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Perez v CA

Facts: Primitivo Perez had been insured with the BF Lifeman Insurance Corporation. Sometime in 1987, an agent of the
insurance corporation visited Perez in Quezon and convinced him to apply for additional insurance coverage. Virginia A. Perez,
Primitivo’s wife, paid to the agent. The receipt issued indicated the amount received was a "deposit." Unfortunately, the agent lost
the application form accomplished by Perez and he asked the latter to fill up another application form. The agent sent
the application for additional insurance of Perez to the Quezon office. Such was supposed to be forwarded to the Manila office.
Perez drowned. His application papers for the additional insurance were still with the Quezon. It was only after some time that
the papers were brought to Manila. Without knowing that Perez died, BF Lifeman Insurance Corporation approved
the application and issued the corresponding policy. Petitioner Virginia Perez went to Manila to claim the benefits under the
insurance policies of the deceased. She was paid under the first insurance policy but the insurance company refused to pay the
claim under the additional policy coverage. The insurance company maintained that the insurance had not been perfected at the
time of the death of Primitivo Perez. Consequently, the insurance company refunded the amount paid. BF Lifeman Insurance
Corporation filed a complaint against Virginia Perez seeking the rescission and declaration of nullity of the insurance contract in
question. Petitioner Virginia A. Perez, on the other hand, averred that the deceased had fulfilled all his prestations under the
contract and all the elements of a valid contract are present.
Issue: WON the widow can receive the proceeds of the 2 insurance policy

Held: No. Perez’s application was subject to the acceptance of private respondent BF Lifeman Insurance Corporation. The
perfection of the contract of insurance between the deceased and respondent corporation was further conditioned with the
following requisites stated in the application form: there shall be no contract of insurance unless and until a policy is issued on
this application and that the said policy shall not take effect until the premium has been paid and the policy delivered to and
accepted by me/us in person while I/We, am/are in good health. BF Lifeman didn’t give its assent when it merely received
the application form and all the requisite supporting papers of the applicant. This happens only when it gives a policy. It is not
disputed, however, that when Primitivo died, his application papers for additional insurance coverage were still with the branch
office of respondent in Quezon. Consequently, there was absolutely no way the acceptance of the application could have been
communicated to the applicant for the latter to accept inasmuch as the applicant at the time was already dead. Petitioner insists
that the condition imposed by BF that a policy must have been delivered to and accepted by the proposed insured in good health
is potestative, being dependent upon the will of the corporation and is therefore void. A potestative condition depends upon the
exclusive will of one of the parties and is considered void. The Civil Code states: When the fulfillment of the condition depends
upon the sole will of the debtor, the conditional obligation shall be void. The following conditions were imposed by the
respondent company for the perfection of the contract of insurance: a policy must have been issued, the premiums paid, and the
policy must have been delivered to and accepted by the applicant while he is in good health. The third condition isn’t potestative,
because the health of the applicant at the time of the delivery of the policy is beyond the control or will of the insurance company.
Rather, the condition is a suspensive one whereby the acquisition of rights depends upon the happening of an event which
constitutes the condition. In this case, the suspensive condition was the policy must have been delivered and accepted by
the applicant while he is in good health. There was non-fulfillment of the condition, because the applicant was already dead at the
time the policy was issued. As stated above, a contract of insurance, like other contracts, must be assented to by both parties
either in person or by their agents. So long as an application for insurance has not been either accepted or rejected, it is merely an
offer or proposal to make a contract. The contract, to be binding from the date of application, must have been a completed
contract. The insurance company wasn’t negligent because delay in acting on the application does not constitute acceptance even
after payment. The corporation may not be penalized for the delay in the processing of the application papers due to the fact that
process in a week wasn’t the usual timeframe in fixing the application. Delay could not be deemed unreasonable so as to
constitute gross negligence.


Facts: Juan B. Dans, together with his wife, his son and daughter-in-law, applied for a loan of P500,000.00 with the Development
Bank of the Philippines (DBP), Basilan Branch. As the principal mortgagor, Dans, then 76 years of age, was advised by DBP to
obtain a mortgage redemption insurance (MRI) with the DBP Mortgage Redemption Insurance Pool (DBP MRI Pool).
A loan, in the reduced amount of P300,000.00, was approved by DBP and released. From the proceeds of the loan, DBP
deducted the amount of P1,476.00 as payment for the MRI premium. Dans accomplished and submitted the “MRI Application
for Insurance” and the “Health Statement for DBP MRI Pool. The MRI premium of Dans, less the DBP service fee of 10
percent, was credited by DBP to the savings account of the DBP MRI Pool. Accordingly, the DBP MRI Pool was advised of the
credit. Dans died of cardiac arrest. The DBP, upon notice, relayed this information to the DBP MRI Pool. The DBP MRI Pool
notified DBP that Dans was not eligible for MRI coverage, being over the acceptance age limit of 60 years at the time of
application. DBP apprised the wife of Dans of the disapproval of her late husband’s MRI application. The DBP offered to
refund the premium of P1,476.00 which the deceased had paid, but Candida Dans refused to accept the same, demanding
payment of the face value of the MRI or an amount equivalent to the loan. She, likewise, refused to accept an ex gratia settlement
of P30,000.00, which the DBP later offered. On February 10, 1989, respondent Estate, through Candida Dans as administratrix,
filed a complaint with the Regional Trial Court, Branch I, Basilan, against DBP and the insurance pool for “Collection of Sum of
Money with Damages.” Respondent Estate alleged that Dans became insured by the DBP MRI Pool when DBP, with full
knowledge of Dans’ age at the time of application, required him to apply for MRI, and later collected the insurance premium
1) WON there is a contract made between DBP MRI Pool and the late Juan Dans;
2) Whether or not DBP should be held liable.


