Insurance Law Cases Art 36-66.docx

7/26/2019 Insurance Law Cases Art 36-66.docx

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Mrs. Henry Hardingvs

Commercial Union Assurance Company

FACTS: In February 1916, Mrs. Harding applied for car insurance for a

Studebaker she received as a gift fro her husband. She !as assisted by

Sith, "ell, and #o. !hich !as the duly authori$ed representative %insurance

agent& of #oercial 'nion (ssurance #opany in the )hilippines. *he

car+s value !as estiated !ith the help of an eperienced echanic %Mr.

Server& of the -uneta arage. *he car !as bought by Mr. Harding for

)/,0.. *he echanic, considering soe repairs done, estiated the

value to be at )2,.. *his estiated value !as the value disclosed by

Mrs. Harding to Sith, "ell, and #o. She also disclosed that the value !as

an estiate ade by -uneta arage %!hich also acts as an agent for Sith,

"ell, and #o&.

In March 1916, a fire destroyed the Studebaker. Mrs. Harding filed an

insurance clai but #oercial 'nion denied it as it insisted that the

representations and averents ade as to the cost of the car !ere false3

and that said stateent !as a !arranty. #oercial 'nion also stated that

the car does not belong to Mrs. Harding because such a gift 4fro her

husband5 is void under the #ivil #ode.

ISSUE: hether or not Mrs. Harding is entitled to the insurance clai.

HELD: 7es. #oercial 'nion is not the proper party to attack the validity of

the gift ade by Mr. Harding to his !ife.

*he stateent ade by Mrs. Harding as to the cost of the car is not a

!arranty. *he evidence does not prove that the stateent is false. In fact, the

evidence sho!s that the cost of the car is ore than the price of theinsurance. *he car !as bought for )/,0. and then thereafter, -uneta

arage ade soe repairs and body paints !hich aounted to )9.. Mr.

Server attested that the car is as good as ne! at the tie the insurance !as

effected.

#oercial 'nion, upon the inforation given by Mrs. Harding, and after an

inspection of the autoobile by its eainer, having agreed that it !as !orth)2,, is bound by this valuation in the absence of fraud on the part of the

insured. (ll stateents of value are, of necessity, to a large etent atters of

opinion, and it !ould be outrageous to hold that the validity of all valued

policies ust depend upon the absolute correctness of such estiated value.

8stefania Saturnino

vs

*he )hilippine (erican -ife Insurance #opany

FACTS:In Septeber 19:, 8stefania Saturnino !as operated for cancer in

!hich her right breast !as reoved. She !as advised by her surgeon that

she+s not totally cured because her cancer !as alignant. In ;oveber

19:, she applied for an insurance policy under )hilalife %)hilippine

(erican -ife Insurance #opany&. She did not disclose the fact that she

!as operated nor did she disclose any edical histories. )hilalife, upon

seeing the clean bill of health fro 8stefania !aived its right to have

8stefania undergo a edical checkup. In Septeber 190, 8stefania died of

pneuonia secondary to influen$a. Her heirs no! seek to enforce the

insurance clai.

ISSUE: hether or not Saturnino is entitled to the insurance clai.


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HELD: ;o. *he concealent of the fact of the operation is fraudulent. 8ven

if, as argued by the heirs, 8stefania never kne! she !as operated for cancer,

there is still fraud in the concealent no atter !hat the ailent she !as

operated for. ;ote also that in order to avoid a policy, it is not necessary that

actual fraud be established other!ise insurance copanies !ill be at the

ercy of any one seeking insurance.

In this

(lso, the fact that )hilalife !aived its right to have 8stefania undergo a

edical eaination is not negligence. "ecause of 8stefania+s concealent,

)hilalife considered edical checkup to be no longer necessary. Had

)hilalife been infored of her operation, she !ould have been ade to

undergo edical checkup to deterine her insurability.

Segundina Musngi, et al.

vs

est #oast -ife Insurance #o.

F(#*S? (rsenio arcia !as insured by the defendant copany in the su of

), effective as of / @uly 1921. He !as again insured by the saecopany for )1, effective as of / Actober 1921. *he t!o policies !ere

valid and subsisting at the tie of his death on 2 Beceber 192/. Ho!ever,

the clai of the beneficiaries Segundina Musngi and "uenaventura arcia

!ere denied by the defendant copany on the ground that the latter

discovered that the insured+s ans!ers in the policy regarding his state of

health !ere false and fraudulent, because the truth !as that the insured,

before ans!ering and signing that applications and before the issuance of

the policies, he had been treated in the eneral Hospital by Br. )ilar #ru$ for

different ailents. Befendant contended that at the outset that the t!o

policies did not create any valid obligation because they !ere fraudulently

obtained by the insured.

ISS'8? hether the ans!ers given by the insured in his applications are

false, and if they !ere the cause, or one of the causes, !hich induced the

defendant to issue the policies.

H8-B? 7es. *he insured kne! that he had suffered fro a nuber ofailents, including incipient pulonary tuberculosis, before subscribing the


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applications, yet he concealed the and oitted the hospital !here he !as

confined as !ell as the nae of the lady physician !ho treated hi. *hat this

concealent and the false stateents constituted fraud, is like!ise clear,

because the defendant by reason thereof accepted the risk !hich it !ould

other!ise have flatly refused. hen not other!ise specially provided for by

the Insurance -a!, the contract of life insurance is governed by the general

rules of the civil la! regarding contracts.

(rticle 1/61 of the #ivil #ode provides that there is no contract unless there

should be, in addition to consent and a definite obGappearsto have been ans!ered, =no.> *he false ans!er above referred to, as !ell as

the others, !as !ritten by the #opanyJs soliciting agent Koulo M. Bavid,in collusion !ith the edical eainer Br. regorio Lalde$, for the purpose ofsecuring the #opanyJs approval of the application so that the policy to beissued thereon ight be credited to said agent in connection !ith the interprovincial contest !hich the #opany !as then holding aong its solicitingagents to boost the sales of its policies.

*he petitioner insists that upon the facts of the case the policies in Duestion

are null and void ab initio and that all that the respondents are entitled to isthe refund of the preius paid thereon.

