RAFAEL ENRIQUEZ vs.

SUN LIFE ASSURANCE COMPANY OF CANADA

FACTS:
On September 24, 1917, Joaquin Herrer made application to the Sun Life Assurance
Company of Canada through its office in Manila for a life annuity. Two days later he paid
the sum of P6,000 to the manager of the company's Manila office and was given a
provisional receipt.
The application was forwarded to the head office of the company at Montreal, Canada
and on November 26, 1917 a notice of acceptance was sent by cable to Manila. (There
is no evidence however, whether on the same day the cable was received notice was
sent by the Manila office of Herrer that the application had been accepted)
On December 4, 1917, the policy was issued. On December 18, 1917, Herrer
communicated his desire to withdraw his application through his lawyer. The local office
replied to Mr. Torres, stating that the policy had been issued, and called attention to the
notification of November 26, 1917. The reply was received by Herrer's council a day after
the latter died.
Plaintiff ad administrator of the estate of the late Joaquin Ma. Herrer to recover from the
defendant life insurance company the sum of pesos 6,000 paid by the deceased for a life
annuity. The trial court gave judgment for the defendant.
ISSUE:
Whether or not the insurance contract between Sun Life and Herrer has been perfected
RULING:
No, the contract for a life annuity in the case at bar was not perfected because it has 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. Only the mailing of acceptance, it has been said,
completes the contract of insurance, as the locus poenitentiae is ended when the
acceptance has passed beyond the control of the party.
An acceptance made by letter shall not bind the person making the offer except
from the time it came to his knowledge (Civil Code Art. 1262).
When a letter or other mail matter is addressed and mailed with postage prepaid there is
a rebuttable presumption of fact that it was received by the addressee as soon as it could
have been transmitted to him in the ordinary course of the mails. But if any one of these
elemental facts fails to appear, it is fatal to the presumption. A letter will not be presumed
to have been received by the addressee unless it is shown that it was deposited in the
post-office, properly addressed and stamped.
 GREPALIFE v. CA (1999)
Facts:

- A contract of group life insurance was executed between Great Pacific Life
Assurance Corporation (Grepalife) and Development Bank of the Philippines
(DBP). Grepalife agreed to insure the lives of eligible housing loan mortgagors
of DBP.
- Dr. Wilfredo Leuterio, a physician and a housing debtor of DBP applied for
membership in the group life insurance plan. In an application form, Dr. Leuterio
answered questions concerning his health condition. He stated that he was in
good health.
- Subsequently, Grepalife approved Dr. LEUTERIO’s application and issued
Certificate No. B-18558, as insurance coverage of Dr. Leuterio, to the extent of
his DBP mortgage indebtedness.
- Thereafter, Dr. LEUTERIO died due to “massive cerebral hemorrhage.”
Consequently, DBP submitted a death claim to Grepalife. Grepalife denied the
claim alleging that Dr. Leuterio was not physically healthy when he applied for
an insurance coverage.
- Grepalife insisted that Dr. Leuterio did not disclose he had been suffering from
hypertension, which caused his death. Allegedly, such non-disclosure
constituted concealment that justified the denial of the claim.
- Then the widow of the late Dr. Leuterio filed a complaint with the Regional Trial
Court of Misamis Oriental against Grepalife for “Specific Performance with
Damages
- Trial court ruled in favour of the widow.
- CA affirmed. Thus the petition
Issue:
1. Whether the CA erred in holding Grepalife liable to DBP as beneficiary in a
group life insurance contract from a complaint filed by the widow of the
decedent/mortgagor? YES
2. Whether the Court of Appeals erred in not finding that Dr. Leuterio concealed
that he had hypertension, which would vitiate the insurance contract? NO
3. Whether the Court of Appeals erred in holding Grepalife liable in the amount
of eighty six thousand, two hundred (P86,200.00) pesos without proof of the
actual outstanding mortgage payable by the mortgagor to DBP. -YES
Held:
WHEREFORE, the petition is hereby DENIED. The Decision and Resolution of the
Court of Appeals in is AFFIRMED with MODIFICATION that Grepalife is ORDERED to
pay the insurance proceeds.
Ratio:
1) Yes. The rationale of a group insurance policy of mortgagors, otherwise known as the
“mortgage redemption insurance,” is a device for the protection of both the mortgagee
and the mortgagor. On the part of the mortgagee, it has to enter into such form of
contract so that in the event of the unexpected demise of the mortgagor during the
subsistence of the mortgage contract, the proceeds from such insurance will be applied
to the payment of the mortgage debt, thereby relieving the heirs of the mortgagor from
paying the obligation. In a similar vein, ample protection is given to the mortgagor under
such a concept so that in the event of death; the mortgage obligation will be
extinguished by the application of the insurance proceeds to the mortgage
indebtedness. Consequently, where the mortgagor pays the insurance premium under
the group insurance policy, making the loss payable to the mortgagee, the insurance is
on the mortgagor’s interest, and the mortgagor continues to be a party to the
contract. In this type of policy insurance, the mortgagee is simply an appointee of the
insurance fund, such loss-payable clause does not make the mortgagee a party to the
contract.
Section 8 of the Insurance Code provides:

