INSURANCE- STA.

BARBARA CASE DOCTRINES

Shaaanaps

General Concepts

CASE DOCTRINE
1. Enriquez vs. Sun Life 1. While, as just noticed, the Insurance Act deals with life insurance, it is silent as to the methods to be followed in order that there
Assurance Company of may be a contract of insurance.
Canada
2. The courts who take this view have expressly held that 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 poienitentise is ended when the acceptance has passed beyond the control of the party.

2. 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.

3. An acceptance of an offer of insurance NOT actually or constructively communicated to the proposer does NOT make a contract
of insurane, as the locus poenitentiae is ended when an acceptance has passed beyond the control of the party.

4. Life annuity is the opposite of a life insurance. In life annuity, a big amount is given to the insurance company, and if after a
certain period of time the insured is stil living, he is entitled to regular smaller amounts for the rest of his life. Examples of Life
annuity are pensions. Life Insurance on the other hand, the insured during the period of the coverage makes small regular
payments and upon his death, the insurer pays a big amount to his beneficiaries.
2. Eternal Gardens vs. 1. It must be remembered that an insurance contract is a contract of adhesion which must be construed liberally in favor of the
Philamlife insured and strictly against the insurer in order to safeguard the latter’s interest.

2. Indemnity and liability insurance policies are construed in accordance with the general rule of resolving any ambiguity therein in
favor of the insured, where the contract or policy is prepared by the insurer. A contract of insurance, being a contract of adhesion,
par excellence, any ambiguity therein should be resolved against the insurer; in other words, it should be construed liberally in favor
of the insured and strictly against the insurer. Limitations of liability should be regarded with extreme jealousy and must be
construed in such a way as to preclude the insurer from noncompliance with its obligations. (Malayan vs. CA)

3. When the terms of insurance contract contain limitations on liability, courts should construe them in such a way as to preclude the
insurer from non-compliance with his obligation. Being a contract of adhesion, the terms of an insurance contract are to be
construed strictly against the party which prepared the contract, the insurer. By reason of the exclusive control of the insurance
company over the terms and phraseology of the insurance contract, ambiguity must be strictly interpreted against the insurer and
liberally in favor of the insured, especially to avoid forfeiture. (Philamcare vs. CA)
3. Philamcare Health 1. Where matters of opinion or judgment are called for, answers made in good faith and without intent to deceive will not avoid a
Systems Inc. vs. Court of policy even though they are untrue. Thus, although false, a representation of the expectation, intention, belief, opinion, or judgment
Appeals of the insured will not avoid the policy if there is no actual fraud in inducing the acceptance of the risk, or its acceptance at a lower
rate of premium, and this is likewise the rule although the statement is material to the risk, if the statement is obviously of the
foregoing character, since in such case the insurer is not justified in relying upon such statement, but is obligated to make further
inquiry

2. There is a clear distinction between such a case and one in which the insured is fraudulently and intentionally states to be true,
as a matter of expectation or belief, that which he then knows, to be actually untrue, or the impossibility of which is shown by the

