42. MALAYAN INSURANCE COMPANY, INC., vs. PAP CO., LTD. (PHIL.

BRANCH)
G.R. No. 200784               August 7, 2013
Facts: The petitioner issued Fire Insurance Policy to the respondent for the latter’s machineries and
equipment. PAP Co. Renewed the insurance policy on an “As is” basis, and a renewal policy was thus
issued by Malayan.  During the subsistence of the renewal policy, the insured machineries and equipment
were totally lost by fire, hence PAP Co, filed a claim for fire insurance in the amount insured, which
Malayan denied, averring that at the the time of the loss, the insured machineries and equipment were
transferred by PAP Co to a location different from that indicated in the insurance policy.   The trial court
ruled in favour of PAP Co. On appeal to the CA, the latter affirmed with modification the RTC ruling,
deleting the award of attorneys fees. 
Issue: WON PAP concealed when it did not inform Malayan of the actual and new location of the insured
properties. 
Held: It can be said that with the transfer of the location of the subject properties, without notice and
without Malayan’s consent, after the renewal of the policy, PAP clearly committed concealment,
misrepresentation and a breach of a material warranty. Section 26 of the Insurance Code provides:
Section 26. A neglect to communicate that which a party knows and ought to communicate, is called a
concealment. Under Section 27 of the Insurance Code, “a concealment entitles the injured party to rescind
a contract of insurance.”
43. SUN LIFE OF CANADA (PHILIPPINES), INC., v. SANDRA TAN KIT AND THE ESTATE
OF THE DECEASED NORBERTO TAN KIT G.R. No. 183272, October 15, 2014
Facts: Respondent is the widow and designated beneficiary of Norberto Tan Kit (Norberto), whose
application for a life insurance policy was granted by petitioner on October 28, 1999. On February 19,
2001, Norberto died of disseminated gastric carcinoma. 6 Consequently, respondent filed a claim under the
subject policy. In September 3, 2001, petitioner denied respondent ’s claim on account of Norberto’s
failure to fully and faithfully disclose in his insurance application certain material and relevant
information about his health and smoking history. Believing that the policy is null and void, petitioner
opined that its liability is limited to the refund of all the premiums paid. Accordingly, it enclosed in the
said letter a check for P13,080.93 representing the premium refund. In September 13, 2001, respondent
refused to accept the check and insisted on the payment of the insurance proceeds. On October 4, 2002,
petitioner filed a Complaint for Rescission of Insurance Contract before the (RTC).
Issue: whether petitioner is liable to pay interest on the premium to be refunded to respondents.
Held: it is undisputed that simultaneous to its giving of notice to respondents that it was rescinding the
policy due to concealment, petitioner tendered the refund of premium by attaching to the said notice a
check representing the amount of refund. Petitioner did not incur delay or unjustifiably deny the claim
that he properly complied with its obligation under the law and contract. Hence, it should not be made
liable to pay compensatory interest.
Considering the prevailing circumstances of the case, we hereby direct petitioner to reimburse the
premium paid within 15 days from date of finality of this Decision. If petitioner fails to pay within the
said period, then the amount shall be deemed equivalent to a forbearance of credit. In such a case, the rate
of interest shall be 6% per annum.
44. BERNARDO ARGENTE vs. WEST COAST LIFEINSURANCE CO. G.R. No. L-24899 March
19, 1928
Facts: In February 1925, Bernardo Argente and his wife applied for a joint life insurance under the
respondent insurance. The couple was examined by the insurance company doctor (Doctor Sta. Ana). The
couple disclosed to the doctor that they never had any serious medical histories; In May 1925, the couple
were issued with the insurance policy. In November 1925, Vicenta died. West Coast Life denied the
subsequent insurance claim filed by Argente as it averred that the application made in June was attended
by fraud because the couple failed to disclose the fact that each of them were actually confined prior to
their application. Argente averred that if West Coast did have the right to rescind the insurance, it should
have done so prior to the filing of a suit involving the insurance claim.
ISSUE: W O N t h e a l l e g e d c o n c e a l m e n t w a s i m m a t e r i a l a n d insufficient to avoid the
policy?
HELD: The court held that the alleged concealment was not immaterial and insufficient to avoid the
policy. In an action on a life insurance policy where the evidence conclusively shows that the answers to
questions concerning diseases were untrue, the truth of falsity of the answers become the determining
factor. If the true facts been disclosed by the assured, the insurance would never have been granted.
Concealment must, in the absence of inquiries, be not only material, but fraudulent, or the fact must have
been intentionally withheld. If no inquiries are made and no fraud or design to conceal enters into the
concealment the contract is not avoided.
 45. EMILIO TAN, et.al.,vs.CA, philam life G.R. No. 48049 June 29, 1989
Facts: Tan Lee Siong, father of the petitioners, applied for life insurance in the amount of P 80,000.00
with Philamlife. It was approved. Tan Lee Siong died of hepatoma. Petitioners then filed a claim for the
proceeds. The company denied petitioners' claim and rescinded the policy by reason of the alleged
misrepresentation and concealment of material facts. The premiums paid on the policy were refunded.
The petitioners filed a complaint in the Insurance Commission. The latter dismissed the complaint.
Issue:
WON Philam didn’t have the right to rescind the contract of insurance as rescission must allegedly be
done during the lifetime of the insured within two years and prior to the commencement of action.
Held: No. Petition dismissed. After a policy of life insurance made payable on the death of the insured
shall have been in force during the lifetime of the insured for a period of two years from the date of its
issue or of its last reinstatement, the insurer cannot prove that the policy is void ab initio or is rescindable
by reason of the fraudulent concealment or misrepresentation of the insured or his agent.”