HELD: )etitioner+s contention is correct. hen 8varisto Feliciano, theapplicant for insurance, signed the application in blank and authori$ed thesoliciting agent andor edical eainer of the #opany to !rite theans!ers for hi, he ade the his o!n agents for that purpose, and he !asresponsible for their acts in that connection. Moreover, fro the facts of thecase !e cannot escape the conclusion that the insured acted in connivance!ith the soliciting agent and the edical eainer of the #opany inaccepting the policies in Duestion. In conclusion, the insured !as a coparticipant in the fraudulent procureent of the policies in Duestion and thatby reason thereof said policies are void ab initio.

Edillon#s

Manila $an%ers Lie

FACTS: In (pril 1969, #aren -apu$ filled out an application for for

insurance under Manila "anker -ife (ssurance #orporation. She stated that

her date of birth !as @uly 11, 19E. 'pon payent of the )hp /.

preiu, she !as issued the insurance policy in (pril 1969. In May 1969,

#aren -apu$ died in a vehicular accident. Kegina 8dillon, !ho !as naed

a beneficiary in the insurance policy sought to collect the insurance

proceeds but Manila "anker denied the clai.


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(pparently, it is a rule of the insurance copany that they !ere not to issue

insurance policies to =persons !ho are under the age of siteen %16& years of

age or over the age of sity %6& years > ;ote, that -apu$ !as already 6

years old !hen she !as applying for the insurance policy.

ISSUE: hether or not 8dillon is entitled to the insurance clai as abeneficiary.

HELD: 7es. #aren -apu$ did not conceal her true age. Bespite this, the

insurance copany still received preiu fro -apu$ and issued the

corresponding insurance policy to her. hen the accident happened, the

insurance policy has been in force for E days already and such tie !as

already sufficient for Manila "anker to notice the fact that -apu$ is already

over 6 years old and thereby cancel the insurance policy. If Manila "anker

failed to act, it is either because it !as !illing to !aive such disDualification3

or, through the negligence or incopetence of its eployees for !hich it has

only itself to blae, it siply overlooked such fact. 'nder the circustances,

Manila "anker is already deeed in estoppel.

&on'ale' Lao#s

(e% Tong Lin Fire ) Marine Insurance

FACTS: on$ales !as issued / fire insurance policies by 7ek for 1*covering his leaf tobacco prducts. *hey !ere stored in on$ales+ building onSoler St., !hich on @an. 11, 19/0, burned do!n. (rt. 2 of the Insurancepolicies provided that? =(ny insurance in force upon all or part of the thingsunsured ust be declared in !riting by the insured and he %insured& shouldcause the copany to insert or ention it in the policy. ithout suchreDuisite, such policy !ill be regarded as null and void and the insured !ill bedeprived of all rights of indenity in case of loss.>

;ot!ithstanding said provision, on$ales entered into other insurance

contracts. hen he sought to clai fro 7ek after the fire, the latter denied

any liability on the ground of violation of (rt. 2 of the said policies. on$ales

ho!ever proved that the insurer kne! of the other insurance policies

obtained by hi long efore the fire, and the insurer did ;A* rescind the

insurance policies in Duestion but deanded and collected fro the insured

the preius.


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Issue:

hether or not 7ek is still entitled to annul the contract.

Held:

*+.

*he action by the insurance copany of taking the preius of the insured

not!ithstanding kno!ledge of violations of the provisions of the policies

aounted to !aiver of the right to annul the contract of insurance.

Tan Chay Heng#s

The ,es" Coas" Lie Insurance Company

FACTS: In (pril 19/, the defendant copany approved a life insurancepolicy in favor of *an #eang for )1, , in !hich the plaintiff !as solebeneficiary. *an #eang died on 1 May 19/ and the follo!ing onth,plaintiff subitted proofs of the death of *an #eang !ith a clai for thepayent of the policy !hich the defendant refused to pay on the grounds offraud and isrepresentation.

*he lo!er court ruled in favor of plaintiff !hich defendant appealed and heldthat the lo!er court erred in holding that an insurer cannot avoid a policy!hich had been procured by fraud unless he brings action to rescind it beforehe is sued thereon %Section E: of the Insurance (ct&.

ISSUE:hether or not Section E: of the Insurance (ct applies in the case atbar.

HELD:;o. In the instant case, it !ill be noted that even in its prayer, thedefendant does not seek to have the alleged insurance contract rescinded. Itdenies that it ever ade any contract of insurance on the life of *an #eang orthat any such a contract ever eisted, and that is the Duestion !hich it seeks

to have litigated by its special defense. In the very nature of things, if thedefendant never ade or entered into the contract in Duestion, there is nocontract to rescind, and, hence, section E: upon !hich the lo!er court basedits decision in sustaining the deurrer does not apply. *herefore, Section E:does not apply.


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Nua #hee an

vs

-a! 'nion (nd Kock Insurance #o., -td. %19&

F(#*S? Nua #hee an o!ns four !arehouses in (lbay. He !as using these

!arehouses to house crops like copra and hep. (ll !arehouses !ere

insured by -a! 'nion and Kock Insurance for the aount of )2:,..

*he insurance states that Nua #hee an should install 11 hydrants in the

!arehouses+ preises. Nua #hee an installed only t!o, but -a! 'nion

nevertheless !ent on !ith the insurance policy and collected preius fro

Nua #hee an. *he insurance contract also provides that =oil> should not be

stored !ithin the preises of the !arehouses.

In 19E, three of the !arehouses !ere destroyed by fire. *he daage

caused aounted to )290k. Nua #hee an deanded insurance pay fro

-a! 'nion but the latter refused as it alleged that after investigation fro

their part, they found out that Nua #hee an caused the fire. -a! 'nion in

fact sued Nua #hee an for (rson.

Nua #hee an !as acDuitted in the arson case. He then deanded that -a!'nion pay up. *his tie, -a! 'nion averred that the insurance contract is

void because Nua #hee an failed to install 11 hydrants3 and that gasoline

!as found in one of the !arehouses.

ISSUE:hether or not the insurance contract is void.

