Anda di halaman 1dari 28

Insurance Law case digests SY 2010-2011

Interpretation of insurance contracts


G.R. NO. L-16138, April 29, 961
1 SCRA 1324

Petitioner obtained personal accident policies which stipulated,
among others, that for partial disability resulting to the loss of
either hand, the insurer shall be liable for P650.00. It was
further stated in the policies that, “That loss of a hand shall
mean the loss by amputation through the bones of the wrist.” A
fire broke out which totally destroyed Broadway Cotton Factory,
Ty’s employer. Fighting his way out of the factory, Ty was
injured on the left hand by a heavy object. As a result, Ty
suffered a temporary total disability of his left hand which
prevented hi from performing his work or labor necessary in the
pursuance of his occupation.

Whether or not the insurer is liable

The insurer was not liable. We can not go beyond the clear and
express conditions of the insurance policies, all of which defined
partial disability as loss of either hand by amputation through
the bones of the wrist. There was no such amputation. All that
was found was that the physical injuries caused temporary total
disability of Ty’s left hand. We might add that the agreement
contained in the insurance policies are clear, express and
specific that only amputation of the left hand should be
considered as a loss thereof, an interpretation that would
include the mere fracture or other temporary disability not
covered by the policies would certainly be unwarranted.
WHEREFORE, the decision appealed from is hereby affirmed,
with costs against the plaintiff-appellant.
Insurance Law case digests SY 2010-2011

Interpretation of insurance contracts


G.R. No. L-21574, June 30, 1966
17 SCRA 599

Eduardo de la Cruz, the son of herein petitioner, was the holder
of an accident insurance policy. In connection with the
celebration of the New Year, the insured, a non-professional
boxer, participated in a boxing contest. In the course of his bout
with another person, likewise a non-professional, of the same
height, weight, and size, Eduardo slipped and was hit by his
opponent on the left part of the back of the head, causing
Eduardo to fall, with his head hitting the rope of the ring. The
insured died with the cause of death reported as “hemorrhage
intercranial, left”. The insurer refused to pay the proceeds of
the policy on the ground that the death of the insured, caused
by his participation in a boxing contest, was not accidental and,
therefore, not covered by insurance.

Whether or not the death of the insured is covered by the policy

The terms “accident” and “accidental” as used in the insurance
contract, have not acquired any technical meaning, and are
construed by the courts in their ordinary and common
acceptation. Thus, the terms have been taken to mean that
which happen by chance or fortuitously, without intention and
design, and which is unexpected, unusual, and unforeseen. An
accident is an event that proceeds from an unknown cause and,
therefore, not expected. Without the unintentional slipping of
the deceased, perhaps he would not have received the blow in
the head and would not have died. Boxing is attended with
some risks of external injuries, but any injury received in the
course of the game could be accidental. In boxing, as in other
equally physically rigorous sports, such as basketball or
baseball, death is not ordinarily anticipated to result. If,
therefore, it ever does, the injury or death can only be
accidental or produced by some unforeseen happening or event
as what occurred in this case. The insurer was liable.
Insurance Law case digests SY 2010-2011

WHEREFORE, in view of the foregoing, considerations, the

decision appealed from is hereby affirmed, with costs against
appellant, so ordered.
Insurance Law case digests SY 2010-2011

Interpretation of insurance contracts


G.R. No. L-21380, May 20, 1966
17 SCRA 228

Misamis Lumber has insured its Ford Falcon motor car for the
amount of P14,000.00 with Capital Insurance & Surety. It is
included in the policy that the insured may authorize the repair
of the said vehicle and that the insurance company will be liable
for it provided that a detailed estimate of the cost is forwarded
immediately to the insurance company and that the estimated
cost of such repair shall not exceed the authorized Repair Limit
which is set at P150.00.
Sometime after, the car figured in a minor accident that broke
its crankcase and flywheel. The plaintiff then had it repaired,
the repair costs totaled P302.27.
However, the insurance company refused to pay for the total
cost of repairs because it claimed that the cost exceeded that
which was stipulated as the repair limit.

