Enriquez v. Sun Life Assurance Co.

of Canada
G.R. No. L-15895, 29 November 1920, 41 Phil. 269

FACTS:
On Sept. 24 1917, Herrer made an application to SunLife through its office in Manila for life annuity. Two
(2) days later, he paid the sum of 6T to the company’s manager in its Manila office and was given a receipt.
On Nov. 26, 1917, the head office gave notice of acceptance by cable to Manila. On the same date, the
Manila office prepared a letter notifying Herrer that his application has been accepted and this was placed in the
ordinary channels of transmission, but as far as known was never actually mailed and never received by Herrer.
Herrer died on Dec. 20, 1917. The plaintiff as administrator of Herrer’s estate brought this action to recover the 6T
paid by the deceased.

ISSUES:
Whether or not the insurance contract was perfected.

HELD:
NO. The contract for life annuity was NOT perfected because it had NOT been proved satisfactorily that
the acceptance of the application ever came to the knowledge of the applicant. An acceptance of an offer of
insurance NOT actually or constructively communicated to the proposer does NOT make a contract of insurane, as
the locus poenitentiae is ended when an acceptance has passed beyond the control of the party.
Great Pacific v CA G.R. No. L-31845 April 30, 1979
J. De Castro

Facts:
Ngo Hing filed an application with the Great Pacific for a twenty-year endowment policy in the amount of
P50,000.00 on the life of his one-year old daughter Helen. He supplied the essential data which petitioner
Mondragon, the Branch Manager, wrote on the form. The latter paid the annual premium the sum of P1,077.75
going over to the Company, but he retained the amount of P1,317.00 as his commission for being a duly authorized
agent of Pacific Life.
Upon the payment of the insurance premium, the binding deposit receipt was issued Ngo Hing. Likewise,
petitioner Mondragon handwrote at the bottom of the back page of the application form his strong recommendation
for the approval of the insurance application. Then Mondragon received a letter from Pacific Life disapproving the
insurance application. The letter stated that the said life insurance application for 20-year endowment plan is not
available for minors below seven years old, but Pacific Life can consider the same under the Juvenile Triple Action
Plan, and advised that if the offer is acceptable, the Juvenile Non-Medical Declaration be sent to the company.
The non-acceptance of the insurance plan by Pacific Life was allegedly not communicated by petitioner
Mondragon to private respondent Ngo Hing. Instead, on May 6, 1957, Mondragon wrote back Pacific Life
again strongly recommending the approval of the 20-year endowment insurance plan to children, pointing out that
since the customers were asking for such coverage.
Helen Go died of influenza. Ngo Hing sought the payment of the proceeds of the insurance, but having
failed in his effort, he filed the action for the recovery before the Court of First Instance of Cebu, which ruled
against him.

Issues:
1. Whether the binding deposit receipt constituted a temporary contract of the life insurance in question
2. Whether Ngo Hing concealed the state of health and physical condition of Helen Go, which rendered void the
policy

Held:  No. Yes. Petition dismissed.

Ratio:
The receipt was intended to be merely a provisional insurance contract. Its perfection was subject to
compliance of the following conditions: (1) that the company shall be satisfied that the applicant was insurable on
standard rates; (2) that if the company does not accept the application and offers to issue a policy for a different
plan, the insurance contract shall not be binding until the applicant accepts the policy offered; otherwise, the
deposit shall be refunded; and (3) that if the company disapproves the application, the insurance applied for shall
not be in force at any time, and the premium paid shall be returned to the applicant.
The receipt is merely an acknowledgment that the latter's branch office had received from the applicant the
insurance premium and had accepted the application subject for processing by the insurance company. There was
still approval or rejection the same on the basis of whether or not the applicant is "insurable on standard rates."
Since Pacific Life disapproved the insurance application of respondent Ngo Hing, the binding deposit receipt in
question had never become in force at any time. The binding deposit receipt is conditional and does not insure
outright. This was held in Lim v Sun.
The deposit paid by private respondent shall have to be refunded by Pacific Life.

