ormation6 in its +(o e e5tent6 to t(e insurer; and in neit(er "ase is (e responsi) e -or its trut(6 un ess it pro"eeds -rom an agent o- t(e insured6 +(ose duty it is to gi2e t(e in-ormation.

What i the e))ect (he"e in)o"2ation i o$taine% )"o2 thi"% !e" on ' Under Se". #96 t(e insured is gi2en dis"retion to "ommuni"ate to t(e insurer +(at (e *no+s o- a matter o- +(i"( (e (as no persona *no+ edge. I- t(e representation turns out to )e -a se6 (e is NB' responsi) e t(ere-or6 pro2ided (e gi2es t(e e5p anation t(at (e represents so on t(e in-ormation o- ot(ers. E@a2!#e' I- t(e insured (as no persona *no+ edge o- t(e "auses o- t(e deat( o- (is parents )e"ause t(ey died +(en t(e inIured +as sti an in-ant6 (e may report in-ormation o)tained -rom -riends and re ati2es i- (e i*es. In +(i"( "ase6 (e is not responsi) e -or t(e trut( o- t(e in-ormation. What i the e))ect (he"e in)o"2ation i o$taine% )"o2 the a3ent o) the in &"e%' I- t(e in-ormation pro"eeds -rom an agent o- t(e insured6 +(ose duty it is in t(e ordinary "ourse o)usiness to "ommuni"ate su"( in-ormation to (is prin"ipa 6 and it is possi) e -or t(e agent under su"( "ir"umstan"es in t(e e5er"ise o- due di igen"e to (a2e made su"( "ommuni"ation )e-ore t(e ma*ing o- t(e "ontra"t6 t(e insured +i )e ia) e -or t(e trut(.

P"o$#e2. ' is the ca#tain of *itanic$ James is the shi#owner$ .n Se#t$ 19, 0GG4, James a## es for an ins!rance !#on *itanic DEost or /ot Eost4 with Jack and Rose 2ns!rance +o$ =owever as of Se#t$ 11, 0GG4, ' a read( knew that the shi# was ost at sea b!t did not te James$ +an James sti recover on the #o ic(> NB. a "aptain o- t(e s(ip is )ound to "ommuni"ates its oss to t(e o+ner6 and i- t(e atter e--e"ts an insuran"e on t(e s(ip , ost or not ost1 in ignoran"e o- t(e ante"edent oss due to t(e -raud or neg igen"e ot(e "aptain6 t(e insured "annot re"o2er on t(e po i"y. Ca e9 7668 Ha"%in3 *5 Co22e"cia# Union A /, PHIL 060 &"ance Co2!an4

Fact 9 7enry 7arding )oug(t a "ar -or C' in 1.1F. 7e t(en ga2e t(e "ar to (is +i-e >rs. 7arding.

W(i e >rs. 7arding +as (a2ing t(e "ar repaired at t(e <uneta 8arage (<uneta +as an agent o- Smit( 3e and Co.6 +(i"( in turn is Commer"ia Union=s agent&6 t(e atter indu"ed >rs. 7arding to insure t(e "are +it( Commer"ia . >rs. 7arding agreed6 and Smit( 3e sent an agent to <uneta 8arage6 +(o toget(er +it( t(e manager o<Uneta6 appraised t(e "ar and de" ared t(at its present 2a ue +as P9'. '(is amt +as +ritten in t(e proposa -orm +(i"( >rs. 7arding signed. Su)seGuent y6 t(e "ar +as damaged )y -ire. Commer"ia re-used to pay )e"ause t(e "ar=s present 2a ue +as on y C.0' and not 9'. &e9 WBN Commer"ia is ia) e.

He#%9 Co22e"cia# i #ia$#e5

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W(ere it appears t(at t(e proposa -orm6 +(i e signed )y t(e insured +as made out )y t(e person aut(ori4ed to so i"it t(e insuran"e (<uneta and Smit( 3e & t(e -a"ts stated in t(e proposa 6 e2en i- in"orre"t6 +i not )e regarded as +arranted )y t(e insured6 in t(e a)sen"e o- +i -u misstatement. Under su"( "ir"umstan"es6 t(e proposa is to )e regarded as t(e a"t o- t(e insurer.

Section 00. A representation is to )e deemed -a se +(en t(e -a"ts -ai to "orrespond +it( its assertions or stipu ations. What i the i2!o"tance o) Sec5 00' '(is de-ines misrepresentation. ?& t "e!"e entation $e #ite"a##4 t"&e' No. See Se"tion 90. Representations are not reGuired to )e itera y true un i*e +arranties +(i"( must )e itera y true. It is su--i"ient t(at representations are su)stantia y true. I the a2e t"&e in ca e o) 2a"ine in &"ance' NB. In marine insuran"e6 t(e su)stantia trut( o- a representation is NB' su--i"ient. A""dg. to Se". 1%/6 t(e insured is reGuired to state t(e e5a"t and +(o e trut( in re ation to a matters t(at (e represents6 or upon inGuiry6 dis" oses or assumes to dis" ose. When (i## a "e!"e entation "e#ie% &!on a*oi% a !o#ic4' In order t(at a representation s(a a2oid a po i"y6 it must )e re ied upon and )e -a ise in a su)stantia and materia respe"t.

Section 015 I- a representation is -a se in a materia point6 +(et(er a--irmati2e or promissory6 t(e inIured party is entit ed to res"ind t(e "ontra"t -rom t(e time +(en t(e representation )e"omes -a se. '(e rig(t to res"ind granted )y t(is Code to t(e insurer is +ai2ed )y t(e a""eptan"e opremium payments despite *no+ edge o- t(e ground -or res"ission. (As amended )y 3atasang Pam)ansa 3 g. 0/#&

What %oe thi ection !"o*i%e' It pro2ides t(at t(e -a sity o- a representation entit es t(e inIured party to res"ind t(e "ontra"t -rom t(e time +(en t(e representation )e"omes -a se. And ordinari y6 under t(is se"tion6 -raudu ent intent is I>>A'ERIA<. In ot(er +ords6 t(e inIured party "an res"ind t(e "ontra"t o- insuran"e +(ere t(ere is a misrepresentation e2en +it(out -raud. And not t(at t(e -a se representation >US' )e materia . 76/8 Sat&"nino *5 Phi#a2#i)e (repeat "ase O #$& 7 SCRA /16 Fact 9 C mont(s prior to t(e insuran"e o- t(e po i"y6 Saturnino +as operated on -or "an"er6 in2o 2ing "omp ete remo2a o- t(e rig(t )reast6 in" uding t(e pe"tora mus" es and t(e g ands6 -ound in t(e rig(t armpit. Not+it(standing t(e -a"t o- (er operation6 Saturnino did not ma*e a dis" osure t(ereo- in (er app i"ation -or insuran"e. S(e stated t(erein t(at s(e did not (a2e6 nor (ad s(e e2er (ad6 among ot(ers isted in t(e app i"ation6 "an"er or ot(er tumors; t(at s(e (ad not "onsu ted any p(ysi"ian6 undergone any operation or su--ered any inIury +it(in t(e pre"eding F years. S(e a so stated t(at s(e (ad ne2er )een treated -or6 nor did s(e e2er (a2e any i ness or disease pe"u iar to (er se56 parti"u ar y o- t(e )reast6 o2aries6 uterus and menstrua disorders. '(e app i"ation a so re"ited t(at t(e de" arations o- Saturnino "onstituted a -urt(er )asis -or t(e issuan"e o- t(e po i"y. I &e9 WBN t(e insured made su"( -a se representation o- materia -a"ts as to a2oid t(e po i"y.

He#%9 >ES5

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'(ere "an )e no dispute t(at t(e in-ormation gi2en )y (er in t(e app i"ation -or insuran"e +as -a se6 name y6 t(at s(e ne2er (ad "an"er or tumors or "onsu ted any p(ysi"ian or undergone any operation +it(in t(e pre"eding period o- F years. '(e Guestion to determine isJ Are t(e -a"ts t(en -a se y represented materia H '(e Insuran"e <a+ pro2ides t(at ,materia ity is to )e determined not )y t(e e2ent6 )ut so e y )y t(e pro)a) e and reasona) e in- uen"e o- t(e -a"ts upon t(e party to +(om t(e "ommuni"ation is due6 in -orming (is estimate o- t(e proposed "ontra"t6 or ma*ing (is inGuiries. '(e "ontention o- appe ants is t(at t(e -a"ts su)Ie"t o- t(e representation +ere not materia in 2ie+ ot(e non:medi"a nature o- t(e insuran"e app ied -or6 +(i"( does a+ay +it( t(e usua reGuirement o- medi"a e5amination )e-ore t(e po i"y is issued. '(e "ontention is +it(out merit. I- anyt(ing6 t(e +ai2er o- medi"a e5amination renders e2en more materia t(e in-ormation reGuired o- t(e app i"ant "on"erning pre2ious "ondition o- (ea t( and diseases su--ered6 -or su"( in-ormation ne"essari y "onstitutes an important -a"tor +(i"( t(e insurer ta*es into "onsideration in de"iding +(et(er to issue t(e po i"y or not. Appe ants a so "ontend t(at t(ere +as no -raudu ent "on"ea ment o- t(e trut( inasmu"( as t(e insured (erse - did not *no+6 sin"e (er do"tor ne2er to d (er6 t(at t(e disease -or +(i"( s(e (ad )een operated on +as "an"er. In t(e -irst p a"e6 "on"ea ment o- t(e -a"t o- t(e operation itse - +as -raudu ent6 as t(ere "ou d not (a2e )een any mista*e a)out it6 no matter +(at t(e ai ment. Se"ond y6 in order to a2oid a po i"y6 it is not ne"essary to s(o+ a"tua -raud on t(e part o- t(e insured. In t(is Iurisdi"tion6 "on"ea ment6 +(et(er intentiona or unintentiona entit ed t(e insurer to res"ind t(e "ontra"t o- insuran"e6 "on"ea ment )eing de-ined as ,ne) i)ence to comm!nicate that which a #art( knows and o!)ht to comm!nicate$1 '(e )asis o- t(e ru e 2itiating t(e "ontra"t in "ases o- "on"ea ment is t(at it mis eads or de"ei2es t(e insurer into a""epting t(e ris*6 or a""epting it at a rate o- premium agreed upon. '(e insurer6 re ying upon t(e )e ie- t(at t(e insured +i dis" ose e2ery materia -a"t +it(in (is a"tua or presumed *no+ edge6 is mis ed into a )e ie- t(at t(e "ir"umstan"es +it((e d does not e5ist6 and (e is t(ere)y indu"ed to estimate t(e ris* upon a -a se )asis t(at it does not e5ist. 7608 ?& n3i *5 We t Coa t Li)e A 61 PHIL ,60 Fact 9 &"ance Co5

Arsenio 8ar"ia +as insured )y West Coast t+i"e in 1.91. In )ot( po i"ies6 (e +as as*ed to ans+er t(e GuestionJ ,what #h(sician or #ractitioners have (o! cons! ted or been treated b(, and for what i ness or ai ment> In )ot( po i"ies6 (e ans+ered in t(e negati2e. It turned out t(at -rom 1.C. to 1.9.6 (e +ent to see se2era p(ysi"ians -or a num)er o- ai ments. So +(en (e died in 1.#C6 t(e "ompany re-used to pay t(e pro"eeds o- t(e insuran"e. &e9 WBN t(e ans+er gi2en )y Arsenio in t(e po i"ies Iusti-ies t(e "ompany=s re-usa to payH

He#%9 >ES5 Aresenio *noe+ t(at (e +as su--ering -rom a num)er o- ai ments6 yet6 (e "on"ea ed t(is. Su"( "on"ea ment and (is -a se statements "onstituted -raud6 )e"ause t(e insuran"e "ompany )y reasons o- su"( statement a""epted t(e ris* +(i"( it +ou d ot(er+ise (a2e reIe"ted. 7618 In &#a" Li)e *5 Fe#iciano (repeat "ase O F$& 7/ PHIL 6-1 Fact 9 E2aristo @e i"iano -i ed an app i"ation +it( Insu ar <i-e upon t(e so i"itation o- one o- its agents. It appears t(at during t(at time6 E2aristo +as a ready su--ering -rom tu)er"u osis. Su"( -a"t appeared during t(e medi"a e5am6 )ut t(e e5aminer and t(e "ompany=s agent ignored it. A-ter t(at6 E2aristo +as made to sign an app i"ation -orm and t(erea-ter t(e ) an* spa"es +ere -i ed )y t(e medi"a e5aminer and t(e agent ma*ing it appear t(at E2aristo +as a -it su)Ie"t o- insuran"e. (E2aristo "ou d not read and understand Eng is(&

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INSURANCE REVIEWER Atty. Quimson I W(en E2aristo died6 Insu ar i-e re-used to pay t(e pro"eeds )e"ause o- "on"ea ment. &e9 WBN Insu ar <i-e +as )ound )y t(eir agent=s a"ts.

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He#%9 >e 5 '(e insuran"e )usiness (as gro+n so 2ast and u"rati2e +it(in t(e past "entury. No+adays6 e2en peop e o- modest means enter into insuran"e "ontra"ts. Agents +(o so i"it "ontra"ts are paid arge "ommissions on t(e po i"ies se"ured )y t(em. '(ey a"t as genera representati2es o- insuran"e "ompanies. IN t(e "ase at )ar6 t(e true state o- (ea t( o- t(e insured +as "on"ea ed )y t(e agents o- t(e insurer. '(e insurer=s medi"a e5aminer appro2ed t(e app i"ation *no+ing -u y +e t(at t(e app i"ant +as si"*. '(e situation is one in +(i"( o- t+o inno"ent parties must )ear a oss -or (is re ian"e upon a t(ird person. In t(is "ase6 it is t(e one +(o dra-ted and a""epted t(e po i"y and "onsummated t(e "ontra"t. It seems reasona) e t(at as )et+een t(e t+o o- t(em6 t(e one +(o emp oyed and ga2e "(ara"ter to t(e t(ird person as its agent s(ou d )e t(e one to )ear t(e oss. 7en"e6 Insu ar is ia) e to t(e )ene-i"iaries. 7618 In &#a" #i)e *5 Fe#iciano (repeat "ase O F/& 70 PHIL 06,1 Fact 9 Insu ar i-e -i ed a motion -or re"onsideration o- t(e de"ision in t(e pre"eding "ase. I &e9 WBN Insu ar <i-e +as )ound )y t(eir agent=s a"ts.

He#%9 NO (what the fO>) '(ere +as "o usion )et+een E2aristo and t(e agent and t(e medi"a e5aminer in ma*ing it appear t(at E2aristo +as a -it su)Ie"t -or insuran"e. W(en E2aristo aut(ori4ed t(em to +rite t(e ans+ers -or (im6 (e made t(em (is o+n agents -or t(at purpose and (e +as responsi) e -or t(eir a"ts in t(at "onne"tion. I- t(ey -a si-ied t(e ans+ers -or (im6 (e "ou d not e2ade ia)i ity -or t(e -a si-i"ation. 7e +as not supposed to sign t(e app i"ation in ) an*. 7e *ne+ t(at (is ans+ers +ou d )e t(e )asis -or t(e po i"y6 and +as reGuired +it( (is signature to 2ou"( -or t(eir trut(. '(e Iudgment rendered t(ere-ore in t(e pre"eding "ase is t(us re2ersed6 and Insu ar <i-e is a)so 2ed -rom ia)i ity. (bakit ka(a na)reverse>$$$ the # ot thickensO =mmO$) 7668 E%i##on *5 ?ani#a Ean;e" Li)e In &"ance Co"!5 117 SCRA 1,7 Fact 9 In Apr. 1.$.6 Carmen <apu4 app ied -or insuran"e +it( >ani a 3an*ers. In t(e app i"ation s(e stated t(e date o- (er )irt( as Eu y 116 1.%# (around $# yrs o d&. '(e po i"y +as t(erea-ter issued. Su)seGuent y6 in >ay 1.$.6 Carmen died o- a "ar a""ident. 7er sister6 as )ene-i"iary " aimed t(e pro"eeds o- t(e insuran"e. >ani a 3an*ers re-used to pay )e"ause t(e "erti-i"ate o- insuran"e "ontained a pro2ision e5" uding it=s ia)i ity to pay " aims to persons under 1$ or o2er $%. I &e9 WBN t(e po i"y is 2oid "onsidering t(at t(e insured +as o2er $% +(en s(e app ied.

He#%9 NO5 '(e age o- Carmen +as not "on"ea ed to t(e insuran"e "ompany. 7er app i"ation -orm indi"ated (er true age. !espite su"( in-ormation6 >ani a 3an*ers a""epted t(e premium and issued t(e po i"y. It (ad a t(e time to pro"ess t(e app i"ation and noti"e t(e app i"ant=s age. I- it -ai ed to a"t6 it +as )e"ause >ani a 3an*ers +as +i ing to +ai2e su"( disGua i-i"ations or it simp y o2er oo*ed su"( -a"t. It is t(ere-ore estopped -rom dis" aiming any ia)i ity. 7678 GonFa#eF Lao *5 >e; Ton3 Lin Fi"e H ?a"ine In &"ance 11 PHIL /,6 Fact 9 8on4a es +as issued C -ire insuran"e po i"ies )y Ae* -or 1%%' "o2ering (is ea- to)a""o prdu"ts.

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INSURANCE REVIEWER Atty. Quimson '(ey +ere stored in 8on4a es= )ui ding on So er St.6 +(i"( on Ean. 116 1.C06 )urned do+n.

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Art. 9 o- t(e Insuran"e po i"ies pro2ided t(atJ , 'n( ins!rance in force !#on a or #art of the thin)s !ns!red m!st be dec ared in writin) b( the ins!red and he (ins!red) sho! d ca!se the com#an( to insert or mention it in the #o ic($ -itho!t s!ch re3!isite, s!ch #o ic( wi be re)arded as n! and void and the ins!red wi be de#rived of a ri)hts of indemnit( in case of oss$4 Not+it(standing said pro2ision6 8on4a es entered into ot(er insuran"e "ontra"ts. W(en (e soug(t to " aim -rom Ae* a-ter t(e -ire6 t(e atter denied any ia)i ity on t(e ground o- 2io ation o- Art. 9 o- t(e said po i"ies. 8on4a es (o+e2er pro2ed t(at t(e insurer *ne+ o- t(e ot(er insuran"e po i"ies o)tained )y (im ong e-ore t(e -ire6 and t(e insurer did NB' res"ind t(e insuran"e po i"es in Guestion )ut demanded and "o e"ted -rom t(e insured t(e premiums. &e9 WBN Ae* is sti entit ed to annu t(e "ontra"t.

He#%9 NOPE5 '(e a"tion )y t(e insuran"e "ompany o- ta*ing t(e premiums o- t(e insured not+it(standing *no+ edge o- 2io ations o- t(e pro2isions o- t(e po i"ies amounted to +ai2er o- t(e rig(t to annu t(e "ontra"t oinsuran"e. 76,8 Tan Cha4 Hen3 *5 We t Coa t Li)e 11 Phi# ,Fact 9

In 1.C$6 'an C(ay 7eng sued West Coast on t(e po i"y a eged y issued to (is ,un" e16 'an Caeng +(o died in 1.CF. 7e +as t(e so e )ene-i"iary t(ereo-. West Coast re-used on t(e ground t(at t(e po i"y +as o)tained )y 'an Caeng +it( t(e (e p o- agents 8o C(ui ian6 @ran"is"o San"(e4 and !r. <o"sin o- West Coast. West Coast said t(at it +as made to appear t(at 'an Caeng +as sing e6 a mer"(ant6 (ea t( and not a drug user6 +(en in -a"t (e +as married6 a a)orer6 su--ering -orm tu)er"u osis and addi"ted to drugs. West Coast no+ denies ia)i ity )ased on t(ese misrepresentations. 'an C(ay "ontends t(at West Coast may not res"ind t(e "ontra"t )e"ause an a"tion -or per-orman"e (as a ready )een -i ed. 'ria "ourt -ound -or 'an C(ay (o ding t(at an insurer "annot a2oid a po i"y +(i"( (as )een pro"ured )y -raud un ess (e )rings an a"tion to res"ind it )e-ore (e is sued t(ereon. &e9 WBN West Coast=s a"tion -or res"ission is t(ere-ore )arred )y t(e "o e"tion suit -i ed )y 'an C(ay.