Whether or not the insurance company is held liable for the cost
of repair which exceeded the stipulated repair limit

The Insurance Company is liable for only P150.00. The
insurance policy stipulated in paragraph 4 that if the insured
authorizes the repair the liability of the insurer, per its sub-
paragraph (a) is limited to P150.00. The literal meaning of this
stipulation must control, it being the actual contract, expressly
and plainly provided for in the policy.
The insurance contract may be rather onerous (“one-sided” as
the lower court put it), but that in itself does not justify the
abrogation of its express terms, terms which the insured
accepted or adhered to and which is the law between the
contracting parties.
Finally, to require the insurer to prove that the cost of the
repairs ordered by the insured is unreasonable, as the appealed
decision does, when the insurer was not given an opportunity to
inspect and assess the damage before the repairs were made,
strikes us as contrary to elementary justice and equity.
Insurance Law case digests SY 2010-2011

For the foregoing reasons, the appealed decision is hereby

modified by ordering the defendant-appellant Capital Insurance
& Surety Company, Inc. to pay not more than P150.00 to the
plaintiff-appellee Misamis Lumber Corporation. Each party shall
bear its own costs and attorney’s fees.
Insurance Law case digests SY 2010-2011

Interpretation of insurance contracts


G.R. No. L-54171, 28 October 1980
100 SCRA 467

Villacorta had her Colt Lancer car insured with Empire Insurance
Company against own damage, theft and 3rd party liability.
While the car was in the repair shop, one of the employees of
the said repair shop took it out for a joyride after which it
figured in a vehicular accident. This resulted to the death of the
driver and some of the passengers as well as to extensive
damage to the car.
Villacorta filed a claim for total loss with the said insurance
company. However, it denied the claim on the ground that the
accident did not fall within the provisions of the policy either for
the Own Damage or Theft coverage, invoking the policy
provision on “Authorized Driver Clause”.
This was upheld by the Insurance Commission further stating
that the car was not stolen and therefore not covered by the
Theft Clause because it is not evident that the person who took
the car for a joyride intends to permanently deprive the insured
of his/ her car.

Whether or not the insurer company should pay the said claim

Yes. Where the insured’s car is wrongfully taken without the
insured’s consent from the car service and repair shop to whom
it had been entrusted for check-up and repairs (assuming that
such taking was for a joy ride, in the course of which it was
totally smashed in an accident), respondent insurer is liable and
must pay insured for the total loss of the insured vehicle under
the Theft Clause of the policy.
Assuming, despite the totally inadequate evidence, that the
taking was “temporary” and for a “joy ride”, the Court sustains
as the better view that which holds that when a person, either
with the object of going to a certain place, or learning how to
drive, or enjoying a free ride, takes possession of a vehicle
belonging to another, without the consent of its owner, he is
guilty of theft because by taking possession of the personal
property belonging to another and using it, his intent to gain is
Insurance Law case digests SY 2010-2011

evident since he derives therefrom utility, satisfaction,

enjoymet and pleasure.
ACCORDINGLY, the appealed decision is set aside and judgment
is hereby rendered sentencing private respondent to pay
petitioner the sum of P35,000.00 with legal interest from the
filing of the complaint until full payment is made and to pay the
costs of suit.
Insurance Law case digests SY 2010-2011

Interpretation of insurance contracts


G.R. No. L-16215, June 29, 1963
8 SCRA 343

The defendant insurance company issued a personal accident
policy on the life of Francisco del Rosario, herein plaintiff’s son,
binding itself to pay the sum of P1,000.00 to P3,000.00 as
indemnity for the death of the insured. In the said policy, for the
different causes of death, disability of the insured, there is a
corresponding is a specific amount as indemnity. As for death
due to drowning, there was no specific amount, hence, an
ambiguous provision.
Later, Francisco died of drowning as he was forced to jump off
the motor launch on which he was riding on account of fire that
broke out on the said vessel. Simeon then filed a claim for
payment with defendant company which then paid him the sum
of P1,000.00. However, Simeon’s lawyer, informed the said
company that the amount was wrong. In turn, the defendant
company referred the matter to the Insurance Commissioner,
who rendered an opinion that the liability of the company was
only P1,000.00. Hence, it refused to pay more than P1,00.00. A
complaint for the recovery of the balance of P2,000.00 was
instituted with the CFI of Rizal.

