1. Huenfeld & Co.
- Enemy Corporation
Facts:
Domestic Corp Christern, after payment of the premium, obtained from Filipinas, fire
policy for P100T covering merchandise contained in a building located in Binondo.
During the Japan occupation, the building and the insured merchandise were
burned. Christern submitted to Filipinas its claim.
Salvaged goods were sold and the total loss of Christern was P92T.
Filipinas denied liability on the ground that Christern was an enemy corporation and
cannot be insured.
Issue:
Whether or not Filipinas is liable to Christern, Huenfeld & Co.
Held:
NO.
Majority of the stockholders of Christern were German subjects. This being so, SC
ruled that said corporation became an enemy corporation upon the war between the
US and Germany. The Phil Insurance Law in Sec. 8 provides that anyone except a
public enemy may be insured. It stands to reason that an insurance policy ceases to
be allowable as soon as an insured becomes a public enemy.
The purpose of the war is to cripple the power and exhaust the resources of the
enemy, and it is inconsistent that one country should destroy its enemy property and
repay in insurance the value of what has been so destroyed, or that it should in such
manner increase the resources of the enemy or render it aid.
All individuals who compose the belligerent powers, exist as to each other, in a state
of utter exclusion and are public enemies. Christern having become an enemy
corporation on Dec. 10. 1941, the insurance policy issued in his favor on Oct. 1, 1941
by Filipinas had ceased to be valid and enforceable, and since the insured goods were
burned after Dec. 10, 1941, and during the war, Christern was NOT entitled to any
indemnity under said policy from Filipinas.
Elementary rules of justice require that the premium paid by Christern for the period
covered by the policy from Dec. 10, 1941 should be returned by Filipinas.
2. 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 covered the stock 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 petitioners 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 attorneys 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.
3. Col. C. Castro v. Insurance Commissioner - Insurable Interest
Facts:
Castro applied for insurance on the life of his driver. On the basis of such application,
Insular Life issued policy No. 934943 effective July 18, 1979.
The policy applied for and issued was on a 20-yr endowment plan for the sum of P25T
with double indemnity in case of accidental death.
Castro paid the first quarterly premium of P309.95. About 3 months later, on Oct.
16, 1959, the insured driver was allegedly shot to death by unknown persons.
(hmmm sounds fishy)
Castro then filed a claim for the total benefits of 50T under the policy.
Insular life denied the claim on the ground that the policy was VOID. Insular instead
refunded to Castro the premiums he had paid.
Issue:
Whether or not Castro has an insurable interest in his driver.
Held:
NO.
The requirement of insurable interest to support a contract of insurance is based
upon consideration of public policy which renders wager policies INVALID. To sustain
a contract of this character it must appear that there is a real concern in the life of
the party whose death would be the cause of substantial loss to those who are named
as a beneficiary.
Mere relationship of uncle and nephew, employer and employee is NOT sufficient to
provide an insurable interest on the life of the insured. It must be shown that the
destruction of the life of the insured would cause pecuniary loss to the
complainant. This, Castro failed to prove.
4. Lincoln National Life v. San Juan - Life Insurance
Facts:
An employer insured the life of the employee with two insurance companies.
The insurance totaled 200T and the only beneficiaries were the employer and his
wife.
A severed head was later found, purportedly that of the insured employee.
The insurance companies refused to pay on the ground that the employer had no
insurable interest in the life of the employee.
Issue:
Whether or not the employer can recover the proceeds of a life insurance policy of
his employee.
Held:
NO.
The insured was a tenant in a coconut land owned by the employer and his
earning were barely that of a farm laborer. It was established that the insured could
not have afforded the insurance policies drawn on his life. Many more policies were
found to have been issued with the employee/tenant as insured and the employer
and his wife as beneficiaries.
The policies were also found to have been acquired in quick succession. It was
found that the various postal money orders issued in payment of the premiums were
made by the employer. It appears that, based on the circumstances and evidence,
the insurance was really taken out by the employer.
5. Gercio v. Sun Life - Insurance Beneficiary
Facts:
Sunlife issued a life insurance policy to Gercio, the former agreeing to insure the life
of Gercio for 2T to be paid to him on Feb. 1, 1930 or if he should die before said date,
then to his wife Andrea, should she survive him; otherwise to the executor,
administrator of Gercio.
> The policy did not include any provision reserving to Gercio the right to change the
beneficiary.
> The wife was convicted of adultery and a decree of divorce was issued.
> Gercio notified Sunlife that he had revoked his donation in favor of Andrea and
that he had designated his present wife Adela as his beneficiary.
> Sunlife refused to change the beneficiary.
Issue:
Whether or not Gercio may change the beneficiary in the policy.
Held:
NO.
If the policy contains no provision authorizing a change of beneficiary
without the beneficiarys consent, the insured cannot make such change. It is held
that a life insurance policy of a husband made payable to his wife as a beneficiary is
the separate property of the beneficiary and beyond the control of the husband.
(NOTE: this case is based on the old rule under the Insurance Act)
Court also held that the designation of a beneficiary that is originally valid
does NOT render it invalid due to a subsequent cessation of the interests between
the beneficiary and insured.
6. Philamlife v. Pineda - Life Insurance
Facts:
Dimayuga processed an ordinary life insurance policy from Philamlife and designated
his wife and children as irrevocable beneficiaries.
Dimayuga filed a petition in court to amend the designation of the beneficiaries in his
policy from irrevocable to revocable.
Lower Court granted the petition.
Issue:
Whether or not the court erred in granting Dimayugas petition.
Held:
YES.
Under the Insurance Act, the beneficiary designated in a life insurance
contract cannot be changed without the consent of the beneficiary because he has a
vested interest in the policy. The policy contract states that the designation of the
beneficiaries is irrevocable. Therefore, based on the said provision of the contract,
not to mention the law then applicable, it is only with the consent of all the
beneficiaries that any change or amendment in the policy may be legally and validly
effected. The contract between the parties is the law binding on them. (This case
rule is no longer controlling under the Insurance Code.)
7. Souther Luzon Employees Association v. Golpeo - Insurance Beneficiaries
Facts:
SLEA is composed of laborers and employees of the LTBC and BTC (now BLTB Co.),
and one of its purposes is mutual aid of its members and their dependents in case of
death.
Roman Concepcion was a member until his death in 1950.
In 1949, SLEA adopted a resolution providing that: A member may, if he chooses, put
down his common law wife and/or children he had with her as his beneficiaries; and
such person so named by the member will be the sole persons to be recognized by
SLEA regarding claims for condolence contributions.
Roman listed as his beneficiaries Aquilina Maloles and their 4 children. After his
death, SLEA was able to collect voluntary contribution from its members amounting
to P2,205.
Three sets of claimants to the amount presented themselves to the association
namely:
o Juanita Golpeo, legal wife, and her children
o Aquilina Maloles, the common law wife, and her children
o Elsie Hicban, another common law wife of Roman, and her child.