HELD:;o. -a! 'nion cannot eept itself fro paying Nua #hee an

because it is estopped fro invoking the sae. It is a !ell settled rule of la!

that an insurer !hich !ith kno!ledge of facts entitling it to treat a policy as no

longer in force, receives and accepts a preiu on the policy, estopped to

take advantage of the forfeiture.

(lso, gasoline is not one of those ites specifically prohibited fro the

preises of the !arehouses. hat !as entioned !as the !ord =oil> !hich

could ean anything %fro pal oil to lubricant and not gasoline or

kerosene&. *his abiguity is to be interpreted against -a! 'nion because a

contract of insurance is a contract of adhesion. Further, oil is incidental to

Nua #hee an+s business, it being used for otor fuel.


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Solian

vs

'S -ife

FACTS: 'S -ife issued a / yr endo!ent life policy on the


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FACTS:An /2 Septeber 19:2, *an -ee Siong applied for life insurance inthe aount of )0, , effective 6 ;oveber 19:2, !ith petitioners thebeneficiaries thereof. An /6 (pril 19:, *an -ee Siong died of hepatoa. An11 Septeber 19:, respondent copany denied petitioners clai andrescinded the policy by reason of the alleged isrepresentation andconcealent of aterial facts ade by the deceased. *he preius paid!ere thereupon refunded. )etitioners filed a coplaint !ith the Affice of theInsurance #oissioner, !hich !as disissed and affired by the #ourt of

(ppeals.

ISSUE: hether or not respondent copany no longer had the right torescind the contract of insurance as rescission ust allegedly be done duringthe lifetie of the insured !ithin t!o years and prior to the coenceent ofthe action.

HELD:;o. *he pertinent section in the Insurance #ode provides? Section E0.henever a right to rescind a contract of insurance is given to the insurer byany provision of this chapter, such right ust be eercised previous to thecoenceent of an action on the contract. (fter a policy of life insuranceade payable on the death of the insured shall have been in force during thelifetie of the insured for a period of t!o years fro the date of its issue or ofits last reinstateent, the insurer cannot prove that the policy is void ab initioor is rescindable by reason of the fraudulent concealent orisrepresentation of the insured or his agent.

*he socalled Cincontestability clauseC precludes the insurer fro raising thedefenses of false representations or concealent of aterial facts insofar ashealth and previous diseases are concerned if the insurance has been inforce for at least t!o years during the insuredJs lifetie. *he phrase Cduringthe lifetieC found in Section E0 siply eans that the policy is no longerconsidered in force after the insured has died. *he key phrase in the secondparagraph of Section E0 is Cfor a period of t!o years.C *he policy !as issuedon ;oveber 6,19:2 and the insured died on (pril /6,19:.

*he policy !as thus in force for a period of only one year and five onths.#onsidering that the insured died before the t!oyear period had lapsed,respondent copany is not, therefore, barred fro proving that the policy isvoid ab initio by reason of the insuredJs fraudulent concealent orisrepresentation.

-da de Sindayen#s

Insular Lie

FACTS: Sindayen, eployed in the "ureau of )rinting at Manila !ent to*arlac, to spend the #hristas vacation !ith his aunt. *here he applied forfor life insurance in the su of )1, and paid to the agent )1 cash aspart of the first preiu. It !as agreed !ith the agent that the policy, !henand if issued, should be delivered to his aunt !ith !ho he left su of)/6.6 to coplete the payent of the first annual preiu of )E.6.Sindayen returned to Manila and resued his !ork a linotype operator. *hecopany accepted the risk after eaining Sindayen and issued a policy andto the sae agent for delivery to the insured. Sindayen abruptly passeda!ay.

*he policy !hich the copany issued !as received by its agent in *arlac.*he agent delivered the policy to Felicidad 8strada upon her payent of thebalance of the first year+s annual preiu. *he agent asked Felicidad8strada if her nephe! !as in good health and she replied that she believedso. He gave her the policy. *he agent learned of the death of (rturo Sindayenand the aunt to return the policy. He did not return or offer to return thepreiu paid. *he aunt gave hi the policy.

*he copany obtained fro the beneficiary, the !ido! of (rturo Sindayen,her signature to a legal docuent entitled =(##AKB, S(*ISF(#*IA; (;BK8-8(S8> In consideration of the su of )E.6 paid to her by a check ofthe copany, she discharged the copany for all clais . *he said check for)E.6 !as never cashed but returned to the copany. *he !ido! broughtaction to enforce payent of the policy. *he first preiu !as already paidby the insured covering the period fro Beceber 1, 192/. It is to Beceber1, 1922. Hence, this appeal.

ISSUE:A; the said policy never took effect because of paragraph 2 of theapplication for at the tie of its delivery by the agent the insured !as not ingood health.

Held? ;o. )etition granted.

ATI+:*he application !hich the insured signed in *arlac, contained aong othersthe follo!ing provisions?

2. *hat the said policy shall not take effect until the first preiu has beenpaid and the policy has been delivered to and accepted by e, !hile I a ingood health.*here is one line of cases !hich holds that the stipulation contained inparagraph 2 is in the nature of a condition precedent, that is to say, that therecan be no valid delivery to the insured unless he is in good health at the tie.

( nuber of these cases, on the other hand, go to the of holding that the

delivery of the policy by the agent to the insured consuates the contract


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even though the agent kne! that the insured !as not in good health at thetie, the theory being that his kno!ledge is the copany+s kno!ledge andhis delivery of the policy is the copany+s delivery.

e are inclined to the vie! that it is ore consonant !ith the !ell kno!npractice of life insurance copanies and the evidence in the present case torest our decision on the proposition that Mendo$a !as authori$ed by thecopany to ake the delivery of the policy !hen he received the payent ofthe first preiu and he !as satisfied that the insured !as in good health.In the case of Me-aurin vs. Mutual -ife Insurance #o. It is plain, therefore,that upon the facts it is not necessarily a case of !aiver or of estoppel, but acase !here the local agents, in the eercise of the po!ers lodged in the,accepted the preiu and delivered the policy. *hat act binds their principal,the defendant.