4. Phil. Health Care
Providers, inc vs.
Commissioner of internal
revenue
5. Fortune Insurance and
Surety Co. Inc. vs. Court of
Appeals
6. Sun Insurance Office,
Ltd. vs Court of Appeals &
Nerissa Lim
facts within his knowledge, since in such case the intent to deceive the insurer is obvious and amounts to actual fraud. The
fraudulent intent on the part of the insured must be established to warrant rescission of the insurance contract.
1. Health Maintenance Organizations are not engaged in the insurance business because its agreements are treated as insurance
contracts and the DST is not a tax on the business but an excise on the privilege, opportunity or facility used in the transaction of
the business.
2. Although Group Health’s activities may be considered in one aspect as creating security against loss from illness or accident
more truly they constitute the quantity purchase of well-rounded, continuous medical service by its members. xxx The functions of
such an organization are not identical with those of insurance or indemnity companies. The latter are concerned primarily, if not
exclusively, with risk and the consequences of its descent, not with service, or its extension in kind, quantity or distribution; with the
unusual occurrence, not the daily routine of living. Hazard is predominant. On the other hand, the cooperative is concerned
principally with getting service rendered to its members and doing so at lower prices made possible by quantity purchasing and
economies in operation. Its primary purpose is to reduce the cost rather than the risk of medical care; to broaden the service to the
individual in kind and quantity; to enlarge the number receiving it; to regularize it as an everyday incident of living, like purchasing
food and clothing or oil and gas, rather than merely protecting against the financial loss caused by extraordinary and unusual
occurrences, such as death, disaster at sea, fire and tornado. It is, in this instance, to take care of colds, ordinary aches and pains,
minor ills and all the temporary bodily discomforts as well as the more serious and unusual illness. To summarize, the distinctive
features of the cooperative are the rendering of service, its extension, the bringing of physician and patient together, the preventive
features, the regularization of service as well as payment, the substantial reduction in cost by quantity purchasing in short, getting
the medical job done and paid for; not, except incidentally to these features, the indemnification for cost after the services is
rendered. Except the last, these are not distinctive or generally characteristic of the insurance arrangement. There is, therefore, a
substantial difference between contracting in this way for the rendering of service, even on the contingency that it be needed, and
contracting merely to stand its cost when or after it is rendered.
3. There is another and more compelling reason for holding that the service is not engaged in the insurance business. Absence or
presence of assumption of risk or peril is not the sole test to be applied in determining its status. The question, more broadly, is
whether, looking at the plan of operation as a whole, ‘service’ rather than ‘indemnity’ is its principal object and purpose. Certainly the
objects and purposes of the corporation organized and maintained by the California physicians have a wide scope in the field of
social service. Probably there is no more impelling need than that of adequate medical care on a voluntary, low-cost basis for
persons of small income. The medical profession unitedly is endeavoring to meet that need. Unquestionably this is ‘service’ of a
high order and not ‘indemnity.’
1. It has been aptly observed that in burglary, robbery, and theft insurance, "the opportunity to defraud the insurer — the moral
hazard — is so great that insurers have found it necessary to fill up their policies with countless restrictions, many designed to
reduce this hazard.
2. An insurance contract is a contract of indemnity upon the terms and conditions specified therein. It is settled that the terms of the
policy constitute the measure of the insurer's liability. In the absence of statutory prohibition to the contrary, insurance companies
have the same rights as individuals to limit their liability and to impose whatever conditions they deem best upon their obligations
not inconsistent with public policy.
1. The words "accident" and "accidental" have never acquired any technical signification in law, and when used in an insurance
contract are to be construed and considered according to the ordinary understanding and common usage and speech of people
generally. In-substance, the courts are practically agreed that the words "accident" and "accidental" mean that which happens by
chance or fortuitously, without intention or design, and which is unexpected, unusual, and unforeseen. The definition that has
usually been adopted by the courts is that an accident is an event that takes place without one's foresight or expectation — an event
that proceeds from an unknown cause, or is an unusual effect of a known case, and therefore not expected.

7. Tiu vs Arriesgado
8. VDA. De Maglana vs.
Hon. Consolacion
9. Villacorta vs. The
Insurance Commission and
Empire Insurance Company
10. Andrew Palermo vs.
Pyramid Insurance Co. Ltd
11. Summit Guaranty
Insurance Inc. vs. Hon
Gregoria Arnaldo in her
capacity as Insurance
Commissioner, and FGU
Insurance Corporation
12. Agapito Gutierez,
vs.Capital Insurance Surety
Co.
2. Invoking the case of De la Cruz v. Capital Insurance, 6 says that "there is no accident when a deliberate act is performed unless
some additional, unexpected, independent and unforeseen happening occurs which produces or brings about their injury or death.
1. Whenever a contract contains a stipulation for the benefit of a third person and the moment the third person communicates his
assent thereto, the contract becomes binding upon him. The fact that a third person demands fulfilment of the insurance policy may
be reasonably construed as an assent on his part to the benefit provided in the policy. This provision arms with the requisite legal
personality to bring an action on the insurance policy. (Stipulation pour artrui)
1. The liability of the insurer is based on contract; that of the insured is based on tort.
2. Jurisprudence dictates "[w]here an insurance policy insures directly against liability, the insurer's liability accrues immediately
upon the occurrence of the injury or even upon which the liability depends, and does not depend on the recovery of judgment by the
injured party against the insured."
3. The direct liability of the insurer under indemnity contracts against third party liability does not mean that the insurer can be held
solidarily liable with the insured and/or the other party found at fault. The liability of the insurer is based on contract; that of the
insured is based on tort. X x x [The insurer cannot] be made solidarily liable. X x For if petitioner-insurer were solidarily liable with
said 2 respondents by reason of the indemenity contract against third party liability—under which an insurer can be directly sued by
a third party—this will result in a violation of the principles underlying solidary obligation and insurance contracts.”
1. The main purpose of the "authorized driver" clause, is that a person other than the insured owner, who drives the car on the
insured's order, such as his regular driver, or with his permission, such as a friend or member of the family or the employees of a
car service or repair shop must be duly licensed drivers and have no disqualification to drive a motor vehicle.
2. A car owner who entrusts his car to an established car service and repair shop necessarily entrusts his car key to the shop owner
and employees who are presumed to have the insured's permission to drive the car for legitimate purposes of checking or road-
testing the car. The mere happenstance that the employee(s) of the shop owner diverts the use of the car to his own illicit or
unauthorized purpose in violation of the trust reposed in the shop by the insured car owner does not mean that the "authorized
driver" clause has been violated such as to bar recovery, provided that such employee is duly qualified to drive under a valid driver's
license.
1. The requirement that the driver be "permitted in accordance with the licensing or other laws or regulations to drive the Motor
Vehicle and is not disqualified from driving such motor vehicle by order of a Court of Law or by reason of any enactment or
regulation in that behalf," applies only when the driver" is driving on the insured's order or with his permission." It does not apply
when the person driving is the insured himself.
2. The main purpose of the "authorized driver" clause, as may be seen from its text, is that a person other than the insured owner,
who drives the car on the insured's order, such as his regular driver, or with his permission, such as a friend or member of the family
or the employees of a car service or repair shop, must be duly licensed drivers and have no disqualification to drive a motor vehicle.
1. The cause of action arises only and starts to run upon the denial of the claim by the insurance company. The one-year period
should instead be counted from the date of rejection by the insurer as this is the time when the cause of action accrues. Since in
these cases there has yet been no accrual of cause of action. We hold that prescription has not yet set in.
1. There need be no prior conviction for the crime of theft to make an insurer liable under the theft clause of the policy.
2. The policy defines the term 'authorized driver' to be the insured himself or any person driving on the insured's order or with his
 permission provided he is permitted to drive under the licensing laws.