He#%9 NO5 Pre"ise y6 t(e de-ense o- West Cast +as t(at t(roug( -raud in its e5e"ution6 t(e po i"y is 2oid a) initio6 and t(ere-ore6 no 2a id "ontra"t +as e2er made. Its a"tion t(en "annot )e -ore res"ission )e"ause an a"tion to res"ind is -ounded upon and presupposes t(e e5isten"e o- t(e "ontra"t. 7en"e6 West Coast=s de-ense is not )arred )y Se". #/. In t(e instant "ase6 it +i )e noted t(at e2en in its prayer6 t(e de-endant does not see* to (a2e t(e a eged insuran"e "ontra"t res"inded. It denies t(at it e2er made any "ontra"t o- insuran"e on t(e i-e o- 'an Caeng6 or t(at any su"( a "ontra"t e2er e5isted6 and t(at is t(e Guestion +(i"( it see*s to (a2e itigated )y its spe"ia de-ense. In t(e 2ery nature o- t(ings6 i- t(e de-endant ne2er made or entered into t(e "ontra"t in Guestion6 t(ere is no "ontra"t to res"ind6 and6 (en"e6 se"tion #/ upon +(i"( t(e o+er "ourt )ased its de"ision in sustaining t(e demurrer does not app y. As stated6 an a"tion to res"ind a "ontra"t is -ounded upon and presupposes t(e e5isten"e o- t(e "ontra"t +(i"( is soug(t to )e res"inded. I- a o- t(e materia matters set -ort( and a eged in t(e de-endantLs spe"ia p ea are true6 t(ere +as no 2a id "ontra"t o- insuran"e6 -or t(e simp e reason t(at t(e minds o- t(e parties ne2er met and ne2er agreed upon t(e terms and "onditions o- t(e "ontra"t. We are " ear y o- t(e opinion t(at6 i- su"( matters are *no+n to e5ist )y a preponderan"e o- t(e e2iden"e6 t(ey +ou d "onstitute a 2a id de-ense to p ainti--Ls "ause o- a"tion. Upon t(e Guestion as to +(et(er or not t(ey are or are not true6 +e do not at t(is time (a2e or e5press any opinion6 )ut +e are " ear t(at se"tion #/ does not app y to t(e a egations made in t(e ans+er6 and t(at t(e tria "ourt erred in sustaining t(e demurrer. 7698 :&a Chee Gan *5 La( Union H Roc; In &"ance

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INSURANCE REVIEWER Atty. Quimson 9, PHIL ,1 Fact 9

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3e-ore t(e ast +ar6 Qua C(ee 8an o+ned # +are(ouses or )odegas (designated as 3odegas nos. 1 to #& in 'a)a"o6 A )ay6 used -or t(e storage o- sto"*s o- "opra and o- (emp6 )a ed and oose6 in +(i"( (e dea t e5tensi2e y. '(ey (ad )een6 +it( t(eir "ontents6 insured +it( <a+ Union sin"e 1.9/6 and t(e oss made paya) e to t(e P(i ippine Nationa 3an* as mortgagee o- t(e (emp and "opra6 to t(e e5tent o- its interest. @ire )ro*e out in6 1.#%6 and asted a most one +ee*6 gutted and "omp ete y destroyed 3odegas Nos. 16 9 and #6 +it( t(e mer"(andise stored t(erein. Qua in-ormed t(e insurer )y te egram on t(e same date; and on t(e ne5t day6 t(e insurer sent -ire adIusters to estimate t(e oss. '(e oss +as estimated at 9/%'. <a+ Union re-used to pay "ontending t(at Qua purpose y set -ire to (is )odegas and 2io ation o- +arranties and "onditions as agreed. <a+ Union t(en -i ed a "rimina "ase -or arson6 )ut t(e same +as dismissed )y t(e tria "ourt. Qua C(ee t(erea-ter instituted t(is "i2i "ase -or t(e "o e"tion o- t(e pro"eeds o- insuran"e. As de-ense6 <a+ Union Ro"* "ontends t(at Qua C(ee 2io ated t(e pro2isions agreed upon in a rider in t(e insuran"e po i"y +(ereJ o a -ire (ydrants s(ou d )e p a"ed e2ery 1F% -eet o- t(e e5terna +a measurement6 sin"e t(ere are on y C and anot(er C in a -urt(er area o+ned )y t(e muni"ipa ity. o Qua C(ee -ai ed to maintain t(e agreed +ater pressure and t(e 1%% -eet o- -ire (ose o 7e did maintain C% -ire )rigade men +it(in t(e premises Insurer a so a2erred t(at Qua C(ee 2io ated t(e pro2ision o- t(e 7emp Warranty +(i"( pro(i)its t(e storage o- oi s +(en (e stored gaso ine in )odega C. &e9 WBN t(e "ompany "an res"ind t(e "ontra"t on t(e )asis o- su"( a eged 2io ation.

He#%9 NO5 <a+ Union is )arred )y +ai2er (or rat(er estoppe & to " aim 2io ation o- t(e so: "a ed -ire (ydrants +arranty6 -or t(e reason t(at *no+ing -u y a t(at t(e num)er o- (ydrants demanded t(erein ne2er e5isted -rom t(e 2ery )eginning6 t(e <a+ Union ne2ert(e ess issued t(e po i"ies in Guestion su)Ie"t to su"( +arranty6 and re"ei2ed t(e "orresponding premiums. It +ou d )e peri ous y " ose to "onni2ing at -raud upon t(e insured to a o+ <a+ Union to " aim no+ as 2oid a) initio t(e po i"ies t(at it (ad issued to t(e p ainti-- +it(out +arning o- t(eir -ata de-e"t6 o- +(i"( it +as in-ormed6 and a-ter it (ad mis ed t(e de-endant into )e ie2ing t(at t(e po i"ies +ere e--e"ti2e. '(e insuran"e "ompany +as a+are6 e2en )e-ore t(e po i"ies +ere issued6 t(at in t(e premises insured t(ere +ere on y t+o -ire (ydrants insta ed )y Qua C(ee 8an and t+o ot(ers near)y6 o+ned )y t(e muni"ipa ity o- 'a)a"o6 "ontrary to t(e reGuirements o- t(e +arranty in Guestion. Su"( -a"t appears -rom positi2e testimony -or t(e insured t(at appe antLs agents inspe"ted t(e premises; and t(e simp e denia s oappe antLs representati2e (Eami"4on& "an not o2er"ome t(at proo-. '(at su"( inspe"tion +as made is moreo2er rendered pro)a) e )y its )eing a prereGuisite -or t(e -i5ing o- t(e dis"ount on t(e premium to +(i"( t(e insured +as entit ed6 sin"e t(e dis"ount depended on t(e num)er o- (ydrants6 and t(e -ire -ig(ting eGuipment a2ai a) e '(e a eged 2io ation o- t(e +arranty o- 1%% -eet o- -ire (ose -or e2ery t+o (ydrants6 must )e eGua y reIe"ted6 sin"e t(e appe antLs argument t(ereon is )ased on t(e assumption t(at t(e insured +as )ound to maintain no ess t(an e e2en (ydrants (one per 1F% -eet o- +a &6 +(i"( reGuirement appe ant is estopped -rom en-or"ing. '(e supposed )rea"( o- t(e +ater pressure "ondition is made to rest on t(e testimony o- +itness Serra6 t(at t(e +ater supp y "ou d -i a F:ga on "an in 9 se"onds; appe ant t(ereupon in-erring t(at t(e ma5imum Guantity o)taina) e -rom t(e (ydrants +as 1%% ga ons a minute6 +(en t(e +arranty "a ed -or C%% ga ons a minute. '(e trans"ript s(o+s6 (o+e2er6 t(at Serra repeated y re-used and pro-essed ina)i ity to estimate t(e rate o- dis"(arge o- t(e +ater6 and on y ga2e t(e MF:ga on per 9:se"ondM rate )e"ause t(e insisten"e oappe antLs "ounse -or"ed t(e +itness to (a4ard a guess. B)2ious y6 t(e testimony is +ort( ess and insu--i"ient to esta) is( t(e 2io ation " aimed6 spe"ia y sin"e t(e )urden o- its proo- ay on appe ant. As to maintenan"e o- a trained -ire )rigade o- C% men6 t(e re"ord is preponderant t(at t(e same +as organi4ed6 and dri ed6 -rom time to gi2e6 a t(o not maintained as a permanent y separate unit6 +(i"( t(e

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+arranty did not reGuire. Any+ay6 it +ou d )e unreasona) e to e5pe"t t(e insured to maintain -or (is "ompound a one a -ire -ig(ting -or"e t(at many muni"ipa ities in t(e Is ands do not e2en possess. '(ere is no merit in appe antLs " aim t(at su)ordinate mem)ers(ip o- t(e )usiness manager (Co Cuan& in t(e -ire )rigade6 +(i e its dire"tion +as entrusted to a minor emp oyee6 renders t(e testimony impro)a) e. A )usiness manager is not ne"essari y adept at -ire -ig(ting6 t(e Gua ities reGuired )eing di--erent -or )ot( a"ti2ities. It is +e to note t(at gaso ine is not spe"i-i"a y mentioned among t(e pro(i)ited arti" es isted in t(e so: "a ed M(emp +arranty.M '(e "ause re ied upon )y t(e insurer spea*s o- Moi s (anima andKor 2egeta) e andKor minera andKor t(eir iGuid produ"ts (a2ing a - as( point )e o+ 9%%Y @a(ren(eitM6 and is de"ided y am)iguous and un"ertain; -or in ordinary par an"e6 MBi sM mean M u)ri"antsM and not gaso ine or *erosene. And (o+ many insured6 it may +e )e +ondered6 are in a position to understand or determine M- as( point )e o+ %%9Y @a(ren(eit. 7ere6 again6 )y reason o- t(e e5" usi2e "ontro o- t(e insuran"e "ompany o2er t(e terms and p(raseo ogy o- t(e "ontra"t6 t(e am)iguity must )e (e d stri"t y against t(e insurer and i)era y in -a2or ot(e insured6 spe"ia y to a2oid a -or-eiture 77-8 Co#a%o *5 In &#a" Li)e 11 OG 7No 168 6669 Fact 9

Vi2en"io Co ado app ied -or an insuran"e "ontra"t +it( Insu ar i-e in 1.#0. 7is app i"ation +as appro2ed and (e )egan started ma*ing premium payments. 7o+e2er6 (e de-au ted and t(e insuran"e +as "an"e ed. 7e t(en app ied -or t(e reinstatement o- (is insuran"e po i"y in No2. o- 1.F1 and tendered t(e amount opremium -or t(e years 1.F%:1.F1. 7e stated t(at (e +as as o- No2. 1.F1 o- good (ea t(6 and t(at (e (ad no inIuries6 ai ments or i nesses and (ad not )een si"* -or any "ase sin"e 1.#0 ((is medi"a "(e"* up +(en (e app ied -or insuran"e& and t(at (e (ad not "onsu ted any p(ysi"ian or pra"titioner -or any "ase sin"e t(e date o- su"( atest medi"a e5am. 7o+e2er6 +(en Vi2en"io app ied -or t(e reinstatement6 (e +as a ready si"* o- a -ata disease *no+n as "ar"inoma o- t(e i2er and t(at # days prior to (is app i"ation -or insuran"e6 (e "onsu ted a do"tor regarding (is "ondition. '(e reinstatement +as appro2ed. Vi2en"io again -ai ed to pay t(e premiums -or t(e ast Guarter o- No2. 1.F1 and as su"(6 Insu ar i-e sent (im a noti"e "an"e ing t(e po i"y. Vi2en"io t(en died. '(e )enei-i"iaries instituted t(e present a"tion to re"o2er -rom Insu ar i-e t(e deat( )ene-its o- a i-e insuran"e po i"y 2a ued at C'. Insu ar re-used to pay " aiming "on"ea ment on t(e part o- Vi2en"io. Co ado "ontends t(at Insu ar i-e (ad +ai2ed t(e rig(t to res"ine t(e po i"y in 2ie+ o- its repeated a""eptan"e o- t(e o2erdue premiums -or t(e se"ond and t(ird years. >uni"ipa "ourt o- >ani a -ound -or Co ado and Insu ar -i ed an appea +it( C@I o- >ani a. C@I rendered Iudgment in -a2or o- Insu ar and dismissed Co ado=s "omp aint.

I &e9 WBN Insu ar i-e +as estopped and "ou d no onger "an"e t(e "ontra"t due to t(e -a"t t(at it a""epted t(e tender o- o2erdue payments -rom Vi2en"io. He#%9 NO5 It is enormous y " ear t(at +(en t(e de"eased app ied -or a reinstatement o- (is po i"y in No2. 1.F16 (e (ad a ready )een a-- i"ted +it( t(e -ata ai ment -or a period o- a)out -our mont(s. @urt(ermore6 in su)mitting toget(er +it( (is app i"ation -or reinstatement6 a (ea t( statement to t(e e--e"t t(at (e +as in good (ea t(6 Vi2en"io "on"ea ed t(e materia -a"t t(at (e (ad "onsu ted a do"tor and +as t(en -ound to )e a-- i"ted +it( t(e ma ady. '(e a""eptan"e o- Insu ar i-e o- t(e o2erdue premiums did not ne"essari y depri2e it o- t(e rig(t to "an"e t(e po i"y in "ase o- de-au t in"urred )y t(e Insured in t(e payment o- -uture premiums. '(e "ase +ou d )e di--erent (ad t(e insured died at any time a-ter t(e payment o- o2erdue premiums )ut pre2ious to t(e reinstatement o- t(e po i"y6 -or t(e6 Insu ar6 )y its a""eptan"e o- its o2erdue premiums is deemed to (a2e +ai2ed its rig(t to res"ind t(e po i"y.

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'(e e2iden"e at (and s(o+s t(at inso-ar as t(e payment o- t(e ast Guarter y premium -or 1.F1 +as "on"erned6 Insu ar (ad a2ai ed o- t(e rig(t to res"ind t(e po i"y )y noti-ying t(e Insured t(at t(e po i"y (ad apsed. (2Hm sorr( k!n) ma)! o (!n) di)est$$ sobran) #an)it (!n) co#(a n!n) case$$ nde ko mabasa$$ mas ma a a #a sa reviewer na Kero&)

Section 065 '(e materia ity o- a representation is determined )y t(e same ru es as t(e materia ity o- a "on"ea ment. What i the te t o) 2ate"ia#it4' '(e materia ity o- t(e representation is to )e determined NB' )y t(e e2ent6 )ut so e y )y t(e pro)a) e and reasona) e in- uen"e o- t(e -a"ts upon t(e party to +(om t(e representation is made6 in -orming (is estimates o- t(e disad2antages o- t(e proposed "ontra"t or in ma*ing (is inGuiries. Who %ete"2ine 2ate"ia#it4' It is a Iudi"ia Guestion. It is NB' e-t to t(e insuran"e "ompany to say a-ter t(e oss (as o""urred t(at it +ou d or +ou d not (a2e issued t(e po i"y (ad an ans+er )een tru y gi2en. '(e matter misrepresented must )e o- t(at "(ara"ter +(i"( t(e "ourt "an say +ou d reasona) y a--e"t t(e insurer=s Iudgment. What a"e the %i))e"ence an% i2i#a"itie $et(een a concea#2ent an% 2i "e!"e entation' (a read( disc!ssed in #rior sections, b!t for the convenience of a O #resented in a o)ica format$) CONCEAL?ENT Insured +it((o ds in-ormation o- materia -a"ts -rom t(e insurer ?ISREPRESENTATION Insured ma*es erroneous statements o- -a"ts +it( t(e intent o- indu"ing t(e insurer to enter into t(e insuran"e "ontra"t. >ateria ity is determined )y t(e same ru es app ied in "ases o- misrepresentation. Con"ea ment on t(e part o- t(e insured (as t(e a2e e))ect as a misrepresentation and gi2es t(e insurer t(e rig(t to res"ind t(e "ontra"t. W(et(er intentiona# or not intentiona#6 t(e inIured party is entit ed to res"ind t(e "ontra"t oinsuran"e on ground o- "on"ea ment or -a se representation. Ru es on "on"ea ment and representation app y i*e+ise to t(e insurer sin"e t(e "ontra"ts oinsuran"e is said to )e one o- utmost good -ait( on part o- )ot( parties to t(e agreement.

Section 07. '(e pro2isions o- t(is "(apter app y as +e insuran"e as to its origina -ormation.

to a modi-i"ation o- a "ontra"t o-

What %oe thi ection 2ean' '(is se"tion means t(at t(e pro2isions o- Se". C$ to 9F go2erning "on"ea ment and Se". 9$:#0 go2erning representation app y NB' BN<A to t(e origina -ormation o- t(e "ontra"t )ut a so to a modi-i"ation o- t(e same during t(e time it is in -or"e.

Section 0,. W(ene2er a rig(t to res"ind a "ontra"t o- insuran"e is gi2en to t(e insurer )y any pro2ision o- t(is "(apter6 su"( rig(t must )e e5er"ised pre2ious to t(e "ommen"ement o- an a"tion on t(e "ontra"t. A-ter a po i"y o- i-e insuran"e made paya) e on t(e deat( o- t(e insured s(a (a2e )een in -or"e during t(e i-etime o- t(e insured -or a period o- t+o years -rom t(e date o- its issue or o- its ast reinstatement6 t(e insurer "annot pro2e t(at t(e po i"y is 2oid a) initio or is res"inda) e )y reason ot(e -raudu ent "on"ea ment or misrepresentation o- t(e insured or (is agent. When 2& t the in &"e" e@e"ci e hi "i3ht to "e cin%' In a non+#i)e in &"ance po i"y6 t(e insurer may res"ind a "ontra"t o- insuran"e #rior to the commencement of an action on the contract$

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In a #i)e in &"ance po i"y6 t(e insurer may res"ind t(e "ontra"t o- insuran"e d!rin) the first two (ears when the #o ic( was in force d!rin) the ifetime of the ins!red from the date of its iss!e or of its ast reinstatement$ What a"e the "e=&i ite in o"%e" that the in &"e" 2a4 "e cin% a #i)e in &"ance !o#ic4' 1) '(ere must )e a )asis -or t(e res"ission ()rea"( o- +arranty6 "on"ea ment6 misrepresentation6 et".& C& '(e res"ission must )e "oup ed +it( a "(e"* -or t(e amount o- premiums a ready paid. (+it(out t(is6 t(e res"ission is not e--e"ti2e& 3) '(e res"ission must )e e5er"ised +it(in t(e t+o years t(at t(e insuran"e is in -or"e during t(e i-etime o- t(e insured. (2 "!st tried to #!t to)ether a of what 'tt($ M!imson said in c ass) What i an AInconte ta$i#it4 C#a& eB' In"ontesta)i ity " auses are t(ose " auses in i-e insuran"e po i"ies stipu ating t(at t(e po i"y s(a )e in"ontesta) e a-ter a stated period. Se". #0 par. C no+ reGuires t(at t(e in"ontesta)i ity o- a i-e insuran"e po i"y starts a-ter t(e apse o- t(e C years t(at t(e insuran"e +as in -or"e during t(e i-e time o- t(e insured. What i the "ea on )o" thi inconte ta$i#it4' 's to the 2ns!rer '(e insurer is gi2en a reasona) e opportunity to in2estigate t(e statements +(i"( t(e app i"ant ma*es in pro"uring (is po i"y and t(at a-ter t(e de-inite period6 t(e insurer s(ou d not )e permitted to Guestion t(e 2a idity o- t(e po i"y6 eit(er )y a--irmati2e a"tion6 or )y de-ense to a suit )roug(t on t(e i-e po i"y )y t(e )ene-i"iary. 's to the ins!red$ Su"( " auses gi2e assuran"e to t(e po i"y (o der t(at (is )ene-i"iaries +ou d re"ei2e payment +it(out Guestion as to t(e 2a idity o- t(e po i"y or t(e e5isten"e o- t(e "o2erage on"e t(e period o- "ontesta)i ity passes. It is designed to prote"t t(e po i"y(o der or )ene-i"iary -rom a a+suit "ontesting t(e 2a idity o- t(e po i"y a-ter a "onsidera) e time (as passed and e2iden"e o- t(e -a"ts surrounding t(e pur"(ase may )e una2ai a) e. What a"e the "e=&i ite )o" INCONTESTAEILIT>' 1& '(e po i"y is a i-e insuran"e po i"y C& It is paya) e on t(e deat( o- t(e insured; and 3) It (as )een in )o"ce during t(e #i)eti2e o- t(e insured -or at east C years -rom its date o- issue or oits ast reinstatement. ?a4 the !e"io% o) 6 4ea" $e ho"tene% $4 a3"ee2ent $et(een the in &"e" an% the in &"e%' It may )e s(ortened )ut it "annot )e e5tended )y stipu ation. What %oe the !ha e A%&"in3 the #i)eti2eB o) the in &"e% 2ean' Simp y means t(at t(e po i"y is no onger "onsidered in -or"e a-ter t(e insured (as died. What i the e))ect (hen the #i)e in &"ance !o#ic4 $eco2e inconte ta$#e' '(e insurer may NB' re-use to pay t(e same )y " aiming t(atJ 1& '(e po i"y is 2oid a) initio; or C& It is res"issi) e )y reason o- t(e -raudu ent misrepresentations o- t(e insured or (is agent6 no matter (o+ patent or +e :-ounded; or 9& It is res"issi) e )y reason o- t(e -raudu ent misrepresentations o- t(e insured agent. What a"e the %e)en e that the in &"e" 2a4 "ai e to a*oi% #ia$i#it4 e*en a)te" the #a! e o) the 6 4ea" ' 1& '(at t(e person ta*ing t(e insuran"e a"*ed insura) e interest as reGuired )y a+; C& Cause o- deat( o- t(e insured is an e5pe"ted ris*; 9& '(at t(e premiums (a2e not )een paid WSe"s. //6 C//()&6 CC0()&6 C9%()&X; #& '(at t(e "onditions o- t(e po i"y re ating to mi itary or na2a ser2i"e (a2e )een 2io ated WSe". CC/()&6 CC0()&X; F& '(at t(e -raud is o- a parti"u ar y 2i"ious type6 as +(ere t(e po i"y +as ta*en out in -urt(eran"e o- a s"(eme to murder t(e insured6 or +(ere t(e insured su)stitutes anot(er person -or t(e medi"a e5amination6 or +(ere t(e )ene-i"iary -e onious y *i s t(e insured.

