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Insurance Law Case Digests PDF
Insurance Law Case Digests PDF
I. GENERAL PROVISIONS (Section 1) A fire broke out in the motor launch ISLAMA. As a
A. Origin of Insurance consequence of which, Francisco del Rosario and 33
B. Laws Governing Insurance in the others were forced to jump off the launch. This
Philippines resulted in the death of Francisco and his beneficiary
i. Insurance Code of 1978 Remedios Jayme.
ii. Civil Code (Articles 739, 2012, 2011,
2207) Equitable insurance paid Simeon del Rosario, father of
iii. Special Laws Francisco Php1000 pursuant to Sec.1 of Part 1 of the
C. Insurance Contract (Section 2) policy. On the day of receipt, Atty. Francisco wrote
i. Definition Equitable acknowledging the receipt of Simeon of the
ii. Elements amount of Php1000 but informed the company that the
iii. Characteristics amount is incorrect as Simeon was entitled to
iv. Interpretation of Insurance Contracts Php1,500, under Sec.2 Part 1 of the policy.
Simeon del Rosario vs. The Equitable Insurance Equitable referred the matter to the Insurance
and Casualty Co Inc. (1963) Commissioner who opined that the liability of the
company is only Php1000. Thus, Equitable refused to
Facts: pay. Subsequently, Atty. Francisco asked for Php3000
from Equitable. The company refused to pay. Hence a
On February 7, 1957, Equitable Insurance and complaint for the recovery of the balance was
Casualty Co., Inc., issued Personal Accident Policy No. instituted.
7136 on the life of Francisco del Rosario, alias Paquito
Bolero, son of Simeon, binding itself to pay the sum of Issue:
P1,000.00 to P3,000.00, as indemnity for the death of
the insured. How much should the indemnity be?
ISSUE:
DELA CRUZ V. CAPITAL INS. & SURETY CO., INC.
WON the insurance policy in question has ever been in
force, not a single premium having been paid thereon. DEATH RESULTING FROM BOXING IS AN ACCIDENT –
SINCE DEATH IS NOT A NATURAL OR PROBABLE
RULING: Lower Court decision is sustained. RESULT OF BOXING.
Issue:
Julian Sy insured the stocks in trade of New
Life Enterprises under three insurance
Whether the death of Eduardo was accidental since he
companies.
entered in the boxing contest voluntarily.
INSURANCE TYPE OF AMOUNT
Ruling:
COMPANY INSURANCE
Western Fire Insurance 350, 000. 00
The terms "accident" and "accidental", as used in
Guaranty Policy
insurance contracts, have not acquired any technical
Corporation - This policy
meaning, and are construed by the courts in their
was
ordinary and common acceptation. Thus, the terms
renewed
have been taken to mean that which happen by chance
or fortuitously, without intention and design, and which Reliance Fire Insurance 300, 000. 00
is unexpected, unusual, and unforeseen. An accident is Surety and Policy - There was an
an event that takes place without one's foresight or Insurance Co., This policy was additional
expectation — an event that proceeds from an Inc. also renewed. insurance
unknown cause, or is an unusual effect of a known issued in the
cause and, therefore, not expected. amount of
700, 000. 00
It may be mentioned in this connection, that the Equitable Fire Insurance 200, 000. 00
tendency of court decisions in the United States in the Insurance Policy
recent years is to eliminate the fine distinction Corporation
between the terms "accidental" and "accidental means" TOTAL: 1, 550,
and to consider them as legally synonymous. 000. 00
The generally accepted rule is that, death or injury The building occupied by New Life Enterprises
does not result from accident or accidental means was gutted by fire caused by a faulty electrical
within the terms of an accident-policy if it is the wiring. According to the plaintiffs, the stocks in
natural result of the insured's voluntary act, trade were inside said building and were thus
unaccompanied by anything unforeseen except the burned.
death or injury. 3 There is no accident when a
deliberate act is performed unless some additional, Julian Sy, together with an agent of Reliance
unexpected, independent, and unforeseen happening Insurance, filed his claim. To support his claim,
occurs which produces or brings about the result of he submitted a fire clearance, the insurance
injury or death. 4 In other words, where the death or policies and the inventory of stocks. He further
injury is not the natural or probable result of the testified that the three insurance companies
insured's voluntary act which produces the injury, the are sister companies, and as a matter of fact
resulting death is within the protection of policies when he was following-up his claim with
insuring against the death or injury from accident. Equitable Insurance, the Claims Manager told
him to go first to Reliance Insurance and if said
In the present case, while the participation of the company agrees to pay, they would also pay.
insured in the boxing contest is voluntary, the injury Ultimately, the three insurance companies
was sustained when he slid, giving occasion to the denied plaintiffs' claim for payment due to
infliction by his opponent of the blow that threw him to BREACH OF POLICY CONDITIONS.
the ropes of the ring. Without this unfortunate
incident, that is, the unintentional slipping of the
deceased, perhaps he could not have received that
RULING:
v. What constitutes doing an insurance
business
The Supreme Court ruled in favor of the
insurance companies.
D. Perfection of the Contract of Insurance
a. Offer and
The terms of the contract are clear and
Acceptance/Consensuality
unambiguous. The insured is specifically
(1) Delay in Acceptance
required to disclose to the insurer any other
(2) Delivery of Policy
insurance and its particulars that he may have
effected on the same subject matter. The
II. CONTRACT OF INSURANCE
knowledge of such insurance by the insurer's
A. What may be insured (Sections 3,
agents is not the "notice" that would estop the
4 and 5)
insurers from denying the claim.
B. Parties to the Contract (Sections 6,
7, 8 and 9)
Thus, it points out that while petitioner Julian
i. Who may be an insurer
Sy claimed that he had informed insurance
ii. Who may be insured
agent Alvarez regarding the co-insurance on
iii. Rules on insurance by mortgagor or
the property, he contradicted himself by
mortgagee
inexplicably claiming that he had not read the
iv. Transfer of insurance from mortgagor to
terms of the policies.
mortgagee
WON the “trial court is justified in considering the El Oriente Fabrica de Tabacos, Inc. vs. Juan
obligation of plaintiff fully compensated by the Posadas, Collector of Internal Revenue
insurance amount and in ordering defendant to refund [G.R. No. 34774, September 21, 1931]
to plaintiff the sum of P1107 representing the
difference of the loan of 12K from the sum of P13107 Facts:
collected by defendant from insurance notwithstanding
the fact that it was proven that the insurance was Insurer: Manufacturers Life Insurance Co., of Toronto,
taken for the benefit of the mortgagor?” Canada, thru its local agent E.E. Elser
Insured: A. Velhagen (manager of El Oriente)
HELD: Beneficiary: El Oriente Fabrica de Tabacos, Inc.