The Parties

CASE DOCTRINE
1. Filipinas Compania de 1. The Philippine Insurance Law (Act No. 2427, as amended,) in section 8, provides that "anyone except a public enemy may be
Seguros vs. Christern insured." It stands to reason that an insurance policy ceases to be allowable as soon as an insured becomes a public enemy.
Huenefeld and Co.
2. Gulf Resorts Inc. vs. 1. It is basic that all the provisions of the insurance policy should be examined and interpreted in consonance with each other. All its
Philippine Charter parts are reflective of the true intent of the parties. The policy cannot be construed piecemeal. Certain stipulations cannot be
Insurance Corporation segregated and then made to control; neither do particular words or phrases necessarily determine its character.

2. A contract of adhesion is one wherein a party, usually a corporation, prepares the stipulations in the contract, while the other
party merely affixes his signature or his "adhesion" thereto. Consequently, any ambiguity therein is resolved against the insurer, or
construed liberally in favor of the insured.
3. White Gold vs. Pioneer 1. An insurance business is “an association composed of shipowners in general who band together for the specific purpose of
Insurance providing insurance cover on a mutual basis against liabilities incidental to shipowning that the members incur in favor of third
parties.”

2. Since a contract of insurance involves public interest, regulation by the State is necessary. Thus, no insurer or insurance
company is allowed to engage in the insurance business without a license or a certificate of authority from the Insurance
Commission.

3. SEC. 299 No person shall act as an insurance agent or as an insurance broker in the solicitation or procurement of applications
for insurance, or receive for services in obtaining insurance, any commission or other compensation from any insurance company
doing business in the Philippines or any agent thereof, without first procuring a license so to act from the Commissioner.
4. Great Pacific Insurance 1. The fraudulent intent on the part of the insured must be established to entitle the insurer to rescind the contract.
Co. vs. CA Misrepresentation as a 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.
5. Geagonia vs. CA 1. As to a mortgaged property, the mortgagor and the mortgagee have each an independent insurable interest therein and both
interests may be one policy, or each may take out a separate policy covering his interest, either at the same or at separate times.
The mortgagor's insurable interest covers the full value of the mortgaged property, even though the mortgage debt is equivalent to
the full value of the property. The mortgagee's insurable interest is to the extent of the debt, since the property is relied upon as
security thereof, and in insuring he is not insuring the property but his interest or lien thereon. His insurable interest is prima facie
the value mortgaged and extends only to the amount of the debt, not exceeding the value of the mortgaged property. Thus,
separate insurances covering different insurable interests may be obtained by the mortgagor and the mortgagee.

2. It is a cardinal rule on insurance that a policy or insurance contract is to be interpreted liberally in favor of the insured and strictly
against the company, the reason being, undoubtedly, to afford the greatest protection which the insured was endeavoring to secure
when he applied for insurance. It is also a cardinal principle of law that forfeitures are not favored and that any construction which
would result in the forfeiture of the policy benefits for the person claiming thereunder, will be avoided, if it is possible to construe the
policy in a manner which would permit recovery, as, for example, by finding a waiver for such forfeiture.

3. 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.
6. Palileo vs. Cosio 1. The rule is that “where a mortgagee, independently of the mortgagor, insures the mortgaged property in his own name and for his
own interest, he is entitled to the insurance proceeds in case of loss, but in such case, he is not allowed to retain his claim against
the mortgagor, but is passed by subrogation to the insurer to the extent of the money paid.”