*he evidence in the record sho!s that Mendo$a had the authority, given hiby the copany, to !ithhold the delivery of the policy to the insured =until thefirst preiu has been paid and the policy has been delivered to andaccepted by e %the insured& !hile I a in good health. Mendo$a+s decisionthat the condition had been et by the insured and that it !as proper toake a delivery of the policy to hi is

)aragraph E of the application to the effect is not in point. Mendo$a neither!aived nor pretended to !aive any right or reDuireent of the copany. Infact, his inDuiry as to the state of health of the insured discloses that he !asendeavoring to assure hiself that this reDuireent of the copany hadbeen satisfied. In doing so, he acted !ithin the authority conferred on hi byhis agency and his acts !ithin that authority bind the copany. *he copanytherefore having decided that all the conditions precedent to the taking effectof the policy had been coplied !ith, it is no! estopped to assert that itnever intended that the policy should take effect.


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8nriDue$

vs

Sun-ife

FACTS: An Sept. /E 191:, @oaDuin Herrer ade an application to Sun-ifethrough its office in Manila for life annuity. *!o days later, he paid the su of6* to the copany+s anager in its Manila office and !as given a receipt. An;ov. /6, 191:, the head office gave notice of acceptance by cable to Manila.An the sae date, the Manila office prepared a letter notifying Herrer that hisapplication has been accepted and this !as placed in the ordinary channelsof transission, but as far as kno!n !as never actually ailed and neverreceived by Herrer. Herrer died on Bec. /, 191:. *he plaintiff asadinistrator of Herrer+s estate brought this action to recover the 6* paid bythe deceased.

Issue:

hether or not the insurance contract !as perfected.

Held:

*+.

*he contract for life annuity !as ;A* perfected because it had ;A* been

proved satisfactorily that the acceptance of the application ever cae to the

kno!ledge of the applicant. (n acceptance of an offer of insurance ;A*

actually or constructively counicated to the proposer does ;A* ake a

contract of insurane, as the locus poenitentiaeis ended !hen an acceptance

has passed beyond the control of the party.

;A*8? -ife annuity is the opposite of a life insurance. In life annuity, a big

aount is given to the insurance copany, and if after a certain period of

tie the insured is stil living, he is entitled to regular saller aounts for the

rest of his life. 8aples of -ife annuity are pensions. -ife Insurance on the

other hand, the insured during the period of the coverage akes sall

regular payents and upon his death, the insurer pays a big aount to his

beneficiaries.

*ang

vs

#ourt of (ppeals


11/30

FACTS: An Sept. /, /96, -ee Su uat, !ido!, 61 years old and illiterate!ho spoke only #hinese, applied for life insurance for 6* !ith )hilalife.*he application !as in t!o parts, both in 8nglish. *he second part dealt !ithher state of health. Her ans!ers having sho!n that she !as health,)hilalife issued her a policy effective Act. /2, 196 !ith her nephe!Licente *ang as beneficiary.An ;ov. 1, 196, -ee again applied foradditional insurance of her life for E*. Since it !as only recent fro the tieshe first applied, no further edical ea !as ade but she accoplished)art 1 %!hich certified the truthfulness of stateents ade in )art. /&

*he policy !as again approved. An (pri / 1966, -ee Su uat died of -ung

cancer. *ang claied the aount o 1* but )hilalife refused to pay on the

ground that the insured !as guilty of concealent and isrepresentation.

"oth trial court and #( ruled that -ee !as guilty of concealent.

*ang+s position, ho!ever, is that because -ee !as illiterate and spoke only#hinese, she could not be held guilty of concealent of her health history

because the application for insurance !as 8nglish, and the insurer has not

proven that the ters thereof had been fully eplained to her as provided by

(rt. 122/ of #ivil #ode.

ISSUE: hether or not (rt. 122/ applies.

Held:*+.(rt. 122/ is ;A* applicable. 'nder said article, the obligation tosho! that the ters of the contract had been fully eplained to the party !hois unable to read or understand the language of the contract, !hen fraud oristake is alleged, devolves on the party seeking to enforce it. Here, theinsurance copany is ;A* seeking to enforce the contract3 on the contrary, itis seeking to avoid its perforance.

It is petitioner !ho is seeking to enforce it, even as fraud or istake is ;A*

alleged. (ccordingly, )hilalife !as under no obligation to prove that the

ters of the insurance contract !ere fully eplained to the other party. 8ven

if !e !ere to say that the insurer is the one seeking the perforance of the

cont contracts by avoiding paying the clai, it has to be noted as above

stated that there has been ;A iputation of istake of fraud by the illiterate

insured !hose personality is represented by her beneficiary. In su, (rt.

122/ is inapplicable, and considering the findings of both the trial court and

the #( as to the #oncealent of -ee, the S# affirs their decisions.

#oncurring? @., (ntonio

In a contract of insurance, each party ust counicate to the other, in

good faith, all facts !ithin his kno!ledge !hich are aterial to the contract,

and !hich the other has no eans of ascertaining. (s a general rule, the

failure by the insured to disclose conditions affecting the risk of !hich he is

a!are akes the contract voidable at the option of the insurer.

*he reason for this rule is that insurance policies are traditionally contracts

uberriae fidei, !hich eans =ost abundant good faith>, =absolute and

perfect candor or openness and honesty,> =absence of any concealent ordeception ho!ever slight.> Here the #( found that the insured deliberately

concealed aterial facts about her physical condition and history andor

concealed !ith !hoever assisted her in relaying false inforation to the

edical eainer. #ertainly, the petitioner cannot assue inconsistent

positions by attepting to enforce the contract of insurance for the purpose

of collecting the proceeds of the policy and at the sae tie nullify the

contract by claiing that it !as eecuted through f raud or istake.


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;A*8? (rt. 122/? hen one of the parties is unable to read or if the contract

is in a language not understood by hi, and istake or fraud is alleged, the

person enforcing the contract ust sho! that the ters thereof have been

fully eplained to hi.