SC modified the judgment of the lower court as El Oriente, in order to protect itself against the loss
follows: (1) the transaction had between the plaintiff that it might suffer by reason of the death of its
and defendant was merely an equitable mortgage manager, whose death would be a serious loss to El
intended to secure the payment of the loan of 12K; (2) Oriente procured from the Insurer an insurance policy
that the proceeds of the insurance amounting to P13, on the life of the said manager for the sum of 50,000
107 was properly collected by defendant who is not USD with El Oriente as the designated sole beneficiary.
required to account for it to the plaintiff; (3) that the The insured has no interest or participation in the
collection of said insurance proceeds shall not be proceeds of said life insurance policy.
deemed to have compensated the obligation of the
plaintiff to the defendant, but bars the latter from El Oriente charged as expenses of its business all the
claiming its payment from the former; and (4) said premiums and deducted the same from its gross
defendant shall pay to the plaintiff the sum of P810 incomes as reported in its annual income tax returns,
representing the overpayment made by plaintiff by which deductions were allowed by Posadas (Collector
way of interest on the loan. of Internal Revenue) upon showing by El Oriente that
such premiums were legitimate expenses of the
The rule is that “where a mortgagee, independently of business.
the mortgagor, insures the mortgaged property in his
own name and for his own interest, he is entitled to Upon the death of the manager, El Oriente received all
the insurance proceeds in case of loss, but in such the proceeds of the life insurance policy together with
case, he is not allowed to retain his claim against the the interest and the dividends accruing thereon,
mortgagor, but is passed by subrogation to the insurer aggregating P104,957.88. Posadas assessed and
to the extent of the money paid”. Or, stated in another levied the sum of P3,148.74 as income tax on the
way, “the mortgagee may insure his interest in the proceeds of the insurance policy, which was paid by El
property independently of the mortgagor. In that Oriente under protest. El Oriente claiming exemption
event, upon the destruction of the property the under Section 4 of the Income Tax Law.
insurance money paid to the mortgagee will not inure
to the benefit of the mortgagor, and the amount due Issue:
under the mortgage debt remains unchanged. The
mortgagee, however, is not allowed to retain his claim Whether or not the proceeds of insurance taken by a
against the mortgagor, but it passes by subrogation to corporation on the life of an important official to
indemnify it against loss in case of his death, are
To quote the exact words in the cited case of Chief Pascuala Vda. de Ebrado also filed her claim as the
Justice Taft delivering the opinion of the court: widow of the deceased insured. She asserts that she is
It is earnestly pressed upon us that proceeds of life the one entitled to the insurance proceeds, not the
insurance paid on the death of the insured are in common-law wife, Carponia T. Ebrado.
fact capital, and cannot be taxed as income … that
proceeds of a life insurance policy paid on the In doubt as to whom the insurance proceeds shall be
death of the insured are not usually classed as paid, the insurer, The Insular Life Assurance Co., Ltd.
income. commenced an action for Interpleader before the Court
of First Instance of Rizal on April 29, 1970.
Considering, therefore, the purport of the stipulated
facts, considering the uncertainty of Philippine law, and After the issues have been joined, a pre-trial
considering the lack of express legislative intention to conference was held. In the pre-trial conference the
tax the proceeds of life insurance policies paid to parties submits evidence and make admissions.xxx; 8)
corporate beneficiaries, particularly when in the that the beneficiary designated by the insured in the
exemption in favor of individual beneficiaries in the policy is Carponia Ebrado and the insured made
chapter on this subject, the clause is inserted "exempt reservation to change the beneficiary but although the
from the provisions of this law," we deem it reasonable insured made the option to change the beneficiary,
to hold the proceeds of the life insurance policy in same was never changed up to the time of his death
question as representing an indemnity and not taxable and the wife did not have any opportunity to write the
income. company that there was reservation to change the
designation of the parties it agreed that a decision be
The foregoing pronouncement will result in the rendered based on and stipulation of facts as to who
judgment being reversed and in another judgment among the two claimants is entitled to the policy.
being rendered in favor of El Oriente.
On September 25, 1972, the trial court rendered
judgment declaring among others, Carponia T. Ebrado
disqualified from becoming beneficiary of the insured
Remember: This case took place while the Old Civil The late Petronilo Davac, a former employee of Lianga
Code was still applicable. Bay Logging Co. Inc. became a member of the Social
Security System (SSS for short) on September 1,
HELD: Judgment affirmed. 1957. He designated respondent Candelaria Davac as
his beneficiary and indicated his relationship to her as
The decision is based mainly on the theory that the that of "wife". When he died, each of the respondents
contract between the plaintiff and the deceased Roman (Candelaria Davac and Lourdes Tuplano) filed their
A. Concepcion partook of the nature of an insurance claims for death benefit with the SSS. It appears from
and that, therefore, the amount in question belonged their respective claims and the documents submitted
exclusively to the beneficiaries, invoking the following in support thereof, that the deceased contracted two
pronouncements of this Court in the case of Del Val vs. marriages, the first, with claimant Lourdes Tuplano on
Del Val, 29 Phil., 534: August 29, 1946, who bore him a child, Romeo Davac
With the finding of the trial court that the proceeds and the second, with claimant Candelaria Davac on
of the life-insurance policy belongs exclusively to January 18, 1949, with whom he had a minor
the defendant as his individual and separate daughter, Elizabeth Davac. Due to their conflicting
property, we agree. That the proceeds of an claims, the processing thereof was held in abeyance,
insurance policy belong exclusively to the whereupon the SSS filed this petition praying that
beneficiary and not to the estate of the person respondents be required to interplead and litigate
whose life was insured, and that such proceeds are between themselves their conflicting claims over the
the separate and individual property of the death benefits in question.
beneficiary, and not of the heirs of the person
whose life was insured, is the doctrine in America. Issue:
We believe that the same doctrine obtains in these
Islands by virtue of section 428 of the Code of Whether or not the Social Security Commission acted
Commerce, which reads: correctly in declaring respondent Candelaria Davac as
"The amounts which the underwriter must deliver the person entitled to receive the death benefits in
to the person insured, in fulfillment of the contract, question.
shall be the property creditors of any kind
whatsoever of the person who effected the Held: yes.
insurance in favor of the formers."
The benefit receivable under the Social Security Act is
AS TO THE CONTENTION OF THE COUNSEL’S in the nature of a special privilege or an arrangement
PLAINTIFF THAT THE PROCEEDS OF THE INSURANCE secured by the law, pursuant to the policy of the State
POLICY WERE DONATION OR GIFT MADE BY THE to provide social security to the workingmen. The
FATHER DURING HIS LIFETIME, SUCH THAT UNDER amounts that may thus be received cannot be
considered as property earned by the member during
Section 13 of the Insurance Code defines insurable The insured only has the initial burden of proving that
interest in property as “every interest in property, the cargo was in good condition when the policy
whether real or personal, or any relation thereto, or attached and that the cargo was damaged when
vi. Rules in change of interest (Sections 20, Whether the respondent is entitled to the insurance
21, 22, 23, 24)
vii. Void Stipulations (Section 25) SC:
We are not impressed with private respondent's SEGUNDINA MUSÑGI, ET AL., vs. WEST COAST
contention that failure of petitioner Mondragon LIFE INSURANCE CO.
to communicate to him the rejection of the [G.R. No. L-41794 August 30, 1935]
insurance application would not have any
adverse effect on the allegedly perfected Facts:
temporary contract In this first place, there was
no contract perfected between the parties who The plaintiffs, as beneficiaries, brought suit against the
had no meeting of their minds. Private defendant to recover the value of two life insurance
respondent, being an authorized insurance agent policies. Arsenio T. Garcia was insured by the
of Pacific Life at Cebu branch office, is defendant company in the sum of P5, 000. Arsenio T.