SLEA then filed an action for interpleader against the 3 conflicting claimants.
Trial court rendered a decision declaring Maloles and her children the sole
beneficiaries of the amount citing Del Val v. Del Val.
Only Golpeo appealed. She argues that:
The insurance code does not apply since the association is not an insurance company
but a mutual benefit association.
The stipulation between SLEA and Roman was void for being contrary to law, public
morals and public policy, pursuant to Art. 739 of the CC ( donations between persons
guilty of concubinage at the time of donation are void)
Issue:
Whether or not Golpeo, the legal wife is entitled to the amount.
Held:
NO.
First of all, the lower court did not consider the association as a regular
insurance company, but merely ruled that the death benefit in question is analogous
to insurance. Besides, even the Administrative Code describes a mutual benefit
company as one which provides any method of life insurance among its members out
of dues or assessments collected from its membership.
Secondly, without considering the intimation in the brief for Maloles that
Golpeo, by her silence and actions had acquiesced in the illicit relations between her
husband and Maloles, Golpeos argument would certainly NOT apply to the children
of Maloles likewise named beneficiaries by the deceased. As a matter of fact, the
NCC recognizes certain successional rights of illegitimate children.
8. Villanueva v. Oro - Insurance Proceeds
81 PHIL 464
Facts:
> West Coast Life Insurance Company issued two policies of insurance on the life of
Esperanza Villanueva, one for 2T, maturing April 1, 1943; and other for 3T maturing
Mar. 31, 1943.
> In both policies, West agreed to pay 2T either to Esperanza if still living on Apr 1,
1943; or to beneficiary Bartolome Villanueva, or the father of the insured
immediately upon receipt of the proof of death of Esperanza.
> The policy also gave her the right to change the beneficiary.
> In 1940, Bartolome died, and he was substituted as beneficiary under the policies
by Mariano, Esparanzas brother.
> Esperanza died in 1944 without having collected the insurance proceeds. Adverse
claims for the proceeds were presented by the estate of Esperanza on one hand and
by Mariano on the other.
> CFI held that the estate of Esperanza was entitled to the proceeds to the exclusion
of the beneficiary.
Issue:
Whether or not the beneficiary is entitled to the proceeds.
Held:
NO. Under the SSS Act, the beneficiary as recorded by the employees employer
is the one entitled to the death benefits, hence they should go to Candelaria. Lourdes
Under the policies, the insurer obligated itself to pay the insurance proceeds
contends that the designation made in the person of Candelaria who is party in a
to: (1) the insured if the latter lived on the dates of maturity; or (2) the beneficiary if
bigamous marriage is null and void for being against Art. 739 of the CC. SC held that
the insured died during the continuance of the policies. The first contingency
the disqualification mentioned in Art. 739 is NOT applicable to Candelaria, because
excludes the second, and vice versa. In other words, as the insured Esperanza was
she was not guilty of concubinage , there bieing NO proof that she had actual
living on April 1 and March 31, 1943, the proceeds are payable exclusively to her or
knowledge of the previous marriage of her husband.
to her estate unless she had before her death otherwise assigned the matured
policies. 10.Harvardian Colleges v. Country Bankers Insurance Corp.

The beneficiary could be entitled to said proceeds only in default of the first 1 CARA 2
contingency. To sustain the beneficiarys claim would be to altogether eliminate
Facts:
from the policies the condition that the insurer agrees to pay to the insured if living.
> Harvardian is a family corporation, the stockholders of which are Ildefonso Yap,
This conclusion tallies with American Authorities who say that: The interest of the
Virginia King Yap and their children.
insured in the proceeds of the insurance depends upon his survival of the expiration
of the endowment period. Upon the insureds death, within the period, the > Prior to Aug. 9, 1979, an agent of Country Bankers proposed to Harvardian to insure
beneficiary will take, as against the personal representatives the endowment period, its school building. Although at first reluctant, Harvardian agreed.
the benefits are payable to him or to his assignee, notwithstanding a beneficiary is
designated in the policy. (AmJur and Couch Cyclopedia of Insurance Law) > Country Banks sent an inspector to inspect the school building and agreed to insure
the same for P500,000 for which Harvardian paid an annual premium of P2,500.
9. SSS v. Davac - SSS Benefits
> On Aug. 9, 1979, Country Bankers issued to Harvardian a fire insurance policy. On
17 SCRA 863 March 12, 1980, (39 days before I was born hehehehe )during the effectivity of said
insurance policy, the insured property was totally burned rendering it a total loss.
Facts:
> A claim was made by plaintiff upon defendant but defendant denied it contending
> Davac was an SSS member, and designated Candelaria Davac, his alleged wife, as
that plaintiff had no insurable interest over the building constructed on the piece of
his beneficiary.
land in the name of the late Ildefonso Yap as owner.
> When he died, both his first wife, Lourdes and his second wife, Candelaria filed
> It was contended that both the lot and the building were owned by Ildefonso Yap
claims for the death benefits.
and NOT by the Harvardian Colleges.
> Due to the conflicting claims, the SSS filed a petition praying that both of them be
Issue:
required to interplead and litigate the conflicting claims.
Whether or not Harvardian colleges has a right to the proceeds.
> The death benefits were awarded to Candelaria Davac.
Held:
Issue:
Harvardian has a right to the proceeds.
Who is entitled to the SSS benefits?
Regardless of the nature of the title of the insured or even if he did not have title to
Held:
the property insured, the contract of fire insurance should still be upheld if his
Candelaria. interest in or his relation to the property is such that he will be benefited in its
continued existence or suffer a direct pecuniary loss from its destruction or
injury. The test in determining insurable interest in property is whether one will
derive pecuniary benefit or advantage from its preservation, or will suffer pecuniary
loss or damage from its destruction, termination or injury by the happening of the
event insured against.
Here Harvardian was not only in possession of the building but was in fact using the
same for several years with the knowledge and consent of Ildefonso Yap. It is
reasonably fair to assume that had the building not been burned, Harvardian would
have been allowed the continued use of the same as the site of its operation as an
educational institution. Harvardian therefore would have been directly benefited by
the preservation of the property, and certainly suffered a pecuniary loss by its being
burned.
11. Ang Ka Yu v. Phoenix Assurance - Insurable Interest
1 CARA 704
Facts:
> Ang Ka Yu had a piece of property in his possession. He insured it with Phoenix.
> The property was lost, so Ang Ka Yu sought to claim the proceeds.
> Phoenix denied liability on the ground that Ang was not the owner but a mere
possessor and as such, had no insurable interest over the property.
Issue:
Whether or not a mere possessor has insurable interest over the property.
Held:
Yes.
