Interpretation of insurance contracts VIOLETA LALICAN vs. THE INSULAR LIFE ASSURANCE COMPANY LIMITED G.R. No.

183526, August 25, 2009, 597 SCRA 159 FACTS: 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 Eulogios 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 was not reinstated during her husbands lifetime and good health. ISSUE: Whether or not Eulogio was able to reinstate the lapsed insurance policy before his death HELD: 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. Lalicans Notice of Appeal, on the ground t hat the Decision dated 30 August 2007 subject thereof, was already final and executor. No costs.

Philam v Pineda G.R. No. L-54216 July 19, 1989 J. Paras Facts: Pineda procured an ordinary life insurance policy from the petitioner company and designated his wife and children as irrevocable beneficiaries. He then filed a petition to amend the designation of the beneficiaries in his life policy from irrevocable to revocable. The judge granted the request. Petitioner promptly filed a motion but was denied. Hence, this petition. Issues: 1. WON the designation of the irrevocable beneficiaries could be changed or amended without the consent of all the irrevocable beneficiaries. 2. WON the irrevocable minor beneficiaries could give consent to the change in designation Held: No to both. Petition dismissed. Ratio:

Under the Insurance Act, the beneficiary designated in a life insurance contract cannot be changed without the consent of the beneficiary because he has a vested interest in the policy. There was an express stipulation to this effect: It is hereby understood and agreed that, notwithstanding the provisions of this policy to the contrary, inasmuch as the designation of the primary/contingent beneficiary/beneficiaries in this Policy has been made without reserving the right to change said beneficiary/ beneficiaries, such designation may not be surrendered to the Company, released or assigned; and no right or privilege under the Policy may be exercised, or agreement made with the Company to any change in or amendment to the Policy, without the consent of the said beneficiary/beneficiaries. The alleged acquiescence of the six (6) children beneficiaries of the policy cannot be considered an effective ratification due to the fact that they were minors. Neither could they act through their father insured since their interests are quite divergent from one another. 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. Of equal importance is the well-settled rule that the contract between the parties is the law binding on both of them and for so many times, this court has consistently issued pronouncements upholding the validity and effectivity of contracts. Likewise, contracts which are the private laws of the contracting parties should be fulfilled according to the literal sense of their stipulations, for contracts are obligatory, no matter in what form they may be, whenever the essential requisites for their validity are present The change in the designation of was not within the contemplation of the parties. The lower court instead made a new contract for them. It acted in excess of its authority when it did so

DELFIN NARIO and ALEJANDRA SANTOS-NARIO vs.THE PHILIPPINE AMERICAN LIFE INSURANCE COMPANY (G.R. No. L-22796, June 26, 1967) FACTS: Mrs. Nario was issued by respondent Philamlife a life insurance policy. She designated her husband, Delfin and their unemancipated minor son, Ernesto, as her irrevocable beneficiaries. She applied for a loan on the policy for the school expenses of her son. The loan application bore the signature of Delfin as the father-guardian of minor son and as the legal administrator of the minor's properties. Philamlife denied the application because the written consent for the minor son must not only be given by his father as legal guardian but it must also be authorized by the court in a competent guardianship proceeding. After the denial, Mrs. Nario decided to surrender her policy to Philamlife and demanded its cash value of then amounting to P520. Philamlife also denied the surrender of the policy, on the same ground, hence, Nario brought suit. Philamlife claims that under Articles 320 and 326 of the Civil Code, mere written consent given by the father-guardian, for and in behalf of the minor son, without any court authority, was insufficient, inasmuch as the policy loan application and the surrender of the policy involved acts of disposition and alienation of the property rights of the minor, and said acts are not within the powers of the legal administrator. The lower court agreed with Philamlife and dismissed petitioners claim. It held that under the policy, the minor son, as one of the designated irrevocable beneficiaries, "acquired a vested right to all benefits accruing to the policy, including that of obtaining a policy loan to the extent stated in the schedule of values attached to the policy. On appeal to the SC, petitioner averred that the minor's interest amounted to only one-half of the policy's cash surrender value of P520; that payment of the ward's debts is within the powers of the guardian, where no realty is involved (Rule 96, Sec. 2 of the Revised Rules of Court); hence, father may validly agree to the proposed transaction on behalf of the minor without need of court authority.