000.Held: 1) No. and 4) the amount of the claim. 3) interest at twice the ceiling prescribed by the Monetary Board of the amount of the claim due the injured.00 plus the additional benefits for accidental death. taking into consideration the actual damage.000. On the other hand. Under Article 1987 of the Civil Code of the Philippines. Ebrado filed with the insurer a claim for the proceeds as the designated beneficiary therein. He designated Carponia Ebrado and referred her as his wife as the revocable beneficiary in his policy. oppressive or malevolent manner. Jurisprudence has also declared that exemplary damages cannot be awarded as the insurance company had not acted in wanton. 2) Yes. as a result. no perfected contract of insurance. Insular commenced an action for Interpleader before the trial court as to who should be given the proceeds. Under the aforementioned provisions. The act of petitioner of delaying payment for two months cannot be considered as so wanton or malevolent to justify an award for moral damages.00 and litigation expenses of P3. Ltd. and therefore would have been fully insured by the time he died. These two conditions. the power to approve MRI applications is lodged with the DBP MRI Pool.745. Zenith Insurance Corporation v.00. After allegedly being given a run around by Zenith for two (2) months. representing the face value of the policy in the amount of P5. “the agent who acts as such is not personally liable to the party with whom he contracts. Fernandez FACTS: Private respondent Lawrence Fernandez insured with the insurer his car for "own damage".000. the DBP MRI Pool cannot be held liable on a contract that does not exist. Apparently. In awarding moral damages in case of breach of contract. there is no absolute certainty that Dans could obtain an insurance coverage from another company. on the nineteenth day after applying for the MRI. The car figured in an accident and suffered actual damages. however. being joined conjunctively. 4. did not approve the application of Dans. DBP had full knowledge that Dan’s application was never going to be approved. however. Insular Life was made liable to pay the coverage in the total amount of P11.e.. Fernandez filed a complaint with the Regional Trial Court for sum of money and damages resulting from the refusal of Zenith to pay the amount claimed. The maximum age for MRI acceptance is 60 years as clearly and specifically provided in Article 1 of the Group Mortgage Redemption Insurance Policy signed in 1984 by all the insurance companies concerned. cannot be for the entire value of the insurance policy. The DBP’s liability. Insular v Ebrado FACTS: Cristor Ebrado was issued by The Life Assurance Co. i. There is also no showing that it accepted the sum of P1.00. Issue: WON a common-law wife named as beneficiary in the life insurance policy of a legally married man can claim the proceeds in case of death of the latter? 2 . When Dans applied for MRI.. Dans would have secured an MRI from another insurance company. There was. unless he expressly binds himself or exceeds the limits of his authority without giving such party sufficient notice of his powers. ISSUE: WON the insurer is liable to the insured for moral and exemplary damages HELD: In case of unreasonable delay in the payment of the proceeds of an insurance policy. exemplary damages of P5. must concur. complete and correct to the best of my knowledge and belief and form part of my application for insurance.882. Undisputably. the MRI coverage shall take effect: when the application shall be approved by the insurance pool and when the full premium is paid during the continued good health of the applicant. Carponia T.476. It must also be noted that Dans died almost immediately. 3. is highly speculative. the damages that may be awarded are: 1) attorney's fees.. exemplary or corrective damages are imposed by way of example or correction for the public good. he filled up and personally signed a “Health Statement for DBP MRI Pool” with the following declaration: I hereby declare and agree that all the statements and answers contained herein are true. It is understood and agreed that no insurance coverage shall be effected unless and until this application is approved and the full premium is paid during my continued good health. To assume that were it not for DBP’s concealment of the limits of its authority. attorney's fees of P3.73. The reason for petitioner's failure to indemnify private respondent within the two-month period was that the parties could not come to an agreement as regards the amount of the actual damage on the car. As an insurance agent. Fernandez also prayed for moral damages in the amount of P10. DBP made Dans go through the motion of applying for said insurance.000. She asserts that she is the one entitled to the insurance proceeds. there must be a showing that the breach was wanton and deliberately injurious or the one responsible acted fraudently or in bad faith. hence. Considering his advanced age. Pascuala Vda. The pool. thereby leading him and his family to believe that they had already fulfilled all the requirements for the MRI and that the issuance of their policy was forthcoming.00. although she admited that she and the insured were merely living as husband and wife without the benefit of marriage. which DBP credited to its account with full knowledge that it was payment for Dan’s premium. The insurer offered to pay the claim of Fernandez pursuant to the terms and conditions of the contract which. and on the twenty-third day from the date of release of his loan. de Ebrado also filed her claim as the widow of the deceased insured. a policy with a rider for Accidental Death. Aside from actual damages and interests. Cristor was killed when he was hit by a failing branch of a tree. the private respondent rejected. 2) other expenses incurred by the insured person by reason of such unreasonable denial or withholding of payment.00.