“Unless the policy provides, where a mortgagor of property effects insurance in his own
name providing that the loss shall be payable to the mortgagee, or assigns a policy of
insurance to a mortgagee, the insurance is deemed to be upon the interest of the
mortgagor, who does not cease to be a party to the original contract, and any act of his,
prior to the loss, which would otherwise avoid the insurance, will have the same effect,
although the property is in the hands of the mortgagee, but any act which, under the
contract of insurance, is to be performed by the mortgagor, may be performed by the
mortgagee therein named, with the same effect as if it had been performed by the
mortgagor.”

The insured, Dr. Leuterio did not cede to the mortgagee all his rights or interests in
the insurance, the policy stating that: “In the event of the debtor’s death before his
indebtedness with the Creditor [DBP] shall have been fully paid, an amount to pay the
outstanding indebtedness shall first be paid to the creditor and the balance of sum
assured, if there is any, shall then be paid to the beneficiary/ies designated by the
debtor.” When DBP submitted the insurance claim against Grepalife, the latter denied
payment thereof, interposing the defense of concealment committed by the
insured. Thereafter, DBP collected the debt from the mortgagor and took the necessary
action of foreclosure on the residential lot of Leuterio. In Gonzales La O vs. Yek Tong
Lin Fire & Marine Ins. Co. we held:
“Insured, being the person with whom the contract was made, is
primarily the proper person to bring suit thereon. * * * Subject to some
exceptions, insured may thus sue, although the policy is taken wholly
or in part for the benefit of another person named or unnamed, and
although it is expressly made payable to another as his interest may
appear or otherwise. * * * Although a policy issued to a mortgagor is
taken out for the benefit of the mortgagee and is made payable to him,
 yet the mortgagor may sue thereon in his own name, especially where
the mortgagee’s interest is less than the full amount recoverable under
the policy, * * *.

Moreover, the ‘Insured may be regarded as the real party in interest, although
he has assigned the policy for the purpose of collection, or has assigned as
collateral security any judgment he may obtain.”

And since a policy of insurance upon life or health may pass by transfer, will or
succession to any person, whether he has an insurable interest or not, and such person
may recover it whatever the insured might have recovered, the widow of the decedent
Dr. Leuterio may file the suit against the insurer, Grepalife.

2) No. Concealment exists where the assured had knowledge of a fact material to the
risk, and with honesty, good faith and fair dealing requires that he should communicate
it to the assured, but he designedly and intentionally withheld the same.

The fraudulent intent on the part of the insured need be established to entitle the
insurers to rescind the contract. Misrepresentation as the defense of the insurer to avoid
liability is an affirmative defense and the duty to establish such defense by satisfactory
and convincing evidence rests upon the insurer. In the case at bar, the petitioner failed
to clearly and satisfactorily establish its defense, and is therefore liable to pay the
proceeds of the insurance.