ISSUE: Can an insurer refuse to grant the loan application (on a cash surrender value and not full face value) and the surrender of the policy claimed by a father-guardian in behalf of his minor son when it is without court authority?

HELD: Yes, the insurer can validly refuse.

The vested interest or right of the beneficiaries in the policy should be measured on its full face value and not on its cash surrender value, for in case of death of the insured, said beneficiaries are paid on the basis of its face value and in case the insured should discontinue paying premiums, the beneficiaries may continue paying it and are entitled to automatic extended term or paid-up insurance options, etc. and that said vested right under the policy cannot be divisible at any given time. As above noted, the full face value of the policy is P5,000 and the minor's vested interest therein, as one of the two irrevocable beneficiaries, consists of one-half () of said amount or P2,500. The transactions in question (policy loan and surrender of policy) constitute acts of disposition or alienation of property rights and not merely of management or administration because they involve the incurring or termination of contractual obligations. Under Articles 320 and 326 of the Civil Code provide that the father, or in his absence the mother, is the lega l administrator of their childs property and when it is worth more than two thousand pesos, as in this case, he should have filed a formal application or petition for guardianship and bond. As there was no such petition for guardianship and bond, the consent given by the father-guardian, was insufficient and ineffective, and defendant-appellee was justified in disapproving the proposed transactions in question. The result would be the same even if interest is worth less than P2,000. The parent's authority over the estate of the ward as a legal-guardian would not extend to acts of encumbrance or disposition, as distinguished from acts of management or administration. Since the law merely constitutes the parent as legal administrator of the child's property (which is a general power), the parent requires special authority for the acts above specified, and this authority can be given only by a court.

G.R. No. 181132

June 5, 2009

Lessons Applicable: To whom insurance proceeds payable (Insurance)

FACTS: Loreto Maramag designated as beneficiary his concubine Eva de Guzman Maramag Vicenta Maramag and Odessa, Karl Brian, and Trisha Angelie (heirs of Loreto Maramag) and his concubine Eva de Guzman Maramag, also suspected in the killing of Loreto and his illegitimate children are claiming for his insurance. Vicenta alleges that Eva is disqualified from claiming

RTC: Granted - civil code does NOT apply CA: dismissed the case for lack of jurisdiction for filing beyond reglementary period

ISSUE: W/N Eva can claim even though prohibited under the civil code against donation

HELD: YES. Petition is DENIED. Any person who is forbidden from receiving any donation under Article 739 cannot be named beneficiary of a life insurance policy of the person who cannot make any donation to him If a concubine is made the beneficiary, it is believed that the insurance contract will still remain valid, but the indemnity must go to the legal heirs and not to the concubine, for evidently, what is prohibited under Art. 2012 is the naming of the improper beneficiary.

SECTION 53. The insurance proceeds shall be applied exclusively to the proper interest of the person in whose name or for whose benefit it is made unless otherwise specified in the policy. GR: only persons entitled to claim the insurance proceeds are either the insured, if still alive; or the beneficiary, if the insured is already deceased, upon the maturation of the policy. EX: situation where the insurance contract was intended to benefit third persons who are not parties to the same in the form of favorable stipulations or indemnity. In such a case, third parties may directly sue and claim from the insurer

It is only in cases where the insured has not designated any beneficiary, or when the designated beneficiary is disqualified by law to receive the proceeds, that the insurance policy proceeds shall redound to the benefit of the estate of the insured

The Insular Life Assurance Company vs Ebrado, 80 SCRA 181 Fact: On September 1, 1968, Buenaventura Ebrado issued by the Insular Life Assurance Policy No 009929 a whole-life plan with a rider for Accidental Death. Buenaventura designated Carponia Ebrado as the revocable beneficiary in his policy. He referred her as his wife.