Whether or not the amount paid is the correct indemnity

And so it has been generally held that the “terms in an
insurance policy, which are ambiguous, equivocal or uncertain…
are to be construed strictly against, the insurer, and liberally in
favor of the insured so as to effect the dominant purpose of
indemnity or payment to the insured, especially where a
forfeiture is involved,” and the reason for this rule is that the
“insured usually has no voice in the selection or arrangement of
the words employed and that the language of the contract is
selected with great care and deliberation by expert and legal
advisers employed by, and acting exclusively in the interest of,
the insurance company”.
Insurance Law case digests SY 2010-2011

Where two interpretations, equally fair, of languages used in an

insurance policy may be made, that which allows the greater
indemnity will prevail.
At any event, the policy under consideration, covers death or
disability by accidental means, and the appellant insurance
company agreed to pay P1,000.00 to P3,000.00 is indemnity for
death of the insured.
In view of the conclusions reached, it would seem unnecessary
to discuss the other issued raised in the appeal.
The judgment appealed from is hereby affirmed. Without costs.

Interpretation of insurance contracts

G.R. No. 183526, August 25, 2009, 597 SCRA 159

Eulogio, the husband of herein petitioner, applied for an
insurance policy the value of which is P1,500,000.00. Under the
policy terms, Eulogio is obliged to pay the premiums on a
quarterly basis, until the end of the 20-year period of the policy.
It was likewise stated therein that the insured has 31-day grace
period for the payment of each premium subsequent to the first
and that default in any payment of said premiums shall result in
the automatic lapse of the said policy. Eulogio failed to pay a
premium even after the lapse of the 31-day grace period.
Hence, the policy lapsed and became void. He filed an
Application for Reinstatement of said policy and paying the
amount of the premium due. However, Insular Life notified him
that they could not fully process his application because the
amount he paid is inadequate to cover the accrued interests.
Hence, he again applied for the reinstatement of said policy this
time, together with the required amount. The husband of the
insurance agent was the one who received his application
because the agent was away at that time. Within the same day,
the insured died. This fact was unknown to the agent who then
submitted Eulogio’s application for reinstatement to the Insular
Life Regional Office.
Violeta then filed a claim for payment of the full proceeds of the
policy. However, the company said that she is not entitled to
the insurance proceeds because they claimed that the policy
Insurance Law case digests SY 2010-2011

was not reinstated during her husband’s lifetime and good


Whether or not Eulogio was able to reinstate the lapsed
insurance policy before his death

NO. The Court agrees with the RTC that the conditions for
reinstatement under the Policy Contract and Application for
Reinstatement were written in clear and simple language, which
could not admit of any meaning or interpretation other than
those that they so obviously embody. Violeta did not adduce
any evidence that Eulogio might have failed to fully understand
the import and meaning of the provisions of his Policy Contract
and/or Application for Reinstatement both of which he
voluntarily signed. While it is a cardinal principle of insurance
law that a policy or contract of insurance is to be construed
liberally in favor of the insured and strictly as against the
insurer company, yet, contracts of insurance, like other
contracts are to be construed according to the sense and
meaning of the terms, which the parties themselves have used,
if such terms are clear and unambiguous, they must be taken
and understood in their plain, ordinary and popular sense.
WHEREFORE, premises considered, the Court DENIES the
instant Petition for Review on Certiorari under Rule 45 of the
Rules of Court. The Court AFFIRMS the Orders dated 10 April
2008 and 3 July 2008 of the RTC of Gapan City, Branch 34, in
Civil Case No. 2177, denying petitioner Violeta R. Lalican’s
Notice of Appeal, on the ground that the Decision dated 30
August 2007 subject thereof, was already final and executor. No
Estoppel as applied to insurance contracts

G.R. No. L-4611, 17 December 1955

Plaintiff-appellee owned four bodegas used for the storage of
copra and hemp. These buildings, together with their contents,
were insured with the defendant company since 1937 and the
loss made payable to the Philippine National Bank as mortgage
of the hemp and crops, to the extent of its interest.
Insurance Law case digests SY 2010-2011

Sometime after, three of the bodegas, together with the

merchandise inside, were completely destroyed by fire of an
undetermined origin. Consequently, Qua Chee Gan notified the
insurance company of his loss. The latter conducted an
extensive investigation. The damage was determined to be
equivalent to P398,562.81 which was later reduced to the full
amount of the insurance, Php370,000.00. However, the
insurance company refused payment, claiming violation of
warranties and conditions, filing of fraudulent claims, and that
the fire had been deliberately caused by the insured or by other
persons in connivance with him.
If moreover argued that since the bodegas insured had an
external wall perimeter of 500 meters or 1,640 feet, the
appellee should have 11 fire hydrants in the compound, and
that he actually had only 2 with a further pair nearby, belonging
to the municipality of Tabaco.