3) Yes. A life insurance is a valued policy. Unless the interest of a person insured is
susceptible of exact pecuniary measurement, the measure of indemnity under a policy
of insurance upon life or death is the sum fixed in the policy.
 Development Bank of the Philippines v CA
231 SCRA 370
March 21, 1994
Facts:

Juan B. Dans, together with his family applied for a loan of P500,000 with DBP. As
principal mortgagor, Dans, then 76 years of age was advised by DBP to obtain
a mortgage redemption insurance (MRI) with DBP MRI pool. A loan in the reduced
amount was approved and released by DBP. From the proceeds of the loan, DBP
deducted the payment for the MRI premium. The MRI premium of Dans, less the DBP
service fee of 10%, was credited by DBP to the savings account of DBP MRI-Pool.
Accordingly, the DBP MRI Pool was advised of the credit.

Dans died of cardiac arrest. DBP MRI Pool notified DBP that Dans was not eligible for
MRI coverage, being over the acceptance age limit of 60 years at the time of application.
DBP apprised Candida Dans of the disapproval of her late husband’s MRI application.
DBP offered to refund the premium which the deceased had paid, but Candida Dans
refused to accept the same demandingpayment of the face value of the MRI or an amount
equivalent of the loan. She, likewise, refused to accept an ex gratia settlement which DBP
later offered. Hence the case at bar.

Issue:
Whether or not the DBP MRI Pool should be held liable on the ground that the contract
was already perfected?

Held:
No, it is not liable. The power to approve MRI application is lodged with the DBP MRI
Pool. The pool, however, did not approve the application. There is also no showing that
it accepted the sum which DBP credited to its account with full knowledge that it
was payment for the premium. There was as a result no perfected contract of insurance’
hence the DBP MRI Pool cannot be held liable on a contract that does not exist

In dealing with Dans, DBP was wearing 2 legal hats: the first as a lender and the second
as an insurance agent. As an insurance agent, DBP made Dans go through the motion
of applying for said insurance, thereby leading him and his family to believe that they had
already fulfilled all the requirements for the MRI and that the issuance of their policy was
forthcoming. DBP had full knowledge that the application was never going to be approved.
The DBP is not authorized to accept applications for MRI when its clients are more than
60 years of age. Knowing all the while that Dans was ineligible, DBP exceeded the scope
of its authority when it accepted the application for MRI by collecting the
insurance premium and deducting its agent’s commission and service fee. Since the third
person dealing with an agent is unaware of the limits of the authority conferred by the
principal on the agent and he has been deceived by the non-disclosure thereof by the
agent, then the latter is liable for damages to him.
 FILIPINO MERCHANTS INSURANCE CO., Inc. v. CA
GR No. 85141 Nov. 28, 1989 Second Division [Regalado]
Nature: Petition for review on certiorari challenging a CA decision finding FilMerchant
liable to pay plaintiff. (PRIVATE RESPO CHOA TIEK SENG)
Facts:
This is a story about a consignee/buyer who bought fishmeal products from Bangkok and
had it delivered to the port of Manila. He entered into an insurance contract with defendant
insurance company (FilMerchant) under policy no. M-2678 for P267,653.59 and for goods
described as 600 metric tons of fishmeal in new gunny bags of 90 kilos each. What was
actually imported was 59.940mtons in 666 gunny bags. Upon arrival at Manila, arrastre
and defendant’s surveyor found 227 bags in bad order condition. Because of this loss,
buyer formally claimed from FilMerchant but the said insurance company refused to pay.
He brought suit.

Trial court ruled for him and against FilMerchant, CA affirmed trial court hence this
petition.

FilMerchant argues:
(1) CA erred in the interpretation and application of the “all risk” clause of maritime
insurance policy. It says it should not be held liable for partial loss notwithstanding the
clear absence of proof of some fortuitous event, casualty, or accidental cause to which
the loss is attributable.
(2) Respondent had no insurable interest in the subject cargo. The shipment reveals that
it is a “C & F” contract of shipment. The seller, not the consignee, paid for the shipment.
As there was yet no delivery to the consignee, ownership (and interest) does not yet pass
to him.