A person having a mere right or possession of property may insure it to its full value
and in his own name, even when he is not responsible for its safekeeping. The reason
is that even if a person is NOT interested in the safety and preservation of material
in his possession because they belong to 3rd parties, said person still has insurable
interest, because he stands either to benefit from their continued existence or to be
prejudiced by their destruction.
12. Traders Insurance and Surety Co. v. Golangco- Insurance Proceeds
95 PHIL 826
Facts:
> A decision was rendred in Civil Case No. 6306 granting Golangco the right to collect
rentals from a building in Sta. Cruz, Manila.
> Golangco then sought fire insurance from Traders. Before the policy was issued,
Golangco made a full and clear exposal of his interests in the premises, i.e. that he
was not the owner.
> The fire policy that defendant issued covered only all of Golangcos interest in the
premises and his right to collect the rentals.
> The building burned down in a fire and Golangco sought to collect from
Traders. Traders denied any liability on the ground that since Golangco was not the
owner of the premises then he had no insurable interest in the same and
consequently, he could not collect the insurance proceeds.
Issue:
Whether or not plaintiff can claim the insurance proceeds.
Held.
YES.
Both at the time of the issuance of the policy and at the time of the fire,
plaintiff Golangco was in legal possession of the premises, collecting rentals from its
occupant. It seems plain that if the premises were destroyed as they were, by fire,
Golangco would be, as he was, directly damnified thereby; and hence he had an
insurable interest therein.
13. Argente v. West Coast Life Insurance Co.- Misrepresentation
51 PHIL 725
Facts:
> A joint life insurance policy was issued to Bernardo Argente and his wife Vicenta
upon payment of premium, by West Coast.
> On Nov. 18, 1925, during the effectivity of the policy, Vicenta died of cerebral
apoplexy. Thereafter, Bernardo claimed payment but was refused.
> It is admitted that in the Medical Examiners report, Vicenta, in response to the
question asked by the medical examiner, her replies were as follows:
o How frequently do you use beer, wine, spirits and other intoxicants? she
answered beer only in small quantities.
o What physician have you consulted or been treated by within the last 5 years
and for what illness or ailment? she answered none
> It is however, not disputed that in 1924, Vicenta was taken to a hospital for what
was first diagnosed as alcoholism and later changed to manic-depressive psychosis
and then again changed to pscyhonuerosis.
Issue:
Whether or not on the basis of the misrepresentations of Vicenta, Bernardo is barred
from recovery.
Held:
YES.
The court found that the representations made by Vicenta in his application
for life insurance were false with respect to her state of health and that she knew
and was aware that the representations so made by her were false. In an action on
a life insurance policy where the evidence conclusively shows that the answers to
questions concerning diseases were untrue, the truth or falsity of the answer
becomes the determining factor.
If the policy was procured by fraudulent misrepresentations, the contract of
insurance apparently set forth therein was never legally existent. It can be fairly
assumed that had the true facts been disclosed by the insured, the insurance would
never have been granted.
14. Yu Pang Cheng v. CA- Life Insurance Policy
105 PHIL 1930
Facts:
> Yu Pang Eng obtained a life insurance policy naming his brother Yu Pang Cheng as
beneficiary.
> Eng subsequently died of medullary carcinoma, Grade 4, advanced and lesser
curvature.
> Cheng claims the proceeds of the policy.
> Insurance co. refused payment on the ground that the policy was void due to the
concealment.
Issue:
Whether or not the policy is void.
Held:
YES.
In the application for the policy, Eng was asked whether he had been ill or had
consulted a doctor due to symptoms or illnesses enumerated in the
questionnaire. He answered No, when in fact he was hospitalized seven months
prior to his application for the said policy.
15. Vda. De Canilang v. CA - Concealment
223 SCRA 443 (1993)
Facts:
> Canilang consulted Dr. Claudio and was diagnosed as suffering from "sinus
tachycardia." Mr. Canilang consulted the same doctor again on 3 August 1982 and
this time was found to have "acute bronchitis."
> On the next day, 4 August 1982, Canilang applied for a "non-medical" insurance
policy with Grepalife naming his wife, as his beneficiary. Canilang was issued
ordinary life insurance with the face value of P19,700.
> On 5 August 1983, Canilang died of "congestive heart failure," "anemia," and
"chronic anemia." The wife as beneficiary, filed a claim with Grepalife which the
insurer denied on the ground that the insured had concealed material information
from it.
> Vda Canilang filed a complaint with the Insurance Commissioner against Grepalife
contending that as far as she knows her husband was not suffering from any disorder
and that he died of kidney disorder.
> Grepalife was ordered to pay the widow by the Insurance Commissioner holding
that there was no intentional concealment on the Part of Canilang and that Grepalife
had waived its right to inquire into the health condition of the applicant by the
issuance of the policy despite the lack of answers to "some of the pertinent
questions" in the insurance application. CA reversed.
Issue:
Whether or not Grepalife is liable.
Held:
SC took note of the fact that Canilang failed to disclose that hat he had twice
consulted Dr. Wilfredo B. Claudio who had found him to be suffering from "sinus
tachycardia" and "acute bronchitis. Under the relevant provisions of the Insurance
Code, the information concealed must be information which the concealing party
knew and "ought to [have] communicate[d]," that is to say, information which was
"material to the contract.
The information which Canilang failed to disclose was material to the ability of
Grepalife to estimate the probable risk he presented as a subject of life insurance.
Had Canilang disclosed his visits to his doctor, the diagnosis made and the medicines
prescribed by such doctor, in the insurance application, it may be reasonably
assumed that Grepalife would have made further inquiries and would have probably
refused to issue a non-medical insurance policy or, at the very least, required a higher
premium for the same coverage.
The materiality of the information withheld by Canilang from Grepalife did not
depend upon the state of mind of Jaime Canilang. A man's state of mind or subjective
belief is not capable of proof in our judicial process, except through proof of external
acts or failure to act from which inferences as to his subjective belief may be
reasonably drawn. Neither does materiality depend upon the actual or physical
events which ensue. Materiality relates rather to the "probable and reasonable
influence of the facts" upon the party to whom the communication should have been
made, in assessing the risk involved in making or omitting to make further inquiries
and in accepting the application for insurance; that "probable and reasonable
influence of the facts" concealed must, of course, be determined objectively, by the
judge ultimately.
SC found it difficult to take seriously the argument that Grepalife had waived inquiry
into the concealment by issuing the insurance policy notwithstanding Canilang's
failure to set out answers to some of the questions in the insurance application. Such
failure precisely constituted concealment on the part of Canilang. Petitioner's
argument, if accepted, would obviously erase Section 27 from the Insurance Code of
1978.
16. Sun Life v. CA - Concealment in Insurance
245 SCRA 268 (1995)
Facts:
> On April 15, 1986, Bacani procured a life insurance contract for himself from Sun
Life. He was issued a life insurance policy with double indemnity in case of accidental
death. The designated beneficiary was his mother, Bernarda.