2.  Ngo Hing had deliberately concealed the state of health of his daughter Helen Go. When he supplied data, he
was fully aware that his one-year old daughter is typically a mongoloid child. He withheld the fact material to the
risk insured.
“The contract of insurance is one of perfect good faith uberrima fides meaning good faith, absolute and
perfect candor or openness and honesty; the absence of any concealment or demotion, however slight.”
The concealment entitles the insurer to rescind the contract of insurance.
Insurance Case Digest: Cha V. CA (1997)

G.R. No. 124520  August 18, 1997

Lessons Applicable: Effect of Lack of Insurable Interest (Insurance)

Laws Applicable: Sec. 17, Sec. 18, Sec. 25 of the Insurance Code

FACTS:
Spouses Nilo Cha and Stella Uy-Cha and CKS Development Corporation entered a 1 year lease contract
with a stipulation not to insure against fire the chattels, merchandise, textiles, goods and effects placed at any stall
or store or space in the leased premises without first obtaining the written consent and approval of the lessor.  But it
insured against loss by fire their merchandise inside the leased premises for P500,000 with the United Insurance
Co., Inc. without the written consent of CKS
On the day the lease contract was to expire, fire broke out inside the leased premises and CKS learning that
the spouses procured an insurance wrote to United to have the proceeds be paid directly to them. But United
refused so CKS filed against Spouses Cha and United.
RTC: United to pay CKS the amount of P335,063.11 and Spouses Cha to pay P50,000 as exemplary
damages, P20,000 as attorney’s fees and costs of suit
CA: deleted exemplary damages and attorney’s fees

ISSUE: W/N the CKS has insurable interest because the spouses Cha violated the stipulation

HELD: NO. CA set aside. Awarding the proceeds to spouses Cha.

Sec. 18.  No contract or policy of insurance on property shall be enforceable except for the benefit of some
person having an insurable interest in the property insured
A non-life insurance policy such as the fire insurance policy taken by petitioner-spouses over their
merchandise is primarily a contract of indemnity.  Insurable interest in the property insured must exist a t the time
the insurance takes effect and at the time the loss occurs.  The basis of such requirement of insurable interest in
property insured is based on sound public policy: to prevent a person from taking out an insurance policy on
property upon which he has no insurable interest and collecting the proceeds of said policy in case of loss of the
property.  In such a case, the contract of insurance is a mere wager which is void under Section 25 of the Insurance
Code.
SECTION 25.  Every stipulation in a policy of Insurance for the payment of loss, whether the person
insured has or has not any interest in the property insured, or that the policy shall be received as proof of such
interest, and every policy executed by way of gaming or wagering, is void
Section 17.  The measure of an insurable interest in property is the extent to which the insured might be
damnified by loss of injury thereof
The automatic assignment of the policy to CKS under the provision of the lease contract previously quoted
is void for being contrary to law and/or public policy.  The proceeds of the fire insurance policy thus rightfully
belong to the spouses.  The liability of the Cha spouses to CKS for violating their lease contract in that Cha spouses
obtained a fire insurance policy over their own merchandise, without the consent of CKS, is a separate and distinct
issue which we do not resolve in this case.
Geagonia v CA G.R. No. 114427
Geagonia v CA G.R. No. 114427 February 6, 1995
 