2. The mortgagee may insure his interest in the property independently of the mortgagor. In that event, upon the destruction of the
property the insurance money paid to the mortgagee will not inure to the benefit of the mortgagor, and the amount due under the
mortgage debt remains unchanged. The mortgagee, however, is not allowed to retain his claim against the mortgagor, but it passes
by subrogation to the insurer, to the extent of the insurance money paid.

3. Where a mortgage, independently of the mortgagor, insures the mortgaged property in his own name and for his own interest, he
is entitled to the issuance proceeds in case of loan, but in such case, he is not allowed to retain his claim against the mortgagor, but
is passed by subrogation to the insurer to the extent of the money paid.

Insurable Interest

1. Insular Life Assurance 1. A common-law wife named as a beneficiary in the life insurance policy of a legally married man cannot claim the proceeds
Co., Ltd. Vs. Carponia thereof in case the death of the latter. The contract of insurance is govern by the provisions of the new civil code on matters not
Ebrado specifically provided for in the insurance code.

2. Any person who is forbidden from receiving any donation under Article 739 cannot be named beneficiary of a fife insurance policy
by the person who cannot make a donation to him. Common-law spouses are, definitely, barred from receiving donations from each
other.

3. A beneficiary is like a donee, because the premiums of the policy which the insured pays out of liberality, the beneficiary will
receive the proceeds or profits of said insurance.
2. Filipino Merchants 1. An "all risks policy" should be read literally as meaning all risks whatsoever and covering all losses by an accidental cause of any
Insurance Co. vs. CA kind. The terms "accident" and "accidental", as used in insurance contracts, have not acquired any technical meaning. They are
construed by the courts in their ordinary and common acceptance. Thus, the terms have been taken to mean that which happens by
chance or fortuitously, without intention and design, and which is unexpected, unusual and unforeseen. An accident is an event that
takes place without one's foresight or expectation; an event that proceeds from an unknown cause, or is an unusual effect of a
known cause and, therefore, not expected.

2. 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.

3. 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.

4. The basic rule is that the insurance company has the burden of proving that the loss is caused by the risk excepted and for want
of such proof, the company is liable.

5. Contracts of insurance are contracts of indemnity upon the terms and conditions specified in the policy. The agreement has the
force of law between the parties. The terms of the policy constitute the measure of the insurer's liability. If such terms are clear and

3. Gercio v. Sun Life
Assurance Co. of Canada
4. Ong Lim Sing, Jr. vs. Feb
Leasing and Finance
Corporation
5. Heirs of Loreto C.
Maramag represented by
surviving spouse Vicente
Pangilinan Maramag vs.
Eva Verna De Guzman
Maramag et. al
6. Gaisano Cagayan Inc.
vs. Insurance Company of
North America
7. RCBC vs. CA
unambiguous, they must be taken and understood in their plain, ordinary and popular sense.
1. The life insurance policy of the husband made payable to his former wife as beneficiary is the separate property of the beneficiary
and beyond the control of the husband. As the divorce merely dissolved the community property, and in the absence of a statute to
the contrary, the subsequent divorce does not destroy the wife’s rights under the policy.
1. It has also been held that the test of insurable interest in property is whether the assured has a right, title or interest therein that
he will be benefited by its preservation and continued existence or suffer a direct pecuniary loss from its destruction or injury by the
peril insured against. If the defendants were to be regarded as only a lessee, logically the lessor who asserts ownership will be the
one directly benefited or injured and therefore the lessee is not supposed to be the assured as he has no insurable interest.
1. The only persons entitled to claim the insurance proceeds are either the insured, if still alive; or the beneficiary, if the insured is
already deceased, upon the maturation of the policy. The exception to this rule is a situation where the insurance contract was
intended to benefit third persons who are not parties to the same in the form of favorable stipulations or indemnity. In such a case,
third parties may directly sue and claim from the insurer.
1. Anyone who derives a benefit from its existence or would suffer loss from its destruction has an insurable interest in the said
property. The rationale that an obligor should be held exempt from liability when the loss occurs thru a fortuitous event only holds
true when the obligation consists in the delivery of a determinate thing and there is no stipulation holding him liable even in case of
fortuitous event. It does not apply when the obligation is pecuniary in nature.
1. Mortgagor and a mortgagee have separate and distinct insurable interests in the same mortgaged property, such that each one
of them may insure the same property for his own sole benefit although it appears that other party obtained the subject insurance
policies naming itself as the sole payee, the intentions of the parties as shown by their contemporaneous acts, must be given due
consideration in order to better serve the interest of justice and equity.