/ere'#s

Cour" o Appeals

FACTS: )riitivo )ere$ had been insured !ith the "F -ifean Insurance#orporation since 190 for )/,.. In Actober 190:, an agent of-ifean, Kodolfo -alog, visited )ere$ in Nue$on and convinced hi to applyfor additional insurance coverage of ),., to avail of the ongoing

prootional discount of )E. if the preiu !ere paid annually. )riitivo". )ere$ accoplished an application for for the additional insurancecoverage. Lirginia (. )ere$, his !ife, paid )/,:. to -alog. *he receiptissued by -alog indicated the aount received !as a Cdeposit.C

'nfortunately, -alog lost the application for accoplished by )ere$ and so

on Actober /0, 190:, he asked the latter to fill up another application for.

An ;oveber 1, 190:, )ere$ !as ade to undergo the reDuired edical

eaination, !hich he passed. -alog for!arded the application for additional

insurance of )ere$, together !ith all its supporting papers, to the office of "F

-ifean Insurance #orporationn in Nue$on !hich office !as supposed to

for!ard the papers to the Manila office.

An ;oveber /, 190:, )ere$ died !hile he !as riding a banca !hich

capsi$ed during a stor. (t the tie of his death, his application papers for

the additional insurance !ere still !ith the Nue$on office. -alog testified that

!hen he !ent to follo! up the papers, he found the still in the Nue$on

office and so he personally brought the papers to the Manila office of "F-ifean Insurance #orporation. It !as only on ;oveber /:, 190: that said


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papers !ere received in Manila. ithout kno!ing that )ere$ died on

;oveber /, 190:, "F -ifean Insurance #orporation approved the

application and issued the corresponding policy for the ),. on

Beceber /, 190:.

Lirginia !ent to Manila to clai the benefits under the insurance policies ofthe deceased. She !as paid )E,. under the first insurance policy for

)/,. %double indenity in case of accident& but the insurance

copany refused to pay the clai under the additional policy coverage of

),., the proceeds of !hich aount to )1,. in vie! of a triple

indenity rider on the insurance policy.

In its letter of @anuary /9, 1900 to Lirginia (. )ere$, the insurance copany

aintained that the insurance for ),. had not been perfected at the

tie of the death of )riitivo )ere$. #onseDuently, the insurance copany

refunded the aount of )/,:. !hich Lirginia )ere$ had paid.

-ifean filed for the rescission and the declaration of nullity. )ere$, on the

other hand, averred that the deceased had fulfilled all his prestations under

the contract and all the eleents of a valid contract are present. K*# ruled in

favor of )ere$. #( reversed.

ISSUE: hether or not there !as a perfected additional insurance contract.

HELD:*he contract !as not perfected.

Insurance is a contract !hereby, for a stipulated consideration, one party

undertakes to copensate the other for loss on a specified sub


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counicated to the applicant for the latter to accept inasuch as the

applicant at the tie !as already dead.

#oissioner Af Internal Kevenue

vs

-incoln )hilippine -ife Insurance #o., Inc %//&

FACTS: -incoln )hilippine -ife Insurance #o., Inc., %no! @ardine#M( -ifeInsurance #opany, Inc.& issued a special kind of life insurance policy kno!nas the C@unior 8state "uilder )olicyC !ith a distinguishing feature. It hada Cautoatic increase clauseC upon attainent of a certain age by theinsured. #oissioner of Internal Kevenue issued deficiency docuentary

staps ta assessent for the year 190E pertaining to the aount inthe autoatic increase clause. -incoln Duestioned the deficiencyassessents. #ourt of *a (ppeals? found no valid basis and cancelled it. #(affired #*(. #IK clais that Cautoatic increase clauseC in the sub


15/30

Should the copany not issue such a policy, then this agreeent shall benull and void ab initio, and the copany shall be held not to have been onthe risk.C *his eans that the agreeent should not go into effect until thehoe office of the copany should confir it by issuing a policy. *heprovisional policy aounts to nothing but an ackno!ledgent on behalf ofthe copany, that it has received fro the person naed therein the su ofoney agreed upon as the first yearJs preiu upon a policy to be issuedupon the application, if the application is accepted by the copany.

*here can be no contract of insurance unless the inds of the parties haveet in agreeent. In this case, the contract of insurance !as notconsuated by the parties.

*he general rule concerning the agentJs receipt pending approval or issuanceof policy is in several points, according to @oyce?

/. here an agreeent is ade bet!een the applicant and the agent!hether by signing an application containing such condition, or other!ise,that no liability shall attach until the principal approves the risk and a receiptis given buy the agent, such acceptance is erely conditional, and itsubordinated to the act of the copany in approving or re


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In May 19:, Helen died of influen$a !ith coplication of broncho

pneuonia. ;go filed a clai !ith epalife, but the latter denied liability on

the ground that there !as no contract bet!een the insurer and the insured

and a binding receipt is ;A* evidence of such contract.

Issue:

hether or not the binding deposit receipt, constituted a teporary contract

of life insurance.

Held:

*+. *he binding receipt in Duestion !as erely an ackno!ledgeent onbehalf of the copany, that the latter+s branch office had received fro the

applicant, the insurance preiu and had accepted the application sub


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)acific+s contention, for no such preiu could have been paid, since by the

nature of the cover note, it did not contain, as all cover notes do not contain,

particulars of the shipent that !ould serve as basis for the coputation of

the preius. (s a logical conseDuence, no separate preius are

reDuired to be paid on a cover note.

If the note is to be treated as a separate policy instead of integrating it to the

regular policies subseDuently issued, its purpose !ould be eaningless for it

is in a real sense a contract, not a ere application.

San Miguel "re!ery

vs.

-a! 'nion Kock Insurance #opany

FACTS:An @an. 1/, 1910, Bunn ortgaged a parcel of land to SM" tosecure a debt of 1*. Mortgage contract stated that Bunn !as to have theproperty insured at his o!n epense, authori$ing SM" to choose the insurersand to receive the proceeds thereof and retain so uch of the proceeds as!ould cover the ortgage debt. Bunn like!ise authori$ed SM" to take outthe insurance policy for hi. "rias, SM"+s general anager, approached -a!'nion for insurance to the etent of 1* upon the property. In theapplication, "rias stated that SM"+s interest in the property !as erely thatof a ortgagee.

-a! 'nion, not !anting to issue a policy for the entire aount, issued one for):, and procured another policy of eDual aount fro Filipinas #ia deSeguros. "oth policies !ere issued in the nae of SM" only and containedno reference to any other interests in the property. "oth policies reDuiredassignents to be approved and noted on the policy. )reius !ere paid bySM" and charged to Bunn. ( year later, the policies !ere rene!ed.