Whether or not the insurer company is liable

YES. The SC is in agreement with the trial court that the
appellant is barred by waiver (or rather estoppel) to claim
violation of the so-called fire hydrants warranty, for the reason
that knowing fully all that the number of hydrants demanded
therein never existed from the very beginning, the appellant
nevertheless issued the policies in question subject to such
warranty, and received the corresponding premiums. It would
be perilously close to conniving at fraud upon the insured to
allow appellant to claims now as void ab initio the policies that
it had issued to the plaintiff without warining of their fatal
defect, of which it was informed, and after it had misled the
defendant into believing that the policies were effective.
The contract of insurance is one of perfect good faith (uferrimal
fidei) not for the insured alone, but equally so for the insurer, in
fact, it is mere so for the latter, since its dominant bargaining
position carries with it stricter responsibility.
We find no reversible error in the judgment appealed from,
wherefore the same is hereby affirmed. Costs against the
Insurance Law case digests SY 2010-2011

Estoppel due to insurer’s inequitable conduct


G.R. No. L-24833, 23 September 1968

Federico Songco, a man who was only able to finish grade 1,
owned a private jeepney which he, through the inducement of
Fieldmen’s insurance agent, insured with the plaintiff company.
The policy is a Common Carrier’s Accident Insurance Policy. The
insurance agent told Federico that whether his vehicle was an
“owner” type or for passengers it could be insured because
their company is not owned by the Governent and that the
Government has nothing to do with their company, hence, they
could do what they please whenever they believe a vehicle is
insurable. During the policy’s covered period, the insured
vehicle while being driven by Rodolfo, a duly licensed driver and
son of Federico figured in a vehicular accident resulting in the
death of both father and son as well as physical injuries to the
other passengers of the jeepney.
The insurance company refused payment.

Whether or not the insurance company is liable

YES. 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.”
After petitioner Fieldmen’s Insurance Co., Inc. had led the
insured Federico Songco to believe that he could qualify under
the common carrier liability insurance policy, and to enter into
contract of insurance paying the premiums due, it could not,
thereafter, in any litigation arising out of such representation,
be permitted to change its stand to the detriment of the heirs of
the insured. As 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, the failure to apply it
in this case would result in a gross travesty of justice.
That is all that needs be said insofar as the first alleged error of
respondent Court of Appeals is concerned, petitioner being
adamant in its far-from-reasonable plea that estoppels could
not be invoked by the heirs of the insured as a bar to the
alleged breach of warranty and condition in the policy. It would
Insurance Law case digests SY 2010-2011

now rely on the fact that the insured owned a private vehicle,
not a common carrier, something which it knew all along when
not once but twice its agent, no doubt without any objection in
its part, exerted the utmost pressure on the insured, a man of
scant education, to enter into such a contract.
WHEREFORE, the decision of respondent Court of Appeals of
July 20, 1965, is affirmed in its entirety. Costs against petitioner
Fieldmen’s Insurance Co., Inc.
Insurance Law case digests SY 2010-2011

Automatic Insurance Coverage


G.R. No. 166245, 9 April 2008

Respondent insurance company entered into a Creditor Group
Life Policy agreement with Eternal Gardens Memorial. Under
said policy, the clients of Eternal who purchased burial lots from
it on installment basis would be insured by Philamlife. The
amount of insurance coverage depended upon the existing
balance of the purchased burial lots. The policy was to be
effective for a period of one year, renewable on a yearly basis.
As required under the said policy, Eternal submitted a list of all
new lot purchasers, including the application of each purchaser
and their corresponding unpaid balances. Included in this list is
a certain John Chuang.
When Chuang died, Eternal sent a letter, together with the
pertinent papers, to Philamlife which served as an insurance
claim for Chuang’s death. Philamlife required that Eternal
submit certain documents relative to its insurance claim for
Chuang’s death. Eternal transmitted said documents which
Philamlife was able to received. However, after more than one
year, Philamlife did not anymore reply to Eternal’s insurance
claim. This prompted Eternal to demand the insurance claims.
However, Philamlife denied the said claim, prompting Eternal to
file a case before the RTC of Makati.

