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Philam v Pineda G.R. No.

L-54216 July 19, 1989
J. Paras
petition for review on certiorari
Facts:
On January 15, 1968, private respondent Pineda procured an ordinary life
insurance policy from the petitioner company and designated his wife and
children as irrevocable beneficiaries.
Under date February 22, 1980 - He then filed a petition to amend the
designation of the beneficiaries in his life policy from irrevocable to
revocable.
The judge granted the request.
PHILAM - Petitioner promptly filed a Motion for Reconsideration in an Order
June 10, 1980. Hence, this petition raising the following issues for resolution:
I
WHETHER OR NOT THE DESIGNATION OF THE IRREVOCABLE BENEFICIARIES
COULD BE CHANGED OR AMENDED WITHOUT THE CONSENT OF ALL THE
IRREVOCABLE BENEFICIARIES.
II
WHETHER OR NOT THE IRREVOCABLE BENEFICIARIES HEREIN, ONE OF WHOM
IS ALREADY DECEASED WHILE THE OTHERS ARE ALL MINORS, COULD VALIDLY
GIVE CONSENT TO THE CHANGE OR AMENDMENT IN THE DESIGNATION OF
THE IRREVOCABLE BENEFICIARIES.
We are of the opinion that his Honor, the respondent Judge, was in error in
issuing the questioned Orders.
This was denied.
Hence, this petition.
Issues:
1. WON the designation of the irrevocable beneficiaries could be changed or
amended without the consent of all the irrevocable beneficiaries.
2. WON the irrevocable minor beneficiaries could give consent to the change
in designation
Held: No to both. Petition dismissed.
Ratio: Needless to say, the applicable law in the instant case is the Insurance
Act, otherwise known as Act No. 2427 as amended, the policy having been
procured in 1968. Under the said law, the beneficiary designated in a life

insurance contract cannot be changed without the consent of the beneficiary
because he has a vested interest in the policy

Under the Insurance Act, the beneficiary designated in a life insurance
contract cannot be changed without the consent of the beneficiary because
he has a vested interest in the policy.
There was an express stipulation to this effect: “It is hereby understood and
agreed that, notwithstanding the provisions of this policy to the contrary,
inasmuch
as
the
designation
of
the
primary/contingent
beneficiary/beneficiaries in this Policy has been made without reserving the
right to change said beneficiary/ beneficiaries, such designation may not be
surrendered to the Company, released or assigned; and no right or privilege
under the Policy may be exercised, or agreement made with the Company to
any change in or amendment to the Policy, without the consent of the said
beneficiary/beneficiaries.”
The alleged acquiescence of the six (6) children beneficiaries of the policy
cannot be considered an effective ratification due to the fact that they were
minors. Neither could they act through their father insured since their
interests are quite divergent from one another.
Therefore, the parent-insured cannot exercise rights and/or privileges
pertaining to the insurance contract, for otherwise, the vested rights of the
irrevocable beneficiaries would be rendered inconsequential.
Of equal importance is the well-settled rule that the contract between the
parties is the law binding on both of them and for so many times, this court
has consistently issued pronouncements upholding the validity and effectivity
of contracts. Likewise, contracts which are the private laws of the contracting
parties should be fulfilled according to the literal sense of their stipulations,
for contracts are obligatory, no matter in what form they may be, whenever
the essential requisites for their validity are present
The change in the designation of was not within the contemplation of the
parties. The lower court instead made a new contract for them. It acted in
excess of its authority when it did so.

Intestate estate of the late Esperanza J. Villanueva. MARIANO J.
VILLANUEVA, claimant-appellant,
vs.
PABLO ORO, administrator.
FACTS:

West Coast Life Insurance Company issued 2 policies of insurance on
the life of Esperanza J. Villanueva:



2,000 php - maturing on April 1, 1943
if living, on the 1st day of April 1943 - to insured
upon death during the continuance of this policy - to the

beneficiary Bartolome Villanueva, father of the insured, with right on the
part of the insured to change the beneficiary
1940: Bartolome Villanueva died, Mariano J.


Villanueva duly substituted as beneficiary, a brother of the insured
3,000 php - maturing on March 31, 1943
Esperanza J. Villanueva survived the insurance period, for she died only

on October 15, 1944, without, however, collecting the insurance proceeds.
CFI: estate of the insured Esperanza is entitled to the insurance
proceeds

The West Coast Life Insurance Company issued two policies of insurance on
the life of Esperanza J. Villanueva, one for two thousand pesos and maturing
on April 1, 1943, and the other for three thousand pesos and maturing on
March 31, 1943. In both policies (with corresponding variation in amount and
date of maturity) the insurer agreed "to pay two thousand pesos, at the home
office of the Company, in San Francisco, California, to the insured hereunder,
if living, on the 1st day of April 1943, or to the beneficiary Bartolome
Villanueva, father of the insured, immediately upon receipt of due proof of the
prior death of the insured, Esperanza J. Villanueva, of La Paz, Philippine
Islands, during the continuance of this policy, with right on the part of the
insured to change the beneficiary.
After the death of Bartolome Villanueva in 1940, the latter was duly
substituted as beneficiary under the policies by Mariano J. Villanueva, a
brother of the insured. Esperanza J. Villanueva survived the insurance period,
for she died only on October 15, 1944, without, however, collecting the
insurance proceeds. Adverse claims for said proceeds were presented by the
estate of Esperanza J. Villanueva on the one hand and by Mariano J.
Villanueva on the other, which conflict was squarely submitted in the
intestate proceedings of Esperanza J. Villanueva pending in the Court of First
Instance of Iloilo. From an order, dated February 26, 1947, holding the estate
of the insured is entitled to the insurance proceeds, to the exclusion of the
beneficiary, Mariano J. Villanueva, the latter has interposed the present
appeal.
The lower court committed no error. Under the policies, the insurer obligated
itself to pay the insurance proceeds (1) to the insured if the latter lived on the
dates of maturity or (2) to the beneficiary if the insured died during the
continuance of the policies. The first contingency of course excludes the
second, and vice versa. In other words, as the insured Esperanza J. Villanueva
was living on April 1, and March 31, 1943, the proceeds are payable
exclusively to her estate unless she had before her death otherwise assigned
the matured policies. (It is not here pretended and much less proven, that

there was such assignment.) The beneficiary, Mariano J. Villanueva, could be
entitled to said proceeds only in default of the first contingency. To sustain
the beneficiary's claim would be altogether eliminate from the policies the
condition that the insurer "agrees to pay . . . to the insured hereunder, if
living".

ISSUE: W/N the estate of insured Esperanza should be entitled to the
insurance proceeds since she outlived the insurance policy

HELD: YES. appealed order is, therefore, hereby affirmed

To sustain the beneficiary's claim would be altogether eliminate from

the policies the condition that the insurer "agrees to pay . . . to the
insured hereunder, if living
Upon the insured's death, within the period, the beneficiary will take,
as against the personal representative or the assignee of the insured.
Upon the other hand, if the insured survives the endowment period, the
benefits are payable to him or to his assignee, notwithstanding a
beneficiary is designated in the policy

Harvardian Colleges v Country Bankers (CA)
Facts:
> Harvardian is a family corporation, the stockholders of which are Ildefonso
Yap, Virginia King Yap and their children.
> Prior to Aug. 9, 1979, an agent of Country Bankers proposed to Harvardian
to insure its school building. Although at first reluctant, Harvardian agreed.
> Country Banks sent an inspector to inspect the school building and agreed
to insure the same for P500,000 for which Harvardian paid an annual
premium of P2,500.
> On Aug. 9, 1979, Country Bankers issued to Harvardian a fire insurance
policy. On March 12, 1980, (39 days before I was born… hehehehe )during
the effectivity of said insurance policy, the insured property was totally
burned rendering it a total loss.
> A claim was made by plaintiff upon defendant but defendant denied it
contending that plaintiff had no insurable interest over the building

R. No.) Inc. Harvardian would have been allowed the continued use of the same as the site of its operation as an educational institution. Held: Harvardian has a right to the proceeds. termination or injury by the happening of the event insured against. or will suffer pecuniary loss or damage from its destruction.constructed on the piece of land in the name of the late Ildefonso Yap as owner. 147839 June 8. 2006 J. > It was contended that both the lot and the building were owned by Ildefonso Yap and NOT by the Harvardian Colleges. the contract of fire insurance should still be upheld if his interest in or his relation to the property is such that he will be benefited in its continued existence or suffer a direct pecuniary loss from its destruction or injury. The test in determining insurable interest in property is whether one will derive pecuniary benefit or advantage from its preservation. The insurance policies provide for coverage on "book debts in connection with ready-made clothing . Regardless of the nature of the title of the insured or even if he did not have title to the property insured. It is reasonably fair to assume that had the building not been burned. Issue: Whether or not Harvardian colleges has a right to the proceeds. Harvardian therefore would have been directly benefited by the preservation of the property. Here Harvardian was not only in possession of the building but was in fact using the same for several years with the knowledge and consent of Ildefonso Yap. and certainly suffered a pecuniary loss by its being burned. Gaisano v Insurance G. Martinez Facts: IMC and Levi Strauss (Phils. (LSPI) separately obtained from respondent fire insurance policies with book debt endorsements.