Issues:
a) W/N CA was correct in its interpretation of the “all risk” clause in the
maritime insurance contract.
b) W/N the insured had insurable interest over the property insured.
Ruling:
a) “All risks policy” has no technical meaning.
The clause in question reproduced:
“5. This insurance is against all risks of loss or damage to the subject-matter
 insured but shall in no case be deemed to extend to cover loss, damage, or
expense proximately caused by delay or inherent vice or nature of the
subject-matter insured. Claims recoverable hereunder shall be payable
irrespective of percentage “
An "all risks policy" should be read literally as meaning all risks whatsoever and covering
all losses by an accidental cause of any kind. The very nature of the term "all risks" must
be given a broad and comprehensive meaning as covering any loss other than a willful
and fraudulent act of the insured. 7 This is pursuant to the very purpose of an "all risks"
insurance to give protection to the insured in those cases where difficulties of logical
explanation or some mystery surround the loss or damage to property.
Burden of proof shifts to the insurer.
Generally, the burden of proof is upon the insured to show that a loss arose from a
covered peril, but under an "all risks" policy the burden is not on the insured to prove the
precise cause of loss or damage for which it seeks compensation. The insured under an
"all risks insurance policy" has the initial burden of proving that the cargo was in good
condition when the policy attached and that the cargo was damaged when unloaded from
the vessel; thereafter, the burden then shifts to the insurer to show the exception to the
coverage.
b) Vendee/Consignee has insurable interest
SC: The shipment contract being that of cost and freight (C&F) is immaterial in the
determination of insurable interest. The perfected contract of sale vests in the
vendee an equitable title, an interest sufficient enough to be insurable. Further,
Art. 1523 NCC provides that where, in pursuance of a contract of sale, the
seller is authorized or required to send the goods to the buyer, delivery of
the goods to a carrier, whether named by the buyer or not, for, the purpose
of transmission to the buyer is deemed to be a delivery of the goods to the
buyer, the exceptions to said rule not obtaining in the present case.
The Court has heretofore ruled that the delivery of the goods on board the carrying
vessels partake of the nature of actual delivery since, from that time, the foreign
buyers assumed the risks of loss of the goods and paid the insurance premium
covering them.
WHEREFORE, the instant petition is DENIED and the assailed decision of the
respondent Court of Appeals is AFFIRMED in toto.
Ang Giok Chip v. Author: KC
Springfield http://www.lawphil.net/judjuris/juri1931/dec1931/gr_l-
G.R. No. L-33637 33637_1931.html
December 31, 1931
Topic: The Policy
Ponente: MALCOLM, J
1. Ang Giok Chip doing business under the name and style of Hua Bee Kong Si owns
a warehouse situated in the City of Manila.

2. One insurance policy, in the amount of P10,000, was taken out with the Springfield
Fire & Marine Insurance Company. The warehouse was destroyed by fire on
January 11, 1928, while the policy issued by the latter company was in force.

3. Plaintiff instituted action against the defendant to recover a proportional part of the
loss coming to P8,170.59.

4. The Insurance Company raised as a defense the violation of warranty F, that no

hazardous goods be stored in the Building or that the Insured be permitted to stored
a small quantity of the hazardous but not exceeding in all 3 per cent of the total
value of the goods. However, they claimed that hazardous goods reached as high
as 39 %.

5. Trial judge gave judgment in favor of plaintiff in the sum of P8,1888.74. Thus, the
insurance company appealed.
ISSUE:
1. Whether a warranty referred to in the policy as forming part of the contract of
insurance and in the form of a rider to the insurance policy, is null and void because
not complying with the Philippine Insurance Act.
HELD:
1. NO. Warranty F, a rider attached to the face of the insurance policy, is valid and
sufficient under section 65 of the Insurance Act.
RATIO:
1. Section 65 of the Insurance Act and its counterpart, section 265 of the Civil Code
of California states:
 "Every express warranty, made at or before the execution of a policy, must be
contained in the policy itself, or in another instrument signed by the insured
and referred to in the policy, as making a part of it.

2. "Another instrument," "instrument" does not mean a mere slip of paper like a
rider, but something akin to the policy itself, which in section 48 of the Insurance
Act is defined as "The written instrument, in which a contract of insurance is set
forth."