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$& '(at t(e )ene-i"iary -ai ed to -urnis( proo- o- deat( or to "omp y +it( any "ondition imposed )y t(e po i"y a-ter t(e oss (as (appened (Se". C#C& /& '(at t(e a"tion +as not )roug(t +it(in t(e time spe"i-ied. What %oe Sec5 6677$8C Sec5 66, 7$8 an% Sec5 6/- 7$8 !"o*i%e' Section 667. In t(e "ase o- indi2idua i-e or endo+ment insuran"e6 t(e po i"y s(a "ontain in su)stan"e t(e -o o+ing "onditionsJ 555 ()& A pro2ision t(at t(e po i"y s(a )e in"ontesta) e a-ter it s(a (a2e )een in -or"e during t(e i-etime ot(e insured -or a period o- t+o years -rom its date o- issue as s(o+n in t(e po i"y6 or date o- appro2a o- ast reinstatement6 e5"ept -or non:payment o- premium and e5"ept -or 2io ation o- t(e "onditions o- t(e po i"y re ating to mi itary or na2a ser2i"e in time o- +ar; Section 66,. No po i"y o- group i-e insuran"e s(a )e issued and de i2ered in t(e P(i ippines un ess it "ontains in su)stan"e t(e -o o+ing pro2isions6 or pro2isions +(i"( in t(e opinion o- t(e Commissioner are more -a2ora) e to t(e persons insured6 or at east as -a2ora) e to t(e persons insured and more -a2ora) e to t(e po i"y:(o dersJ 555 ()& A pro2ision t(at t(e 2a idity o- t(e po i"y s(a not )e "ontested6 e5"ept -or non:payment o- premiums a-ter it (as )een in -or"e -or t+o years -rom its date o- issue; and t(at no statement made )y any insured under t(e po i"y re ating to (is insura)i ity s(a )e used in "ontesting t(e 2a idity o- t(e insuran"e +it( respe"t to +(i"( su"( statement +as made a-ter su"( insuran"e (as )een in -or"e prior to t(e "ontest -or a period o- t+o years during su"( personLs i-etime nor un ess "ontained in +ritten instrument signed )y (im; Section 6/-5 In t(e "ase o- industria i-e insuran"e6 t(e po i"y s(a "ontain in su)stan"e t(e -o o+ing pro2isionsJ 555 ()& A pro2ision t(at t(e po i"y s(a )e in"ontesta) e a-ter it (as )een in -or"e during t(e i-etime o- t(e insured -or a spe"i-ied period6 not more t(an t+o years -rom its date o- issue6 e5"ept -or non:payment opremiums and e5"ept -or 2io ation o- t(e "onditions o- t(e po i"y re ating to na2a or mi itary ser2i"e6 or ser2i"es au5i iary t(ereto6 and e5"ept as to pro2isions re ating to )ene-its in t(e e2ent o- disa)i ity as de-ined in t(e po i"y6 and t(ose granting additiona insuran"e spe"i-i"a y against deat( )y a""ident or )y a""identa means6 or to additiona insuran"e against oss o-6 or oss o- use o-6 spe"i-i" mem)ers o- t(e )ody; P"o$#e2 5 ' #roc!red ins!rance on his ife thro!)h fra!d! ent concea ment or misre#resentation$ -hat is the effect if ' dies within two (ear from the iss!ance of the #o ic(, and the ins!rer earned of the concea ment or misre#resentation> 7is )ene-i"iary "annot re"o2er on t(e po i"y )e"ause t(e a+ says t(at t(e po i"y must (a2e )een in -or"e during t(e i-etime o- t(e insured -or a period o- t+o years. '(e deat( o- t(e insured ma*es t(e po i"y no onger ,in -or"e1 and t(e insurer "an sti res"ind t(e "ontra"t. -hat if the two (ears had a read( a#sed> '(en t(e insurer "annot e5er"ise (is rig(t o- res"ission anymore. W(et(er A is dead or a i2e is immateria 6 +(at is important is t(e -a"t t(at t+o years (a2e a ready apsed and (as "ured t(e -raud "ommitted )y A. B #roc!red a ife ins!rance in Jan 2000$ =e attested that he was in )ood hea th which was tr!e$ Before 0GGG ended, B defa! ted in the #a(ment of the #remi!m and thereafter the ins!rance com#an( cance ed his #o ic($ 2n Mar 2001, B a## ied for the reinstatement of his ife ins!rance #o ic( tenderin) the overd!e amo!nts$ 's re3!ired, B s!bmitted that a certificate statin) that he is sti in )ood hea th$ *he tr!th however was that in Feb. 2001, B was dia)nosed with cancer and on ( had 0 (ears to ive$ *he ins!rance was reinstated on A ril 2001$ B died on Feb. 200! and +, his beneficiar( fi ed a c aim a)ainst the ins!rance com#an($ *he atter ref!sed c aimin) that B concea ed the fact that he was aff icted with cancer$ + contends that the 0 (ears co!ntin) from Jan 2000 had a read( a#sed and therefore the ins!rance com#an( cannot contest the concea ment made b( B$ 2s + correct>

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No. Se". #0 pro2ides t(at t(e t+o years are "ounted -rom t(e time t(e date o- its issue or o- its ast reinstatement. Sin"e t(e reinstatement +as made in Apr. C%%16 t(e "ounting o- t(e t+o:year period s(ou d start -rom t(ere. '(e "on"ea ment t(at 3 made +(en (e app ied -or t(e reinstatement is not in"ontesta) e. '(e insurer is on"e again gi2en t+o years -rom t(e date o- reinstatement to in2estigate t(e 2era"ity o- t(e -a"ts represented )y t(e insured in t(e app i"ation -or reinstatement. (So iman 2. US <i-e& Counting -rom Apr. C%%16 it is appro5imate y 1 year and 1% mos up unti t(e deat( o- 36 and t(e insurer "an raise t(e de-ense o"on"ea ment. Same facts$ B!t instead, B died on Fecember 0GG3$ 2s the answer sti the same> '(is time6 C "an no+ "o e"t -rom t(e insuran"e "ompany. Sin"e t(e date o- reinstatement +as Apri C%%16 and 3 died in !e"em)er C%%96 t(e t+o year period (as apsed and t(e po i"y (as )e"ome in"ontesta) e. Ca e 9 7718 Phi#a2ca"e *5 CA (repeat "ase O.& /79 SCRA /16 76--68 Fact 9

Ernani 'rinos6 app ied -or a (ea t( "are "o2erage +it( P(i am"are. In t(e standard app i"ation -orm6 (e ans+ered NB to t(e -o o+ing GuestionJ ,=ave (o! or an( of (o!r fami ( members ever cons! ted or been treated for hi)h b ood #ress!re, heart tro!b e, diabetes, cancer, iver disease, asthma or #e#tic ! cer> (2f ?es, )ive detai s)4 '(e app i"ation +as appro2ed -or a period o- one year -rom >ar"( 16 1.00 to >ar"( 16 1.0.. 7e +as a issued 7ea t( Care Agreement6 and under su"(6 (e +as entit ed to a2ai o- (ospita i4ation )ene-its6 +(et(er ordinary or emergen"y6 isted t(erein. 7e +as a so entit ed to a2ai o- Mout:patient )ene-itsM su"( as annua p(ysi"a e5aminations6 pre2enti2e (ea t( "are and ot(er out:patient ser2i"es. Upon t(e termination o- t(e agreement6 t(e same +as e5tended -or anot(er year -rom >ar"( 16 1.0. to >ar"( 16 1..%6 t(en -rom >ar"( 16 1..% to Eune 16 1..%. '(e amount o- "o2erage +as in"reased to a ma5imum sum o- P/F6%%%.%% per disa)i ity. !uring t(e period o- (is "o2erage6 Ernani su--ered a (eart atta"* and +as "on-ined at t(e >ani a >edi"a Center (>>C& -or one mont( )eginning >ar"( .6 1..%. W(i e (er (us)and +as in t(e (ospita 6 Eu ita tried to " aim t(e )ene-its under t(e (ea t( "are agreement. 7o+e2er6 P(i am"are denied (er " aim saying t(at t(e 7ea t( Care Agreement +as 2oid. A""ording to P(i am"are6 t(ere +as "on"ea ment regarding ErnaniLs medi"a (istory. o !o"tors at t(e >>C a eged y dis"o2ered at t(e time o- ErnaniLs "on-inement t(at (e +as (ypertensi2e6 dia)eti" and ast(mati"6 "ontrary to (is ans+er in t(e app i"ation -orm. Eu ita (ad no "(oi"e )ut to pay t(e (ospita i4ation e5penses (erse -6 amounting to a)out P/$6%%%.%% A-ter (er (us)and +as dis"(arged -rom t(e >>C6 (e +as attended )y a p(ysi"a t(erapist at (ome. <ater6 (e +as admitted at t(e C(inese 8enera 7ospita (C87&. !ue to -inan"ia di--i"u ties6 Eu ita )roug(t (er (us)and (ome again. In t(e morning o- Apri 196 1..%6 Ernani (ad -e2er and +as -ee ing 2ery +ea*. Eu ita +as "onstrained to )ring (im )a"* to t(e C87 +(ere (e died on t(e same day. Eu ita instituted6 an a"tion -or damages against P(i am"are. S(e as*ed -or reim)ursement o- (er e5penses p us mora damages and attorneyLs -ees. R'C de"ided in -a2or o- Eu ita. CA a--irmed.

I &e an% Re o#&tion 9 @hi amcare bro!)ht the instant #etition for review, raisin) the #rimar( ar)!ment that a hea th care a)reement is not an ins!rance contract9 hence the 5incontestabi it( c a!se5 !nder the 2ns!rance +ode *it e 1, Sec$ 4A does not a## ($ SC (e d t(at in t(e "ase at )ar6 t(e insura) e interest o- respondentLs (us)and in o)taining t(e (ea t( "are agreement +as (is o+n (ea t(. '(e (ea t( "are agreement +as in t(e nature o- non: i-e insuran"e6 +(i"( is primari y a "ontra"t o- indemnity. Bn"e t(e mem)er in"urs (ospita 6 medi"a or any ot(er e5pense arising -rom si"*ness6 inIury or ot(er stipu ated "ontingent6 t(e (ea t( "are pro2ider must pay -or t(e same to t(e e5tent agreed upon under t(e "ontra"t.

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Under t(e tit e C aim pro"edures o- e5penses6 P(i am"are. (ad 1C mos -rom t(e date o- issuan"e o- t(e Agreement +it(in +(i"( to "ontest t(e mem)ers(ip o- t(e patient i- (e (ad pre2ious ai ment o- ast(ma6 and si5 mont(s -rom t(e issuan"e o- t(e agreement i- t(e patient +as si"* o- dia)etes or (ypertension. '(e periods (a2ing e5pired6 t(e de-ense o- "on"ea ment or misrepresentation no onger ie. @etitioner ar)!es that res#ondent:s h!sband concea ed a materia fact in his a## ication$ 2t a##ears that in the a## ication for hea th covera)e, #etitioners re3!ired res#ondent:s h!sband to si)n an e&#ress a!thori6ation for an( #erson, or)ani6ation or entit( that has an( record or know ed)e of his hea th to f!rnish an( and a information re ative to an( hos#ita i6ation, cons! tation, treatment or an( other medica advice or e&amination$ P(i am"are "annot re y on t(e stipu ation regarding MIn2a idation o- agreementM +(i"( readsJ Bai !re to disc ose or misre#resentation of an( materia information b( the member in the a## ication or medica e&amination, whether intentiona or !nintentiona , sha a!tomatica ( inva idate the ')reement from the ver( be)innin) and iabi it( of @hi amcare sha be imited to ret!rn of a Membershi# Bees #aid$ 'n !ndisc osed or misre#resented information is deemed materia if its reve ation wo! d have res! ted in the dec ination of the a## icant b( @hi amcare or the assessment of a hi)her Membershi# Bee for the benefit or benefits a## ied for$ '(e ans+er assai ed )y petitioner +as in response to t(e Guestion re ating to t(e medi"a (istory o- t(e app i"ant. '(is arge y depends on opinion rat(er t(an -a"t6 espe"ia y "oming -rom respondentLs (us)and +(o +as not a medi"a do"tor. W(ere matters o- opinion or Iudgment are "a ed -or6 ans+ers made in good -ait( and +it(out intent to de"ei2e +i not a2oid a po i"y e2en t(oug( t(ey are untrue. '(us6 (') tho!)h fa se, a re#resentation of the e&#ectation, intention, be ief, o#inion, or "!d)ment of the ins!red wi not avoid the #o ic( if there is no act!a fra!d in ind!cin) the acce#tance of the risk, or its acce#tance at a ower rate of #remi!m, and this is ikewise the r! e a tho!)h the statement is materia to the risk, if the statement is obvio!s ( of the fore)oin) character, since in s!ch case the ins!rer is not "!stified in re (in) !#on s!ch statement, b!t is ob i)ated to make f!rther in3!ir($ *here is a c ear distinction between s!ch a case and one in which the ins!red is fra!d! ent ( and intentiona ( states to be tr!e, as a matter of e&#ectation or be ief, that which he then knows, to be act!a ( !ntr!e, or the im#ossibi it( of which is shown b( the facts within his know ed)e, since in s!ch case the intent to deceive the ins!rer is obvio!s and amo!nts to act!a fra!d$ '(e -raudu ent intent on t(e part o- t(e insured must )e esta) is(ed to +arrant res"ission o- t(e insuran"e "ontra"t. Con"ea ment as a de-ense -or t(e (ea t( "are pro2ider or insurer to a2oid ia)i ity is an a--irmati2e de-ense and t(e duty to esta) is( su"( de-ense )y satis-a"tory and "on2in"ing e2iden"e rests upon t(e pro2ider or insurer. In any "ase6 +it( or +it(out t(e aut(ority to in2estigate6 petitioner is ia) e -or " aims made under t(e "ontra"t. 7a2ing assumed a responsi)i ity under t(e agreement6 petitioner is )ound to ans+er t(e same to t(e e5tent agreed upon. In t(e end6 t(e ia)i ity o- t(e (ea t( "are pro2ider atta"(es on"e t(e mem)er is (ospita i4ed -or t(e disease or inIury "o2ered )y t(e agreement or +(ene2er (e a2ai s ot(e "o2ered )ene-its +(i"( (e (as prepaid. Under Se"tion C/ o- t(e Insuran"e Code6 Ma "on"ea ment entit es t(e inIured party to res"ind a "ontra"t oinsuran"e.M '(e rig(t to res"ind s(ou d )e e5er"ised pre2ious to t(e "ommen"ement o- an a"tion on t(e "ontra"t. In t(is "ase6 no res"ission +as made. 3esides6 t(e "an"e ation o- (ea t( "are agreements as in insuran"e po i"ies reGuire t(e "on"urren"e o- t(e -o o+ing "onditionsJ 1. Prior noti"e o- "an"e ation to insured; C. Noti"e must )e )ased on t(e o""urren"e a-ter e--e"ti2e date o- t(e po i"y o- one or more o- t(e grounds mentioned; 9. >ust )e in +riting6 mai ed or de i2ered to t(e insured at t(e address s(o+n in t(e po i"y; #. >ust state t(e grounds re ied upon pro2ided in Se"tion $# o- t(e Insuran"e Code and upon reGuest o- insured6 to -urnis( -a"ts on +(i"( "an"e ation is )ased. None o- t(e a)o2e pre:"onditions +as -u -i ed in t(is "ase. W(en t(e terms o- insuran"e "ontra"t "ontain imitations on ia)i ity6 "ourts s(ou d "onstrue t(em in su"( a +ay as to pre" ude t(e insurer -rom non: "omp ian"e +it( (is o) igation. 3eing a "ontra"t o- ad(esion6 t(e terms o- an insuran"e "ontra"t are to )e "onstrued stri"t y against t(e party +(i"( prepared t(e "ontra"t N t(e insurer. 3y reason o- t(e e5" usi2e "ontro o- t(e insuran"e "ompany o2er t(e terms and p(raseo ogy o- t(e insuran"e "ontra"t6 am)iguity must )e stri"t y interpreted against t(e insurer and i)era y in -a2or o- t(e insured6 espe"ia y to a2oid -or-eiture. '(is is eGua y app i"a) e to 7ea t( Care Agreements. '(e p(raseo ogy used in medi"a or (ospita ser2i"e "ontra"ts6 su"( as t(e one at )ar6 must )e i)era y "onstrued in -a2or o- t(e su)s"ri)er6 and i- dou)t-u or

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reasona) y sus"epti) e o- t+o interpretations t(e "onstru"tion "on-erring "o2erage is to )e adopted6 and e5" usionary " auses o- dou)t-u import s(ou d )e stri"t y "onstrued against t(e pro2ider. 7768 So#i2an *5 US Li)e 1-0 PHIL 1-06 Fact 9 US <i-e issued a C% yr endo+ment i-e po i"y on t(e Ioint i2es o- Patri"io So iman and (is +i-e Rosario6 ea"( o- t(em )eing t(e )ene-i"iary o- t(e ot(er. In >ar. 1.#.6 t(e spouses +ere in-ormed t(at t(e premium -or Ean 1.#. +as sti unpaid not+it(standing t(at t(e 91:day gra"e period (as a ready e5pired6 and t(ey +ere -urnis(ed at t(e same time ong:-orm (ea t( "erti-i"ates -or t(e reinstatement o- t(e po i"ies. In Apr 1.#.6 t(ey su)mitted t(e "erti-i"ates and paid t(e premiums. In Ean. 1.F%6 Rosario died o- a"ute di ation o- t(e (eart6 and t(erea-ter6 Patri"io -i ed a " aim -or t(e pro"eeds o- t(e insuran"e. US i-e denied t(e " aim and -i ed -or t(e res"ission o- t(e "ontra"t on t(e ground t(at t(e "erti-i"ates -ai ed to dis" ose t(at Rosario (ad )een su--ering -rom )ron"(ia ast(ma -or 9 years prior to t(eir su)mission. I &e9 WBN t(e "ontra"t "an sti )e res"inded.

He#%9 >e 5 '(e insurer is on"e again gi2en t+o years -rom t(e date o- reinstatement to in2estigate into t(e 2era"ity o- t(e -a"ts represented )y t(e insured in t(e app i"ation -or reinstatement. W(en US i-e soug(t to res"ind t(e "ontra"t on t(e ground o- "on"ea mentKmisrepresentation6 t+o years (ad not yet e apsed. 7en"e6 t(e "ontra"t "an sti )e res"inded. 77/8 Tan *5 CA 170 SCRA 0-/ Fact 9 'an <ee Siong +as issued a po i"y )y P(i am i-e on No2. $6 1./9. Bn Apr C$6 1./F6 'an died o- (epatoma. 7is )ene-i"iaries t(en -i ed a " aim +it( P(i am i-e -or t(e pro"eeds o- t(e insuran"e. P(i am i-e +rote t(e )ene-i"iaries in Sep. 1./F denying t(eir " aim and res"inding t(e "ontra"t on t(e ground o- misrepresentation. '(e )ene-i"iaries "ontend t(at P(i am i-e "an no onger res"ind t(e "ontra"t on t(e ground o- misrepresentation as res"ission must a eged y )e done ,during t(e i-etime ot(e insured1 +it(in t+o years and prior to t(e "ommen"ement o- t(e a"tion -o o+ing t(e +ording o- Se". #06 par. C. I &e9 WBN P(i am i-e "an res"ind t(e "ontra"t.

He#%9 >ES5 '(e p(rase ,during t(e i-etime1 -ound in Se". #0 simp y means t(at t(e po i"y is no onger in -or"e a-ter t(e insured (as died. '(e *ey p(rase in t(e se"ond paragrap( is ,-or a period o- t+o years1. What i a i2!#e" i##& t"ation o) the "&#in3 in Tan *5 CA' '(e period to "onsider in a i-e insuran"e poii"y is ,t+o years1 -rom t(e date o- issue or o- t(e ast reinstatement. So i- -or e5amp e t(e po i"y +as issuedKreinstated on Ean 16 C%%%6 t(e insurer "an sti e5er"ise (is rig(t to res"ind up to Ean. 16 C%%9 or t+o years -rom t(e date o- issueKreinstatement6 RE8AR!<ESS o- +(et(er t(e insured died )e-ore or a-ter Ean. 16 C%%9. 7708 Tan Cha4 Hen3 *5 We t Coa t Li)e (repeat "ase O$0& 11 PHIL ,Fact 9 In 1.C$6 'an C(ay 7eng sued West Coast on t(e po i"y a eged y issued to (is ,un" e16 'an Caeng +(o died in 1.CF. 7e +as t(e so e )ene-i"iary t(ereo-. West Coast re-used on t(e ground t(at t(e po i"y +as o)tained )y 'an Caeng +it( t(e (e p o- agents 8o C(ui ian6 @ran"is"o San"(e4 and !r. <o"sin o- West Coast.