> On June 26, 1987, the insured died in a plane crash. Bernarda Bacani filed a claim
with Sun Life, seeking the benefits of the insurance. Sun Life conducted an
investigation and its findings prompted it to reject the claim.
> Sun Life discovered that 2 weeks prior to his application, Bacani was examined and
confined at the Lung Center of the Philippines, where he was diagnosed for renal
failure. During his confinement, the deceased was subjected to urinalysis, ultra-
sonography and hematology tests. He did not reveal such fact in his application.
> In its letter, Sun Life informed Berarda, that the insured did not disclosed material
facts relevant to the issuance of the policy, thus rendering the contract of insurance
voidable. A check representing the total premiums paid in the amount of P10,172.00
was attached to said letter.
> Bernarda and her husband, filed an action for specific performance against Sun
Life. RTC ruled for Bernarda holding that the facts concealed by the insured were
made in good faith and under the belief that they need not be disclosed. Moreover,
it held that the health history of the insured was immaterial since the insurance policy
was "non-medical." CA affirmed.
Issue:
Whether or not the beneficiary can claim despite the concealment.
Held:
NOPE.
Section 26 of the Insurance Code is explicit in requiring a party to a contract of
insurance to communicate to the other, in good faith, all facts within his knowledge
which are material to the contract and as to which he makes no warranty, and which
the other has no means of ascertaining.
Materiality is to be determined not by the event, but solely by the probable and
reasonable influence of the facts upon the party to whom communication is due, in
forming his estimate of the disadvantages of the proposed contract or in making his
inquiries (The Insurance Code, Sec 31)
The terms of the contract are clear. The insured is specifically required to disclose to
the insurer matters relating to his health. The information which the insured failed
to disclose were material and relevant to the approval and the issuance of the
insurance policy. The matters concealed would have definitely affected petitioner's
action on his application, either by approving it with the corresponding adjustment
for a higher premium or rejecting the same. Moreover, a disclosure may have
warranted a medical examination of the insured by petitioner in order for it to
reasonably assess the risk involved in accepting the application.
Thus, "good faith" is no defense in concealment. The insured's failure to disclose the
fact that he was hospitalized for two weeks prior to filing his application for
insurance, raises grave doubts about his bonafides. It appears that such concealment
was deliberate on his part.
REPRESENTATION
1. Saturnino v. Philamlife - False Representation
7 SCRA 316
Facts:
> 2 months prior to the insurance of the policy, Saturnino was operated on for
cancer, involving complete removal of the right breast, including the pectoral
muscles and the glands, found in the right armpit.
> Notwithstanding the fact of her operation, Saturnino did not make a disclosure
thereof in her application for insurance.
> She stated therein that she did not have, nor had she ever had, among others listed
in the application, cancer or other tumors; that she had not consulted any physician,
undergone any operation or suffered any injury within the preceding 5 years.
> She also stated that she had never been treated for, nor did she ever have any
illness or disease peculiar to her sex, particularly of the breast, ovaries, uterus and
menstrual disorders.
> The application also recited that the declarations of Saturnino constituted a further
basis for the issuance of the policy.
Issue:
Whether or not the insured made such false representation of material facts as to
avoid the policy.
Held:
YES.
There can be no dispute that the information given by her in the application
for insurance was false, namely, that she never had cancer or tumors or consulted
any physician or undergone any operation within the preceding period of 5 years.
The question to determine is: Are the facts then falsely represented
material? The Insurance Law provides that materiality is to be determined not by
the event, but solely by the probable and reasonable influence of the facts upon the
party to whom the communication is due, in forming his estimate of the proposed
contract, or making his inquiries.
The contention of appellants is that the facts subject of the representation
were not material in view of the non-medical nature of the insurance applied for,
which does away with the usual requirement of medical examination before the
policy is issued. The contention is without merit. If anything, the waiver of medical
examination renders even more material the information required of the applicant
concerning previous condition of health and diseases suffered, for such information
necessarily constitutes an important factor which the insurer takes into consideration
in deciding whether to issue the policy or not.
Appellants also contend that there was no fraudulent concealment of the
truth inasmuch as the insured herself did not know, since her doctor never told her,
that the disease for which she had been operated on was cancer. In the first place,
concealment of the fact of the operation itself was fraudulent, as there could not
have been any mistake about it, no matter what the ailment.
Secondly, in order to avoid a policy, it is not necessary to show actual fraud
on the part of the insured. In this jurisdiction, concealment, whether intentional or
unintentional entitled the insurer to rescind the contract of insurance, concealment
being defined as negligence to communicate that which a party knows and ought to
communicate. The basis of the rule vitiating the contract in cases of concealment is
that it misleads or deceives the insurer into accepting the risk, or accepting it at a
rate of premium agreed upon. The insurer, relying upon the belief that the insured
will disclose every material fact within his actual or presumed knowledge, is misled
into a belief that the circumstances withheld does not exist, and he is thereby
induced to estimate the risk upon a false basis that it does not exist.
 2. Tan ChayHeng vs. West Coast Life
Facts:
In April 1925, West Coast Life Insurance Company (West Coast) accepted and issued
a temporary life insurance policy (pending further review) to Tan Ceang. The life
insurance was for P10,000.00 and the premium paid therefor was P936.00. The
beneficiary listed in the policy was Tan Chay Heng. In May 1925, Tan Ceang died. Tan
Chay Heng filed an insurance claim which was denied by West Coast. Tan Chay Heng
sued West Coast. West Coast averred, in its ANSWER that Tan Chay Heng, in
connivance with others made Tan Ceang to enter into an insurance policy and name
Tan Chay Heng as the beneficiary; that Tan Ceang was induced to lie on the
application form about his health and life conditions (he was made to account that
he was not addicted to opium, morphine, and cocaine when in fact he was); that Tan
Chay Heng was a gang leader involved in the racket of fraudulent insurance schemes;
that by reason of these fraud and machinations, the insurance policy West Coast
issued is void; that West Coast seeks to avoid the insurance policy. Tan
Chay Heng filed a demurrer as it claimed that West Coasts ANSWER is a cross
-complaint and the facts contained therein was not sufficient as a defense. The lower
court directed West Coast to amend its ANSWER which West Coast duly excepted
from and so the lower court ruled in favor of Tan Chay Heng. The lower court further
ruled that under Section 47 of [the old] Insurance Law, if an insurer (West Coast) has
the right to rescind a contract of insurance, it must do so before a suit is brought
against the insurer on the said contract.
ISSUE:
Whether or not Section 47 is applicable in the case at bar.
HELD:
No. West Coast was not seeking for the rescission of the insurance contract. In fact,
West Coast avers that there was no insurance contract at all because the temporary
insurance issued in favor of Tan Ceang was null and void. For West Coast, it was void
ab initio because of the fraudulent circumstances attending to it. Therefore, it cannot
be subject to rescission. The Supreme Court however remanded the case to the lower
court to determine the material allegations made by West Coast against Tan Chay
Heng.
