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IGNACIO SATURNINO, in his own behalf and as the judicial guardian of CARLOS

SATURNINO, inor, !s" T#$ %#ILI%%IN$ A&$RICAN LI'$ INSURANC$
CO&%AN(
G"R" No" L)*+*+,, 'ebruar- ./, *0+,, 1&A2ALINTAL, 3"4
Materiality is to be determined not by the event, but solely by the probable and reasonable influence of the facts upon the
party to whom the communication is due, in forming his estimate of the proposed contract, or in making his inquiries. In
order to avoid a policy it is not necessary to show actual fraud on the part of the insured.
Plaintiffs, who are her surviving husband and minor child, filed this action in the CFI of Manila to recover the sum of
P,!!!.!!, corresponding to the face value of the policy issued by defendant on the life of "stefania #. $aturnino
%"stefania&. 'he policy sued upon is one for (!)year endowment non)medical insurance, a kind of policy which dispenses
with the usually required medical e*amination. "stefania died of pneumonia, secondary to influen+a. #ppellants here
demanded payment of the face value of the policy.
It appears that two months prior to the issuance of the policy, "stefania was operated on for a malignant cancer, involving
complete removal of the right breast, including the pectoral muscles and the glands found in the right armpit."stefania did
not make a disclosure of such sickness and operation in her application for insurance. ,n the contrary, she stated therein
that she did not have, nor had she ever had, among other ailments listed in the application, cancer or other tumors- that she
had not consulted any physician, undergone any operation or suffered any in.ury within the preceding five years- and that
she had never been treated for nor did she ever have any illness or disease peculiar to her se*, particularly of the breast,
ovaries, uterus, and menstrual disorders.
I$$/"
0. 1hether or not the insured made such false representations of material facts as to
avoid the policy.
(. 1hether or not there was fraudulent concealment on the part of "stefania which can
void the policy.
2"34
0. 'he Insurance 3aw %$ection 5!& provides that 6M#'"7I#3I'8 is to be determined not by the event, but solely by the
probable and reasonable influence of the facts upon the party to whom the communication is due, in forming his estimate of
the proposed contract, or in making his inquiries.6
'he waiver of medical e*amination in this special type of non)medical policy renders even more material the complete
information required in the application concerning previous condition of health and diseases suffered, for such information
necessarily constitutes an important factor which the insurer takes into consideration in deciding whether to issue the policy
or not. It is logical to assume that if appellee had been properly apprised of the insured9s medical history she would at least
have been made to undergo medical e*amination in order to determine her insurability.
Furthermore, it was precisely because the insured had given herself a clean bill of health in the application that appellee no
longer considered an actual medical checkup necessary. 'herefore, there was no negligence on Philam:s part.
(. In order to avoid a policy it is not necessary to show actual fraud on the part of the insured. If it were the law that an
insurance company could not depend a policy on the ground of misrepresentation, unless it could show actual knowledge on
the part of the applicant that the statements were false, then it is plain that it would be impossible for it to protect itself
against fraudulent and improper claims as it would be impossible to show actual fraud e*cept in the e*tremest cases.
In this .urisdiction, concealment, whether intentional or unintentional, entitles the insurer to rescind the contract of
insurance, concealment being defined as 6negligence to communicate that which a party knows and ought to communicate6
%$ections (; < (=,
#ct >o. (;(?&.
GR$AT %ACI'IC LI'$ ASSURANC$ CO&%AN( !s" #ON" COURT O' A%%$ALS
G"R" No" L),*/56, A7ril ,8, *090, 1:$ CASTRO, 3"4
LA%ULA%U :" &ON:RAGON !s" #ON" COURT O' A%%$ALS and NGO #ING
G"R" No" L),*/9/, A7ril ,8, *090, 1:$ CASTRO, 3"4
'he binding deposit receipt is, manifestly, merely conditional and does not insure outright. 1here an agreement is made
between the applicant and the agent, no liability shall attach until the principal approves the risk and a receipt is given by the
agent. 'he acceptance is merely conditional and is subordinated to the act of the company in approving or re.ecting the
application.
,n March 0;, 0@?, private respondent >go 2ing filed an application with the Areat Pacific 3ife #ssurance Company
%Pacific 3ife& for a twenty)year endowment policy in the amount of P!,!!!.!! on the life of his one)year old daughter
2elen Ao through petitioner 3apulapu 4. Mondragon, Branch Manager of the Pacific 3ife via an application form and by
paying the annual premium %P0,50?.!!&, of which Mondragon would retain a portion him being a duly authori+ed agent of
Pacific 3ife. # binding deposit slip was issued by Mondragon after he handwrote his Cstrong recommendationD at the back
of the application form for the approval of the application.
2owever, on #pril 5!, 0@?, Mondragon received a letter from Pacific 3ife disapproving the insurance application because
the said (!)year plan is not available for minors below seven years old, but Pacific 3ife can consider the same under the
Euvenile 'riple #ction Plan. 'he non)acceptance of the insurance plan was not communicated to >go
2ing because Mondragon resent the application and reiterated his strong recommendation. 8et, 2elen Ao died of influen+a
with complication of bronchopneumonia pending such application.
I$$/"$
1hether the binding deposit receipt constituted a temporary contract of the life
insurance in question- and
1hether >go 2ing concealed the state of health and physical condition of 2elen Ao,
who was a mongoloid, which rendered void deposit receipt.