indubitably aware that said company does not Garcia was again insured by the defendant company in
offer the life insurance applied for. When he filed the sum of P10,000. Subsequently, Arsenio died. Even
the insurance application in dispute, private with the demand made by the plaintiffs to the
respondent was, therefore, only taking the chance that defendant company to pay the two policies, defendant
Pacific Life will approve the recommendation of refused to pay
Mondragon for the acceptance and approval of the
application in question along with his proposal that the It is to be noted that in both applications, the insured
insurance company starts to offer the 20-year had to answer inquiries as to his state of health and
endowment insurance plan for children less than seven that of his family, which he did voluntarily. In each of
years. Nonetheless, the record discloses that Pacific the said applications the following question was asked:
Life had rejected the proposal and recommendation. "1. What physician or practitioner or any other person
Secondly, having an insurable interest on the life of his not named above have you consulted or been treated
one-year old daughter, aside from being an insurance by, and for what illness, or ailment? (If none, so
agent and an offense associate of petitioner state.)" In the first application, the insured answered
Mondragon, private respondent Ngo Hing must have "None", and in the second, "No". These answers of the
known and followed the progress on the processing of insured as well as his other statements contained in his
such application and could not pretend ignorance of applications were one of the causes or considerations
the Company's rejection of the 20-year endowment life for the issuance of the policies, and they so positively
insurance application. appear therein. After the death of the insured and as a
result of the demand made by the beneficiaries upon
This Court is of the firm belief that private respondent the defendant to pay the value of the policies, the
had deliberately concealed the state of health and latter discovered that the aforementioned answers
physical condition of his daughter Helen Go. Where were false and fraudulent, because the truth was that
private respondent supplied the required the insured, before answering and signing the
essential data for the insurance application form, applications and before the issuance of the policies,
he was fully aware that his one-year old had been treated in the General Hospital by a lady
daughter is typically a mongoloid child. Such a physician for different ailments.
congenital physical defect could never be
ensconced nor distinguished. Nonetheless, The defendant contends that the two policies did not
private respondent, in apparent bad faith, create any valid obligation because they were
withheld the fact material to the risk to be fraudulently obtained by the insured.
assumed by the insurance company. As an
insurance agent of Pacific Life, he ought to know, Issue:
as he surely must have known. his duty and
responsibility to such a material fact. Had he Whether the two answers given by the insured in his
diamond said significant fact in the insurance applications are false, and if they were the cause, or
application form Pacific Life would have verified the one of the causes, which induced the defendant to
same and would have had no choice but to disapprove issue the policies?
the application outright.
Ruling:
Digested by: Grace Jayne Dingal The provisions of P.D. No. 1460, also known as the
Vda. DE CANILANG v. COURT OF Insurance Code of 1978 read as follows:
Sec. 26. A neglect to communicate that which a
Facts: party knows and ought to communicate, is called a
concealment. xxx xxx xxx
On 18 June 1982, Jaime Canilang consulted Dr. Sec. 28. Each party to a contract of insurance
Claudio and was diagnosed as suffering from "sinus must communicate to the other, in good faith, all
tachycardia” And was latter found to have "acute factors within his knowledge which are material to
bronchitis." On next day, Jaime applied for a "non- the contract and as to which he makes no
medical" insurance policy with respondent Great Pacific warranty, and which the other has not the means
Life Assurance naming his wife, Thelma Canilang, as of ascertaining.
his beneficiary. Jaime was issued ordinary life
insurance Policy effective as of 9 August 1982. On 5 The information concealed must be information which
August 1983, Jaime Canilang died of "congestive heart the concealing party knew and "ought to [have]
failure," "anemia," and "chronic anemia." Petitioner, communicate[d]," that is to say, information which
widow and beneficiary of the insured, filed a claim with was "material to the contract." The test of materiality
Great Pacific which the insurer denied upon the ground is contained in Section 31 of the Insurance Code of
that the insured had concealed material information 1978 which reads:
from it. Petitioner filed a complaint against Great Sec. 31. Materially is to be determined not by the
Pacific with the Insurance Commission for recovery of event, but solely by the probable and reasonable
the insurance proceeds. During the hearing called by influence of the facts upon the party to whom the
iv. Misrepresentation, effect (Section 45) It appears from the record that the insured had
knowledge of the false replied contained in the two
Digested by: Roxanne A. Huyo applications for insurance and knowing permitted fraud
Eguaras v. Great Eastern Life Ass. Co. to be practised upon the insurance company, for in his
acknowledgment and consent his mother-in-law was
Facts: designated as the beneficiary of the insurance, despite
the fact that he had children and his mother was still
living. In the present case the fraud consisted in the
It is essential to the nature of the deceit, to which the Later, Vicenta died of cerebral apoplexy. Bernardo
foregoing article refers, that said deceit be prior to or presented a claim for the payment of the sum of
contemporaneous with the consent that is a necessary P15,000 the amount of the joint life Insurance policy.
requisite for perfecting the contract, but not that it After investigation it was discovered that the answers
may have occurred or happened thereafter. A contract given by the insured in their medical examinations with
is therefore deceitful, for the execution whereof the regard to their health and previous illness and medical
consent of one of the parties has been secured by attendance were untrue. For that reason, the West
means of fraud, because he was persuaded by words Coast Life Insurance Co. refused to pay the claim of
or insidious machinations, statements or false Bernardo Argente.
promises, and a defective consent wrung from him, It is admitted that it appears in the Medical Examiner's
even though such do not constitute estafa or any other Report that Bernardo Argente, in response to the
criminal subject to the penal law. question asked by the medical examiner, "Have you
ever consulted a physician for, or have you ever
With this array of circumstantial evidence derived from suffered from any ailment or disease of, the brain or
facts duly proven as a result of the present suit, we nervous system?" answered "No." To the question,
get, if not a moral certainly, at least a full conviction "Have you consulted a physician for any ailment or
that when Castor Garcia presented himself to be disease not included in your above answer," answered
examined by the physician Vidal in place of Dominador "Yes. Nature of Ailment, Disease or Injury. Scabies,
Albay, serious deceit occurred in perfecting the Number of attacks 1, Date 1911. Duration 1 month,
insurance contract, for had the agent of the company Severity Fair, results and, if within five years, name
not been deceived it would not have granted the and address of every physician consulted. Dr. P.
insurance applied for by Albay, nor would it have Guazon. Cured. Dr. Guazon is dead now." And to the
executed the contract by virtue of whereof payment is question, "What physician or physicians, if any, not
claimed of the value of policy obtained through fraud; named above, have you consulted or been treated by,
and consequently on such assumptions it is improper, within the last five years and for what illness or
nor is it permitted by the law, to order collection of the ailment? (If none, so state)" answered "No." It is,
amount claimed. however, not disputed that on January 10, 11, and 13,
In a contract executed with the requisites fixed in 1923, Bernardo Argente was confined in the Philippine
article 1261, one of the contracting parties may have General Hospital where he was treated by Dr. Agerico
given his consent through error, violence, intimidation, B. M. Sison for cerebral congestion and Bell's Palsy.