WON IMC bears the risk of loss because it expressly reserved ownership of the goods by stipulating in the sales invoices that "[i]t is further agreed that merely for purpose of securing the payment of the purchase price the above described merchandise remains the property of the vendor until the purchase price thereof is fully paid. Warranted that the Company shall not be liable for any unpaid account in respect of the merchandise sold and delivered by the Insured which are outstanding at the date of loss for a period in excess of six (6) months from the date of the covering invoice or actual delivery of the merchandise whichever shall first occur. that the cause of the fire was not attributable to the negligence of the petitioner. Issues: 1. Gaisano is a customer and dealer of the products of IMC and LSPI. Hence this petition. The RTC rendered its decision dismissing Insurance's complaint." The policies defined book debts as the "unpaid account still appearing in the Book of Account of the Insured 45 days after the time of the loss covered under this Policy. Included in the items lost or destroyed in the fire were stocks of ready-made clothing materials sold and delivered by IMC and LSPI. It held that the fire was purely accidental. WON petitioner is liable for the unpaid accounts . it said that IMC and LSPI retained ownership of the delivered goods and must bear the loss. It ordered Gaisano to pay Insurance the P 2 million and the P 500. Also. The CA rendered its decision and set aside the decision of the RTC. Insurance of America filed a complaint for damages against Gaisano.000 the latter paid to IMC and Levi Strauss.119. On February 25.613." The policies also provide for the following conditions: 1. It alleges that IMC and LSPI were paid for their claims and that the unpaid accounts of petitioner on the sale and delivery of ready-made clothing materials with IMC was P2.00." 3.00 while with LSPI it was P535. Warranted that the Insured shall submit to the Company within twelve (12) days after the close of every calendar month all amount shown in their books of accounts as unpaid and thus become receivable item from their customers and dealers. 1991. the Gaisano Superstore Complex in Cagayan de Oro City. owned by petitioner. was consumed by fire. 2. WON the CA erred in construing a fire insurance policy on book debts as one covering the unpaid accounts of IMC and LSPI since such insurance applies to loss of the ready-made clothing materials sold and delivered to petitioner 2.materials which have been sold or delivered to various customers and dealers of the Insured anywhere in the Philippines.205.

of such nature that a contemplated peril might directly damnify the insured. or liability in respect thereof. Thus. (b) an inchoate interest founded on existing interest. the insurable interest of IMC and . Anyone has an insurable interest in property who derives a benefit from its existence or would suffer loss from its destruction. the goods remain at the seller's risk until the ownership therein is transferred to the buyer. In this case. or (c) an expectancy. Indeed. The present case clearly falls under paragraph (1). when the seller retains ownership only to insure that the buyer will pay its debt. Held: No. as where he has a vendor's lien. an insurable interest in property may consist in: (a) an existing interest. a vendor or seller retains an insurable interest in the property sold so long as he has any interest therein. and not the loss or destruction of the goods delivered. where ownership is the basis for consideration of who bears the risk of loss. except that: (1) Where delivery of the goods has been made to the buyer or to a bailee for the buyer. coupled with an existing interest in that out of which the expectancy arises. Article 1504 of the Civil Code: ART. Section 13 of our Insurance Code defines insurable interest as "every interest in property. Petition partly granted. under Section 14 of the same Code. the risk of loss is borne by the buyer. Unless otherwise agreed. but when the ownership therein is transferred to the buyer the goods are at the buyer's risk whether actual delivery has been made or not.4. Yes. but whether insured has substantial economic interest in the property. whether real or personal. one's interest is not determined by concept of title. Ratio: 1." Parenthetically. so long as he would suffer by its destruction. Unlike the civil law concept of res perit domino. in pursuance of the contract and the ownership in the goods has been retained by the seller merely to secure performance by the buyer of his obligations under the contract. Yes. in property insurance. WON it has been established that petitioner has outstanding accounts with IMC and LSPI. or any relation thereto. the goods are at the buyer's risk from the time of such delivery Thus. in other words. Petitioner bears the risk of loss of the goods delivered. 2. what were insured against were the accounts of IMC and LSPI with petitioner which remained unpaid 45 days after the loss through fire. Yes but account with LSPI unsubstantiated. Nowhere is it provided in the questioned insurance policies that the subject of the insurance is the goods sold and delivered to the customers and dealers of the insured. IMC and LSPI had an insurable interest until full payment of the value of the delivered goods. 1504.

: Facts: . Accordingly. 3. 161713. No. 2008 LEPANTO CONSOLIDATED MINING COMPANY." This rule is based on the principle that the genus of a thing can never perish. respondent failed to present sufficient evidence to prove its cause of action. it must be stressed that the insurance in this case is not for loss of goods by fire but for petitioner's accounts with IMC and LSPI that remained unpaid 45 days after the fire. The P 3 m claim has been proven. by itself. J. but also the amount paid to settle the insurance claim. As held earlier. It does not apply when the obligation is pecuniary in nature. the respondent has adequately established its claim. petitioner.R. vs. The rationale for this is that the rule that an obligor should be held exempt from liability when the loss occurs thru a fortuitous event only holds true when the obligation consists in the delivery of a determinate thing and there is no stipulation holding him liable even in case of fortuitous event. 2207. respondent. The subrogation receipt. As to LSPI. petitioner bears the loss under Article 1504 (1) of the Civil Code. CARPIO. Under Article 1263 of the Civil Code. is sufficient to establish not only the relationship of respondent as insurer and IMC as the insured. As correctly stated by the CA. LEPANTO LOCAL STAFF UNION. and he has received indemnity from the insurance company for the injury or loss arising out of the wrong or breach of contract complained of. With respect to IMC. There was no evidence that respondent has been subrogated to any right which LSPI may have against petitioner. "[i]n an obligation to deliver a generic thing. Failure to substantiate the claim of subrogation is fatal to petitioner's case for recovery of P535. petitioner's obligation is for the payment of money. the insurance company shall be subrogated to the rights of the insured against the wrongdoer or the person who has violated the contract. August 20. where the obligation consists in the payment of money. 4. it is not excused by fortuitous loss of any specific property of the debtor. the loss or destruction of anything of the same kind does not extinguish the obligation. G. the failure of the debtor to make the payment even by reason of a fortuitous event shall not relieve him of his liability.LSPI pertain to the unpaid accounts appearing in their Books of Account 45 days after the time of the loss covered by the policies. therefore. An obligation to pay money is generic. Moreover. Petitioner's argument that it is not liable because the fire is a fortuitous event under Article 117432 of the Civil Code is misplaced.613. If the plaintiff's property has been insured.00. The right of subrogation accrues simply upon payment by the insurance company of the insurance claim Respondent's action against petitioner is squarely sanctioned by Article 2207 of the Civil Code which provides: Art.

m.00 per month effective July 1.m. paragraph 3 would have been deleted. Issue: The issue is whether workers are entitled to night shift differential for work performed beyond the regular day shift. CA affirmed VA and held that petitioner’s act disclosed the parties’ intent to include employees in the second shift in the payment of night shift differential.—The company shall grant longevity pay of P30. However.).). Respondent Union filed a complaint with the National Conciliation and Mediation Board. from 7:00 a.m. . Longevity pay.m. the differential pay will be 15% of the basic rate. Held.m. to 3:00 p. The Voluntary Arbitrator ruled that if the intention were otherwise. which extends beyond the regular day shift (7:00 a. 1998 and every year thereafter. to 11:00 p. to 3:00 p. ARTICLE VIII—NIGHT SHIFT DIFFERENTIAL “Section 3. during the effectivity of the 4th CBA. VA ruled in favor of respondent (Union) that the inclusion of paragraph 3.*Note: this case involves interpretation of CBA. Article VIII of the 4th CBA disclosed the intent of the parties to grant night shift differential benefits to employees who rendered work beyond the regular day shift. there [will] be no night differential pay added before the overtime pay is calculated. Night Differential pay. the differential pay will be 20% of the basic rate.” ARTICLE XII—RIGHTS.m. Petitioner also paid night shift differential for work beyond 3:00 p.m. However. for overtime work. during the 4th CBA was a mistake on the part of its accounting department. petitioner alleges that the payment of night shift differential for work performed beyond 3:00 p.” During the effectivity of the first three CBAs. Section 3. Petitioner and respondent failed to amicably settle the dispute so they agreed to submit the issue to a voluntary arbitrator (VA).m.m. For the Third Shift (3:00 p.m.). alleging that petitioner failed to pay the night shift differential and longevity pay of respondent’s members as provided in the 4th CBA. petitioner paid night shift differentials to other workers who were members of respondent for work performed beyond 3:00 p.—The Company shall continue to pay nightshift differential for work during the first and third shifts to all covered employees within the bargaining unit as follows: For the First Shift (11:00 p. to 7:00 a. PRIVILEGES AND OTHER BENEFITS “Section 9.m.