Soliman vs. US Life Facts:
> US Life issued a 20 yr endowment life policy on the joint lives of Patricio Soliman
and his wife Rosario, each of them being the beneficiary of the other. > In Mar. 1949,
the spouses were informed that the premium for Jan 1949 was still unpaid
notwithstanding that the 31-day grace period has already expired, and they were
furnished at the same time long-form health certificates for the reinstatement of the
policies. > In Apr 1949, they submitted the certificates and paid the premiums. > In
Jan. 1950, Rosario died of acute dilation of the heart, and thereafter, Patricio filed a
claim for the proceeds of the insurance. > US life denied the claim and filed for the
rescission of the contract on the ground that the certificates failed to disclose that
Rosario had been suffering from bronchial asthma for 3 years prior to their
submission.
Issue:
Whether or not the contract can still be rescinded.
Held: Yes.
The insurer is once again given two years from the date of reinstatement to
investigate into the veracity of the facts represented by the insured in the application
for reinstatement. When US life sought to rescind the contract on the ground of
concealment/misrepresentation, two years had not yet elapsed. Hence, the contract
can still be rescinded.
3. Tan vs. Court of Appeals
Facts:
Petitioners appeal from the Decision of the Insurance Commissioner dismissing their
complaint against respondent Philippine American Life Insurance Company for the
recovery of the proceeds of Policy No. 1082467 in the amount of P 80,000.00. On
September 23,1973, Tan Lee Siong, father of petitioners, applied for life insurance in
the amount of P80,000.00 with respondent company. Said application was approved
and Policy No. 1082467 was issued effective November 6,1973, with petitioners the
beneficiaries thereof. On April 26,1975, Tan Lee Siong died of hepatoma. Petitioners
then filed with respondent company their claim for the proceeds of the life insurance
policy. However, in a letter dated September 11, 1975, respondent company denied
petitioners' claim and rescinded the policy by reason of the alleged
misrepresentation and concealment of material facts made by the deceased Tan Lee
Siong in his application for insurance. The premiums paid on the policy were
thereupon refunded . Alleging that respondent company's refusal to pay them the
proceeds of the policy was unjustified and unreasonable, petitioners filed on
November 27, 1975, a complaint against the former with the Office of the Insurance
Commissioner. The petitioners contend that the respondent company no longer had
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. After hearing the evidence of both parties, the Insurance Commissioner
rendered judgment on August 9, 1977, dismissing petitioners' complaint. The Court
of Appeals dismissed ' the petitioners' appeal from the Insurance Commissioner's
decision for lack of merit
Issue:
Whether or not the Insurer has the right to rescind the policy on account of
concealment
Held:
Yes, the insurer can still rescind the policy. Petitioners base their contention
on Section 48 of the Insurance Code. The so-called "incontestability clause" under
Section 48 precludes the insurer from raising the defenses of false representations
or concealment of material facts 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 phrase "during the lifetime" found in Section 48 simply means
that the policy is no longer considered in force after the insured has died. The key
phrase in the second paragraph of Section 48 is "for a period of two years." The
insurer has two years from the date of issuance of the insurance contract or of its last
reinstatement within which to contest the policy, whether or not, the insured still
lives within such period. After two years, the defenses of concealment or
misrepresentation, no matter how patent or well founded, no longer lie. In the case
at bar, the policy was issued on November 6,1973 and the insured died on April
26,1975. The policy was thus 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. Moreover,
respondent company rescinded the contract of insurance and refunded the
premiums paid on September 11,1975, previous to the commencement of this action
on November 27,1975. WHEREFORE, the petition is hereby DENIED for lack of merit.
The questioned decision of the Court of Appeals is AFFIRMED.
POLICY
1. Sindayen v. Insular Life- Policy of Insurance 62 PHIL 9
Facts:
> Arturo Sindayen was a linotype operator in the Bureau of Printing. He and his wife
Fortunat went to Camiling to spend Christmas with his aunt Felicidad Estrada.
> On Dec. 26, 1932, while still in Camiling, he made a written application to Insular
Life, through its agent, Cristobal Hendoza, for a policy of insurance on his life in the
sum of 1,000.
> He paid the agent P15 as part of the first premium. It was agreed that the policy,
when and if issued, should be delivered to Felicidad with whom Sindayen left the sum
P25.06 to complete the payment of the first annual premium of P40.06.
> On Jan 1, 1933, Sindayen was examined by Insulars doctor who made a favorable
report to Insular.
> The next day, Sindayen returned to Manila and resumed his work. On Jan. 11,
1933, Insular accepted the risk and issued a policy, and mailed the same to its agent
for delivery to the insured.
> On Jan. 12, 1933, Sindayen complained of a severe headache. ON Jan. 15, 1933,
he called a physician who found that Sindayen was suffering from acute nephritis and
uremia. His illness did not yield to treatment and on Jan. 19, 1933, he died.
> The policy which the company issued and mailed in manila on Jan. 11 1933 was
received by its agent in Camilin on Jan. 16, 1933. On Jan 18, 1933, the agent, in
accordance with his agreement with the insured delivered the policy to Felicided
upon her payment of the balance of the 1st years premium.
> The agent asked Felicidad if her nephew was in good health and she replied that
she believed so because she had no information that he was sick, and thereupon ,
the policy was handed to her by the agent.
> On Jan. 20, 1933, the agent learned of the death of Sindayen, afterwhich he called
upon Felicidad and asked her to return the policy. Felicidad did so.
> On Feb. 4, 1933, the company obtained from Sindayens widow Fortunata (also the
beneficiary), her signature on a legal document whereby in consideration of the sum
40.06 representing the amount of premium paid, Fortunata thereby releases forever
and discharges Insular from any and all claims and obligations she may have against
the latter.
> A check for the above-mentioned amount was drawn in the name of Fortunata,
but the same was never encashed.
> Instead, it was returned to Insular and this complaint to enforce payment under
the policy was instituted.
> The application which Sindayen signed in Camiling contained the following
provisions:
xxx
(3) That the said policy shall not take effect until the first premium has been paid and
the policy has been delivered to and accepted by me, while I am in good health.
> The main defense of the company is the policy never took effect because of par. 3
of the application, since at the time of the delivery of the agent, the insured was not
in good health.
Issue:
Whether or not the policy took effect.
Held:
YES.
There is one line of American cases which holds that the stipulation contained par. 3
is in the nature of a condition precedent, that is to say, that there can be no valid
delivery to the insured unless he is in good health at that time; that this condition
precedent goes to the very essence of the contract and cannot be waived by the
agent making delivery of the policy; HOWEVER, there is also a number of American
decision which state the contrary.