or deceit, and in any of such cases the contract is void,
even though, despite this nullity, no crime was And that Vicenta de Ocampo, in response to the
committed. (Article 1265, Civil Code.) There may not question asked by the medical examiner, "How
have been estafa in the case at bar, but it was frequently, if at all, and in what quantity do you use
conclusively demonstrated by the trial that deceit
It should be noted that under Art. 1332, the obligation Court of First Instance of Zamboanga sustained the
to show that the terms of the contract had been fully demurrer to plaintiff's complaint on the ground that it
explained to the party who is unable to read or fails to state a cause of action.
understand the language of the contract, when fraud
or mistake is alleged, devolves on the party seeking to Issues:
enforce it. Here the insurance company is not seeking
to enforce the contracts; on the contrary, it is seeking (1) WON the contract was consummated?
to avoid their performance. It is petitioner who is (2) WON this is a form of cover notes? (note: not
seeking to enforce them even as fraud or mistake is 100% sure about this )
not alleged. Accordingly, respondent company was
under no obligation to prove that the terms of the Ruling:
insurance contracts were fully explained to the other
party. Even if we were to say that the insurer is the (1) NO. The contract, to be binding from the date of
one seeking the performance of the contracts by the application, must have been a completed contract,
avoiding paying the claim, it has to be noted as above one that leaves nothing to be done, nothing to be
stated that there has been no imputation of mistake or completed, nothing to be passed upon, or determined,
fraud by the illiterate insured whose personality is before it shall take effect. There can be no contract of
represented by her beneficiary the petitioner herein. In insurance unless the minds of the parties have met in
sum, Art. 1332 is inapplicable to the case at bar. agreement. As we read and understand the so-called
provisional policy it amounts to nothing but an
Decision of the Court of Appeals is affirmed. acknowledgment on behalf of the company, that it has
received from the person named therein the sum of
money agreed upon as the first year's premium upon a
ii. Form of insurance Policy; riders, policy to be issued upon the application, if the
etc)/Contents (Sections 50-51) application is accepted by the company.
iii. Cover notes (Section 52)
SC finds the 2nd rule (Joyce on Insurance, relied by
Digested by: Sharmine M. Odchigue appellant) to be applicable . The Rule states;
De Lim vs. Sun Life Ass. Co. of Canada “Where an agreement is made between the applicant
[41 Phil 263] and the agent whether by signing an application
containing such condition, or otherwise, that no liability
Facts: shall attach until the principal approves the risk and a
Digested by: Kristine Oja Plaintiff and defendant are siblings who are heirs at
Pacific Timber Export Corp. v. CA law of Gregorio Nacianceno del Val, who died intestate.
The deceased, during his lifetime, took out an
Facts: insurance on his life for the sum of P40,000 and made
it payable to the defendant as sole beneficiary.
On March 13, 1963, Pacific Timber secured temporary
insurance from the Workmen’s Insurance Co. for its Plaintiffs contend that the amount of the insurance
exportation of logs to Japan. Workmen Insurance policy belonged to the estate of the deceased and not
issued on said date Cover Note 1010 insuring said to the defendant personally; that, therefore, they are
cargo. The regular marine policies were issued by entitled to a partition not only of the real and personal
the company in favor of Pacific Timber on April 2, property, but also of the P40,000 life insurance.
1963. The two marine policies bore the number Issue:
53H01032 and 53H01033. After the issuance of the
cover note but before the issuance of the two policies, Whether or not the insurance policy belongs to the
some of the logs intended to be exported were lost estate
due to a typhoon. Pacific Timber filed its claim with
the company, but the latter refused, contending that Ruling:
the cover note insuring the cargo is null and void for
lack of valuable consideration. With the finding of the trial court that the proceeds of
the life-insurance policy belong exclusively to the
The policy in question has been so framed that "Loss, Capital Insurance & Surety Co. contends that the "no
if any, is payable to H.S. Reyes, Inc.," which action" clause in the policy closes the avenue to any
unmistakably shows the intention of the parties. third party which may be injured in an accident
wherein the jeepney of the insured might have been
the cause of the injury of third persons, alleging the
Digested by: ra osorio freedom of contracts.
Guingon vs. Del Monte
ISSUE:
FACTS:
WON the heirs of Guingon have a cause of action
Julio Aguilar owned and operated several jeepneys. He against Capital Insurance
entered into a contract with the Capital Insurance &
Surety Co., Inc. insuring the operation of his jeepneys RULING: Yes.
against accidents with third-party liability. The
insurance policy contains the following provisions: The policy in the present case is one whereby the
Section II —LIABILITY TO THE PUBLIC insurer agreed to indemnify the insured "against all
1. The Company, will, subject to the limits of sums . . . which the Insured shall become legally liable
liability, indemnify the Insured in the event of to pay in respect of: a. death of or bodily injury to any
accident caused by or arising out of the use of the person . . . ." Clearly, therefore, it is one for indemnity
Motor Vehicle/s or in connection with the loading against liability; from the fact then that the insured is
or unloading of the Motor Vehicle/s, against all
In the discussion of the points thus raised, what is As regards the first defense, it should be noted that,
paramount is the interpretation of the insurance although, in general, only parties to a contract may
contract with the aim in view of attaining the bring an action based thereon, this rule is subject to
objectives for which the insurance was taken. The exceptions, one of which is found in the second
Rules of Court provide that parties may be joined paragraph of Article 1311 of the Civil Code of the
either as plaintiffs or defendants, as the right to relief Philippines, reading:
in respect to or arising out of the same transactions is If a contract should contain some stipulation in favor
alleged to exist (Sec. 6, Rule 3). of a third person, he may demand its fulfillment
The "no action" clause in the policy of insurance cannot provided he communicated his acceptance to the
prevail over the Rules of Court provision aimed at obligor before its revocation. A mere incidental benefit
avoiding multiplicity of suits. or interest of a person is not sufficient. The contracting
parties must have clearly and deliberately conferred a
Similarly, in the instant suit, Sec. 5 of Rule 2 on favor upon a third person.
"Joinder of causes of action" and Sec. 6 of Rule 3 on
"Permissive joinder of parties" cannot be superseded, In the stipulations, the Company "will indemnify any
at least with respect to third persons not a party to the authorized Driver who is driving the Motor Vehicle" of
contract, as herein, by a "no action" clause in the the Insured and, in the event of death of said driver,
contract of insurance. the Company shall, likewise, "indemnify his personal
representatives." In fact, the Company "may, at its
option, make indemnity payable directly to the
Digested by: Mark Recto claimants or heirs of claimants ... it being the true
MELECIO COQUIA, MARIA ESPANUEVA and intention of this Policy to protect ... the liabilities of the
MANILA YELLOW TAXICAB CO., Insured towards the passengers of the Motor Vehicle
INC.vs.FIELDMEN'S INSURANCE CO., INC. and the Public" — in other words, third parties.