On October 21, 1969, Buenaventura Ebrad died as a result of an accident when he was hit by a falling tree. Carponia filed with the insurer a claim for the proceeds of the policy as the designated beneficiary therein. Although she admits that she and the insured Buenaventura were merely living as husband and wife without the benefits of marriage. Pascuala de Ebrado, valid wife, also filed her claim as the widow of the deceased insured.

Issue: Can a common-law wife named as beneficiary in the life insurance policy of legally married man claim the proceeds thereof in case of death of the latter?

Ruling: In essence, a life insurance 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 Article739 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 a beneficiary in the life insurance policy of the persons who cannot make the donation.

Note following Articles from the Civil Code:

Article 2011 - "The contract of insurance is governed by special laws. Matters not expressly provided for in such special laws shall be regulated by this Code."

Article 2012 - "Any person who in forbidden from receiving any donation under Article 739 cannot be named beneficiary of a life insurance policy by the person who cannot be make a donation to him."

Article 739- "The donations shall be void:

1.

Those made between persons who were guilty of adultery or concubinage at the title of donation.xx

In the case provided 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 provided by preponderance of evidence in same action."

Cha vs CA Post under case digests, Commercial Law at Saturday, March 31, 2012 Posted by Schizophrenic Mind Facts: Petitioner spouses Nilo Cha and Stella Uy-Cha, as lesseesentered into a lease contract with private respondent CKS Development Corporation as lessor. A stipulation of the lease contract provides that the Lessee is not allowed to insure against fire the chattels, merchandise, textiles, goods and effects placed at any stall or store or space in the leased premises without first obtaining the written consent and approval of the Lessor. If the Lessee violates this the policy is deemed assigned and transferred to the Lessor for his own benefit.

Petitioner took out a policy of fire insurance over the merchandise inside the leased premises with United Insurance without consent of CKS.

On the day the lease contract was to expire a fire broke out inside the leased premises. CKS, wrote a letter to United asking that the proceeds of the fire insurance be paid directly to CKS. United refused. Hence, the latter filed a complaint against the Cha spouses and United.

RTC ruled in favor of CKS. CA affirmed, hence the petition.

Issue: Whether or not CKS can recover from the insurance policy.

Held: No. Section 18 of the Insurance Code provides that: No contract or policy of insurance on property shall be enforceable except for the benefit of some person having an insurable interest i n the property insured.

In the present case, it cannot be denied that CKS has no insurable interest in the goods and merchandise inside the leased premises under the provisions of Section 17 of the Insurance Code: The measure of an insurable interest i n property is the extent to which the insured might be damnified by loss or injury thereof. Therefore, CKS cannot be validly a beneficiary of the fire insurance policy taken by petitioner-spouses. The insurable interest remains with the Cha spouses.

The stipulation in the lease contract is void for being contrary to law and public policy. This is in keeping with the provision under Sec. 25 of the Insurance Code that: Every stipulation in a policy of Insurance for the payment of loss, whether the person insured has or has not any interest in the property insured or that the policy shall be received as proof of such interest and every policy executed by way of gaming or

Insurance Case Digest: Gaisano Cagayan, Inc. V. Insurance Company Of North America (2006)

G.R. No. 147839

June 8, 2006

Lessons Applicable: Existing Interest (Insurance) Laws Applicable: Article 1504,Article 1263, Article 2207 of the Civil Code, Section 13 of Insurance Code

FACTS: Intercapitol Marketing Corporation (IMC) is the maker of Wrangler Blue Jeans. while Levi Strauss (Phils.) Inc. (LSPI) is the local distributor of products bearing trademarks owned by Levi Strauss & Co IMC and LSPI separately obtained from Insurance Company of North America fire insurance policies for their book debt endorsements related to their ready-made clothing materials which have been sold or delivered to various customers and dealers of the Insured anywhere in the Philippines which are unpaid 45 days after the time of the loss February 25, 1991: Gaisano Superstore Complex in Cagayan de Oro City, owned by Gaisano Cagayan, Inc., containing the ready-made clothing materials sold and delivered by IMC and LSPI was consumed by fire. February 4, 1992: Insurance Company of North America filed a complaint for damages against Gaisano Cagayan, Inc. alleges that IMC and LSPI filed their claims under their respective fire insurance policies which it paid thus it was subrogated to their rights Gaisano Cagayan, Inc: not be held liable because it was destroyed due to fortuities event or force majeure