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West Coast said t(at it +as made to appear t(at 'an Caeng +as sing e6 a mer"(ant6 (ea t( and not a drug user6 +(en in -a"t (e +as married6 a a)orer6 su--ering -orm tu)er"u osis and addi"ted to drugs. West Coast no+ denies ia)i ity )ased on t(ese misrepresentations. 'an C(ay "ontends t(at West Coast may not res"ind t(e "ontra"t )e"ause an a"tion -or per-orman"e (as a ready )een -i ed. 'ria "ourt -ound -or 'an C(ay (o ding t(at an insurer "annot a2oid a po i"y +(i"( (as )een pro"ured )y -raud un ess (e )rings an a"tion to res"ind it )e-ore (e is sued t(ereon. &e9 WBN West Coast=s a"tion -or res"ission is t(ere-ore )arred )y t(e "o e"tion suit -i ed )y 'an C(ay.

He#%9 NO5 Pre"ise y6 t(e de-ense o- West Cast +as t(at t(roug( -raud in its e5e"ution6 t(e po i"y is 2oid a) initio6 and t(ere-ore6 no 2a id "ontra"t +as e2er made. Its a"tion t(en "annot )e -ore res"ission )e"ause an a"tion to res"ind is -ounded upon and presupposes t(e e5isten"e o- t(e "ontra"t. 7en"e6 West Coast=s de-ense is not )arred )y Se". #/. In t(e instant "ase6 it +i )e noted t(at e2en in its prayer6 t(e de-endant does not see* to (a2e t(e a eged insuran"e "ontra"t res"inded. It denies t(at it e2er made any "ontra"t o- insuran"e on t(e i-e o- 'an Caeng6 or t(at any su"( a "ontra"t e2er e5isted6 and t(at is t(e Guestion +(i"( it see*s to (a2e itigated )y its spe"ia de-ense. In t(e 2ery nature o- t(ings6 i- t(e de-endant ne2er made or entered into t(e "ontra"t in Guestion6 t(ere is no "ontra"t to res"ind6 and6 (en"e6 se"tion #/ upon +(i"( t(e o+er "ourt )ased its de"ision in sustaining t(e demurrer does not app y. As stated6 an a"tion to res"ind a "ontra"t is -ounded upon and presupposes t(e e5isten"e o- t(e "ontra"t +(i"( is soug(t to )e res"inded. I- a o- t(e materia matters set -ort( and a eged in t(e de-endantLs spe"ia p ea are true6 t(ere +as no 2a id "ontra"t o- insuran"e6 -or t(e simp e reason t(at t(e minds o- t(e parties ne2er met and ne2er agreed upon t(e terms and "onditions o- t(e "ontra"t. We are " ear y o- t(e opinion t(at6 i- su"( matters are *no+n to e5ist )y a preponderan"e o- t(e e2iden"e6 t(ey +ou d "onstitute a 2a id de-ense to p ainti--Ls "ause o- a"tion. Upon t(e Guestion as to +(et(er or not t(ey are or are not true6 +e do not at t(is time (a2e or e5press any opinion6 )ut +e are " ear t(at se"tion #/ does not app y to t(e a egations made in t(e ans+er6 and t(at t(e tria "ourt erred in sustaining t(e demurrer.

TITLE VI . THE POLIC>

Section 09. '(e +ritten instrument in +(i"( a "ontra"t o- insuran"e is set -ort(6 is "a ed a po i"y o- insuran"e. Section 1-. '(e po i"y s(a )e in printed -orm +(i"( may "ontain ) an* spa"es; and any +ord6 p(rase6 " ause6 mar*6 sign6 sym)o 6 signature6 num)er6 or +ord ne"essary to "omp ete t(e "ontra"t oinsuran"e s(a )e +ritten on t(e ) an* spa"es pro2ided t(erein. Any rider6 " ause6 +arranty or endorsement purporting to )e part o- t(e "ontra"t o- insuran"e and +(i"( is pasted or atta"(ed to said po i"y is not )inding on t(e insured6 un ess t(e des"ripti2e tit e or name o- t(e rider6 " ause6 +arranty or endorsement is a so mentioned and +ritten on t(e ) an* spa"es pro2ided in t(e po i"y. Un ess app ied -or )y t(e insured or o+ner6 any rider6 " ause6 +arranty or endorsement issued a-ter t(e origina po i"y s(a )e "ountersigned )y t(e insured or o+ner6 +(i"( "ountersignature s(a )e ta*en as (is agreement to t(e "ontents o- su"( rider6 " ause6 +arranty or endorsement. 8roup insuran"e and group annuity po i"ies6 (o+e2er6 may )e type+ritten and need not )e in printed -orm. What i a !o#ic4 o) in &"ance' Se". #. de-ines a po i"y o- insuran"e as a +ritten instrument in +(i"( t(e "ontra"t o- insuran"e is set -ort(. Who i3n the !o#ic4 o) in &"ance9

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8enera y6 on y t(e insurer or (is du y aut(ori4ed agent signs t(e po i"y. It need not )e singed )y t(e insured EDCEP' +(ere t(e e5press +arranties are "ontained in a separate instrument -orming part o- t(e po i"y6 in +(i"( "ase6 Se". /% reGuires t(at t(e instrument )e so signed. Wh4 a"e the te"2 o) the !o#ic4 i2!o"tant' '(ey are important )e"ause t(ey measure t(e ia)i ity o- t(e insurer on one (and6 and t(e ot(er (and6 stri"t "omp ian"e +it( t(e terms are reGuired -or t(e re"o2ery on t(e part o- t(e insured. I the !o#ic4 an% the Cont"act one an% the a2e thin3' NBPE. A "ontra"t is a meeting o- t(e minds o- t(e insured and t(e insurer. (Remem)er C<VH& '(e po i"y BN<A t(e -orma +ritten instrument e2iden"ing t(e "ontra"t. What i & &a##4 the $e t e*i%ence that a cont"act ha $een ente"e% into $et(een the in &"e" an% the in &"e%' !e i2ery o- t(e po i"y )y t(e insurer to t(e insured. What a"e the e))ect o) the %e#i*e"4 o) the !o#ic4' I- t(e de i2ery is con%itiona#6 non:-u -i ment o- t(e "ondition )ars t(e "ontra"t -rom ta*ing e--e"t. I- t(e de i2er is &ncon%itiona#6 t(e insuran"e )e"omes e--e"ti2e at t(e time o- de i2ery. What i a "i%e"' It is a printed or typed stipu ation "ontained on a s ip o- paper atta"(ed to t(e po i"y and -orming an integra part o- t(e po i"y. Riders are usua y atta"(ed to t(e po i"y )e"ause t(ey "onstitute additiona stipu ations )et+een t(e parties. What ha!!en i) the"e i an incon i tenc4 $et(een the !o#ic4 an% the "i%e"' RI!ER pre2ai s6 as )eing a more de i)erate e5pression o- t(e agreement o- t(e "ontra"ting parties. What a"e the "e=&i"e2ent in o"%e" that a "i%e" $e $in%in3 &!on the in &"e%' 1& !es"ripti2e tit e or name o- t(e rider +(i"( is pasted or atta"(ed to a po i"y >US' )e mentioned and +ritten on t(e ) an* spa"es pro2ided -or in t(e po i"y; and C& Un ess app ied -or )y t(e insured or o+ner6 said insured or o+ner >US' "ountersign t(e rider. Do the !"ece%in3 "e=&i"e2ent a!!#4 on#4 to "i%e" ' NB. t(ey app y a so to +arranties6 " auses and endorsements. What a"e (a""antie ' Warranties are inserted or atta"(ed to a po i"y to e iminate spe"i-i" potentia in"reases o- (a4ard during t(e po i"y term o+ing to a"tions o- t(e insured6 or "onditions o- property. What a"e c#a& e ' C auses are agreements )et+een t(e insurer and t(e insured on "ertain matters re ating to t(e ai)iity ot(e insurer in "ase o- oss. What a"e e@a2!#e o) c#a& e 9 1& Z C ause +(ere t(e insurer is ia) e -or on y Z o- t(e oss or damage to t(e insured C& <oss Paya) e " ause +(ere t(e oss i- any is paya) e to t(e party or parties named6 as t(eir interests may appear. 9& C(ange o- B+ners(ip " ause +(ere t(e insuran"e +i insure to t(e )ene-it o- +(omsoe2er6 during t(e "ontinuan"e o- t(e ris*6 may )e"ome t(e o+ner o- t(e interest insured. What i an en%o" e2ent' An endorsement is any pro2ision added to an insuran"e "ontra"t a tering its s"ope or app i"ation. E5amp es +ou d )e t(ose additions to t(e "ontra"t "(anging t(e amount6 t(e rate or t(e term o- t(e same. What %oe Sec5 666 a4' Section 666. No po i"y6 "erti-i"ate or "ontra"t o- insuran"e s(a )e issued or de i2ered +it(in t(e P(i ippines un ess in t(e -orm pre2ious y appro2ed )y t(e Commissioner6 and no app i"ation -orm s(a )e used +it(6 and no rider6 " ause6 +arranty or endorsement s(a )e atta"(ed to6 printed or stamped upon su"( po i"y6 "erti-i"ate or "ontra"t un ess t(e -orm o- su"( app i"ation6 rider6 " ause6 +arranty or endorsement (as )een appro2ed )y t(e Commissioner.

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Ca e 9 7718 Sin%a4en *5 In &#a" Li)e 66 PHIL 9 Fact 9 Arturo Sindayen +as a inotype operator in t(e 3ureau o- Printing. 7e and (is +i-e @ortunat +ent to Cami ing to spend C(ristmas +it( (is aunt @e i"idad Estrada. Bn !e". C$6 1.9C6 +(i e sti in Cami ing6 (e made a +ritten app i"ation to Insu ar <i-e6 t(roug( its agent6 Cristo)a 7endo4a6 -or a po i"y o- insuran"e on (is i-e in t(e sum o- 16%%%. 7e paid t(e agent P1F as part o- t(e -irst premium. It +as agreed t(at t(e po i"y6 +(en and i- issued6 s(ou d )e de i2ered to @e i"idad +it( +(om Sindayen e-t t(e sum PCF.%$ to "omp ete t(e payment o- t(e -irst annua premium o- P#%.%$. Bn Ean 16 1.996 Sindayen +as e5amined )y Insu ar=s do"tor +(o made a -a2ora) e report to Insu ar. '(e ne5t day6 Sindayen returned to >ani a and resumed (is +or*. Bn Ean. 116 1.996 Insu ar a""epted t(e ris* and issued a po i"y6 and mai ed t(e same to its agent -or de i2ery to t(e insured. Bn Ean. 1C6 1.996 Sindayen "omp ained o- a se2ere (eada"(e. BN Ean. 1F6 1.996 (e "a ed a p(ysi"ian +(o -ound t(at Sindayen +as su--ering -rom a"ute nep(ritis and uremia. 7is i ness did not yie d to treatment and on Ean. 1.6 1.996 (e died.

'(e po i"y +(i"( t(e "ompany issued and mai ed in mani a on Ean. 11 1.99 +as re"ei2ed )y its agent in Cami in on Ean. 1$6 1.99. Bn Ean 106 1.996 t(e agent6 in a""ordan"e +it( (is agreement +it( t(e insured de i2ered t(e po i"y to @e i"ided upon (er payment o- t(e )a an"e o- t(e 1st year=s premium. '(e agent as*ed @e i"idad i- (er nep(e+ +as in good (ea t( and s(e rep ied t(at s(e )e ie2ed so )e"ause s(e (ad no in-ormation t(at (e +as si"*6 and t(ereupon 6 t(e po i"y +as (anded to (er )y t(e agent. Bn Ean. C%6 1.996 t(e agent earned o- t(e deat( o- Sindayen6 a-ter+(i"( (e "a ed upon @e i"idad and as*ed (er to return t(e po i"y. @e i"idad did so. Bn @e). #6 1.996 t(e "ompany o)tained -rom Sindayen=s +ido+ @ortunata (a so t(e )ene-i"iary&6 (er signature on a ega do"ument +(ere)y in "onsideration o- t(e sum #%.%$ representing t(e amount opremium paid6 @ortunata t(ere)y re eases -ore2er and dis"(arges Insu ar -rom any and a " aims and o) igations s(e may (a2e against t(e atter. A "(e"* -or t(e a)o2e:mentioned amount +as dra+n in t(e name o- @ortunata6 )ut t(e same +as ne2er en"as(ed. Instead6 it +as returned to Insu ar and t(is "omp aint to en-or"e payment under t(e po i"y +as instituted. '(e app i"ation +(i"( Sindayen signed in Cami ing "ontained t(e -o o+ing pro2isionsJ D&&& (3) *hat the said #o ic( sha not take effect !nti the first #remi!m has been #aid and the #o ic( has been de ivered to and acce#ted b( me, whi e 2 am in )ood hea th$4 '(e main de-ense o- t(e "ompany is t(e po i"y ne2er too* e--e"t )e"ause o- par. 9 o- t(e app i"ation6 sin"e at t(e time o- t(e de i2ery o- t(e agent6 t(e insured +as not in good (ea t(. &e9 WBN t(e po i"y too* e--e"t.

He#%9 >ES5 '(ere is one ine o- Ameri"an "ases +(i"( (o ds t(at t(e stipu ation "ontained par. 9 is in t(e nature o- a "ondition pre"edent6 t(at is to say6 t(at t(ere "an )e no 2a id de i2ery to t(e insured un ess (e is in good (ea t( at t(at time; t(at t(is "ondition pre"edent goes to t(e 2ery essen"e o- t(e "ontra"t and "annot )e +ai2ed )y t(e agent ma*ing de i2ery o- t(e po i"y; 7BWEVER6 t(ere is a so a num)er o- Ameri"an de"ision +(i"( state t(e "ontrary. '(ese de"isions say t(at an agent to +(om a i-e insuran"e po i"y (simi ar to t(e one at )ar& +as sent +it( instru"tion to de i2er it to t(e insured6 (as aut(ority to )ind t(e "ompany )y ma*ing su"( de i2ery6 A<'7BU87 t(e insured +as NB' in good (ea t( at t(e time o- de i2ery6 on t(e t(eory t(at t(e de i2ery o- t(e po i"y )eing t(e -ina a"t to t(e "onsummation o- t(e "ontra"t6 t(e "ondition as to t(e insured=s good (ea t( +as WAIVE! )y t(e "ompany. '(ese same "ases -urt(er (o d t(at t(e de i2ery o- t(e po i"y )y t(e agent to t(e insured "onsummates t(e "ontra"t e2en t(oug( t(e agent *ne+ t(at t(e insured +as NB' in good (ea t( at t(e time6 t(e t(eory )eing6 t(at (is *no+ edge is t(e "ompany=s *no+ edge; and (is de i2ery is t(e "ompany=s de i2ery; t(at +(en

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t(e de i2ery is made not+it(standing t(is *no+ edge o- t(e de-e"t6 t(e "ompany is deemed to (a2e WAIVE! su"( de-e"t. '(e agent6 >endo4a +as du y i"ensed )y t(e Insuran"e Commission to a"t -or Insu ar <i-e. 7e (ad t(e aut(ority gi2en )y (im )y t(e "ompany to +it((o d t(e de i2ery o- t(e po i"y to t(e insured unti t(e -irst premium (as )een paid and t(e po i"y (as )een de i2ered to and a""epted )y t(e insured +(i e (e is in good (ea t(. W(et(er t(at "ondition (ad )een met or not p ain y "a s -or t(e e5er"ise o- dis"retion. >endo4a=s de"ision t(at t(e "ondition (ad )een met )y t(e insured and t(at it +as proper to ma*e de i2ery o- t(e po i"y to (im is Iust as )inding on t(e "ompany as i- t(e de"ision (ad )een made )y its 3oard o- !ire"tors. Admitted y6 >endo4a made a mista*e o- Iudgment )e"ause (e a"ted on insu--i"ient e2iden"e as to t(e state o- (ea t( o- t(e insured6 and t(is mista*e "annot )e said to )e indu"ed )y any mis"ondu"t on t(e part o- t(e insured. It is in t(e interest o- not on y o- t(e app i"ant )ut o- a insuran"e "ompanies as +e t(at t(ere s(ou d )e some a"t +(i"( gi2es t(e app i"ant t(e de-inite assuran"e t(at t(e "ontra"t (as )een "onsummated. '(is sense o- se"urity and o- pie"e o- mind t(at one=s dependents are pro2ided -or +it(out ris* o- eit(er oss or oitigation is t(e )edro"* o- i-e insuran"e. A " oud +i )e t(ro+n o2er t(e entire insuran"e )usiness i- t(e "ondition o- (ea t( o- t(e insured at t(e time o- t(e de i2ery o- t(e po i"y may )e inGuired into years a-ter+ards +it( t(e 2ie+ o- a2oiding t(e po i"y on t(e ground t(at it ne2er too* e--e"t )e"ause o- an a eged a"* o- good (ea t( at t(e time o- de i2ery. It is t(ere-ore in t(e pu) i" interest t(at +e are "onstrained to (o d6 as +e do6 t(at t(e de i2ery o- t(e po i"y to t(e insured )y an agent o- t(e "ompany +(o is aut(ori4ed to ma*e de i2ery or +it((o d de i2ery is t(e -ina a"t +(i"( )inds t(e "ompany and t(e insured6 in t(e a)sen"e o- -raud or ot(er ega grounds -or res"ission. '(e -a"t t(at t(e agent to +(om it (as entrusted t(is duty is dere i"t or neg igent or e2en dis(onest in t(e per-orman"e o- t(e duty +(i"( (as )een entrusted to (im +ou d "reate an o) igation )ased upon t(e aut(ori4ed a"ts o- t(e agent to+ard a t(ird party +(o +as not in "o usion +it( t(e agent. 7768 En"i=&eF *5 S&nLI)e 01 PHIL 669 Fact 9 Bn Sept. C# 1.1/6 7errer made an app i"ation to Sun<i-e t(roug( its o--i"e in >ani a -or i-e annuity. C days ater6 (e paid t(e sum o- $' to t(e "ompany=s anager in its >ani a o--i"e and +as gi2en a re"eipt.

Bn No2. C$6 1.1/6 t(e (ead o--i"e ga2e noti"e o- a""eptan"e )y "a) e to >ani a. Bn t(e same date6 t(e >ani a o--i"e prepared a etter noti-ying 7errer t(at (is app i"ation (as )een a""epted and t(is +as p a"ed in t(e ordinary "(anne s o- transmission6 )ut as -ar as *no+n +as ne*e" act&a##4 mai ed and ne*e" "ecei*e% )y 7errer. 7errer died on !e". C%6 1.1/. '(e p ainti-- as administrator o- 7errer=s estate )roug(t t(is a"tion to re"o2er t(e $' paid )y t(e de"eased. &e9 WBN t(e insuran"e "ontra"t +as per-e"ted.