[G.R. No. L-23276, November 29, 1968]
Thus, the policy under consideration is typical of
Facts: contracts pour autrui, this character being made more
manifest by the fact that the deceased driver paid fifty
Fieldmen’s Insurance Company issued Manila Yellow percent (50%) of the corresponding premiums, which
Taxicab Co. a common carrier accident insurance were deducted from his weekly commissions. Under
policy, covering the period from Dec. 1, 1961 to Dec. these conditions, it is clear that the Coquias — who,
1, 1962. admittedly, are the sole heirs of the deceased — have
a direct cause of action against the Company, and,
While the policy was in force, or on February 10, 1962, since they could have maintained this action by
a taxicab of the Insured, driven by Carlito Coquia, met themselves, without the assistance of the Insured, it
a vehicular accident at Mangaldan, Pangasinan, in goes without saying that they could and did properly
consequence of which Carlito died. The Insured filed join the latter in filing the complaint herein.
therefor a claim for P5,000.00 to which the Company
replied with an offer to pay P2,000.00, by way of The second defense set up by the Company is based
compromise. The Insured rejected the same and made upon Section 17 of the policy reading:
a counter-offer for P4,000.00, but the Company did If any difference or dispute shall arise with respect
not accept it. Hence, on September 18, 1962, the to the amount of the Company's liability under this
The Court notes that Policy RY/F-082 is an open policy The ordinary test of the value of property is the price it
and is subject to the express condition that: will commend in the market if offered for sale. But that
Open Policy test cannot, in the very nature of the case, be applied
This is an open policy as defined in Section 57 of at the time application is made for insurance. Men may
the Insurance Act. In the event of loss, whether honestly differ about the value of property, or as to
total or partial, it is understood that the amount of what it will bring in the market; and such differences
the loss shall be subject to appraisal and the are often very marked among those whose special
liability of the company, if established, shall be business it is to buy and sell property of all kinds. The
limited to the actual loss, subject to the applicable assured could do no more than estimate such value;
terms, conditions, warranties and clauses of this and that, it seems, was all that he was required to do
Policy, and in no case shall exceed the amount of in this case. His duty was to deal fairly with the
the policy. Company in making such estimate. The special finding
shows that he discharged that duty and observed good
As defined in the aforestated provision, which is now faith. We shall not presume that the Company, after
Section 60 of the Insurance Code, "an open requiring the assured in his application to give the
policy is one in which the value of the thing 'estimated value,' and then to covenant that he had
insured is not agreed upon but is left to be stated all material facts in regard to such value, so far
ascertained in case of loss. " This means that the as known to him, and after carrying that covenant, by
actual loss, as determined, will represent the express words, into the written contract, intended to
Corollary issue: The insured's cause of action or his right to file a claim
either in the Insurance Commission or in a court of
WON that MOTION FOR RECONSIDERATION filed by competent jurisdiction commences from the time of
Tan on April 3, 1984 INTERRUPTS THE TWELVE (12) the denial of his claim by the Insurer, either
MONTHS PRESCRIPTIVE PERIOD TO CONTEST THE expressly or impliedly.
DENIAL OF THE INSURANCE CLAIM.
But as pointed out by the petitioner insurance
Held: company, the rejection referred to should be construed
as the rejection, in the first instance, for if what is
The petition was considered and the CA decision, which being referred to is a reiterated rejection conveyed in a
affirms RTC decision, was reversed and set aside. SC resolution of a petition for reconsideration, such should
ruled that the MR filed by Tan on April 1984 did not have been expressly stipulated.
interrupt the twelve months prescriptive period.
Thus, to allow the filing of a motion for reconsideration
While it is a cardinal principle of insurance law that a to suspend the running of the prescriptive period of
policy or contract of insurance is to be construed twelve months, a whole new body of rules on the
liberally in favor of the insured and strictly against the matter should be promulgated so as to avoid any
insurer company, yet, contracts of insurance, like other conflict that may be brought by it.
contracts, are to be construed according to the sense
and meaning of the terms which the parties This Court uses the phrase "final rejection", the same
themselves have used. If such terms are clear and cannot be taken to mean the rejection of a petition for
unambiguous, they must be taken and understood in reconsideration as insisted by respondents. Such was
their plain, ordinary and popular sense. Condition 27 of clearly not the meaning contemplated by this Court.
the Insurance Policy, which is the subject of the The Insurance policy in said case provides that the
conflicting contentions of the parties, reads: insured should file his claim, first, with the carrier and
27. Action or suit clause — If a claim be made then with the insurer. The "final rejection" being
and rejected and an action or suit be not referred to in said case is the rejection by the
commenced either in the Insurance insurance company.
Commission or in any court of competent
jurisdiction within twelve (12) months from
receipt of notice of such rejection, or in case of Digested by: Ugbinar, Krystel Marie
arbitration taking place as provided herein, ACCFA vs. Alpha Insurance and Surety Co. Inc.
within twelve (12) months after due notice of [G.R. No. L-24566 July 29, 1968]
the award made by the arbitrator or arbitrators
or umpire, then the claim shall for all purposes Facts:
be deemed to have been abandoned and shall
not thereafter be recoverable hereunder. According to the allegations of the complaint, in order
to guarantee the Asingan Farmers' Cooperative
Respondent Tan, in his letter addressed to the Marketing Association, Inc. (FACOMA) against loss on
petitioner insurance company dated April 3, 1984 account of "personal dishonesty, amounting to larceny
(Rollo, pp. 50-52), admitted that he received a copy of or estafa of its Secretary-Treasurer, Ricardo A.
the letter of rejection on April 2, 1984. Thus, the 12- Ladines, the appellee, Alpha Insurance & Surety
month prescriptive period started to run from the said Company had issued, on 14 February 1958, its bond,
date of April 2, 1984, for such is the plain meaning and No. P-FID-15-58, for the sum of Five Thousand Pesos
intention of Section 27 of the insurance policy. (P5,000.00) with said Ricardo Ladines as principal and
the appellee as solidary surety. On the same date, the
The condition contained in an insurance policy that Asingan FACOMA assigned its rights to the appellant,
claims must be presented within one year after Agricultural Credit Cooperative and Financing
rejection is not merely a procedural requirement but Administration (ACCFA for short), with approval of the
an important matter essential to a prompt settlement principal and the surety.
of claims against insurance companies as it demands
that insurance suits be brought by the insured while During the effectivity of the bond, Ricardo Ladines
the evidence as to the origin and cause of destruction converted and misappropriated, to his personal
have not yet disappeared. benefit, some P11,513.22 of the FACOMA funds, of
which P6,307.33 belonged to the ACCFA. Upon
It is apparent that Section 27 of the insurance policy discovery of the loss, ACCFA immediately notified in
was stipulated pursuant to Section 63 of the Insurance writing the survey company on 10 October 1958, and
Code, which states that: presented the proof of loss within the period fixed in
Sec. 63. A condition, stipulation or agreement the bond; but despite repeated demands the surety
in any policy of insurance, limiting the time for company refused and failed to pay. Whereupon, ACCFA
commencing an action thereunder to a period filed suit against appellee on 30 May 1960.
WHEREFORE, the instant petition is DENIED and the (note: this ruling is deemed modigfied by Sec. 65}
assailed decision of the respondent Court of Appeals is
AFFIRMED in toto.
Saura Import & Export Co. vs. Phil. Inter-
x. Cancellation of Policy (Sections 64-65) National Surety Co., Inc. and Philippine National
Bank
Digested by: Vicente Ynclino [G.R. No. L-15184, May 31, 1963]
Paulino vs Capital Ins. & Surety Co.
[105 Phil. 1315, May 15, 1959] Facts:
On April 6, 1955, the building and its contents worth Thus, liability attached principally to the insurance
P40,685.69 were burned. Saura filed a claim and upon company, for its failure to give notice of the
presentation of notice of loss with PNB, Saura learned cancellation of the policy to Saura.
for the 1st time that the policy had previously been
cancelled. Insurer refused to pay Saura.