2"34
0. 'he provisions printed on the deposit receipt show that the binding deposit receipt is intended to be merely a provisional
or temporary insurance contract. 'he binding deposit receipt is, manifestly, merely conditional and does not insure outright.
1here an agreement is made between the applicant and the agent, no liability shall attach until the principal approves the
risk and a receipt is given by the agent. 'he acceptance is merely conditional and is subordinated to the act of the company
in approving or re.ecting the application.
Clearly implied from the conditions is that the binding deposit receipt in question is merely an acknowledgment, on behalf
of the company, that the latter9s branch office had received from the applicant the insurance premium and had accepted the
application sub.ect for processing by the insurance company- and that the latter will either approve or re.ect the same on the
basis of whether or not the applicant is 6insurable on standard rates.6 $ince petitioner Pacific 3ife disapproved the insurance
application of respondent >go 2ing, there is no meeting of minds nor of the offer and acceptance. 'herefore, the binding
deposit receipt in question had never become in force at any time.
Moreover, it is of no moment that Mondragon failed to communicate to him the re.ection of the insurance application. In
this first place, there was no contract perfected because >go 2ing himself, being an authori+ed insurance agent of Pacific
3ife, is indubitably aware that said company does not offer such kind of life insurance for children below ?)years old. 'here
is no valid offer.
(. >go 2ing had deliberately concealed the state of health and physical condition of his daughter 2elen Ao, a mongoloid.
$uch a congenital physical defect could never be ensconced nor disguised. >onetheless, private respondent, in apparent bad
faith, withheld the fact material to the risk to be assumed by the insurance company. 'he contract of insurance is one of
perfect good faith, uberrima fides, meaning good faith, absolute and perfect candor or openness and honesty- the absence of
any concealment or demotion, however slight, not for the alone but equally so for the insurer.
SUNLI'$ ASSURANC$ CO&%AN( O' CANA:A ;S" CA
G"R" No" *86*,6 3une .., *006
#nent 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)FG‐)disclosure misled
the insurer in forming his estimates of the risks of the proposed insurance policy or in making inquiries. Petitioner properly
e*ercised its right to rescind the contract of insurance by reason of the concealment employed by the insured.
FactsH
7obert Eohn B. Bacani procured a life insurance contract for himself from petitioner. 2e was issued a policy valued at
P0!!,!!!.!!, with double indemnity in case of accidental death. 'he designated beneficiary was his mother, respondent
Bernarda Bacani. 'he insured died in a plane crash. 7espondent Bacani filed a claim with petitioner, seeking the benefits of
the insurance policy. 2owever, petitioner re.ected the claim.
Petitioner claimed that the insured gave false statements in his application whenhe answered the following questionsH
. 1ithin the past years have youH
a& consulted any doctor or other health practitionerI
b& ***
c& attended or been admitted to any hospital or other medical
facilityI
=. 2ave you ever had or sought advice forH ***
b& urine, kidney or bladder disorderI
'he deceased answered question >o. %a& in the affirmative but limited his answer to a consultation for cough and flu
complications. 'he other questions were answered in the negative. Petitioner discovered that two weeks prior to his
application for insurance, the insured was e*amined and confined at the 3ung Center of the Philippines, where he was
diagnosed for renal failure. 4uring his confinement, the deceased was sub.ected to urinalysis, ultra).‐)sonography and
hematology tests. 7'C ruled in favor of the claimants stating that the health history of the insured was immaterial since the
insurance policy was 6ʺnon).‐)medical6ʺand the cause of death was not related to the facts concealed. C# affirmed 7'C:s
ruling.
IssueH
1hether the concealment employed was sufficient to entitle petitioner to rescind
the contract.
7ulingH
8es. C#:s decision is reversed and set aside.
'he terms of the contract are clear. 'he insured is specifically required to disclose to the insurer matters relating to his
health. 'he information which the insured failed to disclose were material and relevant to the approval and issuance of the
insurancepolicy. 'he matters concealed would have definitely affected petitioner9ʹs action on his application, either by
approving it with the corresponding ad.ustment for a higher premium or re.ecting the same. Moreover, a disclosure may
have warranted a medical e*amination for it to reasonably assess the risk involved in accepting the application.
#nent 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
NG GAN <$$ !" ASIAN CRUSA:$R LI'$ ASSURANC$ COR%ORATION
G"R" No" L),8+/6, ,8 &a- *0/,, S$CON: :I;ISION =$scolin, 3">
Concealment must, in the absence of inquiries, be not only material, but fraudulent, or the fact
must have been intentionally withheld.
In 0@=(, Jwong >am applied for a (!)year endowment insurance on his life for the sum of P(!,!!!.!!, with his wife,
appellee >g Aan Kee as beneficiary. ,n the same date, #sian Crusader, upon receipt of the required premium from the
insured, approved the application and issued the corresponding policy. In 0@=5, Jwong >am died of cancer of the liver with
metastasis. #ll premiums had been religiously paid at the time of his death.
2ence, his widow >g Aan Kee presented a claim in due form to appellant for payment of the face value of the policy. ,n
the same date, she submitted the required proof of death of the insured. #ppellant denied the claim on the ground that the
answers given by the insured to the questions appealing in his application for life insurance were untrue. #ppellant alleged
that the insured was guilty of misrepresentation when he answered 6>o6 to the following question appearing in the
application for life insurance) 2as any life insurance company ever refused your application for insurance or for
reinstatement of a lapsed policy or offered you a policy different from that applied forI If, so, name company and date.