He#%9 NO5 '(e "ontra"t -or i-e annuity +as NB' per-e"ted )e"ause it (ad NB' )een pro2ed satis-a"tori y t(at t(e a""eptan"e o- t(e app i"ation e2er "ame to t(e *no+ edge o- t(e app i"ant. An a""eptan"e o- an o--er oinsuran"e NB' a"tua y or "onstru"ti2e y "ommuni"ated to t(e proposer does NB' ma*e a "ontra"t oinsurane6 as t(e oc!s #oenitentiae is ended +(en an a""eptan"e (as passed )eyond t(e "ontro o- t(e party. NB'EJ <i-e annuity is t(e opposite o- a i-e insuran"e. In i-e annuity6 a )ig amount is gi2en to t(e insuran"e "ompany6 and i- a-ter a "ertain period o- time t(e insured is sti i2ing6 (e is entit ed to regu ar sma er amounts -or t(e rest o- (is i-e. E5amp es o- <i-e annuity are pensions. <i-e Insuran"e on t(e ot(er (and6 t(e insured during t(e period o- t(e "o2erage ma*es sma regu ar payments and upon (is deat(6 t(e insurer pays a )ig amount to (is )ene-i"iaries. 7778 Tan3 *5 CA 79- SCRA 6/68 Fact 9

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Bn Sept. CF6 C.$F6 <ee Su 8uat6 +ido+6 $1 years o d and i iterate +(o spo*e on y C(inese6 app ied -or i-e insuran"e -or $%' +it( P(i am i-e. '(e app i"ation +as in t+o parts6 )ot( in Eng is(. '(e se"ond part dea t +it( (er state o- (ea t(. 7er ans+ers (a2ing s(o+n t(at s(e +as (ea t(6 P(i am i-e issued (er a po i"y e--e"ti2e B"t. C96 1.$F +it( (er nep(e+ Vi"ente 'ang as )ene-i"iary. Bn No2. 1F6 1.$F6 <ee again app ied -or additiona insuran"e o- (er i-e -or #%'. Sin"e it +as on y re"ent -rom t(e time s(e -irst app ied6 no -urt(er medi"a e5am +as made )ut s(e a""omp is(ed Part 1 (+(i"( "erti-ied t(e trut(-u ness o- statements made in Part. C& '(e po i"y +as again appro2ed. Bn Apri C% 1.$$6 <ee Su 8uat died o- <ung "an"er. 'ang " aimed t(e amount o 1%%' )ut P(i am i-e re-used to pay on t(e ground t(at t(e insured +as gui ty o- "on"ea ment and misrepresentation. 3ot( tria "ourt and CA ru ed t(at <ee +as gui ty o- "on"ea ment. 'ang=s position6 (o+e2er6 is t(at )e"ause <ee +as i iterate and spo*e on y C(inese6 s(e "ou d not )e (e d gui ty o- "on"ea ment o- (er (ea t( (istory )e"ause t(e app i"ation -or insuran"e +as Eng is(6 and t(e insurer (as not pro2en t(at t(e terms t(ereo- (ad )een -u y e5p ained to (er as pro2ided )y Art. 199C oCC. &e9 WBN Art. 199C app ies.

He#%9 NO5 Art. 199C is NB' app i"a) e. Under said arti" e6 t(e o) igation to s(o+ t(at t(e terms o- t(e "ontra"t (ad )een -u y e5p ained to t(e party +(o is una) e to read or understand t(e anguage o- t(e "ontra"t6 +(en -raud or mista*e is a eged6 de2o 2es on t(e party see*ing to en)o"ce it. 7ere6 t(e insuran"e "ompany is NB' see*ing to en-or"e t(e "ontra"t; on t(e "ontrary6 it is see*ing to a2oid its per-orman"e. It is petitioner +(o is see*ing to en-or"e it6 e2en as -raud or mista*e is NB' a eged. A""ording y6 P(i am i-e +as under no o) igation to pro2e t(at t(e terms o- t(e insuran"e "ontra"t +ere -u y e5p ained to t(e ot(er party. E2en i- +e +ere to say t(at t(e insurer is t(e one see*ing t(e per-orman"e o- t(e "ont "ontra"ts )y a2oiding paying t(e " aim6 it (as to )e noted as a)o2e stated t(at t(ere (as )een NB imputation o- mista*e o- -raud )y t(e i iterate insured +(ose persona ity is represented )y (er )ene-i"iary. In sum6 Art. 199C is inapp i"a) e6 and "onsidering t(e -indings o- )ot( t(e tria "ourt and t(e CA as to t(e Con"ea ment o<ee6 t(e SC a--irms t(eir de"isions. Con"urringJ E.6 Antonio In a "ontra"t o- insuran"e6 ea"( party must "ommuni"ate to t(e ot(er6 in good -ait(6 a -a"ts +it(in (is *no+ edge +(i"( are materia to t(e "ontra"t6 and +(i"( t(e ot(er (as no means o- as"ertaining. As a genera ru e6 t(e -ai ure )y t(e insured to dis" ose "onditions a--e"ting t(e ris* o- +(i"( (e is a+are ma*es t(e "ontra"t 2oida) e at t(e option o- t(e insurer. '(e reason -or t(is ru e is t(at insuran"e po i"ies are traditiona y "ontra"ts u)errimae -idei6 +(i"( means ,most a)undant good -ait(16 ,a)so ute and per-e"t "andor or openness and (onesty61 ,a)sen"e o- any "on"ea ment or de"eption (o+e2er s ig(t.1 7ere t(e CA -ound t(at t(e insured de i)erate y "on"ea ed materia -a"ts a)out (er p(ysi"a "ondition and (istory andKor "on"ea ed +it( +(oe2er assisted (er in re aying -a se in-ormation to t(e medi"a e5aminer. Certain y6 t(e petitioner "annot assume in"onsistent positions )y attempting to en-or"e t(e "ontra"t o- insuran"e -or t(e purpose o- "o e"ting t(e pro"eeds o- t(e po i"y and at t(e same time nu i-y t(e "ontra"t )y " aiming t(at it +as e5e"uted t(roug( -raud or mista*e. NB'EJ Art. 199CJ W(en one o- t(e parties is una) e to read or i- t(e "ontra"t is in a anguage not understood )y (im6 and mista*e or -raud is a eged6 t(e person en-or"ing t(e "ontra"t must s(o+ t(at t(e terms t(ereo(a2e )een -u y e5p ained to (im. 77,8 Pe"eF *5 CA /6/ SCRA 61/ 76---8 Fact 9

Primiti2o Pere4 (ad )een insured +it( t(e 3@ <i-eman Insuran"e Corporation sin"e 1.0% -or PC%6%%%.%%. In B"to)er 1.0/6 an agent o- <i-eman6 Rodo -o <a og6 2isited Pere4 in Que4on and "on2in"ed (im to app y -or additiona insuran"e "o2erage o- PF%6%%%.%%6 to a2ai o- t(e ongoing promotiona dis"ount o- P#%%.%% i- t(e premium +ere paid annua y.

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Primiti2o 3. Pere4 a""omp is(ed an app i"ation -orm -or t(e additiona insuran"e "o2erage. Virginia A. Pere46 (is +i-e6 paid PC6%/F.%% to <a og. '(e re"eipt issued )y <a og indi"ated t(e amount re"ei2ed +as a Mdeposit.M Un-ortunate y6 <a og ost t(e app i"ation -orm a""omp is(ed )y Pere4 and so on B"to)er C06 1.0/6 (e as*ed t(e atter to -i up anot(er app i"ation -orm. Bn No2em)er 16 1.0/6 Pere4 +as made to undergo t(e reGuired medi"a e5amination6 +(i"( (e passed. <a og -or+arded t(e app i"ation -or additiona insuran"e o- Pere46 toget(er +it( a its supporting papers6 to t(e o--i"e o- 3@ <i-eman Insuran"e Corporationn in Que4on +(i"( o--i"e +as supposed to -or+ard t(e papers to t(e >ani a o--i"e. Bn No2em)er CF6 1.0/6 Pere4 died +(i e (e +as riding a )an"a +(i"( "apsi4ed during a storm. At t(e time o- (is deat(6 (is app i"ation papers -or t(e additiona insuran"e +ere sti +it( t(e Que4on o--i"e. <a og testi-ied t(at +(en (e +ent to -o o+ up t(e papers6 (e -ound t(em sti in t(e Que4on o--i"e and so (e persona y )roug(t t(e papers to t(e >ani a o--i"e o- 3@ <i-eman Insuran"e Corporation. It +as on y on No2em)er C/6 1.0/ t(at said papers +ere re"ei2ed in >ani a. Wit(out *no+ing t(at Pere4 died on No2em)er CF6 1.0/6 3@ <i-eman Insuran"e Corporation appro2ed t(e app i"ation and issued t(e "orresponding po i"y -or t(e PF%6%%%.%% on !e"em)er C6 1.0/ Virginia +ent to >ani a to " aim t(e )ene-its under t(e insuran"e po i"ies o- t(e de"eased. S(e +as paid P#%6%%%.%% under t(e -irst insuran"e po i"y -or PC%6%%%.%% (dou) e indemnity in "ase o- a""ident& )ut t(e insuran"e "ompany re-used to pay t(e " aim under t(e additiona po i"y "o2erage o- PF%6%%%.%%6 t(e pro"eeds o- +(i"( amount to P1F%6%%%.%% in 2ie+ o- a trip e indemnity rider on t(e insuran"e po i"y. In its etter o- Eanuary C.6 1.00 to Virginia A. Pere46 t(e insuran"e "ompany maintained t(at t(e insuran"e -or PF%6%%%.%% (ad not )een per-e"ted at t(e time o- t(e deat( o- Primiti2o Pere4. ConseGuent y6 t(e insuran"e "ompany re-unded t(e amount o- PC6%/F.%% +(i"( Virginia Pere4 (ad paid <i-eman -i ed -or t(e res"ission and t(e de" aration o- nu ity. Pere46 on t(e ot(er (and6 a2erred t(at t(e de"eased (ad -u -i ed a (is prestations under t(e "ontra"t and a t(e e ements o- a 2a id "ontra"t are present. R'C ru ed in -a2or o- Pere4. CA re2ersed. &e9 WBN t(ere +as a per-e"ted additiona insuran"e "ontra"t.

He#%9 The cont"act (a not !e")ecte%5 Insuran"e is a "ontra"t +(ere)y6 -or a stipu ated "onsideration6 one party underta*es to "ompensate t(e ot(er -or oss on a spe"i-ied su)Ie"t )y spe"i-ied peri s. A "ontra"t6 on t(e ot(er (and6 is a meeting o- t(e minds )et+een t+o persons +(ere)y one )inds (imse -6 +it( respe"t to t(e ot(er to gi2e somet(ing or to render some ser2i"e. Consent must )e mani-ested )y t(e meeting o- t(e o--er and t(e a""eptan"e upon t(e t(ing and t(e "ause +(i"( are to "onstitute t(e "ontra"t. '(e o--er must )e "ertain and t(e a""eptan"e a)so ute. W(en Primiti2o -i ed an app i"ation -or insuran"e6 paid PC6%/F.%% and su)mitted t(e resu ts o- (is medi"a e5amination6 (is app i"ation +as su)Ie"t to t(e a""eptan"e o- pri2ate respondent 3@ <i-eman Insuran"e Corporation. '(e per-e"tion o- t(e "ontra"t o- insuran"e )et+een t(e de"eased and respondent "orporation +as -urt(er "onditioned upon "omp ian"e +it( t(e -o o+ing reGuisites stated in t(e app i"ation -ormJ 5there sha be no contract of ins!rance !n ess and !nti a #o ic( is iss!ed on this a## ication and that the said #o ic( sha not take effect !nti the #remi!m has been #aid and the #o ic( de ivered to and acce#ted b( me7!s in #erson whi e 27-e, am7are in )ood hea th$5 '(e assent o- pri2ate respondent 3@ <i-eman Insuran"e Corporation t(ere-ore +as not gi2en +(en it mere y re"ei2ed t(e app i"ation -orm and a t(e reGuisite supporting papers o- t(e app i"ant. Its assent +as gi2en +(en it issues a "orresponding po i"y to t(e app i"ant. Under t(e a)o2ementioned pro2ision6 it is on y +(en t(e app i"ant pays t(e premium and re"ei2es and a""epts t(e po i"y +(i e (e is in good (ea t( t(at t(e "ontra"t o- insuran"e is deemed to (a2e )een per-e"ted. It is not disputed6 (o+e2er6 t(at +(en Primiti2o died on No2em)er CF6 1.0/6 (is app i"ation papers -or additiona insuran"e "o2erage +ere sti +it( t(e )ran"( o--i"e o- respondent "orporation in 8uma"a and it +as on y t+o days ater6 or on No2em)er C/6 1.0/6 +(en <a og persona y de i2ered t(e app i"ation papers to t(e (ead o--i"e in >ani a. ConseGuent y6 t(ere +as a)so ute y no +ay t(e a""eptan"e o- t(e app i"ation "ou d (a2e )een "ommuni"ated to t(e app i"ant -or t(e atter to a""ept inasmu"( as t(e app i"ant at t(e time +as a ready dead.

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7798 CIR *5 Linco#n Phi# Li)e /79 SCRA 06/ 76--68 Fact 9

In t(e years prior to 1.0#6 <in"o n issued a spe"ia *ind o- i-e insuran"e po i"y *no+n as t(e MEunior Estate 3ui der Po i"y6M t(e distinguis(ing -eature o- +(i"( is a " ause pro2iding -or an automati" in"rease in t(e amount o- i-e insuran"e "o2erage upon attainment o- a "ertain age )y t(e insured +it(out t(e need o- issuing a ne+ po i"y. '(e " ause +as to ta*e e--e"t in t(e year 1.0#. !o"umentary stamp ta5es due on t(e po i"y +ere paid to t(e petitioner on y on t(e initia sum assured. Su)seGuent y6 petitioner issued de-i"ien"y do"umentary stamps ta5 assessment -or t(e year 1.0#6 "orresponding to t(e amount o- automati" in"rease o- t(e sum assured on t(e po i"y issued )y respondent. <in"o n Guestioned t(e de-i"ien"y assessments and soug(t t(eir "an"e ation in a petition -i ed in t(e Court o- 'a5 Appea s. C'A -ound no )asis -or t(e assessment. CA a--irmed. &e9 WBN t(e automati" in"rease o- t(e sum assured on t(e po i"y is ta5a) e.

He#%9 >ES5 CIR " aims t(at t(e Mautomati" in"rease " auseM in t(e su)Ie"t insuran"e po i"y is separate and distin"t -rom t(e main agreement and in2o 2es anot(er transa"tion; and t(at6 +(i e no ne+ po i"y +as issued6 t(e origina po i"y +as essentia y re:issued +(en t(e additiona o) igation +as assumed upon t(e e--e"ti2ity ot(is Mautomati" in"rease " auseM in 1.0#; (en"e6 a de-i"ien"y assessment )ased on t(e additiona insuran"e not "o2ered in t(e main po i"y is in order. '(e SC agreed +it( t(is "ontention. '(e su)Ie"t insuran"e po i"y at t(e time it +as issued "ontained an Mautomati" in"rease " ause.M A t(oug( t(e " ause +as to ta*e e--e"t on y in 1.0#6 it +as +ritten into t(e po i"y at t(e time o- its issuan"e. '(e distin"ti2e -eature o- t(e MIunior estate )ui der po i"yM "a ed t(e Mautomati" in"rease " auseM a ready -ormed part and par"e o- t(e insuran"e "ontra"t6 (en"e6 t(ere +as no need -or an e5e"ution o- a separate agreement -or t(e in"rease in t(e "o2erage t(at too* e--e"t in 1.0# +(en t(e assured rea"(ed a "ertain age. It is " ear -rom Se"tion 1/9 o- t(e NIRC t(at t(e payment o- do"umentary stamp ta5es is done at t(e time t(e a"t is done or transa"tion (ad and t(e ta5 )ase -or t(e "omputation o- do"umentary stamp ta5es on i-e insuran"e po i"ies under Se"tion 109 o- NIRC is t(e amount -i5ed in po i"y6 un ess t(e interest o- a person insured is sus"epti) e o- e5a"t pe"uniary measurement. <ogi"a y6 +e )e ie2e t(at t(e amount -i5ed in t(e po i"y is t(e -igure +ritten on its -a"e and +(ate2er in"reases +i ta*e e--e"t in t(e -uture )y reason o- t(e Mautomati" in"rease " auseM em)odied in t(e po i"y +it(out t(e need o- anot(er "ontra"t. 7ere6 a t(oug( t(e automati" in"rease in t(e amount o- i-e insuran"e "o2erage +as to ta*e e--e"t ater on6 t(e date o- its e--e"ti2ity6 as +e as t(e amount o- t(e in"rease6 +as a ready de-inite at t(e time o- t(e issuan"e o- t(e po i"y. '(us6 t(e amount insured )y t(e po i"y at t(e time o- its issuan"e ne"essari y in" uded t(e additiona sum "o2ered )y t(e automati" in"rease " ause )e"ause it +as a ready determina) e at t(e time t(e transa"tion +as entered into and -ormed part o- t(e po i"y. '(e Mautomati" in"rease " auseM in t(e po i"y is in t(e nature o- a "onditiona o) igation under Arti" e 11016 0 )y +(i"( t(e in"rease o- t(e insuran"e "o2erage s(a depend upon t(e (appening o- t(e e2ent +(i"( "onstitutes t(e o) igation. In t(e instant "ase6 t(e additiona insuran"e t(at too* e--e"t in 1.0# +as an o) igation su)Ie"t to a suspensi2e o) igation6 . )ut sti a part o- t(e insuran"e so d to +(i"( pri2ate respondent +as ia) e -or t(e payment o- t(e do"umentary stamp ta5. Section 11. A po i"y o- insuran"e must spe"i-yJ (a& '(e parties )et+een +(om t(e "ontra"t is made; ()& '(e amount to )e insured e5"ept in t(e "ases o- open or running po i"ies; ("& '(e premium6 or i- t(e insuran"e is o- a "(ara"ter +(ere t(e e5a"t premium is on y determina) e upon t(e termination o- t(e "ontra"t6 a statement o- t(e )asis and rates upon +(i"( t(e -ina premium is to )e determined; (d& '(e property or i-e insured;

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INSURANCE REVIEWER Atty. Quimson (e& '(e interest o- t(e insured in property insured6 i- (e is not t(e a)so ute o+ner t(ereo-; (-& '(e ris*s insured against; and (g& '(e period during +(i"( t(e insuran"e is to "ontinue.

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What 2& t a !o#ic4 contain an% (hat a"e the "ea on $ehin% &ch "e=&i"e2ent ' A po i"y must "ontainJ 1. Names o- t(e parties C. Amount o- insuran"e to easi y and e5a"t y determine t(e amount o- indemnity to )e paid in "ase o- oss or damage. '(is reGuirement (o+e2er "an )e dispensed +it( in "ases o- open or running po i"ies. 9. Rate o- premium 3e"ause t(e premium represents t(e "onsideration o- t(e "ontra"t; t(ese rates are de2e oped on t(e )asis o- t(e nature and "(ara"ter o- t(e ris* assumed. Remem)er Atty. Quimson=s -amous +ordsH As t(e ris* in"reases6 t(e rate o- premium a so in"reases. #. Property or i-e or t(ing insured Constitutes t(e Su)Ie"t >atter F. Interests o- t(e insured in t(e property In order to determine a"tua damage. Remem)er6 an o+ner gets t(e -u 2a ue o- t(e oss +(i e a mortgagee gets on y t(e 2a ue o- (is "redit. $. Ris*s insured against In order to *no+ +(en t(e insurer is "a ed to indemni-y t(e insured6 )e"ause i- t(is is NB' stated6 and you (o d t(e insurer ia) e -or any oss due to any "ause +(atsoe2er6 it +i resu t to a )ig oss on t(e part o- t(e insurer. /. !uration o- t(e insuran"e '(is period signi-ies t(e i-e o- t(e po i"y. I- t(e duration o- insuran"e (as a ready ended6 it "an no onger )e re2i2ed. What a"e the ;in% o) in &"a$#e "i ; ' 1& Persona ris*s i-e or (ea t( ris*s C& Property ris*s oss or damage to property 9& <ia)i ity ris*s in2o 2e ia)i ity o- t(e insured -or an inIury "aused to t(e person or property oanot(er What a"e the "e=&i"e2ent in o"%e" that a "i ; $e in &"a$#e' 1& '(e oss to )e insured against must )e important enoug( to +arrant t(e e5isten"e o- an insuran"e "ontra"t C& Ris* must permit a reasona) e statisti"a estimate o- t(e "(an"e o- oss in order to determine t(e amount o- premium to )e paid 9& '(e oss s(ou d )e de-inite as to "ause6 time6 p a"e and amount #& '(e oss is not "atastrop(i" F& Ris* is a""identa in nature NB'EJ Read se"tions CC/6 CC06 and C9% -or additiona matters to )e in" uded in indi2idua 6 group and industria i-e po i"ies.