RTC: IMC and LSPI retained ownership of the delivered goods until fully paid, it must bear the loss (res perit domino) CA: Reversed - sales invoices is an exception under Article 1504 (1) of the Civil Code to res perit domino

ISSUE: W/N Insurance Company of North America can claim against Gaisano Cagayan for the debt that was isnured HELD: YES. petition is partly GRANTED. order to pay P535,613 is DELETED insurance policy is clear that the subject of the insurance is the book debts and NOT goods sold and delivered to the customers and dealers of the insured ART. 1504. Unless otherwise agreed, the goods remain at the seller's risk until the ownership therein is transferred to the buyer, but when the ownership therein is transferred to the buyer the goods are at the buyer's risk whether actual delivery has been made or not, except that:

(1) Where delivery of the goods has been made to the buyer or to a bailee for the buyer, in pursuance of the contract and the ownership in the goods has been retained by the seller merely to secure performance by the buyer of his obligations under the contract, the goods are at the buyer's risk from the time of such delivery; IMC and LSPI did not lose complete interest over the goods. They have an insurable interest until full payment of the value of the delivered goods. Unlike the civil law concept of res perit domino, where ownership is the basis for consideration of who bears the risk of loss, in property insurance, one's interest is not determined by concept of title, but whether insured has substantial economic interest in the property Section 13 of our Insurance Code defines insurable interest as "every interest in property, whether real or personal, or any relation thereto, or liability in respect thereof, of such nature that a contemplated peril might directly damnify the insured." Parenthetically, under Section 14 of the same Code, an insurable interest in property may consist in: (a) an existing interest; (b) an inchoate interest founded on existing interest; or (c) an expectancy, coupled with an existing interest in that out of which the expectancy arises. Anyone has an insurable interest in property who derives a benefit from its existence or would suffer loss from its destruction. it is sufficient that the insured is so situated with reference to the property that he would be liable to loss should it be injured or destroyed by the peril against which it is insured an insurable interest in property does not necessarily imply a property interest in, or a lien upon, or possession of, the subject matter of the insurance, and neither the title nor a beneficial interest is requisite to the existence of such an interest

insurance in this case is not for loss of goods by fire but for petitioner's accounts with IMC and LSPI that remained unpaid 45 days after the fire- obligation is pecuniary in nature obligor should be held exempt from liability when the loss occurs thru a fortuitous event only holds true when the obligation consists in the delivery of a determinate thing and there is no stipulation holding him liable even in case of fortuitous event

Article 1263 of the Civil Code in an obligation to deliver a generic thing, the loss or destruction of anything of the same kind does not extinguish the obligation (Genus nunquan perit) The subrogation receipt, by itself, is sufficient to establish not only the relationship of respondent as insurer and IMC as the insured, but also the amount paid to settle the insurance claim Art. 2207. If the plaintiff's property has been insured, and he has received indemnity from the insurance company for the injury or loss arising out of the wrong or breach of contract complained of, the insurance company shall be subrogated to the rights of the insured against the wrongdoer or the person who has violated the contract. As to LSPI, no subrogation receipt was offered in evidence. Failure to substantiate the claim of subrogation is fatal to petitioner's case for recovery of the amount of P535,613

Saturnino vs Philam Life Facts: > 2 months prior to the insurance of the policy, Saturnino was operated on for cancer, involving complete removal of the right breast, including the pectoral muscles and the glands, found in the right armpit. > Notwithstanding the fact of her operation, Saturnino did not make a disclosure thereof in her application for insurance. > She stated therein that she did not have, nor had she ever had, among others listed in the application, cancer or other tumors; that she had not consulted any physician, undergone any operation or suffered any injury within the preceding 5 years. > She also stated that she had never been treated for, nor did she ever have any illness or disease peculiar to her sex, particularly of the breast, ovaries, uterus and menstrual disorders. > The application also recited that the declarations of Saturnino constituted a further basis for the issuance of the policy.