#ppellant further maintains that when the insured was e*amined in connection with his application for life insurance, he
gave the appellant9s medical e*aminer false and misleading information as to his ailment and previous operation. 'he
alleged false statements given by Jwong >am are as followsH ,perated on for a 'umor LmayomaM of the stomach. Claims
that 'umor has been associated with ulcer of stomach. 'umor taken out was hard and of a hen9s egg si+e. ,peration was two
L(M years ago in Chinese Aeneral 2ospital by 4r. 8ap. >ow, claims he is completely recovered.
I$$/"H
1as the appellant misled or deceived into entering the contract or in accepting
the risk at the rate of the premium agreed uponI
2"34H
>o. $ection (? of the Insurance 3aw L#ct (;(?M provides that such party a contract of insurance must communicate to the
other, in good faith, all facts within his knowledge which are material to the contract, and which the other has not the means
of ascertaining, and as to which he makes no warranty. 'hus, 6concealment e*ists where the assured had knowledge of a
fact material to the risk, and honesty, good faith, and fair dealing requires that he should communicate it to the assurer, but
he designedly and intentionally withholds the same.6
It has also been held 6that the concealment must, in the absence of inquiries, be not only material, but fraudulent, or the fact
must have been intentionally withheld.6
#ssuming that the aforesaid answer given by the insured is false, as claimed by the appellant. $ec. (? of the Insurance 3aw,
above)quoted, nevertheless requires that fraudulent intent on the part of the insured be established to entitle the insurer to
rescind the contract. #nd as correctly observed by the lower court, 6misrepresentation as a defense of the insurer to avoid
liability is an 9affirmative9 defense. 'he duty to establish such a defense by satisfactory and convincing evidence rests upon
the defendant. 'he evidence before the Court does not clearly and satisfactorily establish that defense.6
It bears emphasis that Jwong >am had informed the appellant9s medical e*aminer that the tumor for which he was operated
on was 6associated with ulcer of the stomach.6 In the absence of evidence that the insured had sufficient medical knowledge
as to enable him to distinguish between 6peptic ulcer6 and 6a tumor6, his statement that said tumor was 6associated with
ulcer of the stomach, 6 should be construed as an e*pression made in good faith of his belief as to the nature of his ailment
and operation.
Indeed, such statement must be presumed to have been made by him without knowledge of its incorrectness and without
any deliberate intent on his part to mislead the appellant. 1hile it may be conceded that, from the viewpoint of a medical
e*pert, the information communicated was imperfect, the same was nevertheless sufficient to have induced appellant to
make further inquiries about the ailment and operation of the insured.
$ection 5( of Insurance 3aw L#ct >o. (;(?0 provides that the right to information of material facts maybe waived either by
the terms of insurance or by neglect to make inquiries as to such facts where they are distinctly implied in other facts of
which information is communicated. It has been held that where, upon the face of the application, a question appears to be
not answered at all or to be imperfectly answered, and the insurers issue a policy without any further inquiry, they waive the
imperfection of the answer and render the omission to answer more fully immaterial.
#s aptly noted by the lower court, 6if the ailment and operation of Jwong >am had such an important bearing on the
question of whether the defendant would undertake the insurance or not, the court cannot understand why the defendant or
its medical e*aminer did not make any further inquiries on such matters from the Chinese Aeneral 2ospital or require
cocopies of the hospital records from the appellant before acting on the application for insurance. 'he fact of the matter is
that the defendant was too eager to accept the application and receive the insured9s premium. It would be inequitable now to
allow the defendant to avoid liability under the circumstances.6
SUNLI'$ ASSURANC$ CO&%AN( O' CANA:A !" The #on" COURT O'
A%%$ALS and S7ouses ROLAN:O and ?$RNAR:A ?ACANI
G"R" No" *86*,6, .. 3une *006, 'IRST :I;ISION =@uiason, 3">
'he materiality of the information withheld does not depend on the state of mind of the insured.
>either does it depend on the actual or physical events which ensue.
In 0@N=, 7obert Eohn B. Bacani procured a life insurance contract for himself from petitioner $un 3ife. 2e was issued
Policy valued at P0!!,!!!.!!, with double indemnity in case of accidental death. 'he designated beneficiary was his
mother, respondent Bernarda Bacani.
In 0@N?, the insured died in a plane crash. 7espondent Bernarda Bacani filed a claim with petitioner, seeking the benefits of
the insurance policy taken by her son. Petitioner conducted an investigation and its findings prompted it to re.ect the claim.
In its letter, petitioner informed respondent Bernarda Bacani, that the insured did not disclose material facts relevant to the
issuance of the policy, thus rendering the contract of insurance voidable. # check representing the total premiums paid in
the amount of P0!,0?(.!! was attached to said letter.
Petitioner claimed that the insured gave false statements in his application when he gave false statements in his application
when he failed to disclose that ( weeks prior to his application for insurance, the insured was e*amined and confined at the
3ung Center of the Philippines where he was diagnosed for renal failure. $ubsequently, respondent Bernarda Bacani and her
husband 7olando Bacani, filed an action for specific performance against petitioner with the 7'C of Oalen+uela. #
summary .udgment was decided in favor of private respondents.
I$$/"H 1as the concealment and representation of the insured irrelevant as the policy was non)medicalI
2"34H
>o. $ection (= of 'he Insurance Code is e*plicit 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. $aid $ection provides that a neglect to communicate that which a party knows
and ought to communicate, is called concealment.