Malayan Insurance vs. Cruz
Issue:
Facts:
Whether or not the notice of cancellation of the policy
to the mortgagee (PNB) was already a substantial Coronacion Pinca has been sustained by the Insurance
compliance of the insurer’s duty to notify the insured Commission in her claim for compensation for her
of the policy cancellation? burned house. The petitioner now disputes the decision
on the ground that there was no valid insurance
Ruling: contract at the time of the loss because they have
already cancelled the policy for non-payment of
Fire insurance policies and other contracts of insurance premium.
upon property, in addition to the common provision for
cancellation of the policy upon request of the insured, Issue:
generally provide for cancellation by the insurer by
notice to the insured for a prescribed period, which is WON Section 77 of the insurance Code is applicable in
usually 5 days, and the return of the unearned portion this case.
of the premium paid by the insured, such provision for
cancellation upon notice being authorized by statutes Ruling:
in some jurisdiction, either specifically or as a provision
of an adopted standard form of policy. Section 77 is not applicable because payment of
premium was in fact eventually made. There was a
The purpose of provisions or stipulations for notice to premium invoice which was issued to Pinca given by
the insured, is to prevent the cancellation of the policy, the agent of the petitioner who received the payment
without allowing the insured ample opportunity to in behalf of Malayan Insurance.
negotiate for other insurance in its stead. The form
and sufficiency of a notice of cancellation is determined According to Section 65 of the Insurance Code a valid
by policy provisions. cancellation of policy requires the concurrence of the
following conditions 1) Prior notice of cancellation to
In order to form the basis for the cancellation of a insured; 2) Notice must be based on the occurrence
policy, notice to the insured need not be in any after effective date of policy of one of more of the
particular form, in the absence of a statute or policy grounds mentioned; 3) Must be in writing, mailed or
provision prescribing such form, and it is sufficient, so delivered to the insured at the address shown on the
long as it positively and unequivocally indicates to the policy; 4) Must state the grounds relied upon provided
insured, that it is the intention of the company that the in Section 64 of the Insurance Code and upon request
policy shall cease to be binding. Where the policy of the insured, to furnish facts on which cancellation is
contains no provisions that a certain number of days based.
notice shall be given, a reasonable notice and
opportunity to obtain other insurance must be given. However, there was no proof of notice, assuming it
Actual personal notice to the insured is essential to a complied with the other requisites mentioned above,
cancellation under a provision for cancellation by was actually mailed to and received by Pinca. All
notice. The actual receipt by the insured of a notice of Malayan Insurance offers to show that the cancellation
cancellation is universally recognized as a condition was communicated to the insured is its employee’s
precedent to a cancellation of the policy by the insurer, testimony that the said cancellation was sent “by mail
and consequently a letter containing notice of through our mailing section” without more.
The evidence offered by the plaintiff is to the effect Digested by: Kwin Asunto
that alcohol was used in preparing varnish for the Young vs. Midland Textile insurance company
purpose of retouching, though he also says that the [G.R. No. 9370. March 31, 1915.]
alcohol was kept in store and not in the bodega where
the furniture was. Facts:
Whether or not the placing of said fireworks in the The judgment of the lower court is revoked and the
building insured, under the conditions above defendant is relieved from any responsibility under
enumerated, they being "hazardous goods," is a said complaint, and, without any finding as to costs.
violation of the terms of the contract of insurance.
A violation of the terms of a contract of insurance, by (2) As additional condition of the mortgage contract,
either party, will constitute the basis for a termination Union Manufacturing undertook to secure insurance
of the contractual relations, at the election of the coverage over the mortgaged properties for the same
other. The right to terminate the contractual relations amount of P415,000.00.
exists even though the violation was not the direct
cause of the loss. In the present case, the deposit of (3) As Union Manufacturing failed to secure insurance
the "hazardous goods," in the building insured, was a coverage on the mortgaged properties, Republic Bank
violation of the terms of the contract. Although the procured from the Philippine Guaranty Co., Inc. an
hazardous goods did not contribute to the loss, the insurance coverage on loss against fire for
insurer, at his election, was relieved from liability Said P500,000.00 over the properties of the Union
deposit created a new risk, not included in the terms of Manufacturing with the annotation that loss or
the contract. The insurer had neither been paid, nor damage, if any, under is payable to Republic Bank as
Digested by: Birondo It was also ACME’s contention that the INSURER –
ACME Shoe Rubber & Plastic Corp. vs. CA which accepted the one-year premium on January 8,
1964, has no right to apply it to the payment of a
Facts: period of coverage prior thereto for the policy was void
under RA 3450 (Sec. 72. xxx. No policy issued by an
Petitioner ACME had been insuring its properties yearly insurance company is valid and binding unless and
against fire with Domestic Insurance Company until the premium thereof has been paid). However,
(INSURER). It continued the insurance for the period of since said Act was approved only on June 20, 1963
May 15, 1962 up to May 15, 1963 for the amount of and was put into effect only on October 1, 1963, it
P200,000. On January 8, 1964, ACME only paid could not retroactively affect the renewal of the
P3,331.26, which the INSURER applied as renewal insurance policy on May 15, 1963. So, ACME’s
premium for the period May 15, 1963 to May 15, 1964 premium payment of January 8, 1964 was properly
and the issued renewal receipt having a stamp thereon applied to the 1963-1964 premium.
that it is subject to Receipt of Payment Clause and
Credit Agreement – both attached as riders. The Lastly, ACME’s claim that the INSURER would unjustly
former clause declared that “the insurance will be enrich itself if it were to be allowed to apply the one-
deemed valid and binding upon the company only year premium it received to a past period when the
when the premium and documentary stamps have policy was void and the INSURER had incurred no risk
The Insurnace Policy states that: “THE COMPANY The fact that the check issued by Plastic Era in partial
HEREBY AGREES with the Insured but subject to the payment of the promissory note was later on
terms and conditions endorsed or otherwise expressed dishonored did not in any way operate as a forfeiture
hereon, which are to be taken as part of this Policy), of its rights under the policy, there being no express
that if the Property described, or any part thereof, stipulation therein to that effect.
shall be destroyed or damaged by Fire or This is how the story ends. :D
Lightning after payment of the Premiums, at anytime
between...xxx”
Digested by: Brian O. Dalanon
In clear and unequivocal terms the insurance policy Velasco vs. Apostol
provides that it is only upon payment of the premiums
by Plastic Era that Capital Insurance agrees to insure Facts:
the properties of the former against loss or damage in
an amount not exceeding P100,000.00. It appears on That on November 27, 1973, at about 2:30 p.m.
record that on the day the insurance policy was plaintiffs were riding in their Mercury car driven by
delivered, Plastic Era did not pay the Capital their driver Restitute Guarra, along Quezon Boulevard
Insurance, but instead executed an acknowledgment when an N/S taxicab driven by defendant Dominador
receipt. Santos registered in the name of defendants Alice
Artuz, c/o Norberto Santos, crossed the center island
Q:Could not this have been considered a valid towards their direction, and finally collided with their
payment of the insurance premium? car at the left front part. The said taxicab tried to
return to its original lane, but was unable to climb the
Article 1249 NCC: island, and instead, backtracked, hitting again
plaintiffs' car in the left near portion, causing the
The delivery of promissory notes payable to order, or latter's back portion to turn toward the center hitting a
bills of exchange or other mercantile documents shall jeepney on its right.
produce the effect of payment only when they have
been cashed, or when through the fault of the creditor Originally sued as defendants were Dominador Santos,
they have been impaired. Alice Artuz, and Norberto Santos.