Issue:
Whether or not the insured made such false representation of material facts as to avoid the policy.

Held:
YES. There can be no dispute that the information given by her in the application for insurance was false, namely, that she never had cancer or tumors or consulted any physician or undergone any operation within the preceding period of 5 years. The question to determine is: Are the facts then falsely represented material? The Insurance Law provides that materiality is to be determined not by the event, but solely by the probable and reasonable influence of the facts upon the party to whom the communication is due, in forming his estimate of the proposed contract, or making his inquiries. The contention of appellants is that the facts subject of the representation were not material in view of the non-medical nature of the insurance applied for, which does away with the usual requirement of medical examination before the policy is issued. The contention is without merit. If anything, the waiver of medical examination renders even more material the information required of the applicant concerning previous condition of health and diseases suffered, for such information necessarily constitutes an important factor which the insurer takes into consideration in deciding whether to issue the policy or not. Appellants also contend that there was no fraudulent concealment of the truth inasmuch as the insured herself did not know, since her doctor never told her, that the disease for which she had been operated on was cancer. In the first place, concealment of the fact of the operation itself was fraudulent, as there could not have been any mistake about it, no matter what the ailment.

Secondly, in order to avoid a policy, it is not necessary to show actual fraud on the part of the insured. In this jurisdiction, concealment, whether intentional or unintentional entitled the insurer to rescind the contract of insurance, concealment being defined as negligence to communicate that which a party knows and ought to communicate. The basis of the rule vitiating the contract in cases of concealment is that it misleads or deceives the insurer into accepting the risk, or accepting it at a rate of premium agreed upon. The insurer, relying upon the belief that the insured will disclose every material fact within his actual or presumed knowledge, is misled into a belief that the circumstances withheld does not exist, and he is thereby induced to estimate the risk upon a false basis that it does not exist. Sunlife vs Bacani Facts: > On April 15, 1986, Bacani procured a life insurance contract for himself from Sun Life. He was issued a life insurance policy with double indemnity in case of accidental death. The designated beneficiary was his mother, Bernarda. > On June 26, 1987, the insured died in a plane crash. Bernarda Bacani filed a claim with Sun Life, seeking the benefits of the insurance. Sun Life conducted an investigation and its findings prompted it to reject the claim. > Sun Life discovered that 2 weeks prior to his application, Bacani was examined and confined at the Lung Center of the Philippines, where he was diagnosed for renal failure. During his confinement, the deceased was subjected to urinalysis, ultra-sonography and hematology tests. He did not reveal such fact in his application. > In its letter, Sun Life informed Berarda, that the insured did not disclosed material facts relevant to the issuance of the policy, thus rendering the contract of insurance voidable. A check representing the total premiums paid in the amount of P10,172.00 was attached to said letter. > Bernarda and her husband, filed an action for specific performance against Sun Life. RTC ruled for Bernarda holding that the facts concealed by the insured were made in good faith and under the belief that they need not be disclosed. Moreover, it held that the health history of the insured was immaterial since the insurance policy was "non-medical." CA affirmed.

Issue:
Whether or not the beneficiary can claim despite the concealment.

Held:
NOPE. Section 26 of the Insurance Code is explicit in requiring a party to a contract of insurance to communicate to the other, in good faith, all facts within his knowledge which are material to the contract and as to which he makes no warranty, and which the other has no means of ascertaining. Materiality is to be determined not by the event, but solely by the probable and reasonable

influence of the facts upon the party to whom communication is due, in forming his estimate of the disadvantages of the proposed contract or in making his inquiries (The Insurance Code, Sec 31) The terms of the contract are clear. The insured is specifically required to disclose to the insurer matters relating to his health. The information which the insured failed to disclose were material and relevant to the approval and the issuance of the insurance policy. The matters concealed would have definitely affected petitioner's action on his application, either by approving it with the corresponding adjustment for a higher premium or rejecting the same. Moreover, a disclosure may have warranted a medical examination of the insured by petitioner in order for it to reasonably assess the risk involved in accepting the application. Thus, "good faith" is no defense in concealment. The insured's failure to disclose the fact that he was hospitalized for two weeks prior to filing his application for insurance, raises grave doubts about his bonafides. It appears that such concealment was deliberate on his part.