In 191:, Bunn sold the property to Harding, but no assignent of the policies

!as ade to the latter. )roperty !as destroyed by fire. SM" filed an action

in court to recover on the policies. Harding !as ade a defendant because

by virtue of the sale, he becae the o!ner of the property, although the

policies !ere issued in SM"+s nae.

SM" sought to recover the proceeds to the etent of its ortgage credit !ith

the balance to go to Harding. Insurance #opanies contended that they

!ere not liable to Harding because their liability under the policies !as

liited to the insurable interests of SM" only. SM" eventually reached a

settleent !ith the insurance copanies and !as paid the balance of its

ortgage credit. Harding !as left to fend for hiself. *rial court ruled

against Harding. Hence the appeal.

ISSUE:hether or not the insurance copanies are liable to Harding for thebalance of the proceeds of the / policies.

HELD:;o. 'nder the Insurance (ct, the easure of insurable interest in theproperty is the etent to !hich the insured ight be dainified by the loss orin


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If the !ording had been? =ayable to #$%, mortgagee, as its interests may

appear, remainder to whomsoever, during the continuance of the risk, may

become owner of the interest insured!, it !ould have proved an intention to

insure the entire interest in the property, ;A* erely SM"+s and !ould have

sho!n to !ho the oney, in case of loss, should be paid. 'nfortunately,

this !as not !hat !as stated in the policies.

If during the negotiation for the policies, the parties had agreed that even the

o!ner+s interest !ould be covered by the policies, and the policies had

inadvertently been !ritten in the for in !hich they !ere eventually issued,

the lo!er court !ould have been able to order that the contract be refored

to give effect to the in the sense that the parties intended to be bound.

Ho!ever, there is no clear and satisfactory proof that the policies failed to

reflect the real agreeent bet!een the parties that !ould


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#oDuia

vs.

Fielden+s Insurance

FACTS:An Bec. 1, 1961, Fielden+s Insurance co. issued in favor of theManila 7ello! *aicab a coon carrier insurance policy !ith a stipulationthat the copany shall indenify the insured of the sus !hich the latter!y be held liable for !ith respect to death or bodily in&ury to any faire'

paying passenger including the driver and conductor!.

*he policy also stated that in =the event of the death of the driver, the

ompany shall indemnify his personal representatives and at the ompany(s

option may make indemnity payable directly to the claimants or heirs of the

claimants.>

Buring the policy+s lifetie, a taicab of the insured driven by #oDuia et an

accident and #oDuia died. hen the copany refused to pay the only heirs

of #oDuia, his parents, they instituted this coplaint. *he copany contends

that plaintiffs have no cause of action since the #oDuias have no contractual

relationship !ith the copany.

ISSUE: hether or not plaintiffs have the right to collect on the policy.

HELD: 78S. (though, in general, only parties to a contract ay bring an

action based thereon, this rule is sub


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In the case at bar, the policy under consideration is typical of contracts pour

autrui this character being ade ore anifest by the fact that the deceased

driver paid fifty percent %& of the corresponding preius, !hich !ere

deducted fro his !eekly coissions. 'nder these conditions, it is clear

that the #oDuias G !ho, adittedly, are the sole heirs of the deceased G

have a direct cause of action against the #opany, and, since they could

have aintained this action by theselves, !ithout the assistance of the

insured it goes !ithout saying that they could and did properly


21/30

FACTS: )etitioners and private respondents are brothers and Sisters andare the only heirs and net of kin of regorio del Lal !ho died intestate. It!as found out that the deceased took out insurance on his life for the su ofE* and ade it payable to private respondents as sole beneficiary. (fterregorio+s death, (ndres collected the proceeds of the policy. Af the saidpolicy, (ndres paid 10* to redee soe real property !hich regorio hadsold to third persons during his lifetie.

Said redeption of the property !as ade by (ndres+ lay!er in the nae of

(ndres and the petitioners. %(ccdg to (ndres, said redeption in the nae

of )etitioners and hiself !as !ithout his kno!ledge and that since the

redeption, petitioners have been in possession of the property&.

)etitioners no! contend that the aount of the insurance policy belonged to

the estate of the deceased and not to (ndres personally. )etitioners filed acoplaint for partition of property including the insurance proceeds

(ndres clais that he is the sole o!ner of the proceeds and prayed that he

be declared?

Sole o!ner of the real property, redeeed !ith the use of the insuranceproceeds and its reainder3 )etitioners to account for the use and

occupation of the preises.

ISSUE: hether or not the petitioners have a right to the insuranceproceeds

HELD: *o. *he contract of lifeinsuranceis a special contract and thedestination of the proceeds thereof is deterined by special la!s !hich dealeclusively !ith the sub


22/30

)ascuala Lda. de 8brado also filed her clai as the !ido! of the deceasedinsured. She asserts that she is the one entitled to the insurance proceeds.Insular coenced an action for Interpleader before the trial court as to !hoshould be given the proceeds. *he court declared #arponia as disDualified.

ISSUE:A; a coonla! !ife naed as beneficiary in the life insurancepolicy of a legally arried an can clai the proceeds in case of death of thelatter

Held: *o.

ATI+: Section of the Insurance (ct !hich provides that Cthe insuranceshall be applied eclusively to the proper interest of the person in !hosenae it is adeC

*he !ord CinterestC highly suggests that the provision refers only to theCinsuredC and not to the beneficiary, since a contract of insurance is personalin character. Ather!ise, the prohibitory la!s against illicit relationshipsespecially on property and descent !ill be rendered nugatory, as the saecould easily be circuvented by odes of insurance.

hen not other!ise specifically provided for by the Insurance -a!, thecontract of life insurance is governed by the general rules of the civilla! regulating contracts. (nd under (rticle /1/ of the sae #ode, anyperson !ho is forbidden fro receiving any donation under (rticle :29cannot be naed beneficiary of a fife insurance policy by the person !hocannot ake a donation to hi. #oonla! spouses are barred froreceiving donations fro each other.