Materiality is to be determined not by the event, but solely by the probable and reasonable influence of the facts upon the
party to whom communication is due, in forming his estimate of the disadvantages of the proposed contract or in making his
inquiries %'he Insurance Code, $ec. 50&.
'he terms of the contract are clear. 'he insured is specifically required to disclose to the insurer matters relating to his
health. 'he information which the insured failed to disclose were material and relevant to the approval and issuance of the
insurance policy. 'he matters concealed would have definitely affected petitioner9s action on his application, either by
approving it with the corresponding ad.ustment for a higher premium or re.ecting the same. Moreover, a disclosure may
have warranted a medical e*amination of the insured by petitioner in order for it to reasonably assess the risk involved in
accepting the application.
In Oda. de Canilang v. Court of #ppeals, ((5 $C7# ;;5 %0@@5&, we held that materiality of the information withheld does
not depend on the state of mind of the insured. >either does it depend on the actual or physical events which ensue. 'hus,
6goad faith6 is no defense in concealment. 'he insured9s failure to disclose the fact that he was hospitali+ed for two weeks
prior to filing his application for insurance, raises grave doubts about his bonafides. It appears that such concealment was
deliberate on his part.
'he argument, that petitioner9s waiver of the medical e*amination of the insured debunks the materiality of the facts
concealed, is untenable. 1e reiterate our ruling in $aturnino v. Philippine #merican 3ife Insurance Company, ? $C7# 50=
%0@=5&, that 6 . . . the waiver of a medical e*amination Lin a non)medical insurance contractM renders even more material the
information required of the applicant concerning previous condition of health and diseases suffered, for such information
necessarily constitutes an important factor which the insurer takes into consideration in deciding whether to issue the policy
or not. Moreover, such argument of private respondents would make $ection (? of the Insurance Code, which allows the
in.ured party to rescind a contract of insurance where there is concealment, ineffective %$ee Oda. de Canilang v. Court of
#ppeals, supra&.
#nent 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 %2enson v. 'he
Philippine #merican 3ife Insurance Co., = ,.A. >o. ;N L0@=!M&.
$&ILIO TAN, 3UANITO TAN, AL?$RTO TAN and ARTURO TAN !" T#$ COURT
O' A%%$ALS and T#$ %#ILI%%IN$ A&$RICAN LI'$ INSURANC$ CO&%AN(
G"R" No" 5/850, .0 3une *0/0, T#IR: :I;ISION =GutierreA, 3">
In life insurance, where the policy which is payable on the death of the insured has been in force during the lifetime of the
insured for a period of ( years from the date of the of issue or of its last reinstatement, the insurer cannot prove that the
policy is void or rescissible by reason of concealment or misrepresentation.
In 0@?5, 'an 3ee $iong, father of herein petitioners, applied for life insurance in the amount of P N!,!!!.!! with respondent
company. $aid application was approved and Policy >o. 0!N(;=? was issued effective >ovember =,0@?5, with petitioners
the beneficiaries thereof.
In 0@?, 'an 3ee $iong died of hepatoma. Petitioners then filed with respondent company their claim for the proceeds of
the life insurance policy. 2owever, in a letter, respondent company denied petitioners9 claim and rescinded the policy by
reason of the alleged misrepresentation and concealment of material facts made by the deceased 'an 3ee $iong in his
application for insurance. 'he premiums paid on the policy were thereupon refunded.
2ence, petitioners filed a complaint against the former with the ,ffice of the Insurance Commissioner. 'he 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 ( years and prior to the commencement of the action.
I$$/"H 1hether the respondent company may rescind the contract of insuranceI
2"34H
8es. 8es. 'he pertinent section in the Insurance Code providesH
$ection ;N. 1henever a right to rescind a contract of insurance is given to the insurer by any provision of this chapter, such
right must be e*ercised previous to the commencement of an action on the contract.
'he so)called 6incontestability clause6 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 insured9s lifetime. 'he phrase 6during the lifetime6 found in $ection ;N simply means that the
policy is no longer considered in force after the insured has died.
'he key phrase in the second paragraph of $ection ;N is 6for a period of two years.6
'he policy was issued on >ovember =,0@?5 and the insured died on #pril (=,0@?. 'he policy was thus in force for a period
of only one year and five months. Considering that the insured died before the two)year period had lapsed, respondent
company is not, therefore, barred from proving that the policy is void ab initio by reason of the insured9s fraudulent
concealment or misrepresentation. Moreover, respondent company rescinded the contract of insurance and refunded the
premiums paid on $eptember 00, 0@?, previous to the commencement of this action on >ovember
(?,0@?. %7ollo, pp. @@)0!!&
'he insurer has two years from the date of issuance of the insurance contract or of its last reinstatement within which to
contest the policy, whether or not, the insured still lives within such period. #fter two years, the defenses of concealment or
misrepresentation, no matter how patent or well founded, no longer lie. Congress felt this was a sufficient answer to the
various tactics employed by insurance companies to avoid liability. 'he petitioners9 interpretation would give rise to the
incongruous situation where the beneficiaries of an insured who dies right after taking out and paying for a life insurance
policy, would be allowed to collect on the policy even if the insured fraudulently concealed material facts.