Inc at Agoo. the former has no right of subrogation against the third party liable for the loss None of the exceptions are availing in the present case. Under Section 2. The article says that in the case referred to in No. the policy extended earthquake shock coverage to all of the insured properties. and the latter cannot bring an action against the carrier on his right of subrogation. 3 . The exceptions are: (1) if the assured by his own act releases the wrongdoer or third party liable for the loss or damage. provides that contract of insurance as an agreement whereby one undertakes for a consideration to indemnify another against loss. 1. 6. Private respondents filed a Motion to Dismiss alleging that Petitioner had no cause of action against them. Payment by the insurer to the assured operates as an equitable or negligence of a third party. ISSUE: WON petitioner may institute an action to recover the amount it had paid its assured in settlement of an insurance claim against private respondents as the parties allegedly responsible for the damage caused to the insured vehicle. Pan Malayan Insurance Corporation v CA FACTS: Petition filed a complaint for damages with the RTC of Makati against private respondents Erlinda Fabie and her driver and averred on the following: that it insured a Mitsubishi Colt Lancer car with plate No. Erlinda Fabie. therefore.” It would be sufficient if evidence preponderates. An earthquake struck Central Luzon and Northern Luzon so the properties and 2 swimming pools in its Agoo Playa Resort were damaged. as the same could easily be circumvented by modes of insurance. was subrogated to the rights of Canlubang against the driver of the pick-up and his employer. Despite repeated demands. Article 739 provides that void donations are those made between persons who were guilty of adultery or concubinage at the time of donation. There is every reason to hold that the bar in donations between legitimate spouses and those between illegitimate ones should be enforced in life insurance policies since the same are based on similar consideration. All its parts are reflective of the true intent of the parties. It is basic that all the provisions of the insurance policy should be examined and interpreted in consonance with each other. any person who is forbidden from receiving any donation under Article 739 cannot be named beneficiary of a fife insurance policy by the person who cannot make a donation to him. HELD: Yes. DDZ-431 and registered in the name of Canlubang Automotive Resources Corporation and that due to the carelessness. damage or liability arising from an unknown contingent event. (3) where the insurer pays the assured for a loss which is not a risk covered by the policy. Otherwise. the insurer's right of subrogation is defeated. La Union was insured with American Home Assurance Company which includes loss or damage to shock to any of the property insured by this Policy occasioned by or through or in consequence of earthquake. reason and morality dictate that the impediments imposed upon married couple should likewise be imposed upon extra-marital relationship. and the guilty of the donee may be proved by preponderance of evidence in the same action. the prohibitory laws against illicit relationships especially on property and descent will be rendered nugatory. defendants. thereby effecting "voluntary payment". no premium payments were made with regard to earthquake shock coverage. PCR-220. except on the two swimming pools. 5. and imprudence of the unknown driver of a pick-up with plate no. (2) where the insurer pays the assured the value of the lost goods without notifying the carrier who has in good faith settled the assured's claim for loss. Petitioner defrayed the cost of repair of the insured car and. If the insured property is destroyed or damaged through the fault or negligence of a party other than the assured. The word "interest" highly suggests that the provision refers only to the insured and not to the beneficiary. will be subrogated to the rights of the assured to recover from the wrongdoer to the extent that the insurer has been obligated to pay. So long as marriage remains the threshold of family laws. any privity of contract or upon written assignment of claim. FACTS: Gulf Resorts. ISSUE: WON Gulf can claim for its properties aside from the 2 swimming pools HELD: YES. since indemnification thereunder was made on the assumption that there was no wrongdoer or no third party at fault. Gulf's claim was denied on the ground that its insurance policy only afforded earthquake shock coverage to the two swimming pools of the resort. They argued that payment under the "own damage" clause of the insurance policy precluded subrogation under Article 2207 of the Civil Code. no qualifications were placed on the scope of the earthquake shock coverage. an insurance premium is the consideration paid an insurer for undertaking to indemnify the insured against a specified peril. failed and refused to pay the claim of the Petitioner. The right of subrogation is not dependent upon. Common-law spouses are barred from receiving donations from each other.Held: No. the settlement is binding on both the assured and the insurer. Paragraph 1 of the Insurance code. In the subject policy. Payment by the insurer to the assured operates as an equitable that the insurer has been obligated to pay. When not otherwise specifically provided for by the Insurance Law. The law plainly states that the guilt of the party may be proved “in the same acting for declaration of nullity of donation. the contract of life insurance is governed by the general rules of the civil law regulating contracts. The underscored clause neatly conveys that no criminal conviction for the offense is a condition precedent. recklessness. Thus. Section 50 of the Insurance Act which provides that the insurance shall be applied exclusively to the proper interest of the person in whose name it is made. It accrues simply upon payment of the insurance claim by the insurer. Thus. Under Article 2012 of the same Code. Petitioner contends that pursuant to this rider. then the insurer. Article 2207 of the Civil Code is founded on the well-settled principle of subrogation. the insured car was hit and suffered damages. A conviction for adultery or concubinage isn’t required exacted before the disabilities mentioned in Article 739 may effectuate. since a contract of insurance is personal in character. V. the action for declaration of nullity may be brought by the spouse of the donor or donee. Gulf Resorts Inc. upon payment to the assured. Philippine Charter Insurance Corp. from liability. nor does it grow out of.