Canilang vs Great Pacific Life Insurance

Facts:

On June 1982, Jaime Canilang was diagnosed as suffering from sinus tachycardia. Two months later, he was found to have acute bronchitis. The next day, he applied for a nonmedical insurance policy with Great Pacific and named his wife Thelma as his beneficiary. A year later, he died of congestive heart failure, anemia, and chronic anemia. When Thelma filed a claim with Great Pacific, it was denied on the ground that Jaime concealed material information. Thelma filed a complaint against Great Pacific with the Insurance Commission for recovery of the insurance proceeds. She testified that she was not aware of any serious illness suffered by Jaime, and that what she knew was that he died because of a kidney disorder. Great Pacific presented a physician who explained that Jaimes application had been approved based on his medical declaration, and that medical examinations are required only in cases where applicant indicated that he has undergone medical consultation and hospitalization. The Insurance Commission held that there was no intentional concealment on Jaimes part. It also held that Great Pacific waived its right to inquire into Jaimes health condition by issuing the policy despite the lack of answers to some of the pertinent questions in the application. It said BP 874, which voids an insurance contract WON concealment was made intentionally, was not applicable since the law became effective only on 1985. CA reversed IC. CA said that the issue is WON there was material concealment, and not WON Canilang intentionally made material concealment. It held that Jaimes failure to disclose previous medical consultation and treatment constituted material information. CANILANG FAILED TO DISCLOSE MATERIAL INFORMATION The applicable law at that time was PD 1460 (Insurance Code of 1978). Under said law,

the information concealed must be such which the concealing party knew and ought to have communicatedthose which are material to the contract. The test of materiality is determined not by the event, but solely by the probable and reasonable influence of the facts upon the party to whom communication is due, in forming his estimate of the disadvantages of the proposed contract, or in making his inquiries. Canilang failed to disclose material information when he did not indicate under the caption Exceptions that he twice consulted a doctor who found him to be suffering from sinus tachycardia and acute bronchitis. This failure to communicate must have been intentional, since Jaime could have been aware that his heartbeat would rise to high levels and that he consulted a doctor twice before applying for insurance. The preceding statute, Act 2427, provided that a concealment, whether intentional or unintentional, entitles the injured party to rescind a contract of insurance. However, in PD 1460, this phrase was not present. [The current law, BP 874, has the phrase.] SC rejected the ICs unspoken theory that the deletion of the phrase intended to limit the kinds of concealment to intentional concealments. The provision is properly read as referring to ANY concealment [intentional and unintentional cancel each other out]. CA AFFIRMED; PETITION DENIED

Pacific Banking vs CA

Facts: An open Fire Policy issued to Paramount Shirt Manufacturing for Php61,000 on the following: stocks, materils, supplies, furniture, fixture, machinery, equipment contained on the 1st to 3rd floors. Insurance is for a year starting 21 OCTOBER 1964. Paramount Shirt is debtor of Pacific Banking amounting to Php800,000. Goods in policy were held in trust by Paramount for Pacific under thrust receipts. Fire broke out on 4 January 1964. Pacific sent letter of demand to Oriental. Insurance Adjuster of Oriental notified Pacific to submit proof of loss pursuant to Policy Condition 11. Pacific did not accede but asked Insurance Adjuster to verify records form Bureau of Customs. Pacific filed for sum of money against Oriental. Oriental alleged that Pacific prematurely filed a suit, for neither filing a formal claim over loss pursuant to policy nor submitting any proof of loss.