Mrs. Mrs. The car’s value was estimated with the help of an experienced mechanic (Mr. Bell. The car was bought by Mr. petitioner still paid night shift differential for work performed beyond 3:00 p.YES. and Co. Harding applied for car insurance for a Studebaker she received as a gift from her husband. Doctrines: The terms and conditions of a collective bargaining contract constitute the law between the parties. In order to ascertain the intention of the contracting parties. Server) of the Luneta Garage. It only provides that the night shift differential pay shall be excluded in the computation of the overtime pay. Bell. a fire destroyed the Studebaker. the Voluntary Arbitrator shall principally consider their contemporaneous and subsequent acts as well as their negotiating and contractual history and evidence of past practices. She also disclosed that the value was an estimate made by Luneta Garage (which also acts as an agent for Smith. She was assisted by Smith. the Court of Appeals found that even after the promulgation of the Voluntary Arbitrator’s decision and while the case was pending appeal. If the terms of the CBA are clear and have no doubt upon the intention of the contracting parties. The CA correctly ruled that petitioner failed to present any convincing evidence to prove that the payment was erroneous. Commercial Union also stated that the .000.m.m. The mechanic. Mrs. Harding for P2. and Co.m.00.00. considering some repairs done. Henry Harding vs Commercial Union Assurance Company In February 1916. Harding to Smith. Harding filed an insurance claim but Commercial Union denied it as it insisted that the representations and averments made as to the cost of the car were false. The inclusion of the third paragraph is not intended to exclude the regular day shift workers from receiving night shift differential for work performed beyond 3:00 p. SC affirmed CA. Bell. It affirms the intention of the parties to the CBA to grant night shift differential for work performed beyond 3:00 p. In March 1916. the literal meaning of its stipulation shall prevail. and Co). which was the duly authorized representative (insurance agent) of Commercial Union Assurance Company in the Philippines. It does not provide that workers who performed work beyond the second shift shall not be entitled to night shift differential. In fact. The first paragraph of Section 3 provides that petitioner shall continue to pay night shift differential to workers of the first and third shifts. estimated the value to be at P3. and that said statement was a warranty. This estimated value was the value disclosed by Mrs.800.

Barretto took out an insurance policy upon it in his own name.00. Server attested that the car is as good as new at the time the insurance was effected. HELD: Yes.000 as evidenced by a promissory note. upon the information given by Mrs. Commercial Union is not the proper party to attack the validity of the gift made by Mr.600 from the insurance company. having agreed that it was worth P3.00 and then thereafter. GR L-9401. Mariano  R.000 for the construction. The statement made by Mrs. The evidence does not prove that the statement is false. After the completion of the house and before it was destroyed. the evidence shows that the cost of the car is more than the price of the insurance.50 Lampano filed a complaint against Barreto and Jose alleging that Jose  in a verbal agreement told her that the policy will be delivered to her so she should collected P3. and it would be outrageous to hold that the validity of all valued policies must depend upon the absolute correctness of such estimated value. Jose sold the  house to Antonina Lampano for P6.600 from each of them RTC: favored Jose ordering Barreto to pay him P1. Lampano v Jose. he collected P3. Barretto. to a large extent matters of opinion. Harding to his wife. Jose also owed Barretto P2. Harding. Mr. Jose. All statements of value are. Harding is entitled to the insurance claim. Harding because such a gift [from her husband] is void under the Civil Code. In fact. ISSUE: Whether or not Mrs.800. constructed a house for Placida A. Luneta Garage made some repairs and body paints which amounted to P900.50 and offsetting  the P2. is bound by this valuation in the absence of fraud on the part of the insured. Harding as to the cost of the car is not a warranty.000.298. After its destruction. of necessity. for the sum of P4. 30 March 1915 FACTS:  Mariano R. having paid in premiums the sum of P301. and after an inspection of the automobile by its examiner. Commercial Union.000 Barreto alone appealed . with the consent of Placida A.000 The house was destroyed by fire during which Lampano still owed Jose  P2.car does not belong to Mrs. The car was bought for P2.000.

 the insurance taken by one in his own right and in his own interest does not in any way insure to the benefit of another A contract of insurance made for the insurer's (insured) indemnity only. express or implied. that it shall be for the benefit of a third person. and insured it after it had been completed .  as where there is no agreement. reversed and Barretto is absolved  Where different persons have different interests in the same property. does not attach to or run with the title to the insured property on a transfer thereof personal as between the insurer and the insured.ISSUE: W/N Barreto had insurable interest in the house and could insure it for his it for his own protection HELD: YES. He construed the building. Barretto had an insurable interest in the house. furnishing all the materials and supplies.

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724. holder or 14 waehouse receipts and Elias Zamora had their copra deposited The warehouse recipts states an insurance of 1% their declared value  which can be increase or decrease by giving 1 month's notice in writing Lopez paid the insurance to May 18.000. later raised to P72. were made.185.985 was salvaged. At that time Lopez was still liable for the storage and insurance of P315.90. Law Union And Rock Insurance Co. minus P315. with legal interest San Miguel Brewery V. or approximately a net amount of P81. Del Rosario And Quiogue (1922) Lessons Applicable: Carrier or Depositary (Insurance) FACTS:  Benita Quiogue de V. with the exception of Froilan Lopez Ineffectual attempts by Mrs.Lopez V.65. his attorney contended for him. del Rosario). at least.595.994.595. including the stockholders in the Compañia Coprera de Tayabas (whose stock she took over). del Rosario (Mrs. (1920) Lessons Applicable:   Mortgagor (Insurance) Measure of Insurable Interest (Insurance) .093.43 minus P7. entitled to P88. that he should receive not a centavo less than P88. Del Rosario should be held liable to Lopez even if he has not paid the insurance at the time of the fire HELD: YES. his share of the expenses. or. But Lopez stubbornly contended.990. Only copra worth  P49.88. owner of a bonded  warehouse where Froilan Lopez. Del Rosario submitted the insurance with the arbitrators and  seems to have satisfied all of the persons who had copra stored in her warehouse.90 Mrs. 1920: the warehouse was destroyed by fire. but not thereafter  June 6.40) ISSUE: W/N Mrs. 1920.43 (from originally P107. due for insurance and storage. and finally reduced to P17. Del Rosario to effect a compromise with Lopez first for P71.

the two companies settled with San  Miguelto the extent of the mortgage credit. to insure the mortgaged property for its full value and to indorse the policies in such manner as to authorize the Brewery Company to receive the proceeds in case of loss and to retain such part thereof as might be necessary to satisfy the remainder then due upon the mortgage debt. Henry Harding is  not entitled to the difference between the mortgage credit and the face value of the policies.YES 2.55 (now sec.  Effect of Change of Interest in Thing Insured (Insurance) Effect of transfer of thing insured (Insurance) Laws Applicable: sec. 20). The insurance was not  assigned by Dunn to Harding. When it was destroyed by fire. the owner P. until the interest in the thing and the interest in the insurance are vested in the same person section 55: . of effecting the insurance himself Dunn authorized and requested the Brewery Company to procure insurance on the property in the amount of P15. Henry Harding appealed.NO HELD: affirmed  section 19 of the Insurance Act:  a change of interest in any part of a thing insured  unaccompanied by a corresponding change of interest in the insurance.sec. San Miguel insured the property only as mortgagee. RTC: Absolved the 2 companies from the difference.sec. suspends the insurance to an equivalent extent.000 at Dunn's expense. Dunn had agreed. 58) of the Insurance Code (all old law) FACTS:  In the contract of mortgage. however. 19 (now sec.sec. ISSUE: 1. Dunn sold the propert to Henry Harding.D. at his   own expense. W/N San Miguel has insurable interest as mortgagor only to the extent of the mortgage credit . Instead. W/N Harding has insurable interest as owner . 50. 16.

