SUNLIFE ASSURANCE COMPANY OF CANADA vs. COURT OF APPEALS G.R. No.

105135, 22 June 1995 FACTS: Robert John Bacani procured a life insurance contract for himself from petitioner-company, designating his mother Bernarda Bacani, herein private respondent, as the beneficiary. He was issued a policy valued at P100,000.00 with double indemnity in case of accidental death. Sometime after, the insured died in a plane crash. Bernarda filed a claim with petitioner, seeking the benefits of the insurance policy taken by her son. However, said insurance company rejected the claim on the ground that the insured did not disclose material facts relevant to the issuance of the policy, thus rendering the contract of insurance voidable. Petitioner discovered that two weeks prior to his application for insurance, the insured was examined and confined at the Lung Center of the Philippines, where he was diagnosed for renal failure. The RTC, as affirmed by the CA, this fact was concealed, as alleged by the petitioner. But the fact that was concealed was not the cause of death of the insured and that matters relating to the medical history of the insured is deemed to be irrelevant since petitioner waived the medical examination prior to the approval and issuance of the insurance policy. ISSUE: Whether or not the concealment of such material fact, despite it not being the cause of death of the insured, is sufficient to render the insurance contract voidable HELD: YES. Section 26 of the Insurance Code is explicit in requiring a party to a contract of insurance to communicate to the other, in good faith, all facts within his knowledge which are material to the contract and as to which he makes no warranty, and which the other has no means of ascertaining. Anent the finding that the facts concealed had no bearing to the cause of death of the insured, it is well settled that the insured need not die of the disease he had failed to disclose to the insurer. It is sufficient that his non-disclosure misled the insurer in forming his estimates of the risks of the proposed insurance policy or in making inquiries. The SC, therefore, ruled that petitioner properly exercised its right to rescind the contract of insurance by reason of the concealment employed by the insured. It must be emphasized that rescission was exercised within the two-year contestability period as recognized in Section 48 of The Insurance Code. WHEREFORE, the petition is GRANTED and the Decision of the Court of Appeals is REVERSED and SET ASIDE. THELMA VDA. DE CANILANG vs. COURT OF APPEALS G.R. No. 92492, 17 June 1993 FACTS: Jaime Canilang applied for a “non-medical” insurance policy with respondent Great Pacific Life Assurance Company naming his wife, Thelma Canilang as his beneficiary. But he did not disclose the fact that he was diagnosed as suffering from sinus tachycardia and that he has consulted a doctor twice. Jaime was issued an ordinary life insurance policy with the face value of P19,700.00. Jaime died of “congestive heart failure”, “anemia”, and “chronic anemia”. Petitioner widow and beneficiary of the insured, filed a claim with Great Pacific which the insurer denied upon the ground that the insured had concealed material information from it. Hence, Thelma filed a complaint against Great Pacific with the Insurance Commission for recovery of the insurance proceeds. ISSUE: Whether or not the non-disclosure of certain facts about the insured’s previous health conditions is material to warrant the denial of the claims of Thelma Canilang HELD: YES. The SC agreed with the Court of Appeals that the information which Jaime Canilang failed to disclose was material to the ability of Great Pacific to estimate the probable risk he presented as a

subject of life insurance. Had Canilang disclosed his visits to his doctor, the diagnosis made and medicines prescribed by such doctor, in the insurance application, it may be reasonably assumed that Great Pacific would have made further inquiries and would have probably refused to issue a non-medical insurance policy or, at the very least, required a higher premium for the same coverage. The materiality of the information withheld by Great Pacific did not depend upon the state of mind of Jaime Canilang. A man’s state of mind or subjective belief is not capable of proof in our judicial process, except through proof of external acts or failure to act from which inferences as to his subjective belief may be reasonably drawn. Neither does materiality depend upon the actual or physical events which ensure. Materiality relates rather to the “probable and reasonable influence of the facts” upon the party to whom the communication should have been made, in assessing the risk involved in making or omitting to make further inquiries and in accepting the application for insurance; that “probable and reasonable influence of the facts” concealed must, of course, be determined objectively, by the judge ultimately. WHEREFORE, the Petition for Review is DENIED for lack of merit and the Decision of the Court of Appeals dated 16 October 1989 in C.A.-G.R. SP No. 08696 is hereby AFFIRMED. No pronouncement as to the costs.