Whether or not Philamlife assumed the risk of loss without
approving the application.

YES. An insurance contract covering the lot purchaser is created
and the same is effective, valid, and binding until terminated by
Philamlife by disapproving the insurance application. The
second sentence of Creditor Group Life Policy No. P-1920 on the
Effective Date of Benefit is in the nature of a resolutory
condition which would lead to the cessation of the insurance
contract. Moreover, the mere inaction of the insurer on the
insurance application must not work to prejudice the insured; it
cannot be interpreted as a termination of the insurance
contract. The termination of the insurance contract by the
insurer must be explicit and unambiguous.
Insurance Law case digests SY 2010-2011

More often than not, insurance contracts are contracts of

adhesion containing technical terms and conditions of the
industry, confusing if at all understandable to laypersons, that
are imposed on those who wish to avail of insurance. As such,
insurance contracts are imbued with public interest that must
be considered whenever the rights and obligations of the
insurer and the insured are to be delineated. Hence, in order to
protect the interest of insurance applicants, insurance
companies must be obligated to act with haste upon insurance
applications, to either deny or approve the same, or otherwise
be bound to honor the application as a valid, binding, and
effective insurance contract.
WHEREFORE, we GRANT the petition.

When estoppel not applied to insurance contracts


G.R. No. L-34768, 24 February 1984
127 SCRA 766

Daniel Adolfson had a subsisting Malayan car insurance policy
with coverage against own damage as well as 3rd party liability
when his car figured in a vehicular accident with another car,
resulting to damage to both vehicles. At the time of the
accident, Adolfson’s car was being driven by James Stokes, who
was authorized to do so by Adolfson. Stokes, an Irish tourist
who had been in the Philippines for only 90 days, had a valid
and subsisting Irish driver’s license but without a Philippine
driver’s license.
Adolfson filed a claim with Malayan but the latter refused to pay
contending that Stokes was not an authorized driver under the
“Authorized Driver” clause of the insurance policy in relation to
Section 21 of the Land Transportation Office.

Whether or not Malayan is liable to pay the insurance claim of

NO. A contract of insurance is a contract of indemnity upon the
terms and conditions specified therein. When the insurer is
called upon to pay in case of loss or damage, he has the right to
insist upon compliance with the terms of the contract. If the
Insurance Law case digests SY 2010-2011

insured cannot bring himself within the terms and conditions of

the contract, he is not entitled as a rule to recover for the loss
or damage suffered. For the terms of the contract constitute the
measure of the insurer’s liability, and compliance therewith is a
condition precedent to the right of recovery.
At the time of the accident, Stokes had been in the Philippines
for more than 90 days. Hence, under the law, he could not drive
a motor vehicle without a Philippine driver’s license. He was
therefore not an “authorized driver” under the terms of the
insurance policy in question, and Malayan was right in denying
the claim of the insured.
Acceptance of premium within the stipulated period for
payment thereof, including the agreed period of grace, merely
assures continued effectivity of the insurance policy in
accordance with its terms. Such acceptance does not estop the
insurer from interposing any valid defense under the terms of
the insurance policy.
The principle of estoppel is an equitable principle rooted upon
natural justice which prevents a person from going back on his
own acts and representations to the prejudice of another whom
he has led to rely upon them. The principle does not apply to
the instant case. In accepting the premium payment of the
insured, Malayan was not guilty of any inequitable act or
representation. There is nothing inconsistent between
acceptance of premium due under an insurance policy and the
enforcement of its terms.
WHEREFORE, the appealed judgment is reversed. The complaint
is dismissed. Costs against appellees.

Change of irrevocable beneficiaries to revocable beneficiaries

need consent of the irrevocable beneficiaries


G.R. No. L-54216, 19 July 1989
175 SCRA 416
On January 15, 1968, Rodolfo Dimayuga procured an ordinary
life insurance policy from the petitioner company and
designated his wife and children as irrevocable beneficiaries of
said policy. In February 22, 1980, Dimayuga filed a petition
before the CFI of Rizal to amend the designation of the
beneficiaries in his life policy from irrevocable to revocable.
Insurance Law case digests SY 2010-2011

1) Whether or not the designation of the irrevocable
beneficiaries could be changed or amended without the
consent of all the irrevocable beneficiaries.
2) Whether or not the irrevocable beneficiaries, one of
whom is already deceased while the others are all
minors, could validly give consent to such amendment