remainder to whomsoever. The LESSEE shall not insure against fire the chattels." (Sec 54. or mistake the terms of the contract were  not fully set forth in the policy. goods and effects placed at any stall or store or space in the leased premises without first obtaining the written consent and approval of the LESSOR. and it must clearly appear that the contract failed to express the real agreement between the parties In the case now before us the proof is entirely insufficient to authorize reformation. as its interest may appear. textiles. during the continuance of the risk. entered into a lease contract with private respondent CKS Development Corporation (CKS). Spouses CHA and UNITED v. Act No. may become the owner of the interest insured.1997) FACTS: Petitioner-spouses. If the LESSEE obtain(s) the insurance thereof . with the  Brewery rather than with the insurance companies.  but suspends it until the same person becomes the owner of both the policy and the thing insured Undoubtedly these policies of insurance might have been so framed as  to have been "payable to the San Miguel Brewery. But to justify the reformation of a contract. not merely the insurable interest of the San Miguel Brewery. x x x. in case of loss.) Such a clause would have proved an intention to insure the entire interest in the property. as lessor. 2427. and would have shown exactly to whom the money. should be paid. The blame for the situation thus created rests. as lessess. the proof must be of the most satisfactory character. and there is nothing in the record to indicate that the insurance companies were requested to write insurance upon the insurable interest of the owner or intended to make themselves liable to that extent If by inadvertence. however. accident. But the policies are not so written. merchandise. One of the stipulations of the one (1) year lease contract states: 18. the parties are entitled to have it reformed. mortgagee. CA and CKS (August 18. the mere transfer of a thing insured does not transfer the policy.

fire broke out inside the leased premises. the CA affirmed the trial court decision.  United refused to pay CKS. MR denied. the provision is void. x x x 1  Notwithstanding the above stipulation in the lease contract. the spouses insured against loss by fire their merchandise inside the leased premises for 500K with the United Insurance Co.  HELD: NO.  The RTC rendered a decision ordering United to pay CKS . it wrote the United a demand letter asking that the proceeds of the insurance contract (between the Cha spouses and United) be paid directly to CKS. as against public policy .. based on its lease contract with Cha spouses. the latter filed a complaint against the spouses and United. hence this petition  ISSUE: WON the aforequoted paragraph 18 of the lease contract entered into between CKS and the spouses is valid insofar as it provides that any fire insurance policy obtained by the spouses is deemed assigned or transferred to the CKS if said policy is obtained without the prior written of the latter.without the consent of the LESSOR then the policy is deemed assigned and transferred to the LESSOR for its own benefit. Hence.  On the day that the lease contract was to expire.  When CKS learned of the insurance earlier procured by the spouses (without its consent). Inc. (United) without the written consent of private respondents CKS.

In such a case. It is basic in the law on contracts that the stipulations contained in a contract cannot be contrary to law. Every stipulation in a policy of Insurance for the payment of loss. the contract of insurance is a mere wager which is void under Section 25 of the Insurance Code. whether the person insured has or has not any interest in the property insured. good customs. 18. The basis of such requirement of insurable interest in property insured is based on sound public policy: to prevent a person from taking out an insurance policy on property upon which he has no insurable interest and collecting the proceeds of said policy in case of loss of the property. it cannot be denied that CKS has no insurable interest in the goods and merchandise inside the leased premises . morals. and every policy executed by way of gaming or wagering. No contract or policy of insurance on property shall be enforceable except for the benefit of some person having an insurable interest in the property insured. Insurable interest in the property insured must exist at the time the insurance takes effect and at the time the loss occurs.  A non-life insurance policy such as the fire insurance policy taken by petitioner-spouses over their merchandise is primarily a contract of indemnity. or that the policy shall be received as proof of such interest. is void. which provides:  SECTION 25.  Sec. public order or public policy. 18 of the Insurance Code provides:  Sec.  In the present case.

. Lessons Applicable: Effect of Lack of Insurable Interest (Insurance) Laws Applicable: Sec.”  United) cannot be compelled to pay the proceeds of the fire insurance policy to a person (CKS) who has no insurable interest in the property insured  The liability of the spouses to CKS for violating their lease contract in that Cha spouses obtained a fire insurance policy over their own merchandise. 17.  Section 17. fire broke out inside the leased premises and CKS learning that the spouses procured an insurance wrote to United to have the proceeds be paid directly to them. But United refused so CKS filed against Spouses Cha and United. is a separate and distinct issue which we do not resolve in this case. without the consent of CKS. Sec.000 with the United Insurance Co. The measure of an insurable interest in property is the extent to which the insured might be damnified by loss of injury thereof. textiles. without the written consent of CKS On the day the lease contract was to expire. Sec. merchandise. Inc. 18. . 25 of the Insurance Code FACTS:  Spouses Nilo Cha and Stella Uy-Cha and CKS Development Corporation  entered a 1 year lease contract with a stipulation not to insure against fire the chattels. But it insured against loss by fire their merchandise inside the leased premises for P500.under the provisions of Section 17 of the Insurance Code which provide. goods and effects placed at any stall or store or space in the leased premises without first obtaining the written consent and approval of the lessor.

18. The measure of an insurable interest in property is the  extent to which the insured might be damnified by loss of injury thereof The automatic assignment of the policy to CKS under the provision of the lease contract previously quoted is void for being contrary to law and/or public policy. the contract of insurance is a mere wager which is void under Section 25 of the Insurance Code. The liability of the Cha spouses to CKS for violating their lease contract in that Cha spouses obtained a fire insurance policy over their own merchandise.000 as exemplary damages. is a separate and distinct issue which we do not resolve in this case. whether the person insured has or has not any interest in the property insured. The proceeds of the fire insurance policy thus rightfully belong to the spouses. Awarding the proceeds to spouses Cha. is void Section 17.000 as attorney’s fees and costs of suit CA: deleted exemplary damages and attorney’s fees ISSUE: W/N the CKS has insurable interest because the spouses Cha violated the stipulation HELD: NO.11 and Spouses Cha to  pay P50. without the consent of CKS. No contract or policy of insurance on property shall be  enforceable except for the benefit of some person having an insurable interest in the property insured A non-life insurance policy such as the fire insurance policy taken by  petitioner-spouses over their merchandise is primarily a contract of indemnity. RTC: United to pay CKS the amount of P335. Every stipulation in a policy of Insurance for the payment  of loss. In such a case. and every policy executed by way of gaming or wagering. . SECTION 25.063. CA set aside. The basis of such requirement of insurable interest in property insured is based on sound public policy: to prevent a person from taking out an insurance policy on property upon which he has no insurable interest and collecting the proceeds of said policy in case of loss of the property. P20. or that the policy shall be received as proof of such interest. Insurable interest in the property insured must exist a t the time the insurance takes effect and at the time the loss occurs.  Sec.

S.S.S. which was insured with S. CFI: absolved Travellers on the basis that   Arsenio Cua was claiming and NOT Tai Tong Chuache Palomo Appealed Travellers reasoned that the policy is endorsed to Arsenio Chua. the land and building was mortgaged June 11.February 29. Accredited Group of Insurers April 19. has insurable interest . in the amount of P100. P11. 1988 Lessons Applicable: When Insurable Interest Must Exist (Insurance) FACTS:  Azucena Palomo bought a parcel of land and building from Rolando  Gonzales and assumed a mortgage of the building in favor of S. V. 1975: building and the contents were totally razed by fire Palomo was able to claim P41.   mortgage creditor Tai Tong Chuache & Co.000 and the contents thereof for P70.546.. 1975: Azucena Palomo obtained a loan from Tai Tong Chuache  Inc.14 from Zenith Insurance Corporation and P5.57 from S.877. covering the same building for P50.S. 1975: another Fire Insurance policy was procured from  Philippine British Assurance Company.000 and to secure it. 1975: Pedro Palomo secured a Fire Insurance Policy covering  the building for P50. filed a complaint in intervention claiming the proceeds of the fire Insurance Policy issued by travellers affirmative defense of lack of insurable interest that before the occurrence of the peril insured against the Palomos had already paid their credit due the petitioner ISSUE: W/N Tai Tong Chuache & Co.Tai Tong Chuache & Co.000 with Zenith Insurance Corporation July 16.S.000 Before the occurrence of the peril insured against the Palomos had   already paid their credit due the July 31.S. Group of Accredited Insurers but Travellers Multi-Indemnity refused so it demanded the balance from the other three but they refused so they filed against them Insurance Commission.936.79 from Philippine British Assurance  Co. Insurance Commission (1988) .