Petitioners argue that no evidence was presented by respondent company to show that the questions appearing in Part II of
the application for insurance were asked, e*plained to and understood by the deceased so as to prove concealment on his
part.
'he same is not well taken. 'he deceased, by affi*ing his signature on the application form, affirmed the correctness of all
the entries and answers appearing therein. It is but to be e*pected that he, a businessman, would not have affi*ed his
signature on the application form unless he clearly understood its significance. For, the presumption is that a person intends
the ordinary consequence of his voluntary act and takes ordinary care of his concerns. L$ec. %c& and %d&, 7ule 050, 7ules of
CourtM.
'he evidence for respondent company shows that on $eptember 0@,0@?(, the deceased was e*amined by 4r. Oictoriano
3im and was found to be diabetic and hypertensive- that by Eanuary, 0@?5, the deceased was complaining of progressive
weight loss and abdominal pain and was diagnosed to be suffering from hepatoma, %t.s.n. #ugust (5, 0@?=, pp. N)0!- "*hibit
(&. #nother physician, 4r. 1enceslao Oitug, testified that the deceased came to see him on 4ecember 0;, 0@?5 for
consolation and claimed to have been diabetic for five years. %t.s.n., #ug. (5,0@?=, p. - "*hibit =& Because of the
concealment made by the deceased of his consultations and treatments for hypertension, diabetes and liver disorders,
respondent company was thus misled into accepting the risk and approving his application as medically standard %"*hibit )
C& and dispensing with further medical investigation and e*amination %"*hibit )#&. For as long as no adverse medical
history is revealed in the application form, an applicant for insurance is presumed to be healthy and physically fit and no
further medical investigation or e*amination is conducted by respondent company. %t.s.n., #pril N,0@?=,
pp. =)N&. %7ollo, pp. @=)@N&
'here is no showing that the questions in the application form for insurance regarding the insured9s medical history are in
smaller print than the rest of the printed form or that they are designed in such a way as to conceal from the applicant their
importance. If a warning in bold red letters or a bo*ed warning similar to that required for cigarette advertisements by the
$urgeon Aeneral of the /nited $tates is necessary, that is for Congress or the Insurance Commission to provide as
protection against high pressure insurance salesmanship. 1e are limited in this petition to ascertaining whether or not the
respondent Court of #ppeals committed reversible error. It is the petitioners9 burden to show that the factual findings of the
respondent court are not based on substantial evidence or that its conclusions are contrary to applicable law and
.urisprudence. 'hey have failed to discharge that burden
:IOS:A:O C" T( !s" 'IRST NATIONAL SUR$T( B ASSURANC$ CO", INC"
G"R" No" L)*+*,/, A7ril .0, *0+*, LA?RA:OR, 3"
$ec. ;@. 'he written instrument in which a contract of insurance is set forth, is called a policy of insurance.
4iosdado C. 'y insured himself in 0N local insurance companies which issued to him personal accident policies. 1hen a
fire broke out of the Broadway Cotton Factory where he was working, plaintiff was in.ured which have caused temporary
total disability of plaintiff9s left hand. Plaintiff thus filed the corresponding notice of accident and notice of claim with all of
the abovenamed defendants to recover indemnity under Part II of the policy. 'he policy states that if the Insured sustains
any Bodily In.ury which is effected solely through violent, e*ternal, visible and accidental means, and which shall not prove
fatal but shall result, independently of all other causes and within si*ty %=!& days from the occurrence thereof, in 'otal or
Partial 4isability of the Insured, the Company shall pay H
3,$$ ,FH
* * * * * * * * *
"ither hand ............................................................................ P=!.!!
* * * * * * * * *
... 'he loss of a hand shall mean the loss by amputation through the bones of the
wrist....
4efendants re.ected plaintiff9s claim for indemnity for the reason that there being no severance of amputation of the left
hand, the disability suffered by him was not covered by his policy. #ppellant, on the other hand, claims that it is not
necessary that there should be an amputation thereof, but that it is sufficient if the in.uries prevent him from performing his
work or labor necessary in the pursuance of his occupation or business.
Citing authorities, plaintiff claims that 6total disability6 in relation to one9s occupation means that the condition of the
insurance is such that common prudence requires him to desist from transacting his business or renders him incapable of
working. It is also argued that obscure words or stipulations should be interpreted against the person who caused the
obscurity, and the ones which caused the obscurity in the cases at bar are the defendant insurance companies.
2"34H 4enied.
1hile we sympathi+e with the plaintiff or his employer, for whose benefit the policies were issued, we can not go beyond
the clear and e*press conditions of the insurance policies, all of which define partial disability as loss of either hand by
amputation through the bones of the wrist.6 'here was no such amputation in the case at bar. #ll that was found by the trial
court, which is not disputed on appeal, was that the physical in.uries 6caused temporary total disability of plaintiff9s left
hand.6 >ote that the disability of plaintiff9s hand was merely temporary, having been caused by fracture of the inde*, the
middle and the fourth fingers of the left hand.
1e might add that the agreement contained in the insurance policies is the law between the parties. #s the terms of the
policies are clear, e*press and specific that only amputation of the left hand should be considered as a loss thereof, an
interpretation that would include the mere fracture or other temporary disability not covered by the policies would certainly
be unwarranted.