After an answer was filed by said defendants, private
Under this provision the mere delivery of a bill of respondent Maharlika Insurance Co., Inc. was
exchange in payment of a debt does not immediately impleaded as a defendant in an amended complaint
effect payment. It simply suspends the action arising filed by the petitioner with an allegation that the N/S
from the original obligation in satisfaction of which it taxicab was insured against third party liability for
was delivered, until payment is accomplished either P20,000 with private respondent at the time of the
actually or presumptively. But wait... accident.
Acceptance by Capital Insurance considered as In its answer to the amended complaint, respondent
waiver Maharlika Insurance Co., Inc. claimed that there was
no cause of action against it because at the time of the
Significantly, in the case before Us the Capital accident, the alleged insurance policy was not in force
Insurance accepted the promise of Plastic Era to pay due to non-payment of the premium. It further averred
the insurance premium within thirty (30) days from that even if the taxicab had been insured, the
the effective date of policy. By so doing, it has complaint would still be premature since the policy
implicitly agreed to modify the tenor of the insurance provides that the insurer would be liable only when the
policy and in effect, waived the provision therein that it insured becomes legally liable.
However, Maharlika Insurance Co. was exonerated on The fact withheld could not in any event have
the ground that the policy was not in force for failure influenced the respondent company in entering into
of the therein defendants to pay the initial premium the supposed contract or in estimating the character of
and for their concealment of a material fact. the risk or in fixing the rate premium, for the simple
reason that no such contract existed between the
Petitioners fault the respondent-judge for considering defendants and the company at the time of the
private respondent's defense of late payment of accident.
premium when, according to them, "the same was
waived at the pre-trial. What should be apparent from such actuations of
therein defendants, however, is the presence of bad
Petiotioners theorize that what was stipulated in the faith on their part, a reprehensible disregard of the
pre-trail order “does not include the issue on whether principle that insurance contracts are uberrimae fidae
defendant Maharlika Insurance Co., Inc. is liable under and demand the most abundant good faith.
the insurance policy, even as the premium was paid
after the accident in question.”
Digested by: Grace Jayne Dingal
The accident for which respondent insurance company VALENZUELA v. COURT OF APPEALS, ARAGON et
is sought to be held liable occurred on November 27, al.
1973 while the initial premium was paid only on
December 11, 1973. Facts:
Petitioners maintain that in spite of this late payment, Arturo Valenzuela is a General Agent of Philippine
the policy is nevertheless binding because there was American General Insurance (Philamgen) since 1965.
an implied agreement to grant a credit extension so as He was authorized to solicit and sell in behalf of
to make the policy effective. To them, the subsequent Philamgen all kinds of non-life insurance, and in
acceptance of the premium and delivery of the policy consideration of services rendered was entitled to
estops the respondent company from asserting that receive the full agent's commission of 32.5% from
the policy is ineffective. Philamgen under the scheduled commission rates.
Issue: From 1973 to 1975, Valenzuela solicited marine
insurance from one of his clients, the Delta Motors in
Whether defendant Maharlika Insurance Co. Inc. is the amount of P4.4 Million from which he was entitled
liable under the insurance policy on account of the to a commission of 32%. However, Valenzuela did not
negligence of defendant Dominador Santos. receive his full commission which amounted to P1.6
Million from the P4.4 Million insurance coverage of the
Ruling: Delta Motors. In 1977, Philamgen started to become
interested in and expressed its intent to share in the
Petitioners' position is bereft of merit commission due Valenzuela on a fifty-fifty basis.
Because of the refusal of Valenzuela, Philamgen
Although there is no express statement as to the fact terminated the General Agency Agreement of
of late payment, this is necessarily deemed included in Valenzuela.
or ineluctably inferred from the issue of whether the
company is liable under the insurance policy it had Issue:
allegedly issued for the vehicle involved and on which
petitioners seek to recover. Whether or not Philamgen could continue to hold
Valenzuela jointly and severally liable with the insured
Issues that are impliedly included therein or may be for unpaid premiums
inferable therefrom by necessary implication are as
much integral parts of the pre-trial order as those that Held: NO.
are expressly stipulated.
In fact, it would be absurd and inexplicable for the The principal cause of the termination of Valenzuela as
respondent company to knowingly disregard or General Agent of Philamgen arose from his refusal to
deliberately abandon the issue of non-payment of the share his Delta commission. The apparent bad faith of
premium on the policy considering that it is the very the private respondents in terminating the General
core of its defense. Agency Agreement of petitioners. The agency involving
petitioner and private respondent is one "coupled with
GREAT PACIFIC LIFE ASSURANCE CORP. vs. The insured private respondent did not cede to the
COURT OF APPEALS AND MEDARDA V. LEUTERIO mortgagee all his rights or interests in the insurance,
the policy stating that: "In the event of the debtor's
FACTS death before his indebtedness with the Creditor [DBP]
shall have been fully paid, an amount to pay the
This is a petition for review under Rule 45 of the Rules outstanding indebtedness shall first be paid to the
of Court, assailing the decision and resolution of the creditor and the balance of sum assured, if there is
Court of Appeals dated May 17, 1994 and January 4, any, shall then be paid to the beneficiary/ies
1994, respectively, in CA G.R. CV No. 18341. The designated by the debtor." When DBP submitted the
appellate court affirmed in toto the judgment of the insurance claim against petitioner, the latter denied
Regional Trial Court of Misamis Oriental in an insurance payment thereof, interposing the defense of
claim filed by private respondent against Great Pacific concealment committed by the insured. Thereafter,
Life Assurance Co. DBP collected the debt from the mortgagor and took
the necessary action of foreclosure on the residential
The Supreme Court found the petition not meritorious. lot of private respondent. In Gonzales La O vs. Yek
Contrary to petitioner's allegations, there was no Tong Lin Fire & Marine Ins. Co. we held: "Insured,
sufficient proof that the insured had suffered from being the person with whom the contract was made, is
hypertension. Aside from the statement of the primarily the proper person to bring suit thereon. . . .
insured's widow who was not even sure if the Subject to some exceptions, insured may thus sue,
medicines taken by Dr. Leuterio were for hypertension, although the policy is taken wholly or in part for the
the petitioner had not proven nor produced any benefit of another person named or unnamed, and
witness who could attest to Dr. Leuterio's medical although it is expressly made payable to another as his
history. Clearly, it had failed to establish that there interest may appear or otherwise. . . . Although a
was concealment made by the insured, hence it cannot policy issued to a mortgagor is taken out for the
refuse payment of the claim. benefit of the mortgagee and is made payable to him,
yet the mortgagor may sue thereon in his own name,
ISSUES especially where the mortgagee's interest is less than
the full amount recoverable under the policy, . . . 'And
1. Whether the Court of Appeals erred in holding in volume 33, page 82, of the same work, we read the
petitioner liable to DBP as beneficiary in a group following: `Insured may be regarded as the real party
life insurance contract from a complaint filed by in interest, although he has assigned the policy for the
the widow of the decedent/mortgagor? NO purpose of collection, or has assigned as collateral
2. Whether Dr. Leuterio concealed that he had security any judgment he may obtain." And since a
hypertension, which would vitiate the insurance policy of insurance upon life or health may pass by
contract? NO transfer, will or succession to any person, whether he
has an insurable interest or not, and such person may
HELD recover it whatever the insured might have recovered,
the widow of the decedent Dr. Leuterio may file the
suit against the insurer, Grepalife.