Facts:
  Geagonia, owner of a store, obtained from Country Bankers fire insurance policy for P100,000.00. The 1 year policy
and covered thestock trading of dry goods. The policy noted the requirement that "3. The insured shall give notice to the
Company of any insurance or insurances already effected, or which may subsequently be effected, covering any of the
property or properties consisting of stocks in trade, goods in process and/or inventories only hereby insured, and unless notice
be given and the particulars of such insurance or insurances be stated therein or endorsed in this policy pursuant to Section 50
of the Insurance Code, by or on behalf of the Company before the occurrence of any loss or damage, all benefits under this
policy shall be deemed forfeited, provided however, that this condition shall not apply when the total insurance or insurances
in force at the time of the loss or damage is not more than P200,000.00." The petitioners’ stocks were destroyed by fire. He
then filed a claim which was subsequently denied because the petitioner’s stocks were covered by two other fire insurance
policies for Php 200,000 issued by PFIC.
The basis of the private respondent's denial was the petitioner's alleged violation of Condition 3 of the policy.
Geagonia then filed a complaint against the private respondent in the Insurance Commission for the recovery of P100,000.00
under fire insurance policy and damages. He claimed that he knew the existence of the other two policies. But, he said that he
had no knowledge of the provision in the private respondent's policy requiring him to inform it of the prior policies and this
requirement was not mentioned to him by the private respondent's agent.
The Insurance Commission found that the petitioner did not violate Condition 3 as he had no knowledge of the
existence of the two fire insurance policies obtained from the PFIC; that it was Cebu Tesing Textiles w/c procured the PFIC
policies w/o informing him or securing his consent; and that Cebu Tesing Textile, as his creditor, had insurable interest on the
stocks. The Insurance Commission then ordered the respondent company to pay complainant the sum of P100,000.00 with
interest and attorney’s fees. CA reversed the decision of the Insurance Commission because it found that the petitioner knew
of the existence of the two other policies issued by the PFIC.
 
Issues:
1. WON the petitioner had not disclosed the two insurance policies when he obtained the fire insurance and thereby violated
Condition 3 of the policy.
2. WON he is prohibited from recovering
 
Held: Yes. No. Petition Granted
 
Ratio:
1. The court agreed with the CA that the petitioner knew of the prior policies issued by the PFIC. His letter of 18
January 1991 to the private respondent conclusively proves this knowledge. His testimony to the contrary before the
Insurance Commissioner and which the latter relied upon cannot prevail over a written admission made ante litem motam. It
was, indeed, incredible that he did not know about the prior policies since these policies were not new or original.
  2. Stated differently, provisions, conditions or exceptions in policies which tend to work a forfeiture of insurance
policies should be construed most strictly against those for whose benefits they are inserted, and most favorably toward those
against whom they are intended to operate. With these principles in mind, Condition 3 of the subject policy is not totally free
from ambiguity and must be meticulously analyzed. Such analysis leads us to conclude that (a) the prohibition applies only to
double insurance, and (b) the nullity of the policy shall only be to the extent exceeding P200,000.00 of the total policies
obtained.
Furthermore, by stating within Condition 3 itself that such condition shall not apply if the total insurance in force at
the time of loss does not exceed P200,000.00, the private respondent was amenable to assume a co-insurer's liability up to a
loss not exceeding P200,000.00. What it had in mind was to discourage over-insurance. Indeed, the rationale behind the
incorporation of "other insurance" clause in fire policies is to prevent over-insurance and thus avert the perpetration of fraud.
When a property owner obtains insurance policies from two or more insurers in a total amount that exceeds the property's
value, the insured may have an inducement to destroy the property for the purpose of collecting the insurance. The public as
well as the insurer is interested in preventing a situation in which a fire would be profitable to the insured.
RCBC vs CA
GR Nos. 128833, 128834, 128866, 20 April 1998
289 SCRA 292

FACTS
            GOYU was granted credit facilities and accommodations by the RCBC initially in the amount of P 30
million. Upon GOYU’s application, the credit was increased to P50 Million, then P90 Million, then P117 Million.
As security, GOYU executed 2 REM and 2 CM in favor of RCBC, which were registered with the RD. Under the 4
contracts, GOYU committed itself to insure the mortgaged properties with an insurance company approved by
RCBC, and subsequently endorse and deliver the insurance policies to RCBC. GOYU then obtained 10 policies
from MICO. GOYU’s buildings were gutted by fire and it claimed indemnity from MICO but the latter denied the
claim on the ground that the insurance policies were either attached pursuant to writs of attachments/garnishments
issued by various courts or that the proceeds were also claimed by other creditors of GOYU. GOYU, alleging
better rights to the proceeds, filed for specific performance and damges before the RTC of Manila Br 3.
The trial court ruled in favor of GOYU for the fire loss claims but ordered it to pay RCBC its loan
obligations. On appeal to the CA, it affirmed the ruling with regard to the liabilities of MICO and RCBC. The trial
court and appellate courts both held that, since the endorsements do not bear the signature of any officer of GOYU,
they concluded that the endorsements are defective. The CA then ordered GOYU to pay its obligation to RCBC
without any interest, surcharges and penalties.