Trial court decided in favor of Pacific. Decision based on technicality. The defense of lack of proof of loss and defects were raised for the 1st time. (On presentation of evidences by Pacific, it was revealed there was violation of Condition No.3, there were undeclared co-insurances under same property Wellington, Empire, Asian. The only declared co-insurances were Malayan, South Sea, and Victory) CA reversed decision. Concealment of other co-insurances is a misrepresentation and can easily be fraud. Issues: (1) Whether or not unrevealed con-insurances is a violation of Policy Condition No.3 (2) Whether or not there was premature filing of action Held: (1) Yes. Policy Condition 3 provides that the insured must give notice of any insurance already in effect or subsequently be in effect covering same property being insured. Failure to do so, the policy shall be forfeited. Failure to reveal before the loss of the 3 other insurances is a clear misrepresentation or a false declaration. The material fact was asked for but was not revealed. Representations of facts are the foundations of the contract. Pacific itself provided for the evidences in trial court that proved existence of misrepresentation. (2) Yes. Policy Condition 11 is a sine qua non requirement for maintaining action. It requires that documents necessary to prove and estimate the loss should be included with notice of loss. Pacific failed to submit formal claim of loss with supporting documents but

shifted the burden to the insurance company. Failing to submit claim is failure for insurance company to reject claim. Thus, a lack of cause of action to file suit. Furthermore, the mortgage clause in the policy specifically provides that the policy is invalidated by reasons of FRAUD, MISREPRESENTATION and FRAUD. Concealment can easily be fraud or misrepresentation. The insured PARAMOUNT is not entitled to proceeds. Moreso, Pacific as indorsee of policy is not entitled.
Great Pacific Life vs Leuterio: Great Pacific Life Assurance Corporation (Grepalife) executed a contract of group life insurance with Development Bank of the Philippines (DBP) wherein Grepalife agreed to insure the lives of eligible housing loan mortgagors of DBP. One such loan mortgagor is Dr. Wilfredo Leuterio. In an application form, Dr. Leuterio answered questions concerning his test, attesting among others that he does not have any heart conditions and that he is in good health to the best of his knowledge. However, after about a year, Dr. Leuterio died due to massive cerebral hemorrhage. When DBP submitted a death claim to Grepalife, the latter denied the claim, alleging that Dr. Leuterio did not disclose he had been suffering from hypertension, which caused his death. Allegedly, such non-disclosure constituted concealment that justified the denial of the claim. Hence, the widow of the late Dr. Leuterio filed a complaint against Grepalife for Specific Performance with Damages. Both the trial court and the Court of Appeals found in favor of the widow and ordered Grepalife to pay DBP. ISSUE: Whether the CA erred in holding Grepalife liable to DBP as beneficiary in a group life insurance contract from a complaint filed by the widow of the decedent/mortgagor HELD: The rationale of a group of insurance policy of mortgagors, otherwise known as the mortgage redemption insurance, is a device for the protection of both the mortgagee and the mortgagor. On the part of the mortgagee, it has to enter into such form of contract so that in the event of the unexpected demise of the mortgagor during the subsistence of the

mortgage contract, the proceeds from such insurance will be applied to the payment of the mortgage debt, thereby relieving the heirs of the mortgagor from paying the obligation. In a similar vein, ample protection is given to the mortgagor under such a concept so that in the event of death, the mortgage obligation will be extinguished by the application of the insurance proceeds to the mortgage indebtedness. In this type of policy insurance, the mortgagee is simply an appointee of the insurance fund. Such loss-payable clause does not make the mortgagee a party to the contract. The insured, being the person with whom the contract was made, is primarily the proper person to bring suit thereon. Subject to some exceptions, insured may thus sue, although the policy is taken wholly or in part for the benefit of another person, such as a mortgagee. And since a policy of insurance upon life or health may pass by transfer, will or succession to any person, whether he has an insurable interest or not, and such person may recover it whatever the insured might have recovered, the widow of the decedent Dr. Leuterio may file the suit against the insurer, Grepalife.
Ng gan Zee vs Asian Crusader

In 1962, Kwon Nam applied for a 20yr endowment insurance on his life with his wife, Ng Gan Zee as the beneficiary. > He stated in his application that he was operated on for tumor of the stomach associated with ulcer. > In 1963, Kwong died of cancer of the liver with metastasis. Asian refused to pay on the ground of alse information. > It was found that prior to his application, Kwong was diagnosed to have peptic ulcers, and that during the operation what was removed from Kwongs body was actually a portion of the stomach and not tumor.

Issue:
Whether or not the contract may be rescinded on the ground of the imperfection in the application form.

