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GREGORIA CRUZ ARNALDO, in her capacity as the INSURANCE COMMISSIONER, and CORONACION PINCA G.R. No. L-67835 October 12, 1987 FACTS: Coronacion Pinca insured her property for Php 14,000 with Malayan Insurance Company (MICO) for the period July 22, 1981 to July 22, 1982. On October 15, 1981, MICO cancelled the policy for non-payment. On December 24, 1981, Domingo Adora, the agent accepted Pinca's payment and remitted to MICO. On January 18, 1982, Pinca's property was completely burned . She then demanded from MICO for payment of the insured but the latter declined on the ground that the policy had been cancelled due to non-payment. Pinca went to the Insurance Commission, she was ultimately sustained by the public respondent, thus a petition was filed before the SC. ISSUE: Whether or not MICO should be held liable to pay for the insured property. RULING: MICO's acknowledgment of Adora as its agent defeats its contention that he was not authorized to receive the premium payment on its behalf. It is clearly provided in Section 306 of the Insurance Code that: SEC. 306. xxx xxx xxx Any insurance company which delivers to an insurance agant or insurance broker a policy or contract of insurance shall be demmed to have authorized such agent or broker to receive on its behalf payment of any premium which is due on such policy or contract of insurance at the time of its issuance or delivery or which becomes due thereon. And it is a well-known principle under the law of agency that: Payment to an agent having authority to receive or collect payment is equivalent to payment to the principal himself; such payment is complete when the money delivered is into the agent's hands and is a discharge of the indebtedness owing to the principal. The SC denied the petition and affirmed the decision of the Insurance Commission.

Name : Mercy Dedal Cruz Topic : CONTRACT IS CONSIDERED A RISK-DISTRIBUTING DEVICE SPS. ANTONIO A. TIBAY and VIOLETA R. TIBAY and OFELIA M. RORALDO, VICTORINA M. RORALDO, VIRGILIO M. RORALDO, MYRNA M. RORALDO and ROSABELLA M. RORALDO, vs. COURT OF APPEALS and FORTUNE LIFE AND GENERAL INSURANCE CO., INC., G.R. No. 119655 May 24, 1996 FACTS: Violeta R. Tibay and/or Nicolas Roraldo insured their 2-story residential building with Fortune Life and General Insurance Co., Inc. (FORTUNE) for the amount Php 600,000.00 with total premium of P2,983.50. Tibay only paid P600.00 for the period January 23, 1987 to January 23, 1988. On March 8, 1987, the insured building was completely burned. Two days after, Tibay paid the balance premium and on the same day, demanded payment she filed with FORTUNE a claim on the fire insurance policy. FORTUNE denied the claim of Violeta for violation of Policy Condition No. 2 and of Sec. 77 of the Insurance Code. Violeta and other petitioners filed a case for damages. The trial court adjudged FORTUNE liable for the insured value of the building and the personal properties. On appeal, the CA reversed the decision. Hence, a petition was raised to the SC. ISSUE: Whether or not a fire insurance policy is valid, binding and enforceable upon mere partial payment of premium. RULING: Insurance is a contract whereby one undertakes for a consideration to indemnify another against loss, damage or liability arising from an unknown or contingent event. The consideration is the premium, which must be paid at the time and in the way and manner specified in the policy, and if not so paid, the policy will lapse and be forfeited by its own terms. In the desire to safeguard the interest of the assured, it must not be ignored that the contract of insurance is primarily a risk distributing device, a mechanism by which all members of a group exposed to a particular risk contribute premiums to an insurer. From these contributory funds are paid whatever losses occur due to exposure to the peril insured against. Each party therefore takes a risk: the insurer, that of being compelled upon the happening of the contingency to pay the entire sum agreed upon, and the insured, that of parting with the amount required as premium, without receiving anything therefor in case the contingency does not happen. To ensure payment for these losses, the law mandates all insurance companies to maintain a legal reserve fund in favor of those claiming under their policies. It should be understood that the integrity of this fund cannot be secured and maintained if by judicial fiat partial offerings of premiums were to be construed as a legal nexus between the applicant and the insurer despite an express agreement to the contrary. The SC denied the petition and assailed the decision of the CA.


Federico Songco, a man of scant education being only a first grader, applied for a Common Carrier's Liability Insurance Policy for his private jeepney after being induced by agent Benjamin Sambat. After paying the annual premium, Fieldmen's Insurance issued the policy with effectivity on September 15, 1960 to September 15, 1961. On September 22, 1961, Songco renewed the policy coverage from October 15, 1961 to October 15, 1962. On October 29, 1961, the insured vehicle collided with a car leaving Songco and companions dead while Jose Manuel was injured. Fieldmen's Insurance declined to pay the insurance proceeds on the grounds of breach of warranty and condition in the policy. They alleged that the insured jeepney is not a common carrier. The surviving widow and children, as well as Jose Manuel prevailed in the lower court as well as in the CA. Thus a petition was filed in the SC.

ISSUE: Whether or not the respondents are estopped from claiming the insurance proceeds on the grounds of breach of warranty and condition in the policy. RULING: As much, if not much more so than the Qua Chee Gan decision, this is a case where the doctrine of estoppel undeniably calls for application. 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. The conclusion that inescapably emerges from the above is the correctness of the decision of respondent Court of Appeals sought to be reviewed. For, to borrow once again from the language of the Qua Chee Gan opinion: "The contract of insurance is one of perfect good faith (uberima fides) not for the insured alone,but equally so for the insurer; in fact, it is more so for the latter, since its dominant bargaining position carries with it stricter responsibility." This is merely to stress that while the morality of the business world is not the morality of institutions of rectitude like the pulpit and the academe, it cannot descend so low as to be another name for guile or deception. Moreover, should it happen thus, no court of justice should allow itself to lend its approval and support.