1) NO. Needless to say, the applicable law in the instant
case is the Insurance Act, otherwise known as Act No.
2427 as amended, the policy having been procured in
1968. Under the said law, 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 the policy. Inevitably therefore, based on
the aforequoted 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 concerning the irrevocable beneficiaries may be
legally and validly effected. Both the law and the policy
do not provide for any other exception, thus, abrogating
the contention of the private respondent that said
designation can be amended if the Court finds a just,
reasonable ground to do so.
2) NO. the alleged acquiescence of the six children
beneficiaries of the policy (the beneficiary-wife
predeceased the insured) cannot be considered an
effective ratification to the change of the beneficiaries
from irrevocable to revocable. Indubitable is the fact that
all the six children named as beneficiaries were minors
at the time, for which reason, they could not validly give
their consent. Neither could they act through their father
insured since their interests are quite divergent from one
Therefore, the parent-insured cannot exercise rights
and/or privileges pertaining to the insurance contract for
otherwise, the vested rights of the irrevocable
beneficiaries would be rendered inconsequential.
WHEREFORE, premises considered, the questioned Orders of
the respondent Judge are hereby nullified and set aside.

Common-law spouse is disqualified to be the beneficiary of

Insurance Law case digests SY 2010-2011


G.R. No. L-44059, 28 October 1977
80 SCRA 181

Buenaventura Ebrado was issued by petitioner company an
insurance policy wherein he designated Carponia, his common-
law wife, as his revocable beneficiary.
When Buenaventura died, Carponia filed with the insurer a
claim for the proceeds of the policy in the total amount of
Pascuala Vda. de Ebrado, Buenaventura’s legal wife, likewise
filed her claim as the widow of the deceased insured. She
asserts that she is the one entitled to the insurance proceeds,
not the common-law wife, Carponia.

Whether or not a common-law wife named as beneficiary in the
life insurance policy of a legally married man can claim the
proceeds thereof in case of death of the latter

NO. When not otherwise specifically provided for by the
Insurance Law, the contract of life insurance is governed by the
general rules of the civil law regulating contracts. And under
Article 2012 of the same Code, “any person who is forbidden
from receiving any donation under Article 739 cannot be named
beneficiary of a life insurance policy by the person who cannot
make a donation to him. Common-law spouses are, definitely,
barred from receiving donations from each other.
In essence, a life insurance policy is no different from a civil
donation insofar as the beneficiary is concerned. Both are
founded upon the same consideration: liberality. A beneficiary is
like a donee, because from the premiums of the policy which
the insured pays out of liberality, the beneficiary will receive the
proceeds or profits of said insurance. As a consequence, the
proscription in Article 739 of the new Civil Code should equally
operate in life insurance contracts. The mandate of Article 2012
cannot be laid aside: any person who cannot receive a donation
cannot be named as beneficiary in the life insurance policy of
the person who cannot make the donation. Under American law,
a policy of life insurance is considered as a testament and in
construing it, the courts will, so far as possible treat it as a will
Insurance Law case digests SY 2010-2011

and determine the effect of a clause designating the beneficiary

by rules under which wins are interpreted.
ACCORDINGLY, the appealed judgment of the lower court is
hereby affirmed. Carponia T. Ebrado is hereby declared
disqualified to be the beneficiary of the late Buenaventura C.
Ebrado in his life insurance policy. As a consequence, the
proceeds of the policy are hereby held payable to the estate of
the deceased insured. Costs against Carponia T. Ebrado

Health Care agreement is in the nature of non-life insurance


G.R. No. 125678, 18 March 2002

Ernani Trinos obtained a health care coverage with petitioner
Philamcare. Under the agreement, Trinos was entitled to avail
of hospitalization benefits, whether ordinary or emergency,
listed therein. He was entitled to avail of “out-patient benefits”
such as annual physical examinations, preventive health care
and other out-patient services.
During the period of coverage, Trinos suffered a heart attack
and was hospitalized for one month. During this time, his wife,
Julita Trinos, tried to claim the benefits under the health care
agreement but petitioner company denied her claim on the
ground that the Health Care Agreement was void because there
was concealment regarding Ernani’s medical history. Doctors
allegedly discovered at the time of Ernani’s confinement that he
was hypertensive, diabetic and asthmatic, contrary to his
answer in the application form. Thus Julita paid the
hospitalization expenses herself.
When Ernani died, Julita instituted with the RTC of Manila an
action for damages against petitioner and its president. She
asked for reimbursement of her expenses plus moral damages
and attorney’s fees.