Section 16. Co2er notes may )e issued to )ind insuran"e temporari y pending t(e issuan"e ot(e po i"y. Wit(in si5ty days a-ter t(e issue o- t(e "o2er note6 a po i"y s(a )e issued in ieu t(ereo-6 in" uding +it(in its terms t(e identi"a insuran"e )ound under t(e "o2er note and t(e premium t(ere-or. Co2er notes may )e e5tended or rene+ed )eyond su"( si5ty days +it( t(e +ritten appro2a ot(e Commissioner i- (e determines t(at su"( e5tension is not "ontrary to and is not -or t(e purpose o- 2io ating any pro2isions o- t(is Code. '(e Commissioner may promu gate ru es and regu ations go2erning su"( e5tensions -or t(e purpose o- pre2enting su"( 2io ations and may )y su"( ru es and regu ations dispense +it( t(e reGuirement o- +ritten appro2a )y (im in t(e "ase o- e5tension in "omp ian"e +it( su"( ru es and regu ations. What a"e t(o t4!e o) !"e#i2ina"4 cont"act o) in &"ance' '(e pre iminary "ontra"t o- !"e ent in &"ance and t(e pre iminary e@ec&to"4 cont"act o) in &"ance5

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What i a !"e#i2ina"4 cont"act o) !"e ent in &"ance' 3y a pre iminary "ontra"t o- insuran"e6 t(e insurer insures t(e su)Ie"t matter usua y )y +(at is *no+n as a ,)inding s ip1 or ,)inder1 or ,"o2er note1 +(i"( is t(e "ontra"t to )e e--e"ti2e unti t(e -orma po i"y is issued or t(e ris* is reIe"ted. What i a co*e" note' '(e "o2er not is mere y a +ritten memorandum o- t(e most important terms o- t(e pre iminary "ontra"t o- insurane6 intended to gi2e temporary prote"tion pending t(e in2estigation o- t(e ris* )y t(e insurer6 or unti t(e issuan"e o- a -orma po i"y6 pro2ided t(at it is ater determined t(at t(e app i"ant +as insura) e at t(e time it +as gi2en. 3y its nature6 it is su)Ie"t to a "onditions in t(e po i"y e5pe"ted e2en t(oug( t(at po i"y may ne2er issue. In i-e insuran"e6 +(ere an agreement is made )et+een an app i"ant and t(e insurers= agent6 no ia)i ity s(a atta"( unti t(e insurer appro2es t(e ris*. '(us6 in #i)e in &"ance6 a )inding s ip or )inding re"eipt !BES NB' insure itse -. Can 4o& e@!#ain a !"e#i2ina"4 e@ec&to"4 cont"act o) in &"ance' 3y a pre iminary e5e"utory "ontra"t o- insuran"e6 t(e insurer ma*es a "ontra"t to insure t(e su)Ie"t matter at some su)seGuent time +(i"( may )e de-inite or inde-inite. Under su"( an e5e"utory "ontra"t6 t(e rig(t a"Guired )y t(e insured is mere y to demand t(e de i2ery o- t(e po i"y in a""ordan"e +it( t(e terms agreed upon and t(e o) igation assumed )y t(e insurer is to de i2er t(e said po i"y. What a"e the "&#e 3o*e"nin3 co*e" note ' 1& Insuran"e "ompanies doing )usiness in t(e P(i ippines may issue "o2er notes to )ind insuran"e temporari y pending t(e issuan"e o- t(e po i"y C& A "o2er not s(a e deemed to )e a "ontra"t o- insuran"e +it(in t(e meaning o- Se". 1(1& o- IC. 9& NB "o2er note s(a )e issued or rene+ed un ess in t(e -orm pre2ious y appro2ed )y t(e Insuran"e Commission.

4)

A "o2er not s(a )e 2a id and )inding -or a period NB' e5"eeding $% days -rom t(e date o- its issuan"e6 +(et(er or not t(e premium t(ere-ore (as )een paid or not6 3U' su"( "o2er note may )e "an"e ed )y eit(er party upon at east / days noti"e to t(e ot(er party.

F& I- a "o2er not is not so "an"e ed6 a po i"y o- insuran"e s(a 6 +it(in $% days a-ter t(e issuan"e o- t(e "o2er not )e issued in ieu t(ereo-. Su"( po i"y s(a in" ude +it(in its terms t(e identi"a insuran"e )ound under t(e "o2er note and t(e premiums t(ere-ore. $& A "o2er note may )e e5tended or rene+ed )eyond t(e a-orementioned period o- $% days +it( t(e +ritten appro2a o- t(e Insuran"e Commissioner6 pro2ided t(at su"( +ritten appro2a may )e dispensed +it( upon t(e "erti-i"ation o- t(e Pres6 VP or 8enera >gr o- t(e Insuran"e "ompany "on"erned6 t(at t(e ris*s in2o 2ed6 t(e 2a ues o- su"( ris*s6 and t(e premiums t(ere-ore (a2e not as yet )een determined or esta) is(ed and t(at su"( e5tension or rene+a is NB' "ontrary to and is not -or t(e purpose o- 2io ating any pro2ision o- t(e IC. /& '(e insuran"e "ompanies may impose on "o2er notes a deposit premium eGui2a ent to at east CF[ o- t(e estimated premium o- t(e intended insuran"e "o2erage )ut in no "ase ess t(an PF%%. Ca e 9 7,-8 Li2 *5 S&n Li)e 01 PHIL 66/ Fact 9 Bn Eu y $6 1.1/6 <uis <im A 8ar"ia o- Vam)oanga app ied -or a po i"y o- i-e insuran"e +it( Sun i-e in t(e amount o- F'. 7e designated (is +i-e Pi ar <im as t(e )ene-i"iary. '(e -irst premium o- P#99 +as paid )y <im and "ompany issued a ,pro2isiona po i"y1

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Su"( po i"y "ontained t(e -o o+ing pro2isions D&& the abovementioned ife is to be ass!red in accordance with the terms and conditions contained or inserted b( the +om#an( in the #o ic( which ma( be )ranted b( it in this #artic! ar case for 4 months on ( from the date of the a## ication, @R.P2FIF that the com#an( sha confirm this a)reement b( iss!in) a #o ic( on said a## ication &&&$ Sho! d the com#an( /.* iss!e s!ch a #o ic(, then this a)reement sha be n! and void ab initio and the +om#an( sha be he d not to have been on the risk at a , b!t in s!ch case, the amo!nt herein sha be ret!rned$ <im died on Aug. C96 1.1/ a-ter t(e issuan"e o- t(e pro2isiona po i"y )ut )e-ore t(e appro2a o- t(e app i"ation )y t(e (ome o--i"e o- t(e insuran"e "ompany. '(e instant a"tion is )roug(t )y t(e )ene-i"iary to re"o2er -rom Sun <i-e t(e sum o- F'. &e9 WBN t(e )ene-i"iary "an "o e"t t(e F'.

He#%9 NO5 '(e "ontra"t o- insuran"e +as not "onsummated )y t(e parties. '(e a)o2e Guoted agreement " ear y stated t(at t(e agreement s(ou d NB' go into e--e"t unti t(e (ome o--i"e o- t(e Company s(a "on-irm it )y issuing a po i"y. It +as not(ing )ut an a"*no+ edgment )y t(e Company t(at it (as re"ei2ed a sum o- money agreed upon as t(e -irst year=s premium upon a po i"y to )e issued upon t(e app i"ation i- it is a""epted )y t(e Company. W(en an agreement is made )et+een t(e app i"ant and t(e agent +(et(er )y signing an app i"ation "ontaining su"( "ondition or ot(er+ise6 t(at no ia)i ity s(a atta"( unti t(e prin"ipa appro2es t(e ris* and a re"eipt is gi2en )y t(e agent6 su"( a""eptan"e is mere y "onditiona and is su)ordinated to t(e "ompany=s a"t in appro2ing or reIe"ting; so in i-e insuran"e a ,)inding s ip or re"eipt1 does not insure itse -.

7,18 G"e!a#i)e *5 CA ,9 SCRA 10/ Fact 9

Bn >ar"( 1#6 1.F/6 respondent Ngo 7ing -i ed an app i"ation +it( 8repa i-e -or a C%:yr endo+ment po i"y -or F%' on t(e i-e o- (is one year o d daug(ter 7e en 8o. A t(e essentia data regarding 7e en +as supp ied )y Ngo to <apu:<apu >ondragon6 t(e )ran"( manager o- 8repa i-e:Ce)u. >ondragon t(en typed t(e data on t(e app i"ation -orm +(i"( +as ater signed )y Ngo. Ngo t(en paid t(e insuran"e premium and a )inding deposit re"eipt +as issued to (im. '(e )inding re"eipt "ontained t(e -o o+ing pro2isionJ D2f the a## icant sha not have been ins!rab e &&& and the +om#an( dec ines to a##rove the a## ication, the ins!rance a## ied for sha not have been in force at an( time and the s!m #aid sha be ret!rned to the a## icant !#on the s!rrender of this recei#t$4 >ondragon +rote on t(e )ottom o- t(e app i"ation -orm (is strong re"ommendation -or t(e appro2a ot(e insuran"e app i"ation. Bn Apr 9%6 1.F/6 >ondragon re"ei2ed a etter -rom 8repa i-e >ain o--i"e disappro2ing t(e insuran"e app i"ation o- Ngo -or t(e simp e reason t(at t(e C%yr endo+ment p an is not a2ai a) e -or minors )e o+ / yrs o d. >ondragon +rote )a"* t(e main o--i"e again strong y re"ommending t(e appro2a o- t(e endo+ment p an on t(e i-e o- 7e en6 adding t(at 8repa i-e +as t(e on y insuran"e "ompany NB' se ing endo+ment p ans to "(i dren. Bn may 1.F/6 7e en died o- in- uen4a +it( "omp i"ation o- )ron"(o pneumonia. Ngo -i ed a " aim +it( 8epa i-e6 )ut t(e atter denied ia)i ity on t(e ground t(at t(ere +as no "ontra"t )et+een t(e insurer and t(e insured and a )inding re"eipt is NB' e2iden"e o- su"( "ontra"t. &e9 WBN t(e )inding deposit re"eipt6 "onstituted a temporary "ontra"t o- i-e insuran"e.

He#%9 NO5 '(e )inding re"eipt in Guestion +as mere y an a"*no+ edgement on )e(a - o- t(e "ompany6 t(at t(e atter=s )ran"( o--i"e (ad re"ei2ed -rom t(e app i"ant6 t(e insuran"e premium and (ad a""epted t(e app i"ation su)Ie"t -or pro"essing )y t(e insuran"e "ompany6 and t(at t(e atter +i eit(er appro2e or reIe"t t(e same on t(e )asis o- +(et(er or not t(e app i"ant is insura) e on standard rates.

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Sin"e 8repa i-e disappro2ed t(e insuran"e app i"ation o- Ngo6 t(e )inding deposit re"eipt (ad ne2er )e"ame on -or"e at any time6 pursuant to par. E o- t(e said re"eipt. A )inding re"eipt is mani-est y mere y "onditiona and does NB' insure outrig(t. W(ere an agreement is made )et+een t(e app i"ant and t(e agent6 NB ia)i ity s(a atta"( unti t(e prin"ipa appro2es t(e ris* and a re"eipt is gi2en )y t(e agent. '(e a""eptan"e is mere y "onditiona 6 and is su)ordinated to t(e a"t o- t(e "ompany in appro2ing or reIe"ting t(e app i"ation. '(us in i-e insuran"e6 a )inding s ip or )inding re"eipt does NB' insure )y itse -. 7,68 Paci)ic Ti2$e" *5 CA 116 SCRA 199 Fact 9

Bn >ar"( 196 1.$96 Pa"i-i" se"ured temporary insuran"e -rom t(e Wor*emen=s Insuran"e Co. -or its e5portation o- ogs to Eapan. Wor*men issued on said date Co2er Note 1%1% insuring said "argo. '(e regu ar marine po i"ies +ere issued )y t(e "ompany in -a2or o- Pa"i-i" on Apr C6 1.$9. '(e C marine po i"ies )ore t(e num)er F97%1%9C and F97%1%99. A-ter t(e issuan"e o- t(e "o2er note )ut 3E@BRE t(e issuan"e o- t(e C po i"ies6 some o- t(e ogs intended to )e e5ported +ere ost due to a typ(oon. Pa"i-i" -i ed its " aim +it( t(e "ompany6 )ut t(e atter re-used6 "ontending t(at said oss may not )e "onsidered as "o2ered under t(e "o2er note )e"ause su"( )e"ame nu and 2oid )y 2irtue o- t(e issuan"e o- t(e marine po i"ies. &e9 WBN t(e "o2er not +as +it(out "onsideration6 t(us nu and 2oid.

He#%9 It (a (ith con i%e"ation5 SC up(e d Pa"i-i"=s "ontention t(at said "o2er not +as +it( "onsideration. '(e -a"t t(at no separate premium +as paid on t(e "o2er note )e-ore t(e oss +as insured against o""urred does not mi itate against t(e 2a idity o- Pa"i-i"=s "ontention6 -or no su"( premium "ou d (a2e )een paid6 sin"e )y t(e nature o- t(e "o2er note6 it did not "ontain6 as a "o2er notes do not "ontain6 parti"u ars o- t(e s(ipment t(at +ou d ser2e as )asis -or t(e "omputation o- t(e premiums. As a ogi"a "onseGuen"e6 no separate premiums are reGuired to )e paid on a "o2er note. I- t(e note is to )e treated as a separate po i"y instead o- integrating it to t(e regu ar po i"ies su)seGuent y issued6 its purpose +ou d )e meaning ess -or it is in a rea sense a "ontra"t6 not a mere app i"ation. 7,/8 G#o"ia *5 Phi#a2#i)e In &"ance Co5 7/ OG ,66Fact 9 In 1.$$6 Ro)erto Narito app ied -or a 1%%' i-e insuran"e po i"y +it( P(i am i-e Insuran"e Company. Narito +as e5amined )y !ra. Verge de dios6 t(e insurer=s medi"a e5aminer. S(e opined t(at Narito +as insura) e. 7er opinion +as "on-irmed )y !r. Bro)ia6 t(e Asso"iate >edi"a !ire"tor o- t(e insurer. Bn B". 916 1.$$6 an agent o- t(e insured prepared an app i"ation -or t(e i-e insuran"e +(ose annua premium +as P161/0. Bn t(e same date6 t(e app i"ation +as signed )y Narito. Narito paid t(e -irst annua premium on t(e po i"y app ied -or. '(e insurer=s app i"ation -orm "ontained a so:"a ed ,3inding Re"eipt1 +(i"( +as deta"(a) e. It is not sure +(et(er or not Narito +as gi2en t(e 3inding Re"eipt upon (is payment o- t(e -irst premium6 )ut +(at is "ertain t(at (e +as (anded a Cas(ier=s Re"eipt. @rom t(e time t(e insured re"ei2ed t(e app i"ation -orm its agent on No2. F6 1.$$6 up to !e". $6 1.$$6 it did not ta*e any a"tion +it( regard to t(e "ontro2erted insuran"e "o2erage. Bn !e". $6 1.$$6 Narito +as s(ot and *i ed. '(e )ene-i"iaries su)mitted a " aim to t(e insurer. A-ter an under+riting ana ysis "ondu"ted )y t(e insurer6 it -ound out t(at Narito +as una""epta) e as an insuran"e ris*. '(e " aim +as denied. I &e9 WBN t(e )ene-i"iaries "an " aim.

He#%9 >UP

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'(e app i"ation -or insuran"e signed )y t(e de"eased "ontained t(e -o o+ing stipu ationJ D*he bindin) recei#t m!st /.* be iss!ed !n ess a bindin) de#osit is #aid which m!st be at east e3!a to the first f! #remi!m$4 '(e preponderan"e o- e2iden"e is to t(e e--e"t t(at t(e )inding re"eipt +as not issued to t(e de"eased +(en (e paid t(e "ompany=s agent6 t(e -irst annua premium o- P161/0. 7en"e t(e rig(ts o- t(e )ene-i"iaries and t(e o) igation o- t(e "ompany (a2e to )e determined so e y in t(e app i"ation -or insuran"e an in t(e Cas(ier=s re"eipt. '(e app i"ation -or insuran"e "ontained t(e -o o+ing " auseJ D*here sha be no contract of ins!rance !n ess a #o ic( is iss!ed on this a## ication and the f! first #remi!m thereon act!a ( #aid$ 1 It s(ou d )e "on"eded t(at t(ere s(a )e a "ontra"t o- insuran"e on"e t(e -irst premium is paid and a po i"y is issued. '(ere is no Guestion t(at t(e -irst premium +as paid. '(e pro) em is to reso 2e +(et(er or not it "an )e said t(at t(e po i"y (as )een issued. IN t(is "onne"tion6 +(at may )e noted is t(at6 in "ontrast to t(e reGuirement o- a"tua payment o- t(e premium6 it +as NB' reGuired t(at t(e po i"y )e a"tua y issued. An assuming t(at no po i"y (ad indeed )een issued6 it s(ou d sti )e (e d t(at t(e app i"ation -or insuran"e +as appro2ed )y t(e "ompany6 +it( t(e a"tua issuan"e o- t(e po i"y )eing a mere te"(ni"a ity. W(en an insurer a""epts and retains t(e -irst premium -or an unreasona) e engt( o- time6 it s(ou d )e presumed t(at t(e insurer (ad assumed t(e ris*. It s(ou d t(ere-ore )e ia) e -or oss )e-ore t(e app i"ation is su)seGuent y reIe"ted. In t(e "ase at )ar6 t(e "ompany did NB' a"t on t(e app i"ation -or insuran"e6 one +ay or t(e ot(er6 -rom No2. C to !e". F6 1.$$6 and no Iusti-i"ation -or t(e de ay (ad )een pro2en. 7en"e6 it s(ou d )e (e d t(at t(e app i"ation -or insuran"e o- t(e de"eased (ad )een appro2ed prior to (is deat(6 a t(oug( t(e po i"y (ad not a"tua y )een issued6 -or +(i"( reason6 t(e "ompany s(ou d )e ia) e to t(e )ene-i"iaries. 7,08 San ?i3&e# E"e(e"4 *5 La( Union Roc; In &"ance Co2!an4 (repeat "ase O1C& 0- PHIL 670 Fact 9 Bn Ean. 1C6 1.106 !unn mortgaged a par"e o- and to S>3 to se"ure a de)t o- 1%'. >ortgage "ontra"t stated t(at !unn +as to (a2e t(e property insured at (is o+n e5pense6 aut(ori4ing S>3 to "(oose t(e insurers and to re"ei2e t(e pro"eeds t(ereo- and retain so mu"( o- t(e pro"eeds as +ou d "o2er t(e mortgage de)t. !unn i*e+ise aut(ori4ed S>3 to ta*e out t(e insuran"e po i"y -or (im. 3rias6 S>3=s genera manager6 approa"(ed <a+ Union -or insuran"e to t(e e5tent o- 1F' upon t(e property. In t(e app i"ation6 3rias stated t(at S>3=s interest in t(e property +as mere y t(at o- a mortgagee. <a+ Union6 not +anting to issue a po i"y -or t(e entire amount6 issued one -or P/6F%% and pro"ured anot(er po i"y o- eGua amount -rom @i ipinas Cia de Seguros. 3ot( po i"ies +ere issued in t(e name oS>3 on y and "ontained no re-eren"e to any ot(er interests in t(e propty. 3ot( po i"ies reGuired assignments to )e appro2ed and noted on t(e po i"y. Premiums +ere paid )y S>3 and "(arged to !unn. A year ater6 t(e po i"ies +ere rene+ed. In 1.1/6 !unn so d t(e property to 7arding6 )ut no assignment o- t(e po i"ies +as made to t(e atter. Property +as destroyed )y -ire. S>3 -i ed an a"tion in "ourt to re"o2er on t(e po i"ies. 7arding +as made a de-endant )e"ause )y 2irtue o- t(e sa e6 (e )e"ame t(e o+ner o- t(e property6 a t(oug( t(e po i"ies +ere issued in S>3=s name. S>3 soug(t to re"o2er t(e pro"eeds to t(e e5tent o- its mortgage "redit +it( t(e )a an"e to go to 7arding. Insuran"e Companies "ontended t(at t(ey +ere not ia) e to 7arding )e"ause t(eir ia)i ity under t(e po i"ies +as imited to t(e insura) e interests o- S>3 on y. S>3 e2entua y rea"(ed a sett ement +it( t(e insuran"e "ompanies and +as paid t(e )a an"e o- it=s mortgage "redit. 7arding +as e-t to -end -or (imse -. 'ria "ourt ru ed against 7arding. 7en"e t(e appea . I &e9 WBN t(e insuran"e "ompanies are ia) e to 7arding -or t(e )a an"e o- t(e pro"eeds o- t(e C po i"ies.