The officers and cabin crew stayed at the ship while it was being repaired. the former was subrogated to the right of the latter to indemnification from CSEW. declaring ‘total loss’ for the unusable shipment. Issue: 1. and (2) to give it an opportunity to examine the nature and extent of the injury. the agency charged with negligence.7. The shipper or consignee must allege and prove the fulfillment of the condition. Inc.. “This protects the carrier by affording it an opportunity to make an investigation of a claim while the matter is fresh and easily investigated so as to safeguard itself from false and fraudulent claims.’s warehouse. samples of the same were taken and brought to the Bureau of Animal Industry of the Department of Agriculture in the Philippines by SMITHKLINE for examination wherein it was discovered that the reading of vaccinates sera are below the positive reference serum. The requirement of giving notice of loss of or injury to the goods is not an empty formalism. resulting to its total loss. At the time of the incident. William filed suit against CSEW alleging that it was through the latter’s negligence that the ship caught fire and sank. a luxury passenger-cargo vessel. it caught fire and sank. is CSEW. a shipment of 109 cartons of veterinary biologicals for delivery to consignee SMITHKLINE and French Overseas Company in Makati City. WON Prudential has the right of subrogation against its own insured 3. WON the doctrine of res ipsa loquitur applies against the crew 2. It was subrogated to 45 million. As a consequence of the foregoing result of the veterinary biologics test. the filing of a claim with the carrier within the time limitation therefor actually constitutes a condition precedent to the accrual of a right of action against a carrier for loss of or damage to the goods. The facts and evidence reveal the presence of these conditions. the following conditions must concur: (1) the accident was of a kind which does not ordinarily occur unless someone is negligent. to cool the place instead of a refrigerator. The non-licensed broker. They entered into a contract where negligence was the only factor that could make CSEW liable for damages. American Home Assurance FACTS: Shipper SMITHKLINE USA delivered to carrier Burlington Air Express. 8. as found by the trial court and the CA and as shown by the records. CSEW was insured for only Php 10 million for the ship repairer’s liability policy. in the present case the trial court found direct evidence to prove that the workers didn’t exercise due diligence in the care of subject vessel. the insurance company shall be subrogated to the rights of the insured against the wrongdoer or the person who has violated the contract. PHILAM filed an action for damages against the FEDEX imputing negligence on either or both of them in the handling of the cargo. Burlington insured the cargoes with American Home Assurance Company (AHAC). ship repairmen. Indeed. For the doctrine of res ipsa loquitur to apply to a given situation. a non-licensed custom’s broker who was assigned by customs broker. it was subrogated to the right of the latter to recover the insured loss from the liable party. Second. Petitioner theorizes further that there can be no right of subrogation as it is deemed a co-assured under the subject insurance policy with reliance on Clause 20 of the 4 . 12 days after the cargoes arrived in Manila. Inc. no right of action against the carrier can accrue in favor of the former. found out. Inc. In this jurisdiction. The direct evidence substantiates the conclusion that CSEW was really negligent even without applying such doctrine. 11263825 with the words. If the amount paid by the insurance company does not fully cover the injury or loss. ISSUE: WON FEDEX is liable for damage to or loss of the insured goods HELD: Yes. and (2) that the instrumentality or agency which caused the injury was under the exclusive control of the person charged with negligence. Burlington turned over the custody of said cargoes to FEDEX which transported the same to Manila. From the initial proceedings in the trial court up to the present. (PHILAM) which recompensed SMITHKLINE for the whole insured amount. the fire would not have happened in the ordinary course of things if reasonable care and diligence had been exercised. When Prudential paid the latter the total amount covered by its insurance policy. the aggrieved party shall be entitled to recover the deficiency from the person causing the loss or injury. After the vessel was transferred to the docking quay. while he was about to cause the release of the said cargoes. upon instructions from customs broker. Prudential was impleaded as co-plaintiff after it had paid the value of insured items. First. What is more. of the impending arrival of its client’s cargoes. this fact has never been denied by respondents and is plainly evident from the records. and that it is being charged with liability therefor. the Philam Insurance Co. 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. which had control over subject vessel when it was docked for annual repairs. FEDEX informed the customs broker hired by the consignee to facilitate the release of its cargoes from the Bureau of Customs. subject vessel was insured with Prudential for P45M for hull and machinery. Cebu Shipyard v William Facts: Petitioner is engaged in the repair of marine vessels while the Prudential is in the non-life insurance business. William brought the ship to the dry dock of CSEW for repairs. refrigerate when not in transit and perishable stamp marked on its face. Thereafter. The shipment was covered by Burlington Airway Bill No. The following day. petitioner has tirelessly pointed out that respondents’ claim and right of action are already barred. Moreover. an agent of Petitioner. or the value it claimed to indemnify. Upon proof of payment by Prudential to William Lines. The fundamental reasons for such a stipulation are (1) to inform the carrier that the cargo has been damaged.. 2. it does not constitute a limitation of action. liability of CSEW was limited to only Php 1million for damages. SMITHKLINE abandoned the shipment and. That same day. The shipments arrived in Manila and was immediately stored at Cargohaus Inc. Prior to the arrival of the cargoes. WON the provisions limiting CSEW’s liability for negligence to a maximum of Php 1 million is valid Held: 1. did not proceed with the withdrawal of the vaccines and instead. which caught fire and sank. The aforementioned requirement is a reasonable condition precedent. among others. If the plaintiff’s property has been insured. Federal Express vs. William Lines. CSEW. The Hull Policy included an Additional Perils Clause covering loss of or damage to the vessel through the negligence of. that the same were stored only in a room with 2 air conditioners running. is the owner of M/V Manila City. If it fails to do so. filed a claim with AHAC through its representative in the Philippines.