(rticle :29 provides that void donations are those ade bet!een persons!ho !ere guilty of adultery or concubinage at the tie of donation.*here is every reason to hold that the bar in donations bet!een legitiatespouses and those bet!een illegitiate ones should be enforced in life

insurance policies since the sae are based on siilar consideration. Solong as arriage reains the threshold of faily la!s, reason and oralitydictate that the ipedients iposed upon arried couple should like!isebe iposed upon etraarital relationship.

( conviction for adultery or concubinage isn+t reDuired eacted before thedisabilities entioned in (rticle :29 ay effectuate. *he article says that inthe case referred to in ;o. 1, the action for declaration of nullity ay bebrought by the spouse of the donor or donee3 and the guilty of the doneeay be proved by preponderance of evidence in the sae action.*he underscored clause neatly conveys that no criinal conviction for theoffense is a condition precedent. *he la! plainly states that the guilt of theparty ay be proved =in the sae acting for declaration of nullity of

donation.> (nd, it !ould be sufficient if evidence preponderates.

*he insured !as arried to )ascuala 8brado !ith !ho she has silegitiate children. He !as also living in !ith hiscoonla! !ife !ith !hohe has t!o children.

K#"#

vs.

#ourt of (ppeals %1990&

FACTS:A7' applied for credit facilities and accoodations !ith K#"#.(fter due evaluation, a credit facility in the aount of )2 illion !as initiallygranted. 'pon A7'Js application increased A7'Js credit facility to )illion, then to )9 illion, and finally to )11: illion. (s security for itscredit facilities !ith K#"#, A7' eecuted t!o K8M and t!o #M in favor of

K#"#, !hich !ere registered !ith the Kegistry of Beeds at. 'nder each ofthese four ortgage contracts, A7' coitted itself to insure theortgaged property !ith an insurance copany approved by K#"#, andsubseDuently, to endorse and deliver the insurance policies to K#"#. A7'obtained in its nae a total of 1 insurance policies fro MI#A. In February199/, (lchester Insurance (gency, Inc., the insurance agent !here A7'obtained the Malayan insurance policies, issued nine endorseents in favorof K#"# seeingly upon instructions of A7'.

An (pril /:, 199/, one of A7'Js factory buildings in Lalen$uela !as gutted

by fire. #onseDuently, A7' subitted its clai for indenity. MI#A denied

the clai on the ground that the insurance policies !ere either attached

pursuant to !rits of attachentsgarnishents issued by various courts or

that the insurance proceeds !ere also claied by other creditors of A7'

alleging better rights to the proceeds than the insured.

A7' filed a coplaint for specific perforance and daages. K#"#, one

of A7'Js creditors, also filed !ith MI#A its foral clai over the proceeds

of the insurance policies, but said clais !ere also denied for the sae


23/30

reasons that (#A denied A7'Js clais. Ho!ever, because the

endorseents do not bear the signature of any officer of A7', the trial

court, as !ell as the #ourt of (ppeals, concluded that the endorseents are

defective and held that K#"# has no right over the insurance proceeds.

ISSUE:hether or not K#"# has a right over the insurance proceeds.

HELD: K#"# has a right over the insurance proceeds.

It is settled that a ortgagor and a ortgagee have separate and distinct

insurable interests in the sae ortgaged property, such that each one of

the ay insure the sae property for his o!n sole benefit. *here is no

Duestion that A7' could insure the ortgaged property for its o!n

eclusive benefit. In the present case, although it appears that A7'

obtained the sub


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of and for securing A7'Js credit facilities fro K#"#. *he ortgage

contracts contained coon provisions !hereby A7', as ortgagor,

undertook to have the ortgaged property properly covered against any loss

by an insurance copany acceptable to K#"#.

/. A7' voluntarily procured insurance policies to cover the ortgaged

property fro MI#A, no less than a sister copany of K#"# and definitely

an acceptable insurance copany to K#"#.

2. 8ndorseent docuents !ere prepared by MI#AJs under!riter,

(lchester Insurance (gency, Inc., and copies thereof !ere sent to A7',

MI#A and K#"#. A7' did not assail, until of late, the validity of said

endorseents.

E. A7' continued until the occurrence of the fire, to en


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(ny person !ho is forbidden fro receiving any donation under (rticle :29cannot be naed beneficiary of a life insurance policy of the person !hocannot ake any donation to hi.

If a concubine is ade the beneficiary, it is believed that the insurancecontract !ill still reain valid, but the indenity ust go to the legal heirs andnot to the concubine, for evidently, !hat is prohibited under (rt. /1/ is thenaing of the iproper beneficiary.

S8#*IA; 2. *he insurance proceeds shall be applied eclusively to theproper interest of the person in !hose nae or for !hose benefit it is adeunless other!ise specified in the policy.

K? only persons entitled to clai the insurance proceeds are either theinsured, if still alive3 or the beneficiary, if the insured is already deceased,upon the aturation of the policy.

8R? situation !here the insurance contract !as intended to benefit thirdpersons !ho are not parties to the sae in the for of favorable stipulationsor indenity. In such a case, third parties ay directly sue and clai fro the

insurer.

It is only in cases !here the insured has not designated any beneficiary, or!hen the designated beneficiary is disDualified by la! to receive theproceeds, that the insurance policy proceeds shall redound to the benefit ofthe estate of the insured.

De#elopmen" Insurance Corpora"ion#s.

IAC 1&.. *o. 23456 7uly 35! 3895

FACTS: ( fire occurred in the building of )hilippine 'nion. It sued forrecovery of daages fro the petitioner on the basis of an insurance

contract bet!een the. *he petitioner failed to ans!er on tie despite thenuerous etensions it asked for. It !as declared in default by the trial court.

(


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criinal action filed against -adines as reDuired by the conditions of thebond. -ast, -adines is an indispensable party but !as not


27/30

;e! -ife 8nterprises

L. #ourt Af (ppeals %199/&

FACTS: An May 1, 1901, estern uaranty #orporation issuedFire Insurance )olicy to ;e! -ife 8nterprises for )2,, and !asrene!ed on May, 12, 190/.