EMILIO TAN vs. COURT OF APPEALS G.R. No. 48049, 29 June 1989 FACTS: Tan Lee Siong, father of herein petitioners, applied for life insurance in the amount of P80,000.00 with respondent company Philippine American Life Insurance Company. Said application was approved and a corresponding policy was issued effective November 5, 1973, with petitioners as the beneficiaries. On April 26, 1975, Tan Lee Siong died of hepatoma. Hence, petitioners filed with respondent company their claim for the proceeds of the life insurance policy. However, the insurance company denied the said claim and rescinded the policy by reason of the alleged misrepresentation and concealment of material facts made by the deceased Tan Lee Siong in his application for insurance. The premiums paid on the policy were thereupon refunded. The petitioners contend that the respondent company no longer had the right to rescind the contract of insurance as rescission must allegedly be done during the lifetime of the insured within two years and prior to the commencement of action. ISSUE: Whether or not the insurance company has the right to rescind the contract of insurance despite the presence of an incontestability clause HELD: YES. The so-called “incontestability clause” precludes the insurer from raising the defenses of false representations or concealment of material facts insofar as health and previous diseases are concerned if the insurance has been in force for at least two years during the insured’s lifetime. The phrase “during the lifetime” found in Section 48 of the Insurance Law simply means that the policy is no longer considered in force after the insured has died. The key phrase in the second paragraph of Section 48 is “for a period of two years”. The policy was issued on November 6, 1973 and the insured died on April 26, 1975. The policy was thus in force for a period of only one year and five months. Considering that the insured died before the twoyear period has lapsed, respondent company is not, therefore, barred from proving that the policy is void ab initio by reason of the insured’s fraudulent concealment or misrepresentation. Moreover, respondent company rescinded the contract of insurance and refunded the premiums paid on November 11, 1975, previous to the commencement of this action on November 27, 1975. WHEREFORE, the petition is hereby DENIED for lack of merit. The questioned decision of the Court of Appeals is AFFIRMED. JAMES STOKES vs. MALAYAN INSURANCE CO., INC. G.R. No. L-34768, 24 February 1984