Steamship Mutual even renewed its P & I Club cover until it was cancelled due to non- payment of the calls. To allow CSEW to limit its liability to P1M notwithstanding the fact that the total loss suffered by the assured and paid for by Prudential amounted to P45M would sanction the exercise of a degree of diligence short of what is ordinarily required because. Inc. However. without first procuring a license so to act from the Commissioner. filed a complaint with the RTC. the fact that CSEW benefits from the said stipulation does not automatically make it as a co-assured of William Lines. The records reveal Steamship Mutual is doing business in the country albeit without the requisite certificate of authority mandated by Section 187 of the Insurance Code. any commission or other compensation from any insurance company doing business in the Philippines or any agent thereof. it needs a separate license to act as insurance agent for Steamship Mutual. as insurance coverage of Leuterio. regulation by the State is necessary. WON Pioneer need a license as an insurance agent/broker for Steamship Mutual? Held: Yes. such non-disclosure constituted concealment that justified the denial of the claim. Although in this jurisdiction. filed a complaint before the Insurance Commission claiming that Steamship Mutual and Pioneer violated provisions of the Insurance Code.” During the trial. 10.” Consequently. The intention of the parties to make each other a co- assured under an insurance policy is to be read from the insurance contract or policy itself and not from any other contract or agreement because the insurance policy denominates the beneficiaries of the insurance. CA FACTS: A contract of group life insurance was executed between petitioner and DBP. It maintains a resident agent in the Philippines to solicit insurance and to collect payments in its behalf. from Prudential named only “William Lines. Leuterio died due to “massive cerebral hemorrhage. Steamship Mutual thereafter filed a case against White Gold for collection of sum of money to recover the unpaid balance. Later. then. The Insurance Commission dismissed the complaint. to the extent of his DBP mortgage indebtedness. or receive for services in obtaining insurance. Thus. must secure a license from the Insurance Commission. Grepalife denied the claim alleging that. Steamship Mutual as a P & I Club is a mutual insurance association engaged in the marine insurance business. However. By definition then. to constitute CSEW as a co-assured under subject policy. a physician and a housing debtor of DBP applied for membership in the group life insurance plan. The said claim of William Lines. in ruling on the validity and applicability of the stipulation limiting the liability of CSEW for negligence to P1M only. no insurer or insurance company is allowed to engage in the insurance business without a license or a certificate of authority from the Insurance Commission. Grepalife agreed to insure the lives of eligible housing loan mortgagors of DBP. bearing in mind the principles of equity and fair play.Work Order which states that the insurance on the vessel should be maintained by the customer and/or owner of the vessel during the period the contract is in effect. it would not be difficult for petitioner to escape liability by the simple expedient of paying an amount very much lower than the actual damage suffered by William. White Gold v Pioneer Facts: White Gold procured a protection and indemnity coverage for its vessels from The Steamship Mutual through Pioneer Insurance and Surety Corporation. It has been licensed to do or transact insurance business by virtue of the certificate of authority issued by the same agency. which caused his death. The widow of the respondent Medarda.” as the assured. Pioneer also issued receipts. Dr. Thus. a Certification from the Commission states that Pioneer does not have a separate license to be an agent/broker of Steamship Mutual. WON P & I Club is engaged in the insurance business in the Philippines? 2. who issued the death certificate. as binding as an ordinary contract. where the third party is anyone other than the P & I Club and the members. it was ascertained that the replacement cost of the vessel. Thus. P & I Club is a form of insurance against third party liability. Leuterio. Issues: 1.. was then found to be valid and compensable such that Prudential paid the latter the total value of its insurance claim. When White Gold failed to fully pay its accounts. Allegedly. 3. Although Pioneer is already licensed as an insurance company. was called to 5 . to continue doing business here. White Gold was issued a Certificate of Entry and Acceptance. It said that there was no need for Steamship Mutual to secure a license because it was not engaged in the insurance business and that it was a P & I club. the facts and circumstances vis-a-vis the nature of the provision sought to be enforced should be considered. it would unfair to limit the liability of petitioner to One Million Pesos only. Pioneer was not required to obtain another license as insurance agent because Steamship Mutual was not engaged in the insurance business. 2. Leuterio was not physically healthy when he applied for an insurance coverage. The claim of CSEW that it is a co-assured is unfounded. Inc. The evaluation of the average adjuster also reported a constructive total loss. Furthermore. Grepalife insisted that Leuterio did not disclose he had been suffering from hypertension. GREPALIFE vs. Grepalife then issued a Certificate. Mejia. Inc. amounts to P55M. Steamship Mutual refused to renew the coverage. 9. against Grepalife for “Specific Performance with Damages. Leuterio answered questions concerning his health condition. Considering the circumstances. White Gold on the other hand. In an application form. Section 299 of the Insurance Code clearly states that no person shall act as an insurance agent or as an insurance broker in the solicitation or procurement of applications for insurance. Since a contract of insurance involves public interest. Pioneer is the resident agent of Steamship Mutual as evidenced by the certificate of registration issued by the Insurance Commission. Such clause in question is clear in the sense that it requires William Lines to maintain insurance on the vessel during the period of dry-docking or repair. Steamship Mutual or through its agent Pioneer. DBP submitted a death claim to Grepalife. the Court recognizes instances when reliance on such contracts cannot be favored especially where the facts and circumstances warrant that subject stipulations be disregarded. The hull and machinery insurance procured by William Lines. contracts of adhesion have been consistently upheld as valid per se. Inc. There was no manifestation of any intention of William Lines.