chairs. Travellers must be held liable Bachrach V. he need  not prove non-payment for it is presumed The validity of the insurance policy taken b petitioner was not  assailed by private respondent. it is understood that he acted for and in behalf of the firm Upon its failure to prove the allegation of lack of insurable interest on the part of the petitioner.  when the creditor is in possession of the document of credit.HELD: YES. Moreover. mirrors. to secure  certain indebtedness due and owing to said company interest in certain of the goods covered by the said policy is trasnferred to Macke to secure certain obligations assumed by Macke and on behalf of Bachrach . Peabody & Co. No. Travellers Multi-Indemnity Corporation to pay Tai Tong Chuache & Co. Bachrach insured goods belonging to a general furniture store. ice boxes. British American Assurance Co. L-5715 December 20. washstands. and sea-grass furniture stored in the ground floor and first story of house and dwelling with an authorized agent of the British American Assurance Company British American Assurance Company denied alleging that: property covered by the policy to H. bureaus.R. 1910 Lessons Applicable: Effect of Change of Interest in Thing Insured (Insurance) Laws Applicable: FACTS:  E. petitioner's claim that the loan extended to the Palomos has not yet been paid was corroborated by Azucena Palomo who testified that they are still indebted to herein petitioner Chua being a partner of petitioner Tai Tong Chuache & Company is an  agent of the partnership. (1910) G. M.   such as iron and brass bedsteads. W. toilet tables. Being an agent.

including the automobile. though prohibited by the  policy. L-14300 January 19. willfully placed a gasoline can containing 10 gallons of gasoline  close to the insured goods made no proof of the loss with the time required by the  condition RTC: British American Assurance Company liable to bACHRACH ISSUE: W/N Bachrach can claim HELD: YES.R. does not void it if such keeping is incidental to the business It may be added that there was no provision in the policy prohibiting  the keeping of paints and varnishes upon the premises where the insured property was stored. No. The defendant and appellant in the present case made no objection at any time in the lower court to that distribution of the salvage.forfeiture if the interest in the property pass from  the insured there is no alienation within the meaning of the insurance law until the  mortgage acquires a right to take possession by default under the terms of the mortgage. The claim is now made for the first time. If the company intended to rely upon a condition of that character. 1920 . lower court affirmed  keeping of inflammable oils on the premises. It does appear that the automobile was saved and was considered as a part of the salvaged. (1920) G. and the alienation clause is therefore inapplicable. it ought to have been plainly expressed in the policy.000. This amount (P4. It is alleged that the salvage amounted to P4. San Miguel Brewery V. we can not find that there is a preponderance of evidence showing that  the plaintiff did actually set fire or cause fire to be set to the goods in question It does not positively appear of record that the automobile in question was not included in the other policies.000) was distributed among the different insurers and the amount of their responsibility was proportionately reduced. No such right is claimed to have accrued in the case at bar. Law Union And Rock Insurance Co. alienation clause .

sec. the two companies settled with San  Miguelto the extent of the mortgage credit. Dunn had agreed.D.000 at Dunn's expense. 16.Lessons Applicable:  Mortgagor (Insurance)  Measure of Insurable Interest (Insurance)  Effect of Change of Interest in Thing Insured (Insurance)  Effect of transfer of thing insured (Insurance) Laws Applicable: sec. . the owner P. San Miguel insured the property only as mortgagee. The insurance was not  assigned by Dunn to Harding. Henry Harding appealed. 20). however. Dunn sold the propert to Henry Harding. 19 (now sec. Henry Harding is  not entitled to the difference between the mortgage credit and the face value of the policies. to insure the mortgaged property for its full value and to indorse the policies in such manner as to authorize the Brewery Company to receive the proceeds in case of loss and to retain such part thereof as might be necessary to satisfy the remainder then due upon the mortgage debt.NO HELD: affirmed  section 19 of the Insurance Act:  a change of interest in any part of a thing insured unaccompanied by a corresponding change of interest in the insurance. W/N Harding has insurable interest as owner . 58) of the Insurance Code (all old law) FACTS:  In the contract of mortgage.sec.55 (now sec.sec. W/N San Miguel has insurable interest as mortgagor only to the extent of the mortgage credit . ISSUE: 1. Instead.YES 2. at his   own expense. 50. When it was destroyed by fire. RTC: Absolved the 2 companies from the difference. of effecting the insurance himself Dunn authorized and requested the Brewery Company to procure insurance on the property in the amount of P15.

But the policies are not so written.000. Argente v West Coast G. The blame for the situation thus created rests. the proof must be of the most satisfactory character. Sta.) Such a clause would have proved an intention to insure the entire interest in the property. may become the owner of the interest insured. 1928 J. The wife. the parties are entitled to have it reformed. Argente was examined by Dr. during the continuance of the risk. a medical examiner for the West Coast.  but suspends it until the same person becomes the owner of both the policy and the thing insured Undoubtedly these policies of insurance might have been so framed as  to have been "payable to the San Miguel Brewery. and with the exception of the signature of Bernardo Argente. Act No. in case of loss. All the information contained in the applications was furnished the agent by Bernardo Argente.  suspends the insurance to an equivalent extent." (Sec 54. Malcolm Facts: Bernardo Argente signed an application for joint insurance with his wife in the sum of P2. until the interest in the thing and the interest in the insurance are vested in the same person section 55: the mere transfer of a thing insured does not transfer the policy. and there is nothing in the record to indicate that the insurance companies were requested to write insurance upon the insurable interest of the owner or intended to make themselves liable to that extent If by inadvertence. Ana. remainder to whomsoever. not merely the insurable interest of the San Miguel Brewery. L-24899 March 19.R. signed for the same. however. No. Vicenta de Ocampo. or mistake the terms of the contract were  not fully set forth in the policy. and would have shown exactly to whom the money. should be paid. as its interest may appear. and it must clearly appear that the contract failed to express the real agreement between the parties In the case now before us the proof is entirely insufficient to authorize reformation. 2427. with the  Brewery rather than with the insurance companies. mortgagee. accident. was in the hand-writing of . The result was recorded in the Medical Examiner's Report. But to justify the reformation of a contract.

Ana." The court held that the alleged concealment was not immaterial and insufficient to avoid the policy. Vicenta de Ocampo died of cerebral apoplexy. she was diagnosed with "phycho-neurosis. for the payment of the sum of P15. West Coastrefused to pay the claim and wrote Argente to the effect that the claim was rejected due to fraud. The trial court held the policy null and void. It was apparently disclosed that the answers given by the insured in their medical examinations with regard to their health were untrue. The amended application was accompanied by the documents entitled "Short Form Medical Report. and asked that the policy be dated May 15. More than thirty days had elapsed since the applicants were examined. Issue: WON Argente and Ocampo were guilty of concealment and thereby misled the insurer into accepting the risk? Held: Yes. but it was not delivered until the first quarterly premium on the policy was paid. in response to the question asked by the medical examiner. moreover. But the information or answers to the questions contained on the face of the Medical Examiner's Report were furnished the doctor by Argente." Section 25 of the Insurance Code defined concealment as "a neglect to communicate that which a party knows and ought to communicate. within the last five years and for what illness or ailment?" she answered "None. Argente presented a claim in due form to the West Coast Life Insurance Co. not named above.000." But the facts show that she was taken to San Lazaro Hospital. wife of the plaintiff.Doctor Sta. Petition dismissed.000. In an action on a life insurance policy where . answered no to "Have you ever consulted a physician for or have you ever suffered from any ailment or disease of the brain or nervous system?" She also answered “none” as to the question whether she consumed alcohol of not. have you consulted or been treated by. The spouses submitted to West Coast Life an amended application. Vicenta de Ocampo." In both of these documents appear certain questions and answers. increasing the amount to P15. if any. A temporary policy for P15. was examined at her residence by the same doctor. her case was diagnosed by the admitting physician as "alcoholism”. To the question. "What physician or physicians. hence this appeal. 1925. Each of them was required to file a certificate of health before the policy was delivered.000 was issued to Bernardo Argente and his wife as of May 15. Ratio: Vicenta de Ocampo.