Name : Mercy Dedal Cruz Topic : CONTRACT OF INDEMNITY WHITE GOLD MARINE SERVICES, INC., vs. PIONEER INSURANCE AND SURETY CORPORATION AND THE STEAMSHIP MUTUAL UNDERWRITING ASSOCIATION (BERMUDA) LTD. G.R. No. 154514. July 28, 2005 FACTS: White Gold Marine Services, Inc. (White Gold) procured a protection and indemnity coverage for its vessels from The Steamship Mutual Underwriting Association (Bermuda) Limited (Steamship Mutual) through Pioneer Insurance and Surety Corporation (Pioneer). Subsequently, White Gold was issued a Certificate of Entry and Acceptance.Pioneer also issued receipts evidencing payments for the coverage. When White Gold failed to fully pay its accounts, Steamship Mutual refused to renew the coverage. Steamship Mutual thereafter filed a case against White Gold for collection of sum of money to recover the latters unpaid balance. White Gold on the other hand, filed a complaint before the Insurance Commission claiming that Steamship Mutual violated Sections 186 and 187 of the Insurance Code, while Pioneer violated Sections 299, 300 and 301 in relation to Sections 302 and 303, thereof. The Insurance Commission dismissed the complaint. The Court of Appeals affirmed the decision of the Insurance Commissioner. White Gold filed a petition in the SC. ISSUE: Whether or not is engaged in the insurance business in the Philippines. RULING: Basically, an insurance contract is a contract of indemnity. In it, one undertakes for a consideration to indemnify another against loss, damage or liability arising from an unknown or contingent event. In particular, a marine insurance undertakes to indemnify the assured against marine losses, such as the losses incident to a marine adventure. Section 99 of the Insurance Code enumerates the coverage of marine insurance. Relatedly, a mutual insurance company is a cooperative enterprise where the members are both the insurer and insured. In it, the members all contribute, by a system of premiums or assessments, to the creation of a fund from which all losses and liabilities are paid, and where the profits are divided among themselves, in proportion to their interest.17 Additionally, mutual insurance associations, or clubs, provide three types of coverage, namely, protection and indemnity, war risks, and defense costs. A P & I Club is "a form of insurance against third party liability, where the third party is anyone other than the P & I Club and the members." By definition then, Steamship Mutual as a P & I Club is a mutual insurance association engaged in the marine insurance business.

The records reveal Steamship Mutual is doing business in the country albeit without the requisite certificate of authority mandated by Section 187 of the Insurance Code. It maintains a resident agent in the Philippines to solicit insurance and to collect payments in its behalf. We note that Steamship Mutual even renewed its P & I Club cover until it was cancelled due to non-payment of the calls. Thus, to continue doing business here, Steamship Mutual or through its agent Pioneer, must secure a license from the Insurance Commission.

Name : Mercy Dedal Cruz Topic : PERSONAL CONTRACT THE INSULAR LIFE ASSURANCE COMPANY, LTD., vs. CARPONIA T. EBRADO and PASCUALA VDA. DE EBRADO, G.R. No. L-44059 October 28, 1977 FACTS: Buenaventura C. Ebrado, married to Pascuala Ebrado and with six legitimate children was living with his common-law wife Carponia T. Ebrado. They have two children. On September 1, 1968, Buenaventura Cristor Ebrado was issued by The Life Assurance Co., Ltd., Policy No. 009929 on a whole-life for P5,882.00 with a, rider for Accidental Death for the same amount Buenaventura C. Ebrado designated CarponiaT. Ebrado as the revocable beneficiary in his policy. On October 21, 1969, Buenaventura died. Carponia T. Ebrado filed a claim. Pascuala also filed a claimed asserting that she is the legal wife. In doubt as to whom the insurance proceeds shall be paid, the Insular Life filed an action for Interpleader before the CFI Rizal. The trial court disqualified Carponia T. Elardo. On appeal, the CA held that it is a question of law and forwarded the matter before the SC. ISSUE: 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? RULING: It is quite unfortunate that the Insurance Act (RA 2327, as amended) or even the new Insurance Code (PD No. 612, as amended) does not contain any specific provision grossly resolutory of the prime question at hand. Section 50 of the Insurance Act which provides that "(t)he insurance shall be applied exclusively to the proper interest of the person in whose name it is made" cannot be validly seized upon to hold that the mm includes the beneficiary. The word "interest" highly suggests that the provision refers only to the "insured" and not to the beneficiary, since a contract of insurance is personal in character. Otherwise, the prohibitory laws against illicit relationships especially on property and descent will be rendered nugatory, as the same could easily be circumvented by modes of insurance. Rather, the general rules of civil law should be applied to resolve this void in the Insurance Law. Article 2011 of the New Civil Code states: "The contract of insurance is governed by special laws. Matters not expressly provided for in such special laws shall be regulated by this Code." 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 fife insurance policy by the person who cannot make a donation to him. 4 Common-law spouses are, definitely, barred from receiving donations from each other. Article 739 of the new Civil Code provides: The following donations shall be void: 1. Those made between persons who were guilty of adultery or concubinage at the time of donation; Those made between persons found guilty of the same criminal offense, in consideration thereof; 3. Those made to a public officer or his wife, descendants or ascendants by reason of his office. In the case referred to in No. 1, the action for declaration of nullity may be brought by the spouse of the donor or donee; and the guilt of the donee may be proved by preponderance of evidence in the same action. The SC affirmed the decision of the lower court.