During his lifetime. based partly from the information given by the respondent widow. Lalican. who does not cease to be a party to the original contract. the measure of indemnity under a policy of insurance upon life or health is the sum fixed in the policy. 11. In the case at bar. As the agent was away on a business errand. and honesty. The existence of an insurable interest gives a person the legal right to insure the subject matter of the policy of insurance. Eulogio paid the first premiums due. and fair dealing requires that he should communicate it to the assured. is to be performed by the mortgagor. such that the person will derive pecuniary benefit or advantage from the preservation of the subject matter insured and will suffer pecuniary loss or damage from its destruction. Violeta was named as the primary beneficiary.” is a device for the protection of both the mortgagee and the mortgagor. In general. and any act of his. Concealment exists where the assured had knowledge of a fact material to the risk. The stipulation in a life insurance policy giving the insured the privilege to reinstate it upon written application does not give the insured absolute right to such reinstatement by the mere filing of an application. therefore. 8 of the Insurance Code provides that unless the policy provides. and if the premium remained unpaid until the end of the grace period. and the mortgagor continues to be a party to the contract. Lalican vs The Insular Life Assurance Company Limited Facts: Violeta is the widow of the deceased Eulogio C. where a mortgagor of property effects insurance in his own name providing that the loss shall be payable to the mortgagee. Section 10 of the Insurance Code indeed provides that every person has an insurable interest in his own life. but any act which. and is therefore liable to pay the proceeds of the insurance. Widow. However. 2. under the contract of insurance. the mortgage obligation will be extinguished by the application of the insurance proceeds to the mortgage indebtedness. where the mortgagor pays the insurance premium under the group insurance policy. thereby relieving the heirs of the mortgagor from paying the obligation. Later. Eulogio went to submit a second Application for Reinstatement of the policy. may be performed by the mortgagee therein named. there was a grace period of 31 days for the payment of each premium subsequent to the first. although the property is in the hands of the mortgagee. the insurance is on the mortgagor’s interest. Misrepresentation as a defense of the insurer to avoid liability is an affirmative defense and the duty to establish such defense by satisfactory and convincing evidence rests upon the insurer. ISSUE: 1. The insurer has the right to deny the reinstatement if it is not satisfied as to the insurability of the insured and if the latter does not pay all overdue premium and all other indebtedness to the insurer. where he has a relation or connection with or concern in it. the policy would be in default. Who is the proper party to bring the suit. Mejia’s findings. making the loss payable to the mortgagee. Eulogio submitted an Application for reinstatement of the policy. A life insurance policy is a valued policy. Eulogio applied for an insurance policy with Insular Life. termination. prior to the loss. Consequently. good faith. The fraudulent intent on the part of the insured must be established to entitle the insurer to rescind the contract. According to the Policy Contract. Section 19 of the same code also states that an interest in the life or health of a person insured must exist when the insurance takes effect. otherwise known as the “mortgage redemption insurance. or injury by the happening of the event insured against. If any premium was not paid on or before the due date. but need not exist thereafter or when the loss occurs. the policy would automatically lapse and become void. After the death of the insured the insurance Company cannot be compelled to entertain an application for reinstatement of the policy because the conditions precedent to reinstatement can no longer be determined and satisfied. Issue: WON Eulogio had an existing insurable interest in his own life until the day of his death in order to have the insurance policy validly reinstated. Insular Life notified Eulogio that his Application for Reinstatement could not be fully processed because. In a similar vein. Eulogio died of cardio-respiratory arrest secondary to electrocution. The inference was not conclusive because Leuterio was not autopsied. WON there was concealment as to justify Grepalife’s non-payment of the insurance proceeds HELD: 1. such loss-payable clause does not make the mortgagee a party to the contract. Under the terms of the policy. including payments for the overdue interest on the premium and the premiums. will have the same effect. Insular Life through its agent in Gapan City issued in favor of Eulogio insurance policy which contained a 20-Year Endowment Variable Income Package Flexi Plan with two riders. although he already deposited payment for the premium. the proceeds from such insurance will be applied to the payment of the mortgage debt. An insurable interest is one of the most basic and essential requirements in an insurance contract. Dr. with the same effect as if it had been performed by the mortgagor. he left unpaid the overdue interest thereon. Eulogio was to pay the premiums on a quarterly basis until the end of the 20-year period of the policy. The rationale of a group insurance policy of mortgagors. the petitioner failed to clearly and satisfactorily establish its defense. The second assigned error refers to an alleged concealment that the petitioner interposed as its defense to annul the insurance contract. he failed to pay the subsequent premiums due which later lapse the grace period of 31 days. it has to enter into such form of contract so that in the event of the unexpected demise of the mortgagor during the subsistence of the mortgage contract. Held: No. but he designedly and intentionally withholds the same. hence. Unless the interest of a person insured is susceptible of exact pecuniary measurement. the insurance is deemed to be upon the interest of the mortgagor. 6 . The policy. other causes were not ruled out. her husband received Eulogios second Application for Reinstatement and issued a receipt for the amount Eulogio deposited. Thus. or assigns a policy of insurance to a mortgagee. Insular Life instructed Eulogio to pay the amount of interest and to file another application for reinstatement. lapsed and became void.testify. On the part of the mortgagee. stated that Leuterio complained of headaches presumably due to high blood pressure. an insurable interest is that interest which a person is deemed to have in the subject matter insured. In this type of policy insurance. ample protection is given to the mortgagor under such a concept so that in the event of death. Sec. Eulogio was likewise advised to pay the premiums that subsequently became due plus interest. the widow or the mortgagee (DBP)? 2. which would otherwise avoid the insurance. the mortgagee is simply an appointee of the insurance fund.