SI&$ON :$L ROSARIO !s" T#$ $@UITA?L$ INSURANC$ AN: CASUALT(
CO", INC"
G"R" No" L)*+.*6, 3une .0, *0+,
Francisco del 7osario died of drowning while on board the motor launch 6I$3#M#.6 2e was insured for P0,!!!.!! to
P5,!!!.!! depending on the bodily in.ury sustained. 1hile the policy covers a provision for drowning, it however does not
positively state any definite amount that may be recovered in case of death by drowning. 'hus, his lawyer wrote the
insurance company acknowledging receipt of P0,!!! by $imeon del 7osario, father of the insured and as the sole heir, but
informed "quitable that the amount payable under the policy should have been P0,!!.!! based on the rule of pari materia
as the death of the insured occurred under the circumstances similar to that provided under $ection (, which covered in.ury
sustained by the wrecking or disablement of a railroad passenger car or street railway car in or on which the Insured is
travelling as a farepaying passenger.
'he Insurance Commissioner however rendered an opinion that the liability of the company was only P0,!!!.!!, pursuant
to $ection 0 %In.ury sustained other than those specified below unless e*cepted& In the meantime, #tty. Oicente Francisco,
in a subsequent letter to the insurance company, asked for P5,!!!.!! %In.ury sustained by a stroke of lightning or by a
cyclone & which the Company refused, to pay. 2ence, a complaint for the recovery of the balance of P(,!!!.!! more was
instituted with the Court of First Instance of 7i+al.
4efendant Insurance Company presented a Motion to 4ismiss, alleging that the demand or claim is set forth in the
complaint had already been released, plaintiff having received the full amount due as appearing in policy and as per opinion
of the Insurance Commissioner.
'he trial court ordered "quitable to pay P5,!!!.!!. 'he trial court ruled that while the policy covers death by drowning, it
did not state the specific amount. But since "quitable has bound itself to pay P0!!!.!! to P5,!!!.!! as indemnity for the
death of the insured and because there is ambiguity in the policy, said ambiguity must be interpreted in favor of the insured
and strictly against the insurer so as to allow greater indemnity.
2"34H Petition A7#>'"4.
1e believe that under the proven facts and circumstances, the findings and conclusions of the trial court, are well taken, for
they are supported by the generally accepted principles or rulings on insurance, which enunciate that where there is an
ambiguity with respect to the terms and conditions of the policy, the same will be resolved against the one responsible
thereof. It should be recalled in this connection, that generally, the insured, has little, if any, participation in the preparation
of the policy, together with the drafting of its terms and Conditions. 'he interpretation of obscure stipulations in a contract
should not favor the party who cause the obscurity %#rt. 05??, >.C.C.&, which, in the case at bar, is the insurance company.
. . . . #nd so it has been generally held that the 6terms in an insurance policy, which are ambiguous, equivocal or
uncertain . . . are to be construed strictly against, the insurer, and liberally in favor of the insured so as to effect the dominant
purpose of indemnity or payment to the insured, especially where a forfeiture is involved,6 %(@ #m. Eur. 0N0& and the reason
for this rule is that the 6insured usually has no voice in the selection or arrangement of the words employed and that the
language of the contract is selected with great care and deliberation by e*pert and legal advisers employed by, and acting
e*clusively in the interest of, the insurance company6 %;; C.E.$. 00?;&. Calanoc v. Court of #ppeals, et al., A.7. >o. 3)
N00, 4ec. 0=, 0@.
. . . . 1here two interpretations, equally fair, of languages used in an insurance policy may be made, that which allows the
greater indemnity will prevail. %39"ngel v. $cotish /nion < >at. F. Ins. Co., ;N Fla. N(, 5? $o. ;=(, =? 37# N0 000
#m. $t. 7ep. ?!, #nn. Cas. ?;@&. #t any event, the policy under consideration, covers death or disability by accidental
means, and the appellant insurance company agreed to pay P0,!!!.!! to P5,!!!.!!. is indemnity for death of the insured.
'ORTUN$ INSURANC$ AN: SUR$T( CO", INC", 7etitioner, !s" COURT O'
A%%$ALS and %RO:UC$RS ?AN2 O' T#$ %#ILI%%IN$S, res7ondents"
G"R" No" **6.9/, &a- .,, *006
# 6representative6 is defined as one who represents or stands in the place of another- one who represents others or another
in a special capacity, as an agent, and is interchangeable with 6agent.6
F#C'$H
'his case began with the filing with the 7egional 'rial Court %7'C& of Makati, Metro Manila, by private respondent
Producers Bank of the Philippines against petitioner Fortune Insurance and $urety Co., Inc. of a complaint for recovery of
the sum of P?(,!!!.!! under the policy issued by Fortune. 'he sum was allegedly lost during a robbery of Producer9s
armored vehicle while it was in transit to transfer the money from its Pasay City Branch to its head office in Makati. 'he
said armored car was driven by Ben.amin Magalong 8 de Oera, escorted by $ecurity Auard $aturnino #tiga 8 7osete.