3. Warranty F, is contained in the policy itself, because by the contract of insurance

agreed to by the parties it is made to form a part of the same, but is not another
instrument signed by the insured and referred to in the policy as forming a part of it.
 4. The receipt of the policy by the insured without objection binds both the acceptor
and the insured to the terms thereof. Therefore, it will not be a valid excuse to say
that he did not read the policy or know its terms, since it is his duty to do and
presumed to do so.

5. In California Jurisprudence, vol. 14, p. 427, where the holder of a policy discovers
any mistake, a local agent attaching the wrong rider to his application, and did not
raise this error. In effect, he accepts the policy.

6. Accordingly, the judgment appealed from is reversed and the dismissal of the
complaint is ordered.
DOCTRINE:

1. Every express warranty, made at or before the execution of a policy, must be

contained in the policy itself, or in another instrument signed by the insured and
referred to in the policy, as making a part of it.

2. The receipt of this policy by the insured without objection binds both the acceptor
and the insured to the terms thereof.
 MALAYAN INSURANCE CO., INC. (MICO), petitioner,
vs.
GREGORIA CRUZ ARNALDO, in her capacity as the INSURANCE
COMMISSIONER, and CORONACION PINCA, respondents.
G.R. No. L-67835 October 12, 1987

FACTS:
 June 7, 1981: Malayan insurance co., inc. (MICO) issued to Coronacion Pinca, Fire
Insurance Policy for her property effective July 22, 1981, until July 22, 1982
 October 15,1981: MICO allegedly cancelled the policy for non-payment, of the
premium and sent the corresponding notice to Pinca
 December 24, 1981: payment of the premium for Pinca was received by Domingo
Adora, agent of MICO
 January 15, 1982: Adora remitted this payment to MICO,together with other payments
 January 18, 1982: Pinca's property was completely burned
 February 5, 1982: Pinca's payment was returned by MICO to Adora on the ground that
her policy had been cancelled earlier but Adora refused to accept it and instead
demanded for payment
 Under Section 416 of the Insurance Code, the period for appeal is thirty days from
notice of the decision of the Insurance Commission.
The petitioner filed its motion for reconsideration on April 25, 1981, or fifteen days
after such notice, and the reglementary period began to run again after June 13, 1981,
date of its receipt of notice of the denial of the said motion for reconsideration. As the
herein petition was filed on July 2, 1981, or nineteen days later, there is no question
that it is tardy by four days.
 Insurance Commission: favored Pinca
 MICO appealed

ISSUED: WAS THERE A VALID CANCELLATION OF THE POLICY?

RULING: PETITION DENIED. INSURANCE COMMISIONER’S DECISION AFFIRMED.

RATIO: SC sustained the decision of the commissioner. There was no valid cancellation
of the policy. After the policy has become effective, it could be cancelled on any of the
supervening grounds enumerated in Sec. 64 provided the cancellation was made in
accordance therewith and with Sec. 65.

A valid cancellation must, therefore, require concurrence of the following

conditions:
(1) There must be prior notice of cancellation to the insured (Sec.64);
(2) The notice must be based on the occurrence, after the effective date of the policy, of
one or more of the grounds mentioned (Sec.64);
(3) The notice must be
(a) in writing, (b) mailed, or delivered to the named insured,
(c) at the address shown in the policy (Sec.65);

(4) It must state

(a) which of the grounds mentioned in Section 64 is relied upon and
(b) that upon written request of the insured, the insurer will furnish the facts on
which the cancellation is based (Sec.65).

Considering the strict language of Section 64 that no insurance policy shall be

cancelled except upon prior notice, it behooved MICO's to make sure that the
cancellation was actually sent to and received by the insured.

MICO cannot present concrete evidence that it complied with the requisites. Even its
agent Adora had not been informed of the cancellation either and saw no reason not to
accept the said payment.

The presumption of regularity and due performance of duty is unavailing against the
positive duty enjoined Section 64 upon MICO and the flat denial made by Pinca that she
had received notice of the claimed cancellation, who otherwise would have not paid the
premium thereof instead request for a new policy effective on that date of payment.

The Court finds that if she did pay on that date, it was because she honestly believed that
the policy issued on June 7, 1981, was still in effect and she was willing to make her
payment retroact to July 22, 1981, its stipulated commencement date.