IMC and LSPI did not lose complete interest over the goods. for otherwise. Likewise. or agreement made with the Company to any change in or amendment to the Policy. IMC and LSPI separately obtained from Insurance Company of North America fire insurance policies for their book debt endorsements related to their ready-made clothing materials which have been sold or delivered to various customers and dealers of the Insured anywhere in the Philippines which are unpaid 45 days after the time of the loss. An insurable interest in property does not necessarily imply a property interest in. whether real or personal. If the plaintiff's property has been insured. 7 . without the consent of the said beneficiary/beneficiaries. 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. while Levi Strauss (Phils. Section 13 of our Insurance Code defines insurable interest as "every interest in property. or (c) an expectancy. 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 . notwithstanding the provisions of this policy to the contrary.12. for contracts are obligatory. coupled with an existing interest in that out of which the expectancy arises. but whether insured has substantial economic interest in the property. The subrogation receipt. Under the Insurance Act. released or assigned. 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. Neither could they act through their father insured since their interests are quite divergent from one another. They have an insurable interest until full payment of the value of the delivered goods. He then filed a petition to amend the designation of the beneficiaries in his life policy from irrevocable to revocable. 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. Anyone has an insurable interest in property who derives a benefit from its existence or would suffer loss from its destruction. by itself. 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. Article 1263 of the Civil Code in an obligation to deliver a generic thing. this court has consistently issued pronouncements upholding the validity and effectivity of contracts. Insurance Company Of North America FACTS: Intercapitol Marketing Corporation (IMC) is the maker of Wrangler Blue Jeans. such designation may not be surrendered to the Company. The 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. Gaisano Cagayan. Inc.obligation is pecuniary in nature. Therefore. Gaisano Cagayan. (b) an inchoate interest founded on existing interest. an insurable interest in property may consist in: (a) an existing interest. or liability in respect thereof. under Section 14 of the same Code. 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. the goods remain at the seller's risk until the ownership therein is transferred to the buyer. alleges that IMC and LSPI filed their claims under their respective fire insurance policies which it paid thus it was subrogated to their rights. Philam v Pineda Facts: Pineda procured an ordinary life insurance policy from the petitioner company and designated his wife and children as irrevocable beneficiaries. is sufficient to establish not only the relationship of respondent as insurer and IMC as the insured. Unless otherwise agreed.) Inc. and neither the title nor a beneficial interest is requisite to the existence of such an interest. There was an express stipulation to this effect: “It is hereby understood and agreed that. the goods are at the buyer's risk from the time of such delivery.. except that (1) Where delivery of the goods has been made to the buyer or to a bailee for the buyer. whenever the essential requisites for their validity are present 13. Inc. the parent-insured cannot exercise rights and/or privileges pertaining to the insurance contract. or any relation thereto. in property insurance. containing the ready-made clothing materials sold and delivered by IMC and LSPI was consumed by fire. WON the designation of the irrevocable beneficiaries could be changed or amended without the consent of all the irrevocable 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. the vested rights of the irrevocable beneficiaries would be rendered inconsequential." Parenthetically. and no right or privilege under the Policy may be exercised. It is sufficient that the insured is so situated with reference to the property that he would be liable to loss should it be injured or destroyed by the peril against which it is insured. or possession of. the insurance company shall be subrogated to the rights of the insured against the wrongdoer or the person who has violated the contract. The insurance policy is clear that the subject of the insurance is the book debts and NOT goods sold and delivered to the customers and dealers of the insured. Inc. no matter in what form they may be. The insurance Company of North America filed a complaint for damages against Gaisano Cagayan. the loss or destruction of anything of the same kind does not extinguish the obligation (Genus nunquan perit). Unlike the civil law concept of res perit domino. but also the amount paid to settle the insurance claim. owned by Gaisano Cagayan. 2. contracts which are the private laws of the contracting parties should be fulfilled according to the literal sense of their stipulations. Issues: 1. the subject. (LSPI) is the local distributor of products bearing trademarks owned by Levi Strauss & Co. WON the irrevocable minor beneficiaries could give consent to the change in designation Held: No. Gaisano Superstore Complex in Cagayan de Oro City. where ownership is the basis for consideration of who bears the risk of loss. or a lien upon. Inc alleged that it cannot be held liable because it was destroyed due to fortuities event or force majeure ISSUE: WON Insurance Company of North America can claim against Gaisano Cagayan for the debt that was isnured HELD: YES. of such nature that a contemplated peril might directly damnify the insured. V. one's interest is not determined by concept of title. Matter of the insurance. 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.