He#%9 NOPE5 Under t(e Insuran"e A"t6 t(e measure o- insura) e interest in t(e property is t(e e5tent to +(i"( t(e insured mig(t )e damini-ied )y t(e oss or inIury t(ereo-. A so it is pro2ided in t(e IA t(at t(e insuran"e s(a

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)e app ied e5" usi2e y to t(e proper interest o- t(e person in +(ose name it is made. Undou)ted y6 S>3 as t(e mortgagee o- t(e property6 (ad an insura) e interest t(erein; )ut it "ou d NB'6 an any e2ent6 re"o2er upon t(e t+o po i"ies an amount in e5"ess o- its mortgage "redit. 3y 2irtue o- t(e Insuran"e A"t6 neit(er !unn nor 7arding "ou d (a2e re"o2ered -rom t(e t+o po i"ies. Wit( respe"t to 7arding6 +(en (e a"Guired t(e property6 no "(ange or assignment o- t(e po i"ies (ad )een underta*en. '(e po i"ies mig(t (a2e )een +orded di--erent y so as to prote"t t(e o+ner6 )ut t(is +as not done. I- t(e +ording (ad )eenJ ,@a(ab e to SMB, mort)a)ee, as its interests ma( a##ear, remainder to whomsoever, d!rin) the contin!ance of the risk, ma( become owner of the interest ins!red4 6 it +ou d (a2e pro2ed an intention to insure t(e entire interest in t(e property6 NB' mere y S>3=s and +ou d (a2e s(o+n to +(om t(e money6 in "ase o- oss6 s(ou d )e paid. Un-ortunate y6 t(is +as not +(at +as stated in t(e po i"ies. I- during t(e negotiation -or t(e po i"ies6 t(e parties (ad agreed t(at e2en t(e o+ner=s interest +ou d )e "o2ered )y t(e po i"ies6 and t(e po i"ies (ad inad2ertent y )een +ritten in t(e -orm in +(i"( t(ey +ere e2entua y issued6 t(e o+er "ourt +ou d (a2e )een a) e to order t(at t(e "ontra"t )e re-ormed to gi2e e--e"t to t(em in t(e sense t(at t(e parties intended to )e )ound. 7o+e2er6 t(ere is no " ear and satis-a"tory proot(at t(e po i"ies -ai ed to re- e"t t(e rea agreement )et+een t(e parties t(at +ou d Iusti-y t(e re-ormation ot(ese t+o "ontra"ts. A i%e )"o2 the "&#in3C )o" (hat othe" "ea on %i% Att45 :&i2 on a ; & *5 Phi#a2#i)e' '(e "ase de-ined a )inding re"eipt. to "ea% the ca e o) G#o"ia

What i a $in%in3 "ecei!t acco"%in3 to G#o"a *5 Phi#a2#i)e' A )inding re"eipt or s ip is ordinari y a do"ument6 s ip or memorandum gi2en to t(e insured6 +(i"( )inds t(e insuran"e "ompany to pay insuran"e s(ou d a oss o""ur pending a"tion upon t(e app i"ation and a"tua issuan"e o- a po i"y. '(e purpose o- a )inder is to pro2ide temporary insuran"e pending an inGuiry )y t(e insurer as to t(e "(ara"ter o- t(e ris* and to ta*e t(e p a"e o- t(e po i"y unti t(e atter "an )e issued. '(e issuan"e o- a )inder e2iden"es6 a "omp ete6 temporary or pre iminary "ontra"t o- insuran"e e--e"ti2e -rom t(at time unti t(e issuan"e o- t(e -orma po i"y or unti reIe"tion o- t(e ris*. Under a i-e po i"y6 it +ou d esta) is( ia)i ity upon t(e insurer i- deat( o""urred prior to t(e issuan"e o- t(e po i"y. A )inder re"eipt +ou d )e misnamed i- it does NB' )ind t(e insurer. I- t(e insurer issues a )inder re"eipt +it( terms +(i"( +i negate6 or neutra i4e t(e )inding resu t o- t(e re"eipt6 t(en t(e insurer +ou d (a2e a"tua y pra"ti"ed -raud on t(e app i"ant -or insuran"e.

Section 1/. '(e insuran"e pro"eeds s(a )e app ied e5" usi2e y to t(e proper interest o- t(e person in +(ose name or -or +(ose )ene-it it is made un ess ot(er+ise spe"i-ied in t(e po i"y. Reca## Section 165 Se"tion 1C pro2idesJ '(e interest o- a )ene-i"iary in a i-e insuran"e po i"y s(a )e -or-eited +(en t(e )ene-i"iary is t(e prin"ipa 6 a""omp i"e or a""essory in +i -u y )ringing a)out t(e deat( o- t(e insured; in +(i"( e2ent6 t(e nearest re ati2e o- t(e insured s(a re"ei2e t(e pro"eeds o- said insuran"e i- not ot(er+ise Gua i-ied. So' It is an e5"eption to Se"tion F9. What %oe A"t5 6167 o) the CC a4' Art. C1C/. '(e mortgage e5tends to t(e natura a""ession6 to t(e impro2ements6 gro+ing -ruits and t(e rents or in"ome not yet re"ei2ed +(en t(e o) igation )e"omes due6 and t(e amo!nt of the indemnit( )ranted or owin) to the #ro#rietor from the ins!rers of the #ro#ert( mort)a)ed6 or in 2irtue o- e5propriation

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-or pu) i" use6 +it( de" arations6 amp i-i"ations and imitations esta) is(ed )y a+6 +(et(er t(e estate remains in t(e possession o- t(e mortgagor or it passes into t(e (ands o- a t(ird person. P"o$#e2 5 ' had taken o!t a #o ic( on his car with the sti#! ation8 D oss if an( #a(ab e to U, the mort)a)ee of the car4$ *he car )ot ost and K, the owner of the a!to re#air sho# where the car was fi&ed fi ed a c aim with the ins!rance com#an($ 2s K entit ed to co ect the cost of re#air> NB. As -ar as t(e insuran"e "ompany is "on"erned6 D is not pri2y to t(e insuran"e "ontra"t. E2en i- t(ere +as a pro2ision in t(e "ontra"t aut(ori4ing eit(er A or V to "ontra"t -or repairs6 t(is does not mean t(at D )e"ame entit ed to " aim t(e pro"eeds. In t(is "ase6 t(e pro"eeds must )e paid to V6 and in "ase V +as t(e one +(o "ontra"ted -or t(e repairs6 V must pay D. Ca e 9 7,18 Eoni)acio E"o 5 *5 ?o"a 6- SCRA 666 Fact 9 EnriGue >ora mortgaged (is Bd smo)i e sedan "ar to 7S Reyes In". +it( t(e "ondition t(at >ora +ou d insure t(e "ar +it( 7S Reyes as )ene-i"iary. '(e "ar +as t(en insured +it( State Insuran"e Company and t(e po i"y de i2ered to >ora. !uring t(e e--e"ti2ity o- t(e insuran"e "ontra"t6 t(e "ar -igured in an a""ident. '(e "ompany t(en assigned t(e a""ident to an insuran"e appraiser -or in2estigation and appraisa o- t(e damage. >ora +it(out t(e *no+ edge and "onsent o- 7S Reyes6 aut(ori4ed 3oni-a"io 3ros to -i5 t(e "ar6 using materia s supp ied )y t(e Aya a Auto Parts Company.

@or t(e "ost o- <a)or and materia s6 >ora +as )i ed PC61%C./9. '(e )i +as sent to t(e insurer=s appraiser. '(e insuran"e "ompany dre+ a "(e"* in t(e amount o- t(e insuran"e pro"eeds and entrusted t(e "(e"* to its appraiser -or de i2ery to t(e proper party. '(e "ar +as de i2ered to >ora +it(out t(e "onsent o- 7S Reyes6 and +it(out payment to 3oni-a"io 3ros and Aya a. Upon t(e t(eory t(at t(e insuran"e pro"eeds s(ou d )e dire"t y paid to t(em6 3oni-a"io and Aya a -i ed a "omp aint against >ora and t(e insurer +it( t(e muni"ipa "ourt -or t(e "o e"tion o- PC61%C./9. '(e insuran"e "ompany -i ed its ans+er +it( a "ounter" aim -or interp eader6 reGuiring 3oni-a"io and 7S Reyes to interp ead in order to determine +(o (as a )etter rig(t to t(e pro"eeds.

I &e9 WBN t(ere is pri2ity o- "ontra"t )et+een 3on-i"a"io and Aya a on one (and and State Insuran"e on t(e ot(er. He#%9 NONE5 It is -undamenta t(at "ontra"ts ta*e e--e"t on y )et+een t(e parties t(ereto6 e5"ept in some spe"i-i" instan"e pro2ided )y a+ +(ere t(e "ontra"t "ontains some stipu ation in -a2or o- a t(ird person. Su"( stipu ation is *no+n as a stipu ation pour autrui; or a pro2ision in -a2or o- a t(ird person not a party to t(e "ontra"t. Under t(is do"trine6 a t(ird person is a o+ed to a2ai (imse - o- a )ene-it granted to (im )y t(e terms ot(e "ontra"t6 pro2ided t(at t(e "ontra"ting parties (a2e " ear y and de i)erate y "on-erred a -a2or upon su"( person. ConseGuent y6 a t(ird person NB' a party to t(e "ontra"t (as NB a"tion against t(e aprties t(ereto6 and "annot genera y demand t(e en-or"ement o- t(e same. '(e Guestion o- +(et(er a t(ird person (as an en-or"ea) e interest in a "ontra"t must )e sett ed )y determining +(et(er t(e "ontra"ting parties intended to tender (im su"( an interest )y de i)erate y inserting terms in t(eir agreement +it( t(e a2o+ed purpose o- "on-erring -a2or upon su"( t(ird person. IN t(is "onne"tion6 t(is "ourt (as aid do+n t(e ru e t(at t(e -airest test to determine +(et(er t(e interest o- a 9 rd person in a "ontra"t is a stipu ation pour autrui or mere y an in"identa interest6 is to re y upon t(e intention o- t(e parties as dis" osed )y t(eir "ontra"t. In t(e instant "ase t(e insuran"e "ontra"t does not "ontain any +ords or " auses to dis" ose an intent to gi2e any )ene-it to any repairmen or materia men in "ase o- repair o- t(e "ar in Guestion. '(e parties to t(e

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insuran"e "ontra"t omitted su"( stipu ation6 +(i"( is a "ir"umstan"e t(at supports t(e said "on" usion. Bn t(e ot(er (and6 t(e M oss paya) eM " ause o- t(e insuran"e po i"y stipu ates t(at M<oss6 i- any6 is paya) e to 7.S. Reyes6 In".M indi"ating t(at it +as on y t(e 7.S. Reyes6 In". +(i"( t(ey intended to )ene-it. A po i"y o- insuran"e is a distin"t and independent "ontra"t )et+een t(e insured and insurer6 and t(ird persons (a2e no rig(t eit(er in a "ourt o- eGuity6 or in a "ourt o- a+6 to t(e pro"eeds o- it6 un ess t(ere )e some "ontra"t o- trust6 e5pressed or imp ied6 )y t(e insured and t(ird person. In t(is "ase6 no "ontra"t otrust6 e5press or imp ied. In t(is "ase6 no "ontra"t o- trust6 e5pressed or imp ied e5ists. We6 t(ere-ore6 agree +it( t(e tria "ourt t(at no "ause o- a"tion e5ists in -a2or o- t(e appe ants in so -ar as t(e pro"eeds oinsuran"e are "on"erned. '(e appe antLs " aim6 i- at a 6 is mere y eGuita) e in nature and must )e made e--e"ti2e t(roug( EnriGue >ora +(o entered into a "ontra"t +it( t(e 3oni-a"io 3ros In". '(is "on" usion is dedu"i) e not on y -rom t(e prin"ip e go2erning t(e operation and e--e"t o- insuran"e "ontra"ts in genera 6 )ut is " ear y "o2ered )y t(e e5press pro2isions o- se"tion F% o- t(e Insuran"e A"t (no+ Se". F9&. '(e po i"y in Guestion (as )een so -ramed t(at M<oss6 i- any6 is paya) e to 7. S. Reyes6 In".M +(i"( unmista*a) y s(o+s t(e intention o- t(e parties. 7,68 Co=&ia *5 Fie#%2enK In &"ance 66 SCRA 176 Fact 9

Bn !e". 16 1.$16 @ie dmen=s Insuran"e "o. Issued in -a2or o- t(e >ani a Ae o+ 'a5i"a) a "ommon "arrier insuran"e po i"y +it( a stipu ation t(at t(e "ompany s(a indemni-y t(e insured o- t(e sums +(i"( t(e atter +my )e (e d ia) e -or +it( respe"t to Ddeath or bodi ( in"!r( to an( faire-#a(in) #assen)er inc !din) the driver and cond!ctor4. '(e po i"y a so stated t(at in ,the event of the death of the driver, the +om#an( sha indemnif( his #ersona re#resentatives and at the +om#an(Hs o#tion ma( make indemnit( #a(ab e direct ( to the c aimants or heirs of the c aimants.1 !uring t(e po i"y=s i-etime6 a ta5i"a) o- t(e insured dri2en )y CoGuia met an a""ident and CoGuia died. W(en t(e "ompany re-used to pay t(e on y (eirs o- CoGuia6 (is parents6 t(ey institued t(is "omp aint. '(e "ompany "ontends t(at p ainti--s (a2e no "ause o- a"tion sin"e t(e CoGuias (a2e no "ontra"tua re ations(ip +it( t(e "ompany. &e9 WBN p ainti--s (a2e t(e rig(t to "o e"t on t(e po i"y.

He#%9 >ES5 At(oug(6 in genera 6 on y parties to a "ontra"t may )ring an a"tion )ased t(ereon6 t(is ru e is su)Ie"t to e5"eptions6 one o- +(i"( is -ound in t(e se"ond paragrap( o- Arti" e 1911 o- t(e Ci2i Code o- t(e P(i ippines6 readingJ M2f a contract sho! d contain some sti#! ation in favor of a third #erson, he ma( demand its f! fi ment #rovided he comm!nicated his acce#tance to the ob i)or before its revocation$ ' mere incidenta benefit or interest of a #erson is not s!fficient$ *he contractin) #arties m!st have c ear ( and de iberate ( conferred a favor !#on a third #erson$M '(is is )ut t(e restatement o- a +e :*no+n prin"ip e "on"erning "ontra"ts pour autrui6 t(e en-or"ement o- +(i"( may )e demanded )y a t(ird party -or +(ose )ene-it it +as made6 a t(oug( not a party to t(e "ontra"t6 )e-ore t(e stipu ation in (is -a2or (as )een re2o*ed )y t(e "ontra"ting parties In t(e "ase at )ar6 t(e po i"y under "onsideration is typi"a o- "ontra"ts pour autrui t(is "(ara"ter )eing made more mani-est )y t(e -a"t t(at t(e de"eased dri2er paid -i-ty per"ent (F%[& o- t(e "orresponding premiums6 +(i"( +ere dedu"ted -rom (is +ee* y "ommissions. Under t(ese "onditions6 it is " ear t(at t(e CoGuias N +(o6 admitted y6 are t(e so e (eirs o- t(e de"eased N (a2e a dire"t "ause o- a"tion against t(e Company6 and6 sin"e t(ey "ou d (a2e maintained t(is a"tion )y t(emse 2es6 +it(out t(e assistan"e o- t(e insured it goes +it(out saying t(at t(ey "ou d and did proper y Ioin t(e atter in -i ing t(e "omp aint (erein. 7,78 G&in3on *5 De# ?onte ,- SCRA 1,1 Fact 9

'(e insured o+ned a - eet o- Ieepneys. 7e insured t(e operation o- (is Ieepneys against Daccidents with third #art iabi it(1 +it( Capita Insuran"e and Surety Co. Bne day6 one o- (is Ieepney diri2ers6 )umped and *i ed 8uingon.

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An a"tion -or damages +as t(en -i ed against t(e o+ner:insured6 t(e dri2er and t(e "ompany. '(e "ompany soug( to dismiss t(e "(arges against it on t(e ground o- a"* o- "ause o- a"tion against it. &e9 WBN t(ere is a "ause o- a"tion against t(e "ompany.

He#%9 >ES5 '(e rig(t o- a person inIured to sue t(e insurer o- t(e party at -au t depends on +(et(er t(e "ontra"t oinsuran"e +as intended to )ene-it t(ird persons. '(e test app ied (ere isJ W(ere t(e "ontra"t pro2ides -or indemnity against ia)i ity to t(ird persons6 t(en t(ird persons to +(om t(e insured is ia) e6 "an sue t(e insurer. Bn t(e ot(er (and6 +(ere t(e "ontra"t is -or indemnity against a"tua oss or payment6 t(en t(ird persons "annot pro"eed against t(e insurer6 t(e "ontra"t )eing so e y to reim)urse t(e insured -or ia)i ity a"tua y dis"(arged )y (im t(roug( payment to t(ird persons6 said t(ird personsL re"ourse )eing t(us imited to t(e insured a one '(e po i"y in t(e present "ase6 is one +(ere)y t(e insurer agreed to indemni-y t(e insured Magainst a sums . +(i"( t(e Insured s(a )e"ome ega y ia) e to pay in respe"t o-J a. deat( o- or )odi y inIury to any person . . .M C ear y6 t(ere-ore6 it is one -or indemnity against ia)i ity -rom t(e -a"t t(en t(at t(e insured is ia) e to t(e t(ird person6 su"( t(ird person is entit ed to sue t(e insurer. Sin"e t(e po i"y in Guestioned "ontained a stipu ation pour autrui6 t(en t(e insuran"e "ompany must de i2er t(e pro"eeds to t(e " aimants.

7,,8 De# Va# *5 De# Va# 69 Phi# 1/1 Fact 9

Petitioners and pri2ate respondents are )rot(ers and Sisters and are t(e on y (eirs and ne5t o- *in o8regorio de Va +(o died intestate. It +as -ound out t(at t(e de"eased too* out insuran"e on (is i-e -or t(e sum o- #%' and made it paya) e to pri2ate respondents as so e )ene-i"iary. A-ter 8regorio=s deat(6 Andres "o e"ted t(e pro"eeds o- t(e po i"y. B- t(e said po i"y6 Andres paid 10' to redeem some rea property +(i"( 8regorio (ad so d to t(ird persons during (is i-etime. Said redemption o- t(e property +as made )y Andres= ay+er in t(e name o- Andres and t(e petitioners. (A""dg to Andres6 said redemption in t(e name o- Petitioners and (imse - +as +it(out (is *no+ edge and t(at sin"e t(e redemption6 petitioners (a2e )een in possession o- t(e property& Petitioners no+ "ontend t(at t(e amount o- t(e insuran"e po i"y )e onged to t(e estate o- t(e de"eased and not to Andres persona y. Pet -i ed a "omp aint -or partition o- property in" uding t(e insuran"e pro"eeds Andress " aims t(at (e is t(e so e o+ner o- t(e pro"eeds and prayed t(at (e )e de" aredJ So e o+ner o- t(e rea property6 redeemed +it( t(e use o- t(e insuran"e pro"eeds and its remainder; Petitioners to a""ount -or t(e use and o""upation o- t(e premises. &e9 WBN t(e petitioners (a2e a rig(t to t(e insuran"e pro"eedsH

He#%9 NOPE5 '(e "ontra"t o- i-e insuran"e is a spe"ia "ontra"t and t(e destination o- t(e pro"eeds t(ereo- is determined )y spe"ia a+s +(i"( dea e5" usi2e y +it( t(e su)Ie"t. Bur "i2i "ode (as no pro2isions +(i"( re ate dire"t y and spe"i-i"a y to i-e:insuran"e "ontra"ts o- to t(e destination o- i-e:insuran"e pro"eeds t(at su)Ie"t is regu ated e5" usi2e y )y t(e Code o- Commer"e. '(us6 "ontention o- petitioners t(at pro"eeds s(ou d )e "onsidered as a dontation or gi-t and s(ou d )e in" uded in t(e estate o- t(e de"eased is UN'ENA3<E. Sin"e t(e repur"(ase (as )een made n t(e names o- a t(e (eirs instead o- t(e de-endant a one6 petitioners " aim t(at t(e property )e ongs to t(e (eirs in "ommon and not to t(e de-endant a one. '(e SC (e d t(at i- it is esta) is(ed )y e2iden"e t(at t(at +as (is intention and t(at t(e rea estate +as de i2ered to

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t(e p ainti--s +it( t(at understanding6 t(en it is pro)a) e t(at t(eir "ontention is "orre"t and t(at t(ey are entit ed to s(are eGua y +it( t(e de-endant. 7BWEVER6 it appears -rom t(e e2iden"e t(at t(e "on2eyan"es +ere ta*en in t(e name o- t(e p ainti--s +it(out t(e *no+ edge and "onsent o- Andres6 or t(at it +as not (is intention to ma*e a gi-t to t(em o- rea estate6 +(en it )e ongs to (im. 7,98 In &#a" Li)e5 E$"a%o ,- SCRA 1,1 Fact 9 3uena2entura E)rado +as issued a i-e p an )y Insu ar Company. 7e designated Capriona as (is )ene-i"iary6 re-erring to (er as (is +i-e. '(e insured t(en died and Carponia tried to " aim t(e pro"eeds o- t(e said p an. S(e admitted to )eing on y t(e "ommon a+ +i-e o- t(e insured. Pas"ua a6 t(e ega +i-e6 a so -i ed a " aim asserting (er rig(t as t(e ega +i-e. '(e "ompany t(en -i ed an a"tion -or interp eader. I &e9 WBN t(e "ommon a+ +i-e named as )ene-i"iary "an "o e"t t(e pro"eeds.