4river Magalong was assigned by P7C Management $ystems with the plaintiff and the $ecurity Auard #tiga was assigned
by /nicorn $ecurity $ervices, Inc. with the plaintiff by virtue of a contract of $ecurity $ervice. #fter an investigation
conducted by the Pasay police authorities, the driver Magalong and guard #tiga were charged, together with "delmer
Bantigue 8 "ulalio, 7eynaldo #quino and Eohn 4oe, with violation of P.4. 5( %#nti)2ighway 7obbery 3aw& before the
Fiscal of Pasay City. 'he Fiscal of Pasay City then filed an information charging the aforesaid persons with the said crime
before Branch 00( of the 7egional 'rial Court of Pasay City. 4emands were made by the plaintiff upon the defendant to
pay the amount of the loss of P?(,!!!.!!, however such claim was refused by the insurance corporation as the loss is
e*cluded from the coverage of the insurance policy due to the stipulation which reads as followsH
A">"7#3 "PC"P'I,>$
'he company shall not be liable under this policy in report of
*** *** ***
%b& any loss caused by any dishonest, fraudulent or criminal act of the insured or an officer, employee, partner, director,
trustee or authori+ed representative of the Insured whether acting alone or in con.unction with others. . . .
I$$/"H 1hether or not Magalong and #tiga fall under the general e*ceptions clause of the insurance policy and thus
absolved the insurance company from liabilityI
2"34H
Magalong and #tiga were, in respect of the transfer of Producer9s money from its Pasay City branch to its head office in
Makati, its 6authori+ed representatives6 who served as such with its teller Maribeth #lampay. 2owsoever viewed,
Producers entrusted the three with the specific duty to safely transfer the money to its head office, with #lampay to be
responsible for its custody in transit- Magalong to drive the armored vehicle which would carry the money- and #tiga to
provide the needed security for the money, the vehicle, and his two other companions. In short, for these particular tasks, the
three acted as agents of Producers. # 6representative6 is defined as one who represents or stands in the place of another- one
who represents others or another in a special capacity, as an agent, and is interchangeable with 6agent.6 In view of the
foregoing, Fortune is e*empt from liability under the general e*ceptions clause of the insurance policy.
TARCILA L" TRINI:A:, !s" ORI$NT %ROT$CTI;$ ASSURANC$ ASSOCIATION
G"R" No" L)566*9, A7ril 6, *0,0
#ll provisions, conditions, or e*ceptions which in any way tend to work a forfeiture of the policy should be construed most
strongly against those for whose benefit they are inserted, and most favorably toward those against whom they are meant to
operate.
F#C'$H
,n February 0N, 0@5, one #ndres 'rinidad, a resident of "chague, Isabela, applied for membership to, and his application
accepted by, the ,rient Protective #ssurance
#ssociation, the latter delivering the corresponding life benefit certificate as of the aforesaid date. ,n Eanuary 5, 0@5=,
#ndres 'rinidad died. 'arcila 3. 'rinidad, his widow, and plaintiff)appellee in this case, notified the defendant of the death
of her husband. #ppellant forwarded three copies of the form necessary for filing the claim of the beneficiary named in the
benefit certificate. #ppellee accomplished all the necessary papers and sent them to the principal place of business of the
defendant association in the City of Manila. In answer to this claim, appellant informed her that by reason of the failure of
#ndres 'rinidad to pay the premium on time, the benefit certificate had become forfeited and that therefore plaintiff, as the
beneficiary of the deceased #ndres 'rinidad, had lost all rights under the policy. ,n February (=, 0@5=, the plaintiff filed
the complaint for the recovery of the sum of P!! with legal interest thereon from the commencement of the action.
I$$/"H 1hether or not appellee may recover from the appellantI
2"34H
'here are abundant cases which hold that acceptance under these or similar circumstances constitutes a waiver of the
automatic forfeiture contained in the benefit certificate. It is a matter of common knowledge that large amounts of money
are collected from ignorant persons by companies and associations which adopt high sounding titles and print the amount of
benefits they agree to pay in large black)faced type, following such undertakings by fine print conditions which destroy the
substance of the promise. #ll provisions, conditions, or e*ceptions which in any way tend to work a forfeiture of the policy
should be construed most strongly against those for whose benefit they are inserted, and most favorably toward those
against whom they are meant to operate.
C$?U S#I%(AR: AN: $NGIN$$RING COR2S, INC", !s" CILLIA& LIN$S, INC"
and %RU:$NTIAL GUARANT$$ and ASSURANC$ CO&%AN(, INC",
G"R" No" *,.+89" &a- 6, *000
'he intention of the parties to make each other a co)assured under an insurance policy is to be gleaned principally from the
insurance contract or policy itself and not from any other contract or agreement because the insurance policy denominates
the assured and the beneficiaries of the insurance.
F#C'$
Cebu $hipyard and "ngineering 1orks, Inc. %C$"1& is a domestic corporation engaged in the business of dry)docking and
repairing of marine vessels while the private respondent, Prudential Auarantee and #ssurance, Inc. %Prudential&, also a
domestic corporation is in the non)life insurance business.
1illiam 3ines, Inc. %plaintiff below& is in the shipping business. It was the owner of MQO Manila City, a lu*ury passenger)
cargo vessel, which caught fire and sank on February 0=, 0@@0. #t the time of the unfortunate occurrence sued upon, sub.ect
vessel was insured with Prudential for P;,!!!,!!!.!! pesos for hull and machinery. 'he 2ull Policy included an
C#dditional Perils %I>C2M#7""&D Clause covering loss of or damage to the vessel through the negligence of, among
others, ship repairmen. 'he Policy provided as followsH C$ub.ect to the conditions of this Policy, this insurance also covers
loss of or damage to Oessel directly caused by the followingH *** >egligence of Charterers andQor 7epairers, provided such
Charterers andQor 7epairers are not an #ssured hereunder. P** provided such loss or damage has not resulted from want of
due diligence by the #ssured, the ,wners or Managers of the Oessel, of any of them. Masters, ,fficers, Crew or Pilots are
not to be considered ,wners within the meaning of this Clause should they hold shares in the Oessel.D
Petitioner C$"1 was also insured by Prudential for third party liability under a $hiprepairer:s 3egal 3iability Insurance
Policy. ,n February , 0@@0, 1illiam 3ines, Inc. brought its vessel, MQO Manila City, to the Cebu $hipyard in 3apulapu
City for annual dry)docking and repair. 1hile the MQO Manila City was undergoing dry)docking and repairs within the
premises of C$"1, the master, officers and crew of MQO Manila City stayed in the vessel, using their cabins as living
quarters. ,ther employees hired by 1illiam 3ines to do repairs and maintenance work on the vessel were also present
during the dry)docking.