Issue: Facts:
W/N fire was of intentional origin Salomon Sharruf and Eskenazi were doing business
W/N the claim of loss were fraudulent under the firm name of Sharuff & Co. They applied for
insurance the merchandise they had in stock. The
Ruling: insurance companies (Baloise Fire Ins. Co., Sun
Insurance Office, Springfield Insurance Co.) sent their
Fire of Intentional Origin representative to asses and examine the goods. As a
We are thus led to the conclusion that defendants' first result, the insurance companies issued insurance
special defense is well founded — that the fire in policies with the total amount of 40,000.00. They then
question was of intentional origin and was caused with entered into a partnership, substituting the name
the connivance of the plaintiff. Neither the interest of Sharruf & Co. with the Sharruf & Eskanzi. About 12.41
the justice nor public policy would be promoted by an o’clock on the morning of September 22, 1933, a fire
omission of the courts to expose and condemn broke out, burning and damaging the merchandise
incendiarism once the same is established by insured by Sharruf and Eskanzi.
competent evidence. It would tend to encourage rather
than suppress that great public menace if the courts Issue:
do not expose the crime to public condemnation when
the evidence in a case like the present shows that it Whether or not the claim of loss filed by the plaintiffs is
has really been committed. fraudulent.
It is not disputed that the premium was actually paid (1) There must be prior notice of cancellation to the
by Pinca to Adora on December 24, 1981, who insured;
received it on behalf of MICO, to which it was remitted
on January 15, 1982. What is questioned is the validity (2) The notice must be based on the occurrence, after
of Pinca's payment and of Adora's authority to receive the effective date of the policy, of one or more of the
it. grounds mentioned;
MICO's acknowledgment of Adora as its agent defeats (3) The notice must be (a) in writing, (b) mailed, or
its contention that he was not authorized to receive delivered to the named insured, (c) at the address
the premium payment on its behalf. It is clearly shown in the policy;
provided in Section 306 of the Insurance Code. And it (4) It must state (a) which of the grounds mentioned
is a well-known principle under the law of agency that: in Section 64 is relied upon and (b) that upon written
request of the insured, the insurer will furnish the facts
Payment to an agent having authority to receive or on which the cancellation is based.
collect payment is equivalent to payment to the
principal himself; such payment is complete when the Thus, it behooved MICO's to make sure that the
money delivered is into the agent's hands and is a cancellation was actually sent to and received by the
discharge of the indebtedness owing to the principal. insured. No such proof in support thereto was
presented by the insurance company.
The policy could be cancelled on any of the
supervening grounds enumerated in Article 64 As it has not been shown that there was a valid
(except "non-payment of premium") provided cancellation of the policy, there was consequently no
the cancellation was made in accordance need to renew it but to pay the premium thereon.
therewith and with Article 65. Payment was thus legally made on
the original transaction and it could be, and was,
Section 64 reads as follows: validly received on behalf of the insurer by its agent
Adora. Adora, incidentally, had not been informed of
SEC. 64. No policy of insurance other than life shall be the cancellation either and saw no reason not to accept
cancelled by the insurer except upon prior notice the said payment.
thereof to the insured, and no notice of cancellation
shall be effective unless it is based on the occurrence,
On September 19, 1961( 1st letter) FIELDMEN'S, by Court of Appeals affirmed decision of RTC
means of registered mail, served notice to ASIAN to be
relieved from all participation in its various treaties Issue:
with the latter effective December 31, 1961. This
communication, although admittedly received by Whether or not said cancellation had the effect of
ASIAN on September 25, 1961, did not elicit any reply terminating also the liability of FIELDMEN'S as
from ASIAN. reinsurer with respect to policies or cessions issued
prior to the termination of the principal reinsurance
On December 7, 1961 (2nd letter) FIELDMEN'S sent contracts or treaties.
another letter to ASIAN reiterated its position that it
would consider itself "no longer at risk for any Ruling: NO.
reinsurance and/or cession" given by ASIAN which
might be in force on December 31, 1961. Of the six reinsurance contracts under consideration
two contain provisions, which clearly and expressly
Not having received any formal reply from ASIAN, recognize the continuing effectivity of policies ceded
FIELDMEN'S sent anew a letter on February 17, 1962 under them for reinsurance notwithstanding the
(3rd letter) reminding ASIAN of the December 7 letter cancellation of the contracts themselves.
regarding the cancellation of all the reinsurance
treaties and cessions as of December 31, 1961. At the Insofar as the two reinsurance agreements with the
same time FIELDMEN'S requested ASIAN to submit its express stipulations aforequoted are concerned there
final accounting of all cessions made to the former for is clearly no merit in FIELDMEN'S claim that their
the preceding months when the reinsurance cancellation carried with it ipso facto the
agreements were in force. termination of all reinsurance cessions
thereunder. Such cessions continued to be in force
until their respective dates of expiration. Since it was
Stocks covered by Insurance Policy Nos. 5880 and As to the first issue, the court finds no merit in this
6026 were subsequently burned and the share of the contention. Under the abovequoted provision of the
loss assumed by defendant as per reinsurance Reinsurance Agreement, it would seem clear that the
agreement was computed at P2,024.87 and P1,334.80 requirement of submitting for decision to two
respectively. arbitrators or an umpire the matter of losses by fire or
the liability of the parties thereto arises only if and
Notwithstanding repeated demands, defendant refused when the same is disputed by one of the parties. It
and failed to pay plaintiff, and that for defendant's does not appear in the instant case that appellant did
failure to pay its share of the losses assumed by it, dispute appellee's claims. Consequently, appellant may
plaintiff has been compelled to institute an action in not invoke said provision in avoidance of its liability to
court. appellee.
The defendant moved for the dismissal of the case It is true that paragraph (Article VIII) of said
contending that the complaint states no cause of Reciprocal Facultative Reinsurance Agreement required
action, the matter not having been referred to the that 'in the event of any question arising as to the
decision of two arbitrators or umpire, which, it is meaning of, or any way connected with or relating to
claimed, is the condition precedent agreed upon in this Agreement, whether before or after its
Article VIII of the Reinsurance Agreement entered into termination, the parties shall endeavor to arrive at a
between the parties, to wit: . satisfactory compromise by amicable settlement rather
ARTICLE VIII than by court action'; and that the dispute should be
In the event of any question arising as to the referred to the decision of two arbitrators and umpire,
meaning of, or any way connected with or relating as provided, therein. However, in this particular case,
to this Agreement, whether before or after its there is absolutely no dispute between the two parties,
termination, the parties shall endeavor to arrive at because in the stipulation of facts, the defendant has
a satisfactory compromise by amicable settlement admitted that plaintiff has paid its liability to the
rather than by court action. The dispute shall be insured as per its fire insurance policies specified in the