He#%9 NOPE5 '(e "i2i "ode pro(i)itions on donations made )et+een persons gui ty o- adu terous "on"u)inage app ies to insuran"e "ontra"ts. Bn matters not spe"i-i"a y pro2ided -or )y t(e Insuran"e <a+6 t(e genera ru es on Ci2i a+ s(a app y. A i-e insuran"e po i"y is no di--erent -rom a "i2i donation as -ar as t(e )ene-i"iary is "on"erned6 sin"e )ot( are -ounded on i)era ity. Wh4 (a the co22on #a( (i)e not a##o(e% to co##ect the !"ocee% %e !ite the )act that he (a the $ene)icia"4' I nKt thi a3ain t Sec5 1/' It is true t(at SC +ent against Se". F9. 7o+e2er6 Se". F9 is NB' t(e on y pro2ision t(at t(e SC (ad to "onsider. Art. /9. and C%1C o- CC pro(i)it persons +(o are gui ty o- adu tery or "on"u)inage -rom )eing )ene-i"iaries o- t(e i-e insuran"e po i"ies o- t(e persons +it( +(om t(ey "ommitted adu tery or "on"u)inage. I- t(e SC used on y Se". F96 it +ou d (a2e gone against Art. /9. and C%1C. 79-8 RCEC *5 CA 6,9 SCRA 696 7199,8 Fact 9

8BAU app ied -or "redit -a"i ities and a""ommodations +it( RC3C. A-ter due e2a uation6 a "redit -a"i ity in t(e amount o- P9% mi ion +as initia y granted. Upon 8BAULs app i"ation in"reased 8BAULs "redit -a"i ity to PF% mi ion6 t(en to P.% mi ion6 and -ina y to P11/ mi ion As se"urity -or its "redit -a"i ities +it( RC3C6 8BAU e5e"uted t+o RE> and t+o C> in -a2or o- RC3C6 +(i"( +ere registered +it( t(e Registry o- !eeds at. Under ea"( o- t(ese -our mortgage "ontra"ts6 8BAU "ommitted itse - to insure t(e mortgaged property +it( an insuran"e "ompany appro2ed )y RC3C6 and su)seGuent y6 to endorse and de i2er t(e insuran"e po i"ies to RC3C. 8BAU o)tained in its name a tota o- 1% insuran"e po i"ies -rom >ICB. In @e)ruary 1..C6 A "(ester Insuran"e Agen"y6 In".6 t(e insuran"e agent +(ere 8BAU o)tained t(e >a ayan insuran"e po i"ies6 issued nine endorsements in -a2or o- RC3C seeming y upon instru"tions o- 8BAU Bn Apri C/6 1..C6 one o- 8BAULs -a"tory )ui dings in Va en4ue a +as gutted )y -ire. ConseGuent y6 8BAU su)mitted its " aim -or indemnity. >ICB denied t(e " aim on t(e ground t(at t(e insuran"e po i"ies +ere eit(er atta"(ed pursuant to +rits o- atta"(mentsKgarnis(ments issued )y 2arious "ourts or t(at t(e insuran"e pro"eeds +ere a so " aimed )y ot(er "reditors o- 8BAU a eging )etter rig(ts to t(e pro"eeds t(an t(e insured. 8BAU -i ed a "omp aint -or spe"i-i" per-orman"e and damages. RC3C6 one o- 8BAULs "reditors6 a so -i ed +it( >ICB its -orma " aim o2er t(e pro"eeds o- t(e insuran"e po i"ies6 )ut said " aims +ere a so denied -or t(e same reasons t(at A8CB denied 8BAULs " aims. 7o+e2er6 )e"ause t(e endorsements do not )ear t(e signature o- any o--i"er o- 8BAU6 t(e tria "ourt6 as +e as t(e Court o- Appea s6 "on" uded t(at t(e endorsements are de-e"ti2e and (e d t(at RC3C (as no rig(t o2er t(e insuran"e pro"eeds. &e9 WBN RC3C (as a rig(t o2er t(e insuran"e pro"eeds.

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He#%9 RCEC ha a "i3ht o*e" the in &"ance !"ocee% 5 It is sett ed t(at a mortgagor and a mortgagee (a2e separate and distin"t insura) e interests in t(e same mortgaged property6 su"( t(at ea"( one o- t(em may insure t(e same property -or (is o+n so e )ene-it. '(ere is no Guestion t(at 8BAU "ou d insure t(e mortgaged property -or its o+n e5" usi2e )ene-it. In t(e present "ase6 a t(oug( it appears t(at 8BAU o)tained t(e su)Ie"t insuran"e po i"ies naming itse - as t(e so e payee6 t(e intentions o- t(e parties as s(o+n )y t(eir "ontemporaneous a"ts6 must )e gi2en due "onsideration in order to )etter ser2e t(e interest o- Iusti"e and eGuity. It is to )e noted t(at . endorsement do"uments +ere prepared )y A "(ester in -a2or o- RC3C. '(e Court is in a Guandary (o+ A "(ester "ou d arri2e at t(e idea o- endorsing any spe"i-i" insuran"e po i"y in -a2or oany parti"u ar )ene-i"iary or payee ot(er t(an t(e insured (ad not su"( named payee or )ene-i"iary )een spe"i-i"a y dis" osed )y t(e insured itse -. It is a so signi-i"ant t(at 8BAU 2o untari y and purpose y too* t(e insuran"e po i"ies -rom >ICB6 a sister "ompany o- RC3C6 and not Iust -rom any ot(er insuran"e "ompany. A "(ester +ou d not (a2e -ound out t(at t(e su)Ie"t pie"es o- property +ere mortgaged to RC3C (ad not su"( in-ormation )een 2o untari y dis" osed )y 8BAU itse -. 7ad it not )een -or 8BAU6 A "(ester +ou d not (a2e *no+n o- 8BAULs intention o- o)taining insuran"e "o2erage in "omp ian"e +it( its underta*ing in t(e mortgage "ontra"ts +it( RC3C6 and 2eri-y6 A "(ester +ou d not (a2e endorsed t(e po i"ies to RC3C (ad it not )een so dire"ted )y 8BAU. Bn eGuita) e prin"ip es6 parti"u ar y on t(e ground o- estoppe 6 t(e Court is "onstrained to ru e in -a2or omortgagor RC3C. RC3C6 in good -ait(6 re ied upon t(e endorsement do"uments sent to it as t(is +as on y pursuant to t(e stipu ation in t(e mortgage "ontra"ts. We -ind su"( re ian"e to )e Iusti-ied under t(e "ir"umstan"es o- t(e "ase. 8BAU -ai ed to seasona) y repudiate t(e aut(ority o- t(e person or persons +(o prepared su"( endorsements. B2er and a)o2e t(is6 8BAU "ontinued6 in t(e meantime6 to enIoy t(e )ene-its o- t(e "redit -a"i ities e5tended to it )y RC3C. A-ter t(e o""urren"e o- t(e oss insured against6 it +as too ate -or 8BAU to diso+n t(e endorsements -or any imagined or "ontri2ed a"* o- aut(ority o- A "(ester to prepare and issue said endorsements. I- t(ere (ad not )een a"tua y an imp ied rati-i"ation o- said endorsements )y 2irtue o- 8BAULs ina"tion in t(is "ase6 8BAU is at t(e 2ery east estopped -rom assai ing t(eir operati2e e--e"ts. 'o permit 8BAU to "apita i4e on its non:"on-irmation o- t(ese endorsements +(i e it "ontinued to enIoy t(e )ene-its o- t(e "redit -a"i ities o- RC3C +(i"( )e ie2ed in good -ait( t(at t(ere +as due endorsement pursuant to t(eir mortgage "ontra"ts6 is to "ountenan"e gra2e "ontra2ention o- pu) i" po i"y6 -air dea ing6 good -ait(6 and Iusti"e. Su"( an unIust situation6 t(e Court "annot san"tion. Under t(e pe"u iar "ir"umstan"es o)taining in t(is "ase6 t(e Court is )ound to re"ogni4e RC3CLs rig(t to t(e pro"eeds o- t(e insuran"e po i"ies i- not -or t(e a"tua endorsement o- t(e po i"ies6 at east on t(e )asis o- t(e eGuita) e prin"ip e o- estoppe . 8BAU "annot see* re ie- under Se"tion F9 o- t(e Insuran"e Code +(i"( pro2ides t(at t(e pro"eeds oinsuran"e s(a e5" usi2e y app y to t(e interest o- t(e person in +(ose name or -or +(ose )ene-it it is made. '(e pe"u iarity o- t(e "ir"umstan"es o)taining in t(e instant "ase presents a Iusti-i"ation to ta*e e5"eption to t(e stri"t app i"ation o- said pro2ision6 it (a2ing )een su--i"ient y esta) is(ed t(at it +as t(e intention o- t(e parties to designate RC3C as t(e party -or +(ose )ene-it t(e insuran"e po i"ies +ere ta*en out. Consider t(us t(e -o o+ingJ 1. It is undisputed t(at t(e insured pie"es o- property +ere t(e su)Ie"t o- mortgage "ontra"ts entered into )et+een RC3C and 8BAU in "onsideration o- and -or se"uring 8BAULs "redit -a"i ities -rom RC3C. '(e mortgage "ontra"ts "ontained "ommon pro2isions +(ere)y 8BAU6 as mortgagor6 undertoo* to (a2e t(e mortgaged property proper y "o2ered against any oss )y an insuran"e "ompany a""epta) e to RC3C. C. 8BAU 2o untari y pro"ured insuran"e po i"ies to "o2er t(e mortgaged property -rom >ICB6 no ess t(an a sister "ompany o- RC3C and de-inite y an a""epta) e insuran"e "ompany to RC3C. 9. Endorsement do"uments +ere prepared )y >ICBLs under+riter6 A "(ester Insuran"e Agen"y6 In".6 and "opies t(ereo- +ere sent to 8BAU6 >ICB and RC3C. 8BAU did not assai 6 unti o- ate6 t(e 2a idity osaid endorsements. #. 8BAU "ontinued unti t(e o""urren"e o- t(e -ire6 to enIoy t(e )ene-its o- t(e "redit -a"i ities e5tended )y RC3C +(i"( +as "onditioned upon t(e endorsement o- t(e insuran"e po i"ies to )e ta*en )y 8BAU to "o2er t(e mortgaged properties. '(is Court "an not o2er stress t(e -a"t t(at upon re"ei2ing its "opies o- t(e endorsement do"uments prepared )y A "(ester6 8BAU6 despite t(e a)sen"e +ritten "on-ormity t(ereto6 o)2ious y "onsidered said endorsement to )e su--i"ient "omp ian"e +it( its o) igation under t(e mortgage "ontra"ts sin"e RC3C

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a""ording y "ontinued to e5tend t(e )ene-its o- its "redit -a"i ities and 8BAU "ontinued to )ene-it t(ere-rom. Eust as p ain too is t(e intention o- t(e parties to "onstitute RC3C as t(e )ene-i"iary o- t(e 2arious insuran"e po i"ies o)tained )y 8BAU. '(e intention o- t(e parties +i (a2e to )e gi2en -u -or"e and e--e"t in t(is parti"u ar "ase. '(e insuran"e pro"eeds may6 t(ere-ore6 )e e5" usi2e y app ied to RC3C6 +(i"( under t(e -a"tua "ir"umstan"es o- t(e "ase6 is tru y t(e person or entity -or +(ose )ene-it t(e po i"ies +ere " ear y intended.

Section 105 W(en an insuran"e "ontra"t is e5e"uted +it( an agent or trustee as t(e insured6 t(e -a"t t(at (is prin"ipa or )ene-i"iary is t(e rea party in interest may )e indi"ated )y des"ri)ing t(e insured as agent or trustee6 or )y ot(er genera +ords in t(e po i"y. Who 2a4 ta;e in &"ance' An insuran"e may )e ta*en )y a person6 persona y or t(roug( (is agent or trustee. I) the in &"ance i ta;en $4 an a3ent o" t"& teeC (hat 2& t the a3ent o" t"& tee %o' Sin"e t(e insuran"e is to )e app ied e5" usi2e y to t(e interest o- t(e person in +(ose name and -or +(ose )ene-it it is made6 t(e agent or trustee +(en ma*ing an insuran"e "ontra"t -or or on )e(a - o- (is prin"ipa s(ou d6 indi"ate t(at (e is mere y a"ting in a representati2e "apa"ity )y signing as su"( agent or trustee6 or )y ot(er genera terms in t(e po i"y.

Section 11. 'o render an insuran"e e--e"ted )y one partner or part:o+ner6 app i"a) e to t(e interest o- (is "o:partners or ot(er part:o+ners6 it is ne"essary t(at t(e terms o- t(e po i"y s(ou d )e su"( as are app i"a) e to t(e Ioint or "ommon interest.

What ha!!en (hen the in &"ance i e))ecte% $4 a !a"tne" o" a !a"t+o(ne"' A partner or part:o+ner +(o insures partners(ip property in (is o+n name imits t(e "ontra"t to (is indi2idua s(are UN<ESS t(e terms o- t(e po i"y " ear y s(o+ t(at t(e insuran"e +as meant to "o2er a so t(e s(ares o- t(e ot(er partners.

Section 165 W(en t(e des"ription o- t(e insured in a po i"y is so genera t(at it may "ompre(end any person or any " ass o- persons6 on y (e +(o "an s(o+ t(at it +as intended to in" ude (im "an " aim t(e )ene-it o- t(e po i"y. What ha!!en (hen the %e c"i!tion o) the in &"e% i 3ene"a#' In order t(at t(e insuran"e may )e app ied to t(e interest o- t(e person " aiming t(e )ene-it o- t(e po i"y6 (e must s(o+ t(at (e is t(e person named or des"ri)ed or t(at (e )e ongs to t(e " ass o- persons "ompre(ended in t(e po i"y. E@a2!#e' I- t(e po i"y is paya) e ,to t(e "(i dren16 you must s(o+ t(at you are a "(i d o- t(e de"eased. Not a grand:"(i d6 nor a great:grand:"(i d.

Section 17. A po i"y may )e so -ramed t(at it +i inure to t(e )ene-it o- +(omsoe2er6 during t(e "ontinuan"e o- t(e ris*6 may )e"ome t(e o+ner o- t(e interest insured. Section 1,. '(e mere trans-er o- a t(ing insured does not trans-er t(e po i"y6 )ut suspends it unti t(e same person )e"omes t(e o+ner o- )ot( t(e po i"y and t(e t(ing insured. What i the "ea on $ehin% Sec5 1,' Se". F0 -o o+s -rom t(e +e esta) is(ed prin"ip e t(at a po i"y is a persona "ontra"t +it( t(e insured and does NB' run +it( t(e insured property un ess so e5press y stipu ated6 and in t(e a)sen"e o- an assignment o- t(e po i"y +it( t(e insurer=s "onsent6 t(e pur"(aser o- t(e interest o- t(e property reGuires no pri2ity +it( t(e insurer. In "ea%in3 ec5 1,C ta;e not o) Sec5 19 an% 6-5

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Section 195 An interest in property insured must e5ist +(en t(e insuran"e ta*es e--e"t6 and +(en t(e oss o""urs6 )ut need not e5ist in t(e meantime; and interest in t(e i-e or (ea t( o- a person insured must e5ist +(en t(e insuran"e ta*es e--e"t6 )ut need not e5ist t(erea-ter or +(en t(e oss o""urs. Section 6-5 E5"ept in t(e "ases spe"i-ied in t(e ne5t -our se"tions6 and in t(e "ases o- i-e6 a""ident and (ea t( insuran"e6 a "(ange o- interest in any part o- a t(ing insured6 una""ompanied )y a "orresponding "(ange o- interest in t(e insuran"e6 suspends t(e insuran"e to an eGui2a ent e5tent6 unti t(e interests in t(e t(ing and t(e interest in t(e insuran"e are 2ested in t(e same person. P"o$#e25 ' borrowed C,GGG from B, and to sec!re #a(ment of his ob i)ation, he mort)a)ed his ho!se to B$ B then ins!red the ho!se for C*$ S!bse3!ent (, B assi)ned his mort)a)e credit to K, b!t did not make the corres#ondin) transfer of his ri)ht over the ins!rance #o ic($ 2B the ho!se b!rns down, is @a! entit ed to co ect the ins!rance mone( as assi)nee-mort)a)ee> NB6 sin"e 3 did not assign (is rig(t o2er t(e insuran"e po i"y to D. A pur"(aser o- insured property +(o does Not ta*e t(e pre"aution to o)tain a trans-er o- t(e po i"y on t(e insuran"e6 "annot in "ase o- oss6 re"o2er upon t(e "ontra"t6 as t(e trans-er o- t(e property (as t(e e--e"t o- suspending t(e insuran"e unti t(e pur"(aser )e"omes t(e o+ner o- t(e po i"y as +e as t(e property insured. Ca e9 7918 San ?i3&e# *5 La( Union Roc; (repeat Case O 1C& 0- PHIL 670 Fact 9 Bn Ean. 1C6 1.106 !unn mortgaged a par"e o- and to S>3 to se"ure a de)t o- 1%'. >ortgage "ontra"t stated t(at !unn +as to (a2e t(e property insured at (is o+n e5pense6 aut(ori4ing S>3 to "(oose t(e insurers and to re"ei2e t(e pro"eeds t(ereo- and retain so mu"( o- t(e pro"eeds as +ou d "o2er t(e mortgage de)t. !unn i*e+ise aut(ori4ed S>3 to ta*e out t(e insuran"e po i"y -or (im. 3rias6 S>3=s genera manager6 approa"(ed <a+ Union -or insuran"e to t(e e5tent o- 1F' upon t(e property. In t(e app i"ation6 3rias stated t(at S>3=s interest in t(e property +as mere y t(at o- a mortgagee. <a+ Union6 not +anting to issue a po i"y -or t(e entire amount6 issued one -or P/6F%% and pro"ured anot(er po i"y o- eGua amount -rom @i ipinas Cia de Seguros. 3ot( po i"ies +ere issued in t(e name oS>3 on y and "ontained no re-eren"e to any ot(er interests in t(e propty. 3ot( po i"ies reGuired assignments to )e appro2ed and noted on t(e po i"y. Premiums +ere paid )y S>3 and "(arged to !unn. A year ater6 t(e po i"ies +ere rene+ed. In 1.1/6 !unn so d t(e property to 7arding6 )ut no assignment o- t(e po i"ies +as made to t(e atter. Property +as destroyed )y -ire. S>3 -i ed an a"tion in "ourt to re"o2er on t(e po i"ies. 7arding +as made a de-endant )e"ause )y 2irtue o- t(e sa e6 (e )e"ame t(e o+ner o- t(e property6 a t(oug( t(e po i"ies +ere issued in S>3=s name. S>3 soug(t to re"o2er t(e pro"eeds to t(e e5tent o- its mortgage "redit +it( t(e )a an"e to go to 7arding. Insuran"e Companies "ontended t(at t(ey +ere not ia) e to 7arding )e"ause t(eir ia)i ity under t(e po i"ies +as imited to t(e insura) e interests o- S>3 on y. S>3 e2entua y rea"(ed a sett ement +it( t(e insuran"e "ompanies and +as paid t(e )a an"e o- it=s mortgage "redit. 7arding +as e-t to -end -or (imse -. 'ria "ourt ru ed against 7arding. 7en"e t(e appea . I &e9 WBN t(e insuran"e "ompanies are ia) e to 7arding -or t(e )a an"e o- t(e pro"eeds o- t(e C po i"ies.

He#%9 NOPE5 Under t(e Insuran"e A"t6 t(e measure o- insura) e interest in t(e property is t(e e5tent to +(i"( t(e insured mig(t )e damini-ied )y t(e oss or inIury t(ereo-. A so it is pro2ided in t(e IA t(at t(e insuran"e s(a )e app ied e5" usi2e y to t(e proper interest o- t(e person in +(ose name it is made. Undou)ted y6 S>3 as

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t(e mortgagee o- t(e property6 (ad an insura) e interest t(erein; )ut it "ou d NB'6 an any e2ent6 re"o2er upon t(e t+o po i"ies an amount in e5"ess o- its mortgage "redit. 3y 2irtue o- t(e Insuran"e A"t6 neit(er !unn nor 7arding "ou d (a2e re"o2ered -rom t(e t+o po i"ies. Wit( respe"t to 7arding6 +(en (e a"Guired t(e property6 no "(ange or assignment o- t(e po i"ies (ad )een underta*en. '(e po i"ies mig(t (a2e )een +orded di--erent y so as to prote"t t(e o+ner6 )ut t(is +as not done. I- t(e +ording (ad )eenJ ,@a(ab e to SMB, mort)a)ee, as its interests ma( a##ear, remainder to whomsoever, d!rin) the contin!ance of the risk, ma( become owner of the interest ins!red4 6 it +ou d (a2e pro2ed an intention to insure t(e entire interest in t(e property6 NB' mere y S>3=s and +ou d (a2e s(o+n to +(om t(e money6 in "ase o- oss6 s(ou d )e paid. Un-ortunate y6 t(is +as not +(at +as stated in t(e po i"ies. I- during t(e negotiation -or t(e po i"ies6 t(e parties (ad agreed t(at e2en t(e o+ner=s interest +ou d )e "o2ered )y t(e po i"ies6 and t(e po i"ies (ad inad2ertent y )een +ritten in t(e -orm in +(i"( t(ey +ere e2entua y issued6 t(e o+er "ourt +ou d (a2e )een a) e to order t(at t(e "ontra"t )e re-ormed to gi2e e--e"t to t(em in t(e sense t(at t(e parties intended to )e )ound. 7o+e2er6 t(ere is no " ear and satis-a"tory proot(at t(e po i"ies -ai ed to re- e"t t(e rea agreement )et+een t(e parties t(at +ou d Iusti-y t(e re-ormation ot(ese t+o "ontra"ts.

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