The so-called "incontestability clause" prevents the insurer from raising the defenses of false
representations insofar as health and previous diseases are concerned if the insurance has been in force for
at least two years during the insured's lifetime.
The policy was in force for a period of only one year and five months. Considering that the insured died
before the two-year period had lapsed, respondent company is not, therefore, barred from proving that the
policy is void ab initio by reason of the insured's fraudulent concealment or misrepresentation
47. K. S. YOUNG vs. THE MIDLAND TEXTILE INSURANCE COMPANY
G.R. No. L-9370             March 31, 1915
Facts: Young entered into contract of insurance with Midland, in which insurer promised to pay P3,000
incase residence and bodega and its contents should be destroyed by fire. One of the conditions
(WARRANTY B): During the pendency of this policy, no hazardousgoods be stored/kept for sale, and no
hazardous trade/process be carried on, in thebuilding to which this insurance applies, or in any building
connected therewith. Young places 3 boxes filled with fireworks in said residence and bodega. Building
was partially destroyed by fire. Young contends that they were not “stored” and placing them there does
not violate the contract.
Issue: Whether or not the placing of said fireworks in the building insured is a violation of the terms of
the contract of insurance.
Held: The deposit of the "hazardous goods," in the building insured, was a violation of the terms of
thecontract. Although the hazardous goods did not contribute to the loss, the insurer, at his election,
wasrelieved from liability Said deposit created a new risk, not included in the terms of the contract.
Theinsurer had neither been paid, nor had he entered into a contract, to cover the increased risk.
The terms of the contract constitute the measure of theinsurer's liability. If the contract has been
terminated, by a violation of its terms on the part of theinsured, there can be no recovery. Compliance
with the terms of the contract is a condition precedent tothe right of recovery.
48. QUA CHEE GAN vs. LAW UNION AND ROCK INSURANCE CO., LTD G.R. No. L-4611
December 17, 1955
Facts: Qua Chee Gan, a merchant, owned 4 warehouses in Albay which were used for the storage or
copra and hemp in which the appelle deals with exclusively. The warehouses together with the contents
were insured with Law Union since 1937 and the loss made payable to PNB as mortgagee of the hemp
and copra. A fire of undetermined cause broke out. Bodegas including the merchandise stored were
destroyed completely. Insured then informed insurer of the unfortunate event and submitted the
corresponding fire claims, which were later reduced to P370T. Insurer refused to pay claiming violations
of the warranties and conditions, filing of fraudulent claims and that the fire had been deliberately caused
by the insured. Insured filed an action before CFI which rendered a decision in favor of the insured.
Issue: Whether or not the policies should be avoided for the reason that there was a breach of warranty.
Held: Under the Memorandum of Warranty, there should be no less than 1 hydrant for each 150 feet of
external wall measurements of the compound, and since bodegas insured had an external wall per meter
of 1640 feet, the insured should have 11 hydrants in the compound. But he only had 2. Taking into
account the well-known rule that ambiguities or obscurities must strictly be interpreted against the party
that cause them, the memorandum of warranty invoked by the insurer bars the latter from questioning the
existence of the appliances called for, since its initial expression “the undernoted appliances for the
extinction of fire being kept on the premises insured hereby..” admits of the interpretation as an admission
of the existence of such appliances which insurer cannot now contradict, should the parole evidence
apply.
49. ALPHA INSURANCE AND SURETY CO. vs ARSENIA SONIA CASTOR G.R. No. 198174
September 2, 2013
Facts: respondent entered into a contract of insurance with petitioner, involving her motor vehicle, a
Toyota Revo. The contract of insurance obligates the petitioner to pay the respondent in case of loss or
damage to said vehicle during the period covered. Respondent instructed her driver to bring the above-
described vehicle to a nearby auto-shop for a tune-up. However, Jose Lanuza no longer returned the motor vehicle
to respondent. Respondent promptly reported the incident to the police and concomitantly notified petitioner of
the said loss and demanded payment of the insurance proceeds. Petitioner denied the insurance claim of
respondent, stating that on the provision of the Policy, “the company shall not be liable for Any malicious
damage caused by the Insured, any member of his family or by "A PERSON IN THE INSURED’S
SERVICE.” Respondent filed a claim for sum of money and damages with the RTC. RTC rendered a
decision in favor of respondent, CA affirmed.
ISSUE: Whether or not the loss of respondent’s vehicle is excluded under the insurance policy.
RULING: No. Based on the evidence as can be seen in the said policy, the insurance company, subject to the limits of liability, is
obligated to indemnify the insured against theft. Said provision does not qualify as to who would commit the
theft. Thus, even if the same is committed by the driver of the insured, there being no categorical declaration of exception,
the same must be covered.  Accordingly, in interpreting the exclusions in an insurance contract, the terms used specifying the
excluded classes therein are to be given their meaning as understood in common speech. "malicious damage," as provided for in the
subject policy as one of the exceptions from coverage, is the damage that is the direct result from the deliberate or willful act of the
insured, members of his family, and any person in the insured’s service, whose clear plan or purpose was to cause damage to the
insured vehicle for purposes of defrauding the insurer. However, when the terms of the insurance policy are
ambiguous, equivocal or uncertain, such that the parties themselves disagree about the meaning of
particular provisions, the policy will be construed by the courts liberally in favor of the assured and
strictly against the insurer. Lastly, a contract of insurance is a contract of adhesion. So, when the terms of the insurance contract
contain limitations on liability, courts should construe them in such a way as to preclude the insurer from
non-compliance with his obligation.