ISSUE
            Whether or not the ruling of the appellate court is correct.

HELD
The Court held in the negative. The essence or rationale for the payment of interest or cost of money is
separate and distinct  from that of surcharges and penalties. The charging of interest for loans forms a very
essential and fundamental element of the banking business.
Insurance Case Digest: Gaisano Cagayan, Inc. V. Insurance Company Of North America (2006)
G.R. No. 147839             June 8, 2006
Lessons Applicable: Existing Interest (Insurance)
Laws Applicable: Article 1504,Article 1263, Article 2207 of the Civil Code, Section 13 of Insurance Code

FACTS:
Intercapitol Marketing Corporation (IMC) is the maker of Wrangler Blue Jeans. while Levi Strauss (Phils.)
Inc. (LSPI) is the local distributor of products bearing trademarks owned by Levi Strauss & Co
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
February 25, 1991: Gaisano Superstore Complex in Cagayan de Oro City, owned by Gaisano Cagayan,
Inc., containing the ready-made clothing materials sold and delivered by IMC and LSPI was consumed by fire. 
February 4, 1992: Insurance Company of North America filed a complaint for damages against Gaisano Cagayan,
Inc. alleges that IMC and LSPI filed their claims under their respective fire insurance policies which it paid thus it
was subrogated to their rights
Gaisano Cagayan, Inc: not be held liable because it was destroyed due to fortuities event or force majeure
RTC: IMC and LSPI retained ownership of the delivered goods until fully paid, it must bear the loss (res perit
domino)
CA: Reversed - sales invoices is an exception under Article 1504 (1) of the Civil Code to res perit domino

ISSUE:
W/N Insurance Company of North America can claim against Gaisano Cagayan for the debt that was
isnured

HELD:
YES. petition is partly GRANTED. order to pay P535,613 is DELETED
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
ART. 1504. Unless otherwise agreed, the goods remain at the seller's risk until the ownership therein is
transferred to the buyer, 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, except that:

(1) Where delivery of the goods has been made to the buyer or to a bailee for the buyer, 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 are at the buyer's risk from the time of
such delivery;
IMC and LSPI did not lose complete interest over the goods. They have an insurable interest until full
payment of the value of the delivered goods. Unlike the civil law concept of res perit domino, where ownership is
the basis for consideration of who bears the risk of loss, in property insurance, one's interest is not determined by
concept of title, but whether insured has substantial economic interest in the property
Section 13 of our Insurance Code defines insurable interest as "every interest in property, whether real or
personal, or any relation thereto, or liability in respect thereof, of such nature that a contemplated peril might
directly damnify the insured." Parenthetically, under Section 14 of the same Code, an insurable interest in property
may consist in: (a) an existing interest; (b) an inchoate interest founded on existing interest; or (c) an expectancy,
coupled with an existing interest in that out of which the expectancy arises. 
Anyone has an insurable interest in property who derives a benefit from its existence or would suffer loss
from its destruction.
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
an insurable interest in property does not necessarily imply a property interest in, or a lien upon, or possession of,
the subject  matter of the insurance, and neither the title nor a beneficial interest is requisite to the existence of such
an interest.
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 - obligation is pecuniary in nature
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
Article 1263 of the Civil Code in an obligation to deliver a generic thing, the loss or destruction of anything
of the same kind does not extinguish  the obligation (Genus nunquan perit)
The subrogation receipt, by itself, is sufficient to establish not only the relationship of respondent as insurer
and IMC as the insured, but also the amount paid to settle the insurance claim
Art. 2207. If the plaintiff's property has been insured, 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, the insurance company
shall be subrogated to the rights of the insured against the wrongdoer or the person who has violated the contract. 
As to LSPI, no subrogation receipt was offered in evidence. 
Failure to substantiate the claim of subrogation is fatal to petitioner's case for recovery of the amount of
P535,613