Whether or not the petitioner is liable

YES. The health care agreement was in the nature of non-life
insurance, which is primarily a contract of indemnity. Once the
Insurance Law case digests SY 2010-2011

member incurs hospital, medical or any other expense arising

from sickness, injury or other stipulated contingent, the health
care provider must pay for the same to the extent agreed upon
under the contract.
Petitioner alleges that respondent was not the legal wife of the
deceased member considering that at the time of their
marriage, the deceased was previously married to another
woman who was still alive. The health care agreement is in the
nature of a contract of indemnity. Hence, payment should be
made to the party who incurred the expenses. It is not
controverted that respondent paid all the hospital and medical
expenses. She is therefore entitled to reimbursement. The
records adequately prove the expenses incurred by respondent
for the deceased’s hospitalization, medication and the
professional fees of the attending physicians.
WHEREFORE, in view of the foregoing, the petition is DENIED.
The assailed decision of the Court of Appeals dated December
14, 1995 is AFFIRMED.
Insurance Law case digests SY 2010-2011



G.R. No. 105135, 22 June 1995

Robert John Bacani procured a life insurance contract for
himself from petitioner-company, designating his mother
Bernarda Bacani, herein private respondent, as the beneficiary.
He was issued a policy valued at P100,000.00 with double
indemnity in case of accidental death. Sometime after, the
insured died in a plane crash. Bernarda filed a claim with
petitioner, seeking the benefits of the insurance policy taken by
her son. However, said insurance company rejected the claim
on the ground that the insured did not disclose material facts
relevant to the issuance of the policy, thus rendering the
contract of insurance voidable. Petitioner discovered that two
weeks prior to his application for insurance, the insured was
examined and confined at the Lung Center of the Philippines,
where he was diagnosed for renal failure. The RTC, as affirmed
by the CA, this fact was concealed, as alleged by the petitioner.
But the fact that was concealed was not the cause of death of
the insured and that matters relating to the medical history of
the insured is deemed to be irrelevant since petitioner waived
the medical examination prior to the approval and issuance of
the insurance policy.

Whether or not the concealment of such material fact, despite
it not being the cause of death of the insured, is sufficient to
render the insurance contract voidable

YES. 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.
Anent the finding that the facts concealed had no bearing to the
cause of death of the insured, it is well settled that the insured
need not die of the disease he had failed to disclose to the
insurer. It is sufficient that his non-disclosure misled the insurer
in forming his estimates of the risks of the proposed insurance
policy or in making inquiries.
Insurance Law case digests SY 2010-2011

The SC, therefore, ruled that petitioner properly exercised its

right to rescind the contract of insurance by reason of the
concealment employed by the insured. It must be emphasized
that rescission was exercised within the two-year contestability
period as recognized in Section 48 of The Insurance Code.
WHEREFORE, the petition is GRANTED and the Decision of the
Court of Appeals is REVERSED and SET ASIDE.
Insurance Law case digests SY 2010-2011

Waiver of medical examination


G.R. No. L-16163, 28 February 1963

Estefania Saturnino obtained a 20-year endowment non-medical
insurance. This kind of policy dispenses with the medical
examination of the applicant usually required in ordinary life
policies. However, two months prior to the issuance of the
policy, Saturnino was operated on for cancer, involving
mastectomy of the right breast. She did not make a disclosure
thereof in her application for insurance. On the contrary, she
stated therein that she did not have, nor had she ever had,
among other ailments listed in the application, cancer or other
Sometime after, Saturnino died of pneumonia, secondary to
influenza. Appellants here, who are her surviving husband and
minor child, respectively, demanded payment of the face value
of the policy. The claim was rejected and hence an action was
subsequently instituted.