An @uly 2,190, Keliance Surety and Insurance #o., Inc. issued FireInsurance )olicy to ;e! -ife 8nterprises for )2,.

An ;oveber 1/, 1901, (dditional ):,.

An February 0, 190/, 8Duitable Insurance #orporation issued Fire Insurance)olicy to ;e! -ife 8nterprises for )/,. An Actober 19, 190/, / a, fireelectrical in nature destroyed the stock in trade !orth )1,,.

@ulian Sy !ent to Keliance to clai but he !as refused. Sae thinghappened !ith the others !ho !ere sister copanies. Sy

violated the CAther Insurance #lauseC. K*#? favored ;e! -ife and againstthe three insurance copanies. #(? reversed failure to state or endorse theother insurance coverage.

ISSUE: ; Sy can clai against the three insurance copanies forviolating the CAther Insurance #lauseC

HELD:;A. *he ters of the contract are clear and unabiguous.

*he insured is specifically reDuired to disclose to the insurer

any other insurance and its particulars !hich he ay have effected onthe sae sub


28/30

cancelled it, effective as of the date of issue. ;otice of cancellation !as givento );" in !riting, sent via Kegistered Mail, personally addressed toFortunato Boingo, );" "ranch Manager. *he latter received it on ;ov. 0,19E.

An (pril 6, 19, the building and its contents !orth )E,60.69 !ereburned. Saura filed a clai and upon presentation of notice of loss !ith );",Saura learned for the 1st tie that the policy had previously been cancelled.Insurer refused to pay Saura.

ISSUE: hether or not the notice of cancellation of the policy to theortgagee %);"& !as already a substantial copliance of the insurer+s dutyto notify the insured of the policy cancellation.

HELD: Fire insurance policies and other contracts of insurance uponproperty, in addition to the coon provision for cancellation of the policyupon reDuest of the insured, generally provide for cancellation by the insurerby notice to the insured for a prescribed period, !hich is usually days, andthe return of the unearned portion of the preiu paid by the insured, suchprovision for cancellation upon notice being authori$ed by statutes in soe


29/30

*he ortgage also reDuired Saura to endorse the insurance policy to );".

*he eo stated? +oss if any, payable to - as their interest may appear,

sub&ect to the terms, conditions and warranties of this policy.

*he policy !as delivered to );" by Saura.

An Act. 1, 19E, barely 12 days after the issuance of the fire insurance,

)IS# canceled the sae, effective as of the date of issue. ;otice of the

cancellation !as sent to );" in !riting and !as received by the bank on

;ov. 0, 19E.

An (pr. 6, 19, the building and its contents !orth )E,60 !ere burned. An

(pril 11, 190, Saura filed a clai !ith )IS# and ortgagee bank.

'pon presentation of notice of loss !ith );", Saura learned for the first tie

that the policy had been previously canceled by )IS#, !hen Saura+s folder in

the bank+s file !as opened and the notice of the cancellation by )IS# !as

found.

ISSUE: hether or not there !as proper cancellation of the policy

HELD: ;A.

*he policy in Duestion does ;A* provide for the notice of cancellation, its

for or period. *he Insurance -a! does not like!ise provide for such

notice. *his being the case, it devolves upon the #ourt to apply the generally

accepted principles of insurance, regarding cancellation of the insurance

policy by the insurer.

(ctual notice of cancellation in a clear and uneDuivocal anner, preferably in

!riting should be given by the insurer to the insuredso that the latter ight

be given an opportunity to obtain other insurance for his o!n protection. *he

notice should be personal to the insurer and not to andor through any

unauthori$ed person by the policy. "oth the )SI# and the );" failed,

!ittingly or un!ittingly to notify Saura of the cancellation ade.

*he insurer contends that it gave notice to );" as ortgagee of the property

and that !as already substantial copliance !ith its duty to notify the insured

of the cancellation of the policy. "ut notice to the bank, as far as Saura

herein is concerned, is not effective notice. )IS# is then ordered to pay

Saura )/9*, the aount involved in the policy sub


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An Actober 1,1901, MI#A allegedly cancelled the policy for nonpayent,of the preiu and sent the corresponding notice to )inca. An Beceber/E, 1901, payent of the preiu for )inca !as received by Boingo

(dora, agent of MI#A. An @anuary 1, 190/, (dora reitted this payent toMI#A, together !ith other payents. An @anuary 10, 190/, )incaJs property!as copletely burned.DECISI+* +F L+,E C+UTS:%1& Insurance #oission? granted clai for copensation for burnedproperty.

ISSUE:hether there !as a valid insurance contract at the tie of the loss.

HELD:7es.( valid cancellation ust, therefore, reDuire concurrence of the follo!ingconditions?%1& *here ust be prior notice of cancellation to the insured3%/& *he notice ust be based on the occurrence, after the effective date ofthe policy, of one or ore of the grounds entioned3

%2& *he notice ust be

%a& in !riting,

%b& ailed, or delivered to the naed insured,%c& at the address sho!n in the policy3

%E& It ust state%a& !hich of the grounds entioned in Section 6E is relied upon and%b& that upon !ritten reDuest of the insured, the insurer !ill furnish the factson !hich the cancellation is based.

MI#AJs clais it cancelled the policy in Duestion on Actober 1, 1901, for

nonpayent of preiu. *o support this assertion, it presented one of itseployees, !ho testified that Cthe original of the endorseent and crediteoC Gpresuably eaning the alleged cancellation G C!ere sent theassured by ail through our ailing sectionC Ho!ever, there is no proof thatthe notice, assuing it coplied !ith the other reDuisites entioned above,!as actually ailed to and received by )inca.

e also look askance at the alleged cancellation, of !hich the insured andMI#AJs agent hiself had no kno!ledge, and the curious fact that although)incaJs payent !as reitted to MI#AJs by its agent on @anuary 1, 190/,MI#A sought to return it to (dora only on February , 190/, after itpresuably had learned of the occurrence of the loss insured against on

@anuary 10, 190/. *hese circustances ake the otives of the petitionerhighly suspect, to say the least, and cast serious doubts upon its candor andbona fides.

Insurance Law Cases Art 36-66.docx

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Transcript of Insurance Law Cases Art 36-66.docx