These decisions say that an agent to whom a life insurance policy (similar to the one
at bar) was sent with instruction to deliver it to the insured, has authority to bind the
company by making such delivery, ALTHOUGH the insured was NOT in good health
at the time of delivery, on the theory that the delivery of the policy being the final
act to the consummation of the contract, the condition as to the insureds good
health was WAIVED by the company.
These same cases further hold that the delivery of the policy by the agent to the
insured consummates the contract even though the agent knew that the insured was
NOT in good health at the time, the theory being, that his knowledge is the companys
knowledge; and his delivery is the companys delivery; that when the delivery is made
notwithstanding this knowledge of the defect, the company is deemed to have
WAIVED such defect.
The agent, Mendoza was duly licensed by the Insurance Commission to act for Insular
Life. He had the authority given by him by the company to withhold the delivery of
the policy to the insured until the first premium has been paid and the policy has
been delivered to and accepted by the insured while he is in good health. Whether
that condition had been met or not plainly calls for the exercise of
discretion. Mendozas decision that the condition had been met by the insured and
that it was proper to make delivery of the policy to him is just as binding on the
company as if the decision had been made by its Board of Directors. Admittedly,
Mendoza made a mistake of judgment because he acted on insufficient evidence as
to the state of health of the insured, and this mistake cannot be said to be induced
by any misconduct on the part of the insured.
It is in the interest of not only of the applicant but of all insurance companies as well
that there should be some act which gives the applicant the definite assurance that
the contract has been consummated. This sense of security and of piece of mind that
ones dependents are provided for without risk of either loss or of litigation is the
bedrock of life insurance.
A cloud will be thrown over the entire insurance business if the condition of health
of the insured at the time of the delivery of the policy may be inquired into years
afterwards with the view of avoiding the policy on the ground that it never took effect
because of an alleged lack of good health at the time of delivery.
It is therefore in the public interest that we are constrained to hold, as we do, that
the delivery of the policy to the insured by an agent of the company who is authorized
to make delivery or withhold delivery is the final act which binds the company and
the insured, in the absence of fraud or other legal grounds for rescission. The fact
that the agent to whom it has entrusted this duty is derelict or negligent or even
dishonest in the performance of the duty which has been entrusted to him would
create an obligation based upon the authorized acts of the agent toward a third party
who was not in collusion with the agent.
2. ENRIQUEZ VS. SUN LIFE ASSURANCE CO.
FACTS:
 Rafael Enriquez, administrator of the estate of the late Joaquin Herrera made
application to the Sun Life Assurance Company of Canada for a life annuity. The
application was immediately forwarded to the head office of the company in Canada,
which gave notice of acceptance by cable to Manila. The policy was issued at
Montreal on December 4, 1917. However, on December 18, Herrera informed the
Manila office that he desired to withdraw his application. The local office replied to
Torres stating that the policy had been issued. This letter was received by the
attorney on the morning of December 21. Mr. Herrera died on December 20, 1917.
According to the SC, the letter of November 26, 1917, notifying Mr. Herrera that his
application had been accepted, was prepared and signed in the local office of the
insurance company, was placed in the ordinary channels for transmission, but as far
as the SC knows was never actually mailed and thus was never received by the
applicant.
RULING
The law applicable to the case is found to be the second paragraph of article 1262 of
the Civil Code providing that an acceptance made by letter shall not bind the person
making the offer except from the time it came to his knowledge.
The pertinent fact is, that according to the provisional receipt, three things had to
be accomplished by the insurance company before there was a contract: (1) There
had to be a medical examination of the applicant; (2) there had to be approval of the
application by the head office of the company; and (3) this approval had in some way
to be communicated by the company to the applicant.
The further admitted facts are that the head office in Montreal did accept the
application, did cable the Manila office to that effect, did actually issue the policy and
did, through its agent in Manila, actually write the letter of notification and place it
in the usual channels for transmission to the addressee.
The fact as to the letter of notification thus fails to concur with the essential
elements of the general rule pertaining to the mailing and delivery of mail matter as
announced by the American courts, namely, 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. For instance, 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. - We hold that 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.
3. Ang Giok Chip v Springfield G.R. No. L-33637 December 31, 1931
Facts:
Ang insured his warehouse for the total value of Php 60,000. One of these, amounting
to 10,000, was with Springfield Insurance Company. His warehouse burned down,
then he attempted to recover 8,000 from Springfield for the indemnity.
The insurance company interposed its defense on a rider in the policy in the form of
Warranty F, fixing the amount of hazardous good that can be stored in a building to
be covered by the insurance. They claimed that Ang violated the 3 percent limit by
placing hazardous goods to as high as 39 percent of all the goods stored in the
building. His suit to recover was granted by the trial court. Hence, this appeal.
Issue:
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:
No. The warranty is valid. Petition dismissed. Ratio: The Insurance Act, Section 65,
taken from California law, 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." Warranty
F, indemnifying for a value of Php 20,000 and pasted on the left margin of the policy
stated: It is hereby declared and agreed that during the currency of this policy no
hazardous goods be stored in the Building to which this insurance applies or in any
building communicating therewith, provided, always, however, that the Insured be
permitted to stored a small quantity of the hazardous goods specified below, but not
exceeding in all 3 per cent of the total value of the whole of the goods or merchandise
contained in said warehouse, viz; . . . . Also, the court stated a book that said, "any
express warranty or condition is always a part of the policy, but, like any other part
of an express contract, may be written in the margin, or contained in proposals or
documents expressly referred to in the policy, and so made a part of it."
It is well settled that a rider attached to a policy is a part of the contract, to the same
extent and with like effect
as it actually embodied therein. In the second place, it is equally well settled that an
express warranty must appear upon the face of the policy, or be clearly incorporated
therein and made a part thereof by explicit reference, or by words clearly evidencing
such intention.
The court concluded that Warranty F is contained in the policy itself, because by the
contract of insurance agreed to by the parties it was made to be a part. It wasnt a
separate instrument agreed to by the parties. The receipt of the policy by the insured
without objection binds him. It was his duty to read the policy and know its terms.
He also never chose to accept a different policy by considering the earlier one as a
mistake. Hence, the rider is valid.
4. Gonzalez Lao v. Yek Tong Lin Fire & Marine Insurance - Insurance
Premiums
Facts:
> Gonzales was issued 2 fire insurance policies by Yek for 100T covering his leaf
tobacco prducts.
> They were stored in Gonzales building on Soler St., which on Jan. 11, 1928, burned
down.
> Art. 3 of the Insurance policies provided that: Any insurance in force upon all or
part of the things unsured must be declared in writing by the insured and he (insured)
should cause the company to insert or mention it in the policy. Without such requisite,
such policy will be regarded as null and void and the insured will be deprived of all
rights of indemnity in case of loss.