Held:
NO. Kwong did not have sufficient knowledge as to distinguish between a tumor and a peptic ulcer. His statement therefore was made in good faith. Asian should have made an inquiry as to the illness and operation of Kwong when it appeared on the face of the application that a question appeared to be imperfectly answered. Asians failure to inquire constituted a waiver of the imperfection in the answer.

PhilamCare vs CA Facts: Ernani Trinos applied for a health care coverage with Philam. He answered no to a question asking if he or his family members were treated to heart trouble, asthma, diabetes, etc. The application was approved for 1 year. He was also given hospitalization benefits and out-patient benefits. After the period expired, he was given an expanded coverage for Php 75,000. During the period, he suffered from heart attack and was confined at MMC. The wife tried to claim the benefits but the petitioner denied it saying that he concealed his medical history by answering no to the aforementioned question. She had to pay for the hospital bills amounting to 76,000. Her husband subsequently passed away. She filed a case in the trial court for the collection of the amount plus damages. She was awarded 76,000 for the bills and 40,000 for damages. The CA affirmed but deleted awards for damages. Hence, this appeal. Issue: WON a health care agreement is not an insurance contract; hence the incontestability clause under the Insurance Code does not apply. Held: No. Petition dismissed. Ratio: Petitioner claimed that it granted benefits only when the insured is alive during the one-year duration. It contended that there was no indemnification unlike in insurance contracts. It supported this claim by saying that it is a health maintenance organization covered by the DOH and not the Insurance Commission. Lastly, it claimed that the Incontestability clause didnt apply because two-year and not one-year effectivity periods were required. Section 2 (1) of the Insurance Code defines a contract of insurance as an agreement whereby one undertakes for a consideration to indemnify another against loss, damage or liability arising from an unknown or contingent event. Section 3 states: every person has an insurable interest in the life and health: (1) of himself, of his spouse and of his children. In this case, the husbands health was the insurable interest. The health care agreement was in the nature of non-life insurance, which is primarily a contract of indemnity. The provider must pay for the medical expenses resulting from sickness or injury. While petitioner contended that the husband concealed materialfact of his sickness, the contract stated that: that any physician is, by these presents, expressly authorized to disclose or give testimony at anytime relative to any information acquired by him in his professional capacity upon any question affecting the eligibility for health care coverage of the Proposed Members. This meant that the petitioners required him to sign authorization to furnish reports

about his medical condition. The contract also authorized Philam to inquire directly to his medical history. Hence, the contention of concealment isnt valid. They cant also invoke the Invalidation of agreement clause where failure of the insured to disclose information was a grounds for revocation simply because the answer assailed by the company was the heart condition question based on the insureds opinion. He wasnt a medical doctor, so he cant accurately gauge his condition. Henrick v Fire- in such case the insurer is not justified in relying upon such statement, but is obligated to make further inquiry. Fraudulent intent must be proven to rescind the contract. This was incumbent upon the provider. Having assumed a responsibility under the agreement, petitioner is bound to answer the same to the extent agreed upon. In the end, the liability of the health care provider attaches once the member is hospitalized for the disease or injury covered by the agreement or whenever he avails of the covered benefits which he has prepaid. Section 27 of the Insurance Code- a concealment entitles the injured party to rescind a contract of insurance. As to cancellation procedure- Cancellation requires certain conditions: 1. Prior notice of cancellation to insured; 2. Notice must be based on the occurrence after effective date of the policy of one or more of the grounds mentioned; 3. Must be in writing, mailed or delivered to the insured at the address shown in the policy; 4. Must state the grounds relied upon provided in Section 64 of the Insurance Code and upon request of insured, to furnish facts on which cancellation is based None were fulfilled by the provider. As to incontestability- The trial court said that under the title Claim procedures of expenses, the defendant Philamcare Health Systems Inc. had twelve months from the date of issuance of the Agreement within which to contest the membership of the patient if he had previous ailment of asthma, and six months from the issuance of the agreement if the patient was sick of diabetes or hypertension. The periods having expired, the defense of concealment or misrepresentation no longer lie.