petitioner. his one year old daughter. or the fact must have been intentionally withheld. The assurer is entitled to know every material fact of which the assured has exclusive or peculiar knowledge. G. L-31878 April 30. vs. in the absence of inquiries.R. G. If the assured has exclusive knowledge of material facts. MONDRAGON. If no inquiries are made and no fraud or design to conceal enters into the concealment the contract is not avoided. 1979 Facts: Respondent Ngo Hing filed an application with petitioner Great Pacific Life Assurance Company (Pacific Life) for a twenty-year endowment policy in the life of Helen Go. . Thereupon. The binding deposit receipt was issued to respondent. L-31845 April 30. However. 1979 LAPULAPU D. Pacific Life disapproved the application since the plan was not available for minors below 7 years old but it can consider the same under another plan. as well as all material facts which directly tend to increase the hazard or risk which are known by the assured. but fraudulent. Petitioner Lapulapu D. Concealment must.R. be not only material. prepared application form using the essential data supplied by respondent. respondents. Hence the case at bar. the insurance would never have been granted.the evidence conclusively shows that the answers to questions concerning diseases were untrue. petitioner. Mondragon again asserted his strong recommendation. he should fully and fairly disclose the same. If the true facts been disclosed by the assured. Helen Go died of influenza. The determination of the point whether there has or has not been a material concealment must rest largely in all cases upon the exact terms of the contract. or which ought to be or are presumed to be known by him. And a concealment of such facts vitiates the policy. vs. Mondragon. whether he believes them material or not. The latter paid the annual premium and Mondragon retained a portion of it as his commission. respondent sought the payment of the proceeds of the insurance. but having failed in his effort. Mondragon wrote his strong recommendation for the approval of the insurance application. COURT OF APPEALS and NGO HING. HON. GREAT PACIFIC LIFE ASSURANCE COMPANY. No. The non-acceptance of the insurance plan was allegedly not communicated by Mondragon to respondent. HONORABLE COURT OF APPEALS. respondents. he filed an action for the recovery of the same. the truth of falsity of the answers become the determining factor. the branch manager. No.

and is subordinated to the act of the company in approving or rejecting the application. the insurance contract shall not be binding until the applicant accepts the policy offered. Where an agreement is made between the applicant and the agent. What it offered instead is another plan known as the Juvenile Triple Action. and the premium paid shall be returned to the applicant. It bears repeating that through the intra-company communication of 30 April 1957. otherwise. no liability shall attach until the principal approves the risk and a receipt is given by the agent. The acceptance is merely conditional.Issue: Whether the binding deposit receipt constituted a temporary contract of the life insurance in question. merely conditional and does not insure outright. the deposit paid by Ngo Hing shall have to be refunded by Pacific Life. the deposit shall be refunded. Thus. and thus negate the claim that the insurance contract was perfected. in life insurance." Since Pacific Life disapproved the insurance application of Ngo Hing. and that the latter will either approve or reject the same on the basis of whether or not the applicant is "insurable on standard rates. Accordingly. In the absence of a meeting of the minds between Pacific Life and Ngo Hing over the 20-year endowment life insurance in the amount of P50. Pacific Life disapproved the insurance application in question on the ground that it is not offering the 20-year endowment insurance policy to children less than 7 years of age.000. Held: YES. the binding deposit receipt in question had never become in force at any time. Upon this premise. and (3) that if the applicant is not insurable according to the standard rates. and the company disapproves the application. Estefania Saturnino vs The Philippine American Life Insurance Company 7 SCRA 316 – Mercantile Law – Insurance Law – Representation – Concealment – Misrepresentation – Fraud . the binding deposit receipt is. that the latter's branch office had received from the applicant the insurance premium and had accepted the application subject for processing by the insurance company.00 in favor of the latter's one-year old daughter. the insurance applied for shall not be in force at any time. which Ngo Hing failed to accept. (2) that if the company does not accept the application and offers to issue a policy for a different plan. there could have been no insurance contract duly perfected between them. and with the non-compliance of the abovequoted conditions stated in the disputed binding deposit receipt. The provisions printed on the binding deposit receipt show that the binding deposit receipt is intended to be merely a provisional or temporary insurance contract and only upon compliance of the following conditions: (1) that the company shall be satisfied that the applicant was insurable on standard rates. on behalf of the company. Clearly implied from the aforesaid conditions is that the binding deposit receipt in question is merely an acknowledgment. a "binding slip" or "binding receipt" does not insure by itself. manifestly.

concealment being defined as “negligence to communicate that which a party knows and ought to communicate. Feliciano Facts: Canilang was found to have suffered from sinus tachycardia then bronchitis after a check-up from his doctor. Her heirs now seek to enforce the insurance claim. Because of Estefania’s concealment. Even if. The concealment of the fact of the operation is fraudulent. Estefania Saturnino was operated for cancer in which her right breast was removed. 92492 June 17. 1993 J. Philamlife. it is not necessary that actual fraud be established otherwise insurance companies will be at the mercy of any one seeking insurance. Estefania died of pneumonia secondary to influenza. as argued by the heirs. Note also that in order to avoid a policy. he applied for a "non-medical" . In November 1957. she applied for an insurance policy under Philamlife (Philippine American Life Insurance Company). upon seeing the clean bill of health from Estefania waived its right to have Estefania undergo a medical checkup. Vda Canilang v CA G. Philamlife considered medical checkup to be no longer necessary. No. HELD: No. ISSUE: Whether or not Saturnino is entitled to the insurance claim. In this jurisdiction a concealment. the fact that Philamlife waived its right to have Estefania undergo a medical examination is not negligence. In September 1958.” Also.In September 1957. She did not disclose the fact that she was operated nor did she disclose any medical histories. she would have been made to undergo medical checkup to determine her insurability. The next day. there is still fraud in the concealment no matter what the ailment she was operated for. entitles the insurer to rescind the contract of insurance.R. Estefania never knew she was operated for cancer. whether intentional or unintentional. Had Philamlife been informed of her operation. She was advised by her surgeon that she’s not totally cured because her cancer was malignant.

700.00 as attorney's fees. Petition denied.insurance policy with respondent Grepalife naming his wife. . She explained that as a rule.000. all factors within his knowledge which are material to the contract and as to which he makes no warranty. is called a concealment.700 plus legal interest and P2. Canilang also failed to disclose in the that he had twice consulted a doctor who had found him to be suffering from "sinus tachycardia" and "acute bronchitis. On appeal by Great Pacific. He died of "congestive heart failure. in good faith. Each party to a contract of insurance must communicate to the other. Petitioner testified that she was not aware of any serious illness suffered by her late husband and her husband had died because of a kidney disorder. 26. 28. It found that the failure of Jaime Canilang to disclose previous medical consultation and treatment constituted material information which should have been communicated to Great Pacific to enable the latter to make proper inquiries. Issue: Won Canilang was guilty of misrepresentation Held: Yes. and which the other has not the means of ascertaining." Under the Insurance Code: Sec. A neglect to communicate that which a party knows and ought to communicate. medical examinations are required only in cases where the applicant has indicated in his application for insurance coverage that he has previously undergone medical consultation and hospitalization." Great Pacific presented a physician who testified that the deceased's insurance application had been approved on the basis of his medical declaration." "anemia." The widow filed a claim with Great Pacific which the insurer denied on the ground that the insured had concealed material information from it. the Court of Appeals reversed. as his beneficiary. Apart from certifying that he didn’t suffer from such a condition. The Insurance Commissioner ordered Great Pacific to pay P19. Thelma Canilang." and "chronic anemia. Petitioner then filed a complaint against Great Pacific for recovery of the insurance proceeds. Sec. The doctor who gave the check up stated that he treated the deceased for “sinus tachycardia” and "acute bronchitis. Hence this petition by the widow. This was to the value of P19. Ratio: There was a right of the insurance company to rescind the contract if it was proven that the insured committed fraud in not affirming that he was treated for heart condition and other ailments stipulated.

the last medical consultation took place just the day before the insurance application was filed. Canilang's failure to set out answers to some of the questions in the insurance application constituted concealment. But he did not disclose the fact that he was diagnosed as . THELMA VDA. that "probable and reasonable influence of the facts" concealed must.The information concealed must be information which the concealing party knew and should have communicated. 31. Had he disclosed his visits to his doctor. Canilang could not have been unaware that his heart beat would at times rise to high and alarming levels and that he had consulted a doctor twice in the two (2) months before applying for non-medical insurance. 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. Indeed.R. The Insurance Commissioner had also ruled that the failure of Great Pacific to convey certain information to the insurer was not "intentional" in nature. in forming his estimate of the disadvantages of the proposed contract. A concealment whether intentional or unintentional entitles the injured party to rescind a contract of insurance. be determined objectively. 17 June 1993 FACTS: Jaime Canilang applied for a “non-medical” insurance policy with respondent Great Pacific Life Assurance Company naming his wife. or in making his inquiries. 27. in assessing the risk involved in making or omitting to make further inquiries and in accepting the application for insurance. Thelma Canilang as his beneficiary. The test of materiality of such information is contained in Section 31: Sec. 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. The failure to communicate must have been intentional rather than inadvertent. but solely by the probable and reasonable influence of the facts upon the party to whom the communication is due. No. Jaime Canilang went to visit his doctor precisely because of the ailment. the diagnosis made and medicines prescribed by such doctor. COURT OF APPEALS G. Materiality relates rather to the "probable and reasonable influence of the facts" upon the party to whom the communication should have been made. Section 27 stated that: Sec. for the reason that Canilang believed that he was suffering from minor ailment like a common cold. In all probability. by the judge ultimately. DE CANILANG vs. 92492. Materiality is to be determined not by the event. of course. in the insurance application.