Whether or not the insured made such false representations of
material facts as to avoid the policy

YES. 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 in making his inquiries.” 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. It is
logical to assume that if appellee had been properly apprised of
the insured’s medical history she would at least have been
made to undergo medical examination in order to determine
her insurability.
A concealment, whether intentional or unintentional, entitles
the insurer to rescind the contract of insurance, concealment
being defined as “negligence to communicate that which a
Insurance Law case digests SY 2010-2011

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
the rate of premium agreed upon. The insurer, relying upon the
belief that the assured will disclose every material facts within
his actual or presumed knowledge, is misled into a belief that
the circumstance withheld does not exist, and he is thereby
induced to estimate the risk upon a false basis that it does not
The judgment appealed from, dismissing the complaint and
awarding the return to appellants of the premium already, paid,
with interest at 6% up to January 29, 1959, affirmed, with costs
against appellants.

Materiality of the information


G.R. No. 92492, 17 June 1993

Jaime Canilang applied for a “non-medical” insurance policy
with respondent Great Pacific Life Assurance Company naming
his wife, Thelma Canilang as his beneficiary. But he did not
disclose the fact that he was diagnosed as suffering from sinus
tachycardia and that he has consulted a doctor twice. Jaime was
issued an ordinary life insurance policy with the face value of
Jaime died of “congestive heart failure”, “anemia”, and “chronic
anemia”. Petitioner widow and beneficiary of the insured, filed a
claim with Great Pacific which the insurer denied upon the
ground that the insured had concealed material information
from it. Hence, Thelma filed a complaint against Great Pacific
with the Insurance Commission for recovery of the insurance

Whether or not the non-disclosure of certain facts about the
insured’s previous health conditions is material to warrant the
denial of the claims of Thelma Canilang

YES. The SC agreed with the Court of Appeals that the
information which Jaime Canilang failed to disclose was material
to the ability of Great Pacific to estimate the probable risk he
Insurance Law case digests SY 2010-2011

presented as a subject of life insurance. Had Canilang disclosed

his visits to his doctor, the diagnosis made and medicines
prescribed by such doctor, in the insurance application, it may
be reasonably assumed that Great Pacific 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 Great Pacific 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 ensure. 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
WHEREFORE, the Petition for Review is DENIED for lack of merit
and the Decision of the Court of Appeals dated 16 October 1989
in C.A.-G.R. SP No. 08696 is hereby AFFIRMED. No
pronouncement as to the costs.

Effect of partial payment of premium


G.R. No. L-22684, 31 August 1967

Plaintiff Philippine Phoenix Surety issued to defendant company
a fire insurance policy for the amount of P300,000.00. The
defendant was obligated to pay P6,051.95 as premium of the
said policy. However, the defendant was only able to pay
P3,000.00. Despite several demands made by the plaintiff on
the defendant to pay the amount of P3,522.09, the latter failed
to pay.

Insurance Law case digests SY 2010-2011

Whether or not the insurance company has the right to demand

the balance of the premium

YES. There is, consequently, no doubt at all that, as between
the insurer and the insured, there was not only a perfected
contract of insurance but a partially performed one as far as the
payment of the agreed premium was concerned. Thereafter the
obligation of the insurer to pay the insured the amount for
which the policy was issued in case the conditions therefor had
been complied with, arose and became binding upon it, while
the obligation of the insured to pay the remainder of the total
amount of the premium due became demandable.
As the contract had become perfected, the parties could
demand from each other the performance of whatever
obligations they had assumed. In the case of the insurer, it is
obvious that it had the right to demand from the insured the
completion of the payment of the premium due or sue for the
rescission of the contract. As it chose to demand specific
performance of the insured’s obligation to pay the balance of
the premium, the latter’s duty to pay is indeed indubitable.
Wherefore, the appealed decision being in accordance with law
and the evidence, the same is hereby affirmed, with costs.
Insurance Law case digests SY 2010-2011

Incontestability Clause


G.R. No. 48049, 29 June 1989

Tan Lee Siong, father of herein petitioners, applied for life
insurance in the amount of P80,000.00 with respondent
company Philippine American Life Insurance Company. Said
application was approved and a corresponding policy was
issued effective November 5, 1973, with petitioners as the
On April 26, 1975, Tan Lee Siong died of hepatoma. Hence,
petitioners filed with respondent company their claim for the
proceeds of the life insurance policy. However, the insurance
company denied the said 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.
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.

Whether or not the insurance company has the right to rescind
the contract of insurance despite the presence of an
incontestability clause

YES. The so-called “incontestability clause” 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 of the Insurance Law
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 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 has lapsed, respondent
company is not, therefore, barred from proving that the policy is
Insurance Law case digests SY 2010-2011

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
November 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.