> Notwithstanding said provision, Gonzales entered into other insurance
contracts. When he sought to claim from Yek after the fire, the latter denied any
liability on the ground of violation of Art. 3 of the said policies.
> Gonzales however proved that the insurer knew of the other insurance policies
obtained by him long efore the fire, and the insurer did NOT rescind the insurance
polices in question but demanded and collected from the insured the premiums.
Issue:
Whether or not Yek is still entitled to annul the contract.
Held:
NO.
The action by the insurance company of taking the premiums of the insured
notwithstanding knowledge of violations of the provisions of the policies amounted
to waiver of the right to annul the contract of insurance.
5. Del Rosario v. Equitable Insurance - Life Insurance Policy
Facts:
> Equitable Insurance issued a life Insurance policy to del Rosario binding itself to
pay P1,000 to P3,000 as indemnity.
> Del Rosario died in a boating accident. The heirs filed a claim and Equitable paid
them P1,000.
> The heir filed a complaint for recovery of the balance of P2,000, claiming that the
insurere should pay him P3,000 as stated in the policy.
Issue:
Whether or not the heir is entitled to recover P3,000.
Held:
YES.
Generally accepted principles or ruling on insurance, enunciate that where there is
an ambiguity with respect to the terms and conditions of the policy, the same shall
be resolved against the one responsible thereof. The insured has little, if any,
participation in the preparation of the policy. The interpretation of obscure
stipulations in a contract should not favor the party who cause the obscurity.
San Miguel Brewery V. Law Union And Rock Insurance Co.
Facts:
In the contract of mortgage, the owner P.D. Dunn had agreed, at his own expense,
to insure the mortgaged property for its full value and to indorse the policies in such
manner as to authorize the Brewery Company to receive the proceeds in case of loss
and to retain such part thereof as might be necessary to satisfy the remainder then
due upon the mortgage debt. Instead, however, of effecting the insurance himself
Dunn authorized and requested the Brewery Company to procure insurance on the
property in the amount of P15,000 at Dunns expense.
San Miguel insured the property only as mortgagee. Dunn sold the property to Henry
Harding. (he insurance was not assigned by Dunn to Harding. When it was destroyed
by fire, the two companies settled with San Miguel to the extent of the mortgage
credit.
RTC absolved the - companies from the difference. Henry Harding is not entitled to
the difference between the mortgage credit and the face value of the policies. Henry
Harding appealed.
ISSUE$
1. WON San Miguel has insurable interest as mortgagor only to the extent
of the mortgage credit. YES
2. WON Harding has insurable interest as owner. NO
RULING
affirmed
section 19 of the Insurance Act:
a change of interest in any part of a thing insured unaccompanied by a corresponding
change of interest in the insurance, suspends the insurance to an equivalent extent,
until the interest in the thing and the interest in the insurance are vested in the same
person
section 55:
the mere transfer of a thing insured does not transfer the policy, but suspends it until
the same person becomes the owner of both the policy and the thing
insured. 4ndoubtedly these policies of insurance might have been so framed as to
have been5payable to the San Miguel Brewery, mortgagee, as its interest may
appear, remainder to whomsoever, during the continuance of the risk, may become
the owner of the interest insured. such a clause would have proved an intention to
insure the entire interest in the property, not merely the insurable interest of the San
Miguel Brewery, and would have shown exactly to whom the money, in case of loss,
should be paid. But the policies are not so written. (he blame for the situation thus
created rests, however, with the Brewery rather than with the insurance companies,
and there is nothing in the record to indicate that the insurance companies were
requested to write insurance upon the insurable interest of the owner or intended
to make themselves liable to that extent
Fieldmen's Insurance v. vda. de Songco
FIELDMENS INSURANCE v. MERCEDES VARGAS vda. DE SONGCO, et al. and CA
1968 / Fernando / Review of CA decision
Federico Songco, a man of scant education [first grader], owned a private jeepney.
He was induced by Fieldmens Insurance agent Benjamin Sambat to apply for a
Common Carriers Liability Insurance Policy covering his motor vehicle. [As testified
by Songcos son Amor later,] Federico said that his vehicle is an owner private
vehicle and not for passengers, but agent Sambat said that they can insure whatever
kind of vehicle because their company is not owned by the government, so they could
do what they please whenever they believe a vehicle is insurable. Songco paid an
annual premium and he was issued a Common Carriers Accident Insurance Policy.
After the policy expired, he renewed the policy. During the effectivity of the renewed
policy, the insured vehicle while being driven by Rodolfo Songco [duly licensed driver
and Federicos son] collided with a car. As a result, Federico and Rodolfo died, while
Carlos (another son) and his wife Angelita, and a family friend sustained physical
injuries.
The lower court held that Fieldmens Insurance cannot escape liability under
a common carrier insurance policy on the pretext that what was insured was a private
vehicle and not a common carrier, the policy being issued upon the agents
insistence. CA affirmed the lower court.
CA DECISION AFFIRMED; FIELDMENS INSURANCE IS LIABLE
From Qua Chee Gan v. Law Union and Rock Insurance Where inequitable conduct
is shown by an insurance firm, it is estopped from enforcing forfeitures in its favor,
in order to forestall fraud or imposition on the insured. Estoppel is primarily based
on the doctrine of good faith and the avoidance of harm that will befall the innocent
party due to its injurious reliance.
Fieldmens Insurance incurred legal liability under the policy. Since some of the
conditions in the policy were impossible to comply with under the existing conditions
at the time and inconsistent with the known facts, the insurer is estopped from
asserting breach of such conditions. Except for the fact that the passengers were not
fare-paying, their status as beneficiaries under the policy is recognized. Even if the be
assumed that there was an ambiguity, such must be strictly interpreted against the
party that caused them.
The contract of insurance is one of perfect good faith (uberrima fides) not for the
insured alone, but equally so for the insurer; in fact, it is more so for the latter, since
its dominant bargaining position carries with it stricter responsibility.
Fieldman Insurance Co. Inc. vs Vda de Songco Case Digest Essay
Fact: Federico Songco of Floridablanca. Pampanga. a adult male of light instruction
being merely a first grader . owned a private jeepney for the twelvemonth 1960.
On September 15. 1960. he was induced by Fieldmens Insurance Company
Pampanga agent Benjamin Sambat to use for a Common Carriers Liability Insurance
Policy covering his motor vehicle Upon paying an one-year premium of P16. 50.
defendant Fieldmens Insurance Company. Inc. issued on September 19. 1960.
Common Carriers Accident Insurance Policy the continuance of which will be for
one ( 1 ) twelvemonth. effectual September 15. 1960 to September 15. 1961. On
September 22. 1961. upon payment of the corresponding premium. the company
renewed the policy by widening the coverage from October 15. 1961 to October 15.
1962. This clip Federico Songcos private jeepney carried Plate No. J-68136-
Pampanga-1961.