195. 114427 February 6. 1963. and compliance therewith is a condition precedent to the right of recovery.R. Stokes. CA reversed the decision of the Insurance Commission because it found that the petitioner knew of the existence of the two other policies issued by the PFIC.000. Malayan was not guilty of any inequitable act or representation. indeed. Geagonia v CA G. the rationale behind the incorporation of "other insurance" clause in fire policies is to prevent over-insurance and thus avert the perpetration of fraud. as his creditor. Adolfson’s car was being driven by James Stokes. conditions or exceptions in policies which tend to work a forfeiture of insurance policies should be construed most strictly against those for whose benefits they are inserted. The complaint is dismissed. WIC issued two policies for the logs. The policy noted the requirement that "3. Geagonia then filed a complaint against the private respondent in the Insurance Commission for the recovery of P100. 1995 Facts: Geagonia. The 1 year policy and covered thestock trading of dry goods.000. owner of a store.250.000. and that Cebu Tesing Textile." The petitioners’ stocks were destroyed by fire. Such acceptance does not estop the insurer from interposing any valid defense under the terms of the insurance policy.127 SCRA 766 FACTS: Daniel Adolfson had a subsisting Malayan car insurance policy with coverage against own damage as well as 3rd party liability when his car figured in a vehicular accident with another car. WHEREFORE. He was therefore not an “authorized driver” under the terms of the insurance policy in question. goods in process and/or inventories only hereby insured. by stating within Condition 3 itself that such condition shall not apply if the total insurance in force at the time of loss does not exceed P200. provided however. The principle of estoppel is an equitable principle rooted upon natural justice which prevents a person from going back on his own acts and representations to the prejudice of another whom he has led to rely upon them. Hence.00 of the total policies obtained. provisions. The court agreed with the CA that the petitioner knew of the prior policies issued by the PFIC. he has the right to insist upon compliance with the terms of the contract.000 board feet of logs to be exported to Japan. covering any of the property or properties consisting of stocks in trade.00 under fire insurance policy and damages.000.000 issued by PFIC. Such analysis leads us to conclude that (a) the prohibition applies only to double insurance. Stated differently. merely assures continued effectivity of the insurance policy in accordance with its terms.00. who was authorized to do so by Adolfson. an Irish tourist who had been in the Philippines for only 90 days. 2. The Insurance Commission found that the petitioner did not violate Condition 3 as he had no knowledge of the existence of the two fire insurance policies obtained from the PFIC. Acceptance of premium within the stipulated period for payment thereof. and Malayan was right in denying the claim of the insured. When the insurer is called upon to pay in case of loss or damage. At the time of the accident. the total board feet covered this time is only 1. Issues: 1.498. he said that he had no knowledge of the provision in the private respondent's policy requiring him to inform it of the prior policies and this requirement was not mentioned to him by the private respondent's agent. the private respondent was amenable to assume a co-insurer's liability up to a loss not exceeding P200. that this condition shall not apply when the total insurance or insurances in force at the time of the loss or damage is not more than P200. that it was Cebu Tesing Textiles w/c procured the PFIC policies w/o informing him or securing his consent. he is not entitled as a rule to recover for the loss or damage suffered.000. In March 1963. had a valid and subsisting Irish driver’s license but without a Philippine driver’s license. WIC issued a cover note to PTEC for the said logs. The principle does not apply to the instant case.00 with interest and attorney’s fees. He claimed that he knew the existence of the other two policies. . Adolfson filed a claim with Malayan but the latter refused to pay contending that Stokes was not an authorized driver under the “Authorized Driver” clause of the insurance policy in relation to Section 21 of the Land Transportation Office. But. A contract of insurance is a contract of indemnity upon the terms and conditions specified therein. and unless notice be given and the particulars of such insurance or insurances be stated therein or endorsed in this policy pursuant to Section 50 of the Insurance Code. The basis of the private respondent's denial was the petitioner's alleged violation of Condition 3 of the policy. With these principles in mind. Petition Granted Ratio: 1.00. including the agreed period of grace.000. No. What it had in mind was to discourage over-insurance. Stokes had been in the Philippines for more than 90 days. When a property owner obtains insurance policies from two or more insurers in a total amount that exceeds the property's value. Furthermore.00. At the time of the accident. he could not drive a motor vehicle without a Philippine driver’s license. WON the petitioner had not disclosed the two insurance policies when he obtained the fire insurance and thereby violated Condition 3 of the policy. His letter of 18 January 1991 to the private respondent conclusively proves this knowledge. Condition 3 of the subject policy is not totally free from ambiguity and must be meticulously analyzed. The public as well as the insurer is interested in preventing a situation in which a fire would be profitable to the insured. 2. and most favorably toward those against whom they are intended to operate. Pacific Timber Export Corporation (PTEC) applied for a temporary marine insurance from Workmen’s Insurance Company (WIC) in order for the latter to insure 1. WON he is prohibited from recovering Held: Yes.000. The Insurance Commission then ordered the respondent company to pay complainant the sum of P100. all benefits under this policy shall be deemed forfeited. No. He then filed a claim which was subsequently denied because the petitioner’s stocks were covered by two other fire insurance policies for Php 200. If the insured cannot bring himself within the terms and conditions of the contract. under the law. resulting to damage to both vehicles. the appealed judgment is reversed. Pacific Timber Export Corporation vs Court of Appeals In 1963.00. obtained from Country Bankers fire insurance policy for P100. incredible that he did not know about the prior policies since these policies were not new or original. In accepting the premium payment of the insured. the insured may have an inducement to destroy the property for the purpose of collecting the insurance. On April 2. by or on behalf of the Company before the occurrence of any loss or damage. and (b) the nullity of the policy shall only be to the extent exceeding P200. The insured shall give notice to the Company of any insurance or insurances already effected. or which may subsequently be effected. His testimony to the contrary before the Insurance Commissioner and which the latter relied upon cannot prevail over a written admission made ante litem motam. Indeed. However. For the terms of the contract constitute the measure of the insurer’s liability. There is nothing inconsistent between acceptance of premium due under an insurance policy and the enforcement of its terms. Costs against appellees. had insurable interest on the stocks. It was. ISSUE: Whether or not Malayan is liable to pay the insurance claim of Adolfson HELD: NO.

As a logical consequence. The fact that no separate premium was paid on the Cover Note before the loss insured against occurred. HELD: No. no separate premiums are intended or required to be paid on a Cover Note.On April 4. does not militate against the validity of PTEC’s contention. while the logs were in transit to Japan. WIC however denied the insurance claim of PTEC as it averred that the cover note became null and void when the two policies were subsequently issued. At any rate. 1963. ISSUE: Whether or not a separate premium is needed for cover notes. The Cover Note was not without consideration for which the Court of Appeals held the Cover Note as null and void. WIC then asked an adjuster to investigate the loss. not a mere application for insurance which is a mere offer. and denied recovery therefrom. it is not disputed that PTEC paid in full all the premiums as called for by the statement issued by WIC after the issuance of the two regular marine insurance policies. If the Note is to be treated as a separate policy instead of integrating it to the regular policies subsequently issued. for it is in a real sense a contract. . which must be deemed to include the Cover Note. it did not contain. the purpose and function of the Cover Note would be set at naught or rendered meaningless. thereby leaving no account unpaid by PTEC due on the insurance coverage. for no such premium could have been paid. The Court of Appeals ruled that the cover note is void for lack of valuable consideration as it appeared that no premium payment therefor was made by PTEC. since by the nature of the Cover Note. bad weather prevailed and this caused the loss of 32 pieces of logs. 1963 but said logs were included in the cover note earlier issued. The adjuster submitted that the logs lost were not covered by the two policies issued on April 2. as all Cover Notes do not contain particulars of the shipment that would serve as basis for the computation of the premiums.

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