Hence. No pronouncement as to the costs. Had Canilang disclosed his visits to his doctor. required a higher premium for the same coverage. Bernarda Bacani. except through proof of external acts or failure to act from which inferences as to his subjective belief may be reasonably drawn.00. WHEREFORE. the diagnosis made and medicines prescribed by such doctor.700. at the very least. The designated beneficiary was his mother.suffering from sinus tachycardia and that he has consulted a doctor twice.A. 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.-G. 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. Quiason Facts: Robert John B. A man’s state of mind or subjective belief is not capable of proof in our judicial process. with double indemnity in case of accidental death. He was issued a policy for P100.00. . 08696 is hereby AFFIRMED. Jaime was issued an ordinary life insurance policy with the face value of P19. and “chronic anemia”. Petitioner widow and beneficiary of the insured. Jaime died of “congestive heart failure”. the Petition for Review is DENIED for lack of merit and the Decision of the Court of Appeals dated 16 October 1989 in C. be determined objectively. 105135 June 22. No. 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. 1995 J. in assessing the risk involved in making or omitting to make further inquiries and in accepting the application for insurance. The materiality of the information withheld by Great Pacific did not depend upon the state of mind of Jaime Canilang. in the insurance application. SP No.R. that “probable and reasonable influence of the facts” concealed must. Thelma filed a complaint against Great Pacific with the Insurance Commission for recovery of the insurance proceeds. Sunlife v CA G. “anemia”.000. Bacani procured a life insurance contract for himself from Sunlife.R. filed a claim with Great Pacific which the insurer denied upon the ground that the insured had concealed material information from it. of course. Materiality relates rather to the “probable and reasonable influence of the facts” upon the party to whom the communication should have been made. Neither does materiality depend upon the actual or physical events which ensure. by the judge ultimately.

thus rendering the contract of insurance voidable. Petition dismissed. this petition.172. Respondent Bernarda Bacani filed a claim with petitioner. Ratio: Section 26 of The Insurance Code required a party to a contract of insurance to communicate to the other. Issue: WON the insured was guilty of misrepresentation which made the contract void. During his confinement. Petitioner conducted an investigation and its findings prompted it to reject the claim.00 was attached to said letter.The insured died in a plane crash. is called concealment. all facts within his knowledge which are material to the contract and as to which he makes no warranty. Raymundo of the Chinese General Hospital for cough and flu complications.” “Materiality is to be determined not by the event. The appellate court ruled that petitioner cannot avoid its obligation by claiming concealment because the cause of death was unrelated to the facts concealed by the insured. where he was diagnosed for renal failure. the deceased was subjected to urinalysis tests. The deceased answered claimed that he consulted a Dr. The other questions were answered in the negative. the trial court concluded that the facts concealed by the insured were made in good faith and under a belief that they need not be disclosed. The court also held that the medial history was irrelevant because it wasn’t medical insurance. Petitioner's motion for reconsideration was denied. A check representing the total premiums paid in the amount of P10. and which the other has no means of ascertaining. Petitioner claimed that the insured gave false statements in his application. in good faith. but solely by the probable and reasonable influence of the facts upon the party to whom communication .00.000. In ruling for private respondents. The court ruled in favor of the spouses and ordered Sunlife to pay P100. Bernarda Bacani and her husband filed an action for specific performance against petitioner with the RTC. Hence. the insured was examined and confined at the Lung Center of the Philippines. Petitioner discovered that two weeks prior to his application for insurance. Sunlife informed Bacani that the insured did not disclose material facts relevant to the issuance of the policy. The Court of Appeals affirmed the decision of the trial court. Held: Yes. “A neglect to communicate that which a party knows and ought to communicate. seeking the benefits of the insurance policy taken by her son.

The argument. The matters concealed would have definitely affected petitioner's action on his application. . It is sufficient that his nondisclosure misled the insurer in forming his estimates of the risks of the proposed insurance policy or in making inquiries as held in Henson. Moreover. Sometime after. as the beneficiary. thus rendering the contract of insurance voidable. in forming his estimate of the disadvantages of the proposed contract or in making his inquiries. However. “Good faith" is no defense in concealment. Such concealment was deliberate on his part. . Bernarda filed a claim with petitioner.” The terms of the contract are clear. designating his mother Bernarda Bacani. FACTS: Robert John Bacani procured a life insurance contract for himself from petitioner-company. seeking the benefits of the insurance policy taken by her son. said insurance company rejected the claim on the ground that the insured did not disclose material facts relevant to the issuance of the policy.00 with double indemnity in case of accidental death. Petitioner discovered that two weeks prior to his application for insurance. The information which the insured failed to disclose were material and relevant to the approval and issuance of the insurance policy. " Anent the finding that the facts concealed had no bearing to the cause of death of the insured. for such information necessarily constitutes an important factor which the insurer takes into consideration in deciding whether to issue the policy or not . the insured was examined and confined at . the insured died in a plane crash. that petitioner's waiver of the medical examination of the insured debunks the materiality of the facts concealed. Court of Appeals. is untenable.000. either by approving it with the corresponding adjustment for a higher premium or rejecting the same. . Vda. . de Canilang v.is due. Neither does it depend on the actual or physical events which ensue.materiality of the information withheld does not depend on the state of mind of the insured. herein private respondent. a disclosure may have warranted a medical examination of the insured by petitioner in order for it to reasonably assess the risk involved in accepting the application. the waiver of a medical examination [in a non-medical insurance contract] renders even more material the information required of the applicant concerning previous condition of health and diseases suffered. The insured's failure to disclose the fact that he was hospitalized raises grave doubts about his eligibility. it is well settled that the insured need not die of the disease he had failed to disclose to the insurer. He was issued a policy valued at P100. Philippine American Life Insurance " . Saturnino v. The insured is specifically required to disclose to the insurer matters relating to his health.

Anent the finding that the facts concealed had no bearing to the cause of death of the insured.R.the Lung Center of the Philippines. in good faith. The insured. He also claimed to not have consulted a physician regarding such diseases. the petition is GRANTED and the Decision of the Court of Appeals is REVERSED and SET ASIDE. ISSUE: Whether or not the concealment of such material fact. all facts within his knowledge which are material to the contract and as to which he makes no warranty. as affirmed by the CA. this fact was concealed. It must be emphasized that rescission was exercised within the two-year contestability period as recognized in Section 48 of The Insurance Code. Yu then paid the premium in the sum of P591. despite it not being the cause of death of the insured. abdominal pains and tarry stools. WHEREFORE. The RTC. L-12465 May 29. said “no” to ever having stomach disease. and fainting-spells. anemia. he entered the hospital where he complained of dizziness. as alleged by the petitioner. Yu v CA G. 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. is sufficient to render the insurance contract voidable HELD: YES. 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. No. Section 26 of the Insurance Code is explicit in requiring a party to a contract of insurance to communicate to the other. After submitting the form. 1959 J. it is well settled that the insured need not die of the disease he had failed to disclose to the insurer. The SC. ruled that petitioner properly exercised its right to rescind the contract of insurance by reason of the concealment employed by the insured. where he was diagnosed for renal failure. cancer. in his application for insurance. .70. and which the other has no means of ascertaining. Bautista Facts: Yu Pang Eng submitted application for insurance consisting of the medical declaration made by him to the medical examiner and the report. therefore. He was found to have peptic ulcer.

stomach metastases spleen. Argente vs. West Coast. according to the death certificate. the company would probably had never consented to the issuance of the policy in question. advanced cardiac and of lesser curvature. plus P2. In fact. Grade 4. The company set up the defense that the insured was guilty of misrepresentation and concealment of material facts. The Court of Appeals reversed the decision of the trial court. Under the law. Held: Yes. 1950 to February 11. The insured is required to communicate to the insurer all facts within his knowledge which are material to the contract and which the other party has not the means of ascertaining.00 on life of one Yu Pang Eng from an insurance company. When he gave his answers to the policy. Petition dismissed.000. while his application was submitted on September 5. Issue: Whether or not the insured is guilty of concealment of some facts material to the risk insured that consequently avoids the policy. which in section 25 is defined "A neglect to communicate that which a party knows and ought to communicate.00. is called concealment.000.000." Yu Pang Cheng aimed to collect P10. Had defendant been given such opportunity. The negative answers given by the insured regarding his previous ailment deprived defendant of the opportunity to make the necessary inquiry as to the nature of his past illness so that as it may form its estimate relative to the approval of his application. the insured’s death may have direct connection with his previous illness." “In an action on a life insurance policy where the evidence conclusively shows that the answers to questions concerning diseases were untrue.“One ground for the rescission of a contract of insurance under the insurance Act is "a concealment". The 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. The trial court rendered judgment ordering defendant to pay plaintiff the sum of P10.The insured entered another hospital for medical treatment but he died of "infiltrating medullary carcinoma. Hence the present petition. he concealed the ailment of which he was treated in the hospital. 1950. holding that the insured was guilty of concealment of material facts. This entitles the insurer to rescind the contract. Ratio: The first confinement took place from January 29.00 as attorney's fees. If the policy . a neglect to communicate that which a party knows and ought to communicate. the truth or falsity of the answers become the determining factor. They subsequently refused to give the indemnity.