On October 29. 1961. during the effectiveness of the renewed policy. the insured
vehicle while being driven by Rodolfo Songco. a duly licensed driver and boy of
Federico ( the vehicle proprietor ) collided with a auto in the municipality of Calumpit.
state of Bulacan. as a consequence of which bad luck Federico Songco ( male parent
) and Rodolfo Songco ( boy ) died. Carlos Songco ( another boy ) . the latters married
woman. Angelita Songco. and a household friend by the name of Jose Manuel
sustained physical hurts of changing grade. 1 Amor Songco. boy of asleep Federico
Songco. declared that when insurance agent Benjamin Sambat was bring oning his
male parent to see his vehicle. he butted in stating: That can non be. Mr. Sambat.
because our vehicle is an owner private vehicle and non for riders. to which agent
Sambat replied: whether our vehicle was an owner type or for riders it could be
insured because their company is non owned by the Government and the
Government has nil to make with their company. So they could make what they
please whenever they believe a vehicle is insurable Issue:
Whether or non the Songcos can claim the insurance returns despite the fact that
the vehicle concerned was an proprietor and non a common bearer. HELD: YES
Opinion: The footing for the favourable judgement is the philosophy announced in
Qua Chee Gan v. Law Union and Rock Insurance Co. . where unjust behavior is shown
by an insurance house. it is estopped from implementing forfeitures in its favour. in
order to prevent fraud or infliction on the insured. This is a instance where the
philosophy of estoppel undeniably calls for application. After suppliant Fieldmens
Insurance Co. . Inc. had led the insured Federico Songco to believe that he could
measure up under the common bearer liability insurance policy. and to come in into
contract of insurance paying the premiums due. it could non. be permitted to alter
its base to the hurt of the inheritors of the insured. lt would now trust on the fact
that the insured owned a private vehicle. non a common bearer. something which it
knew wholly along when non one time but twice its agent. no uncertainty without
any expostulation in its portion. exerted the extreme force per unit area on the
insured. a adult male of light instruction. to come in into such a contract.
This was clearly a misrepresentation on the portion of the company. Article 1377: the
reading of vague words or judicial admissions in a contract shall non prefer the party
who caused the obscureness. In the instance at saloon. even if it be assumed that
there was an ambiguity. taking into history the good known regulation that
ambiguities or obscurenesss must be purely interpreted against the party that caused
them ( fieldman in the present instance ) . This stiff application of the regulation on
ambiguities has become necessary in position of current concern patterns.
The tribunals can non disregard that nowadays monopolies. trusts and concentration
of capital. endowed with overpowering economic power. manage to enforce upon
parties covering with them cutely prepared agreements that the weaker party may
non alter one shred. his engagement in the agreement being reduced to the option
to take it or go forth it labelled since Raymond Saleilles contracts by adherence (
contrats dadhesion ) . in contrast to those entered into by parties dickering on an
equal terms. such contracts ( of which policies of insurance and international
measures of ladling are premier illustrations ) evidently call for greater stringency and
watchfulness on the portion of tribunals of justness with a position to protecting the
weaker party from maltreatments and infliction. and prevent their going traps for the
unwary The contract of insurance is one of perfect good religion ( uberima fides )
non for the insured entirely. but every bit so for the insurance company ; in fact. it is
more so for the latter. since its dominant bargaining place carries with it stricter duty.
This is simply to emphasize that while the morality of the concern universe is non the
morality of establishments of uprightness like the dais and the academia. it can non
fall so low as to be another name for craft or misrepresentation. Furthermore. should
it go on therefore. no tribunal of justness should let itself to impart its blessing and
support. 1awphil. net We have no pick but to acknowledge the pecuniary duty of
suppliant Fieldmens Insurance Co. . Inc. It did non win in its relentless attempt to
avoid following with its duty in the lower tribunal and the Court of Appeals. Much
less should it happen any receptiveness from us for its indefensible and undue
supplication to get away from its liability
Constantino v. Asia Life- Non-payment of Insurance Premiums
87 PHIL 248
Facts:
> Appeal consolidates two cases.
> Asia life insurance Company (ALIC) was incorporated in Delaware.
> For the sum of 175.04 as annual premium duly paid to ALIC, it issued Policy No.
93912 whereby it insured the life of Arcadio Constantino for 20 years for P3T with
Paz Constantino as beneficiary.
First premium covered the period up to Sept. 26, 1942. No further
premiums were paid after the first premium and Arcadio died on Sept. 22,
1944.
> Due to Jap occupation, ALIC closed its branch office in Manila from Jan. 2 1942-
1945.
> On Aug. 1, 1938, ALIC issued Policy no. 78145 covering the lives of Spouses Tomas
Ruiz and Agustina Peralta for the sum of P3T for 20 years. The annual premium
stipulated was regularly paid from Aug. 1, 1938 up to and including Sept. 30, 1940.
Effective Aug. 1, 1941, the mode of payment was changed from annually to
quarterly and such quarterly premiums were paid until Nov. 18, 1941.
Last payment covered the period until Jan. 31, 1942.
Tomas Ruiz died on Feb. 16, 1945 with Agustina Peralta as his beneficiary.
> Due to Jap occupation, it became impossible and illegal for the insured to deal with
ALIC. Aside from this the insured borrowed from the policy P234.00 such that the
cash surrender value of the policy was sufficient to maintain the policy in force only
up to Sept. 7, 1942.
> Both policies contained this provision: All premiums are due in advance and any
unpunctuality in making such payment shall cause this policy to lapse unless and
except as kept in force by the grace period condition.
> Paz Constantino and Agustina Peralta claim as beneficiaries, that they are entitled
to receive the proceeds of the policies less all sums due for premiums in arrears. They
also allege that non-payment of the premiums were caused by the closing of ALICs
offices during the war and the impossible circumstances by the war, therefore, they
should be excused and the policies should not be forfeited.
> Lower court ruled in favor of ALIC.
Issue:
May a beneficiary in a life insurance policy recover the amount thereof although the
insured died after repeatedly failing to pay the stipulated premiums, such failure
being caused by war?
Held:
NO.
Due to the express terms of the policy, non-payment of the premium produces its
avoidance. In Glaraga v. Sun Life, it was held that a life policy was avoided because
the premium had not been paid within the time fixed; since by its express terms, non-
payment of any premium when due or within the 31 day grace period ipso fact caused
the policy to lapse.
When the life insurance policy provides that non-payment of premiums will cause its
forfeiture, war does NOT excuse non-payment and does not avoid
forfeiture. Essentially, the reason why punctual payments are important is that the
insurer calculates on the basis of the prompt payments. Otherwise, malulugi sila.
It should be noted that the parties contracted not only as to peace time conditions
but also as to war-time conditions since the policies contained provisions applicable
expressly to wartime days. The logical inference therefore is that the parties
contemplated the uninterrupted operation of the contract even if armed conflict
should ensue.