,n February 0=, 0@@0, after sub.ect vessel was transferred to the docking quay, it caught fire and sank, resulting to its
eventual total loss. ,n February (0, 0@@0, 1illiam 3ines, Inc. filed a complaint for damages against C$"1, alleging that
the fire which broke out in MQO Manila City was caused by C$"1:s negligence and lack of care.
,n Euly 0, 0@@0 was filed an #mended Complaint impleading Prudential as coplaintiff, after the latter had paid 1illiam
3ines, Inc. the value of the hull and machinery insurance on the MQO Manila City. #s a result of such payment Prudential
was subrogated to the claim of P; million, representing the value of the said insurance it paid.
I$$/"$
'he court of appeals committed a reversible error in ruling that prudential has the
right of subrogation against its own insured.
7/3I>AH 'he petition is unmeritorious.
2ere, the Court of #ppeals and the Cebu 7egional 'rial Court of origin are agreed that the fire which caused the total loss
of sub.ect MQO Manila City was due to the negligence of the employees and workers of C$"1. Both courts found that the
MQO Manila City was under the custody and control of petitioner C$"1, when the ill)fated vessel caught fire.
,n the issue of subrogation, petitioner contends that Prudential is not entitled to be subrogated to the rights of 1illiam
3ines, Inc., theori+ing that L%0& the fire which gutted MQO Manila City was an e*cluded risk andM %(& it is a co)assured under
the Marine 2ull Insurance Policy.
It is petitioner:s submission that the loss of MQO Manila City or damage thereto is e*pressly e*cluded from the coverage of
the insurance because the same resulted from Cwant of due diligence by the #ssured, ,wners or ManagersD which is not
included in the risks insured against. #gain, this theory of petitioner is bereft of any factual or legal basis. It proceeds from a
wrong premise that the fire which gutted sub.ect vessel was caused by the negligence of the employees of 1illiam 3ines,
Inc. 'o repeat, the issue of who between the parties was negligent has already been resolved against Cebu $hipyard and
"ngineering 1orks, Inc. /pon proof of payment by Prudential to 1illiam 3ines, Inc., the former was subrogated to the
right of the latter to indemnification from C$"1. #s aptly ruled by the Court of #ppeals, the law on the matter is succinct
and clear, to witH
#rt. ((!?. If the plaintiff:s property has been insured, and he has received indemnity from the insurance company for the
in.ury or loss arising out of the wrong or breach of contract complained of, the insurance company shall be subrogated to
the rights of the insured against the wrongdoer or the person who has violated the contract. If the amount paid by the
insurance company does not fully cover the in.ury or loss, the aggrieved party shall be entitled to recover the deficiency
from the person causing the loss or in.ury.
'hus, when Prudential, after due verification of the merit and validity of the insurance claim of 1illiam 3ines, Inc., paid the
latter the total amount covered by its insuranc policy, it was subrogated to the right of the latter to recover the insured loss
from the liable party, C$"1.
Petitioner theori+es further that there can be no right of subrogation as it is deemed a co)assured under the sub.ect insurance
policy. 'o buttress its stance that it is a coassured, petitioner placed reliance on Clause (! of the 1ork ,rder which statesH
(!.'he insurance on the vessel should be maintained by the customer andQor owner of the vessel during the period the
contract is in effect.
#ccording to petitioner, under the aforecited clause, 1illiam 3ines, Inc., agreed to assume the risk of loss of the vessel
while under drydock or repair and to such e*tent, it is benefited and effectively constituted as a co)assured under the policy.
'his theory of petitioner is devoid of sustainable merit. Clause (! of the 1ork ,rder in question is clear in the sense that it
requires 1illiam 3ines to maintain insurance on the vessel during the period of dry)docking or repair. Concededly, such a
stipulation works to the benefit of C$"1 as the shiprepairer. 2owever, the fact that C$"1 benefits from the said
stipulation does not automatically make it as a co)assured of 1illiam 3ines. 'he intention of the parties to make each other
a co)assured under an insurance policy is to be gleaned principally from the insurance contract or policy itself and not from
any other contract or agreement because the insurance policy denominates the assured and the beneficiaries of the
insurance. 'he hull and machinery insurance procured by 1illiam 3ines, Inc. from Prudential named only C1illiam 3ines,
Inc.D as the assured. 'here was no manifestation of any intention of 1illiam 3ines, Inc. to constitute C$"1 as a co)assured
under sub.ect policy. It is a*iomatic that when the terms of a contract are clear its stipulations control. 'hus, when the
insurance policy involved named only 1illiam 3ines, Inc. as the assured thereunder, the claim of C$"1 that it is a co)
assured is unfounded.