demanded from the insurance company the payment of the policy proceeds [10k]. Grade 4. His brother and beneficiary. He answered “no” to questions on his medical history (stomach diseases. An xray picture of his stomach and the diagnosis was that he suffered from peptic ulcer. tumors. advanced cardiac and of lesser curvature. Whether intentional or not. the insurance would never have been granted. cancer.R. he went to St. the contract of insurance was never legally existent. the effect is the avoiding of the policy. but his demand was refused so he brought the present action.ulcers. On December 1950. the company issued to him an insurance policy. anemia.) as well as to the question of WON he consulted any physician regarding said diseases. etc. CA 1959 / Bautista Angelo / Petition for review by certiorari of a CA decision FACTS On September 1950. vertigo. stomach metastases spleen. Yu Pang Eng submitted his application for insurance to an insurance company [defendant]. The insured’s negative answers to the questions on his previous ailments. It appears that the insured entered the Chinese General Hospital for medical treatment on January 1950 [before application for insurance policy]. Luke’s for medical treatment but he died two months later.was procured by fraudulent representations. dizziness. The law requires the insured to communicate to the insurer all facts within his knowledge which are material to the contract and which the other party has not the means of ascertaining. complaining of dizziness. His illness history shows that this started a year ago as frequent dizziness. bleeding. Upon payment of the first premium. hence. it would not probably consent to the policy issuance. or his concealment of his hospitalization deprived the insurance company of the opportunity to make the necessary inquiry as to the nature of his past illness so that it may form its estimate relative to the approval of his application. It can fairly be assumed that had the true facts been disclosed by the assured. The insurance company’s defense was that the insured was guilty of misrepresentation and concealment of material facts in that he gave false and untruthful answers to questions asked him in his application. abdominal pains and tarry stools.” YU PANG CHENG v. According to the death certificate. 1983 J. Ng v Asian Crusader G. concealment entitles the insurer to rescind the contract. Yu Pang Cheng [petitioner]. The materiality is determined not by the event but by the probable and reasonable influence of the facts upon the party to whom the communication is due. INSURED IS GUILTY OF CONCEALMENT OF MATERIAL FACTS Concealment is a neglect to communicate that which a party knows and ought to communicate. L-30685 May 30. No. Had the insurance company been given such opportunity. he died of infiltrating medullary carcinoma. Escolin: .

therefore. On the same date. Issue: WON Asian Crusader was deceived into entering the contract or in accepting the risk at the rate of premium agreed upon because of insured's representation? Held: No. appellee should be paid the full face value of the policy. so. wrote the appellant that he had found no material concealment on the part of the insured and that. and fair dealing requires that he should . all facts within his knowledge which are material to the contract. The latter. Appellant alleged that the insured was guilty of misrepresentation when he answered "No" to the following question appearing in the application for life insuranceHas 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 for? If. appellee Ng Gan Zee as beneficiary. All premiums had been paid at the time of his death. she submitted the required proof of death of the insured. upon receipt of the required premium from the insured. after conducting an investigation. and as to which he makes no warranty. approved the application and issued the corresponding policy. Kwong Nam died of cancer of the liver with metastasis. Such party a contract of insurance must communicate to the other. Ng Gan Zee presented a claim for payment of the face value of the policy. and honesty. Ratio: Section 27 of the Insurance Law: Sec.Facts: Kwong Nam applied for a 20-year endowment insurance on his life for the sum of P20.000. and which the other has not the means of ascertaining. The lower court ruled against the company on lack of evidence. The company contended that he was operated on for peptic ulcer 2 years before the policy was applied for and that he never disclosed such an operation. The company refused to settle its obligation.00. Appellant further maintains that when the insured was examined in connection with his application for life insurance. Asian Crusader. On the same date. 27. Appellee brought the matter to the attention of the Insurance Commissioner. good faith. Petition dismissed. name company and date. he gave the appellant's medical examiner false and misleading information as to his ailment and previous operation. "Concealment exists where the assured had knowledge of a fact material to the risk. in good faith. with his wife. Appellant denied the claim on the ground that the answers given by the insured to the questions in his application for life insurance were untrue.

Where a question appears to be not answered at all or to be imperfectly answered. The fact of the matter is that the defendant was too eager to accept the application and receive the insured's premium. His application was approved and he began started making premium payments.Tender of Overdue Payments 51 OG (No 12) 6269 Facts: > Vivencio Collado applied for an insurance contract with Insular life in 1948. And as correctly observed by the lower court. 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 also been held "that the concealment must. . and the insurers issue a policy without any further inquiry. The evidence before the Court does not clearly and satisfactorily establish that defense.communicate it to the assurer. they waive the imperfection of the answer and render the omission to answer more fully immaterial. or the fact must have been intentionally withheld. However. The company or its medical examiner did not make any further inquiries on such matters from the hospital before acting on the application for insurance. but fraudulent. he defaulted and the insurance was cancelled. the same was sufficient to have induced appellant to make further inquiries about the ailment and operation of the insured." It bears emphasis that Kwong Nam had informed the appellant's medical examiner of the tumor. The duty to establish such a defense by satisfactory and convincing evidence rests upon the defendant." Colado v. but he designedly and intentionally withholds the same." Fraudulent intent on the part of the insured must be established to entitle the insurer to rescind the contract. It would be inequitable now to allow the defendant to avoid liability under the circumstances. Insular Life . His statement that said tumor was "associated with ulcer of the stomach" should be construed as an expression made in good faith of his belief as to the nature of his ailment and operation. in the absence of inquiries. "misrepresentation as a defense of the insurer to avoid liability is an 'affirmative' defense. be not only material. Section 32 of Insurance Law: Section 32. While the information communicated was imperfect.

Held: NO. > However. > Vivencio then died. he was already sick of a fatal disease known as carcinoma of the liver and that 4 days prior to his application for insurance. and that he had no injuries. > The reinstatement was approved. > Collado contends that Insular life had waived the right to rescine the policy in view of its repeated acceptance of the overdue premiums for the second and third years. Vivencio again failed to pay the premiums for the last quarter of Nov. when Vivencio applied for the reinstatement. Insular life sent him a notice canceling the policy. CFI rendered judgment in favor of Insular and dismissed Collado’s complaint. 1951 and as such. 1951 of good health. of 1951 and tendered the amount of premium for the years 1950-1951. . > Municipal court of Manila found for Collado and Insular filed an appeal with CFI of Manila. Issue: Whether or nor Insular life was estopped and could no longer cancel the contract due to the fact that it accepted the tender of overdue payments from Vivencio. Insular refused to pay claiming concealment on the part of Vivencio. The beneificiaries instituted the present action to recover from Insular life the death benefits of a life insurance policy valued at 2T. > He stated that he was as of Nov. ailments or illnesses and had not been sick for any case since 1948 (his medical check up when he applied for insurance) and that he had not consulted any physician or practitioner for any case since the date of such latest medical exam.> He then applied for the reinstatement of his insurance policy in Nov. he consulted a doctor regarding his condition.

The case would be different had the insured died at any time after the payment of overdue premiums but previous to the reinstatement of the policy. 1951. Furthermore. Insular had availed of the right to rescind the policy by notifying the Insured that the policy had lapsed. . The acceptance of Insular life of the overdue premiums did not necessarily deprive it of the right to cancel the policy in case of default incurred by the Insured in the payment of future premiums. Vivencio concealed the material fact that he had consulted a doctor and was then found to be afflicted with the malady. Insular. a health statement to the effect that he was in good health. The evidence at hand shows that insofar as the payment of the last quarterly premium for 1951 was concerned.It is enormously clear that when the deceased applied for a reinstatement of his policy in Nov. in submitting together with his application for reinstatement. by its acceptance of its overdue premiums is deemed to have waived its right to rescind the policy. for the. he had already been afflicted with the fatal ailment for a period of about four months.