She had to pay for the hospital bills. JVL defaulted in the payment of the monthly rentals and refused to pay despite demands. in case of defect of any kind that will be found by the lessee in any of the equipment. damage or liability arising from an unknown or contingent event. In the financial lease agreement. This meant that the petitioners required him to sign authorization to furnish reports about his medical condition. He was also given hospitalization benefits and out-patient benefits. the defense of concealment or misrepresentation no longer lie. None were fulfilled by the provider. FEB filed a complaint for damages and replevin. Section 2 (1) of the Insurance Code defines a contract of insurance as “an agreement whereby one undertakes for a consideration to indemnify another against loss. The periodic payment by petitioner is sufficient to amortize at least 70% of the purchase price or acquisition cost of the said movables in accordance with the Lease Schedules with Delivery and Acceptance Certificates. the husband’s health was the insurable interest. Vicente Ong Lim Sing. A contract of adhesion is as binding as any ordinary contract.e. an extender of credit rather than an ordinary equipment rental company. JVL and Lim admitted the existence of the lease agreement but asserted that it is in reality a sale of equipment on installment basis. FEB did not assume responsibility as to the quality. The contract also authorized Philam to inquire directly to his medical history. Philam Health Systems v CA Facts: Ernani Trinos applied for a health care coverage with Philam. Jr. the contract stated that: that any physician is. so he can’t accurately gauge his condition. asthma. and six months from the issuance of the agreement if the patient was sick of diabetes or hypertension. Lim. he was given an expanded coverag. (Lim) executed an Individual Guaranty Agreement with FEB to guarantee the prompt and faithful performance of the terms and conditions of the lease agreement. in point of fact. He wasn’t a medical doctor. The application was approved for 1 year. (4) Must state the grounds relied upon provided in Section 64 of the Insurance Code and upon request of insured. i.. (3) Must be in writing.” 8 .A. Also. of his spouse and of his children. a financial lease within the purview of R. In this case. diabetes. FEB Leasing And Finance Corp. As to incontestability. Section 27 of the Insurance Code. Ong Lim Sing V. (2) Notice must be based on the occurrence after effective date of the policy of one or more of the grounds mentioned. section 3 states: every person has an insurable interest in the life and health: (1) of himself. or capacity of the equipment.14. to furnish facts on which cancellation is based.“a concealment entitles the injured party to rescind a contract of insurance. does not extend a warranty of the fitness of the equipment for any particular use.Cancellation requires certain conditions: (1)Prior notice of cancellation to insured. JVL entered into the lease contract with full knowledge of its terms and conditions. Thus. They can’t also invoke the “Invalidation of agreement” clause where failure of the insured to disclose information was a grounds for revocation simply because the answer assailed by the company was the heart condition question based on the insured’s opinion. She filed a case in the trial court for the collection of the amount plus damages. The Lease Contract with corresponding Lease Schedules with Delivery and Acceptance Certificates is. Issue: WON a health care agreement is not an insurance contract. During the period.” As to cancellation procedure. The provider must pay for the medical expenses resulting from sickness or injury. the defendant Philamcare Health Systems Inc. mailed or delivered to the insured at the address shown in the policy. hence the “incontestability clause” under the Insurance Code does not apply. had twelve months from the date of issuance of the Agreement within which to contest the membershipof the patient if he had previous ailment of asthma. 8556. the financial lessee was precisely in a position to enforce such warranty directly against the supplier of the equipment and not against the financial lessor. The periods having expired. The health care agreement was in the nature of non-life insurance. has an insurable interest in the equipment and motor vehicles leased. recourse should be made to the manufacturer. by these presents. After the period expired. While petitioner contended that the husband concealed materialfact of his sickness. etc. The wife tried to claim the benefits but the petitioner denied it saying that he concealed his medical history by answering no to the aforementioned question. “The financial lessor. with FEB acting as the financier ISSUE: WON JVL and Lim should jointly and severally be liable for the insured financial lease HELD: YES. This stipulation provides that.The trial court said that “under the title Claim procedures of expenses. merchantability. as a lessee. being a financing company. FACTS: FEB Leasing and Finance Corporation (FEB) leased equipment and motor vehicles to JVL Food Products. He answered no to a question asking if he or his family members were treated to heart trouble. Her husband subsequently passed away. Held: No. FEB leased the subject equipment and motor vehicles to JVL in consideration of a monthly periodic payment. No. which is primarily a contract of indemnity. At the same date. expressly authorized to disclose or give testimony at anytime relative to any information acquired by him in his professional capacity upon any question affecting the eligibility for health care coverage of the Proposed Members. he suffered from heart attack and was confined at MMC. We find nothing contra legem or contrary to public policy in such a contractual arrangement 15.