Page 1 of 8
Vitug v. CA
G.R. No. 82027, March 29, 1990
(1) All money deposited and to be deposited with the Bank in
their joint savings current account shall be both their property
and shall be payable to and collectible or withdrawable by either
or any of them during their lifetime; and
(2) After the death of one of them, the same shall belong to and
be the sole property of the surviving spouse
ISSUE: Whether or not the funds of the savings account subject of
the survivorship agreement were conjugal partnership properties
and part of the estate
No. The Court ruled that a Survivorship Agreement
aleatory contract whereby one or both of the parties reciprocally
bind themselves to give or to do something in consideration of
what the other shall give or do upon the happening of an event
which is to occur at an indeterminate time or is uncertain, such as
death.
Consequently, the Court upheld the validity of the survivorship
agreement entered into by the spouses Vitug. As such, Romarico,
being the surviving spouse, acquired a vested right over the
amounts under the savings account, which became his exclusive
property upon the death of his wife pursuant to the survivorship
agreement.
Thus, the funds of the savings account are
not conjugal partnership properties and not part of the estate of
the deceased Dolores
Xxxxxxxxxxxxxxxxxxxxxxxx
Under Article 2010 of the Code:
ART. 2010. By an aleatory contract, one of the parties or both
reciprocally bind themselves to give or to do something in
consideration of what the other shall give or do upon the
happening of an event which is uncertain, or which is to occur at
an indeterminate time.
Under the aforequoted provision, the fulfillment of an aleatory
contract depends on either the happening of an event which is (1)
"uncertain," (2) "which is to occur at an indeterminate time." A
survivorship agreement, the sale of a sweepstake ticket, a
transaction stipulating on the value of currency, and insurance
have been held to fall under the first category, while a contract
for life annuity or pension under Article 2021, et sequentia, has
been categorized under the second. 25 In either case, the element
of risk is present. In the case at bar, the risk was the death of one
party and survivorship of the other.
However, as we have warned:
xxx xxx xxx
But although the survivorship agreement is per se not contrary to
law its operation or effect may be violative of the law. For
instance, if it be shown in a given case that such agreement is a
mere cloak to hide an inofficious donation, to transfer property in
fraud of creditors, or to defeat the legitime of a forced heir, it may
be assailed and annulled upon such grounds. No such vice has
been imputed and established against the agreement involved in
this case. 26
xxx xxx xxx.
Malayan Insurance Co., Inc. V. Arnaldo (1987)
Authority to Receive Payment/Effect of Payment (Insurance)
Laws Applicable: Article 64, Article 65, Section 77, Section 306 of
the Insurance Code
FACTS:
ISSUE: W/N MICO should be liable because its agent Adora was
authorized to receive it
HELD: YES. petition is DENIED
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.
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.
SEC. 64. No policy of insurance other than life shall be cancelled
by the insurer except upon prior
SEC. 65. All notices of cancellation mentioned in the preceding
section shall be in writing,
Incidentally, Adora had not been informed of the cancellation
either and saw no reason not to accept the said payment
Although Pinca's payment was remitted to MICO's by its agent on
January 15, 1982,
GREAT PACIFIC LIFE ASSURANCE COMPANY, petitioner,
vs.
HONORABLE COURT OF APPEALS,
The two above-entitled cases were ordered consolidated by the
Resolution of this Court dated April 29, 1970, (Rollo, No. L-31878,
p. 58), because the petitioners in both cases seek similar relief,
through these petitions for certiorari by way of appeal, from the
amended decision of respondent Court of Appeals which affirmed
in toto the decision of the Court of First Instance of Cebu,
ordering "the defendants (herein petitioners Great Pacific Ligfe
Assurance Company and Mondragon) jointly and severally to pay
plaintiff (herein private respondent Ngo Hing) the amount of
P50,000.00 with interest at 6% from the date of the filing of the
complaint, and the sum of P1,077.75, without interest.
It appears that on March 14, 1957, private respondent Ngo Hing
filed an application with the Great Pacific Life Assurance Company
(hereinafter referred to as Pacific Life) for a twenty-year
endownment policy in the amount of P50,000.00 on the life of his
one-year old daughter Helen Go. Said respondent supplied the
essential data which petitioner Lapulapu D. Mondragon, Branch
Manager of the Pacific Life in Cebu City wrote on the
corresponding form in his own handwriting (Exhibit I-M).
Mondragon finally type-wrote the data on the application form
which was signed by private respondent Ngo Hing. The latter paid
the annual premuim the sum of P1,077.75 going over to the
Company, but he reatined the amount of P1,317.00 as his
commission for being a duly authorized agebt of Pacific Life. Upon
the payment of the insurance premuim, the binding deposit
receipt (Exhibit E) was issued to private respondent Ngo Hing.
Likewise, petitioner Mondragon handwrote at the bottom of the
back page of the application form his strong recommendation for
the approval of the insurance application. Then on April 30, 1957,
Mondragon received a letter from Pacific Life disapproving the
insurance application (Exhibit 3-M). The letter stated that the said
life insurance application for 20-year endowment plan is not
available for minors below seven years old, but Pacific Life can

consider the same under the Juvenile Triple Action Plan, and
advised that if the offer is acceptable, the Juvenile Non-Medical
Declaration be sent to the company.
The non-acceptance of the insurance plan by Pacific Life was
allegedly not communicated by petitioner Mondragon to private
respondent Ngo Hing. Instead, on May 6, 1957, Mondragon wrote
back Pacific Life again strongly recommending the approval of the
20-year endowment insurance plan to children, pointing out that
since 1954 the customers, especially the Chinese, were asking for
such coverage (Exhibit 4-M).
It was when things were in such state that on May 28, 1957 Helen
Go died of influenza with complication of bronchopneumonia.
Thereupon, private respondent sought the payment of the
proceeds of the insurance, but having failed in his effort, he filed
the action for the recovery of the same before the Court of First
Instance of Cebu, which rendered the adverse decision as earlier
refered to against both petitioners.
The decisive issues in these cases are: (1) whether the binding
deposit receipt (Exhibit E) constituted a temporary contract of the
life insurance in question; and (2) whether private respondent
Ngo Hing concealed the state of health and physical condition of
Helen Go, which rendered void the aforesaid Exhibit E.
1. At the back of Exhibit E are condition precedents required
before a deposit is considered a BINDING RECEIPT. These
conditions state that:
A. If the Company or its agent, shan have received the premium
deposit ... and the insurance application, ON or PRIOR to the date
of medical examination ... said insurance shan be in force and in
effect from the date of such medical examination, for such period
as is covered by the deposit ..., PROVIDED the company shall be
satisfied that on said date the applicant was insurable on standard
rates under its rule for the amount of insurance and the kind of
policy requested in the application.
D. If the Company does not accept the application on standard
rate for the amount of insurance and/or the kind of policy
requested in the application but issue, or offers to issue a policy
for a different plan and/or amount ..., the insurance shall not be in
force and in effect until the applicant shall have accepted the
policy as issued or offered by the Company and shall have paid the
full premium thereof. If the applicant does not accept the policy,
the deposit shall be refunded.
E. If the applicant shall not have been insurable under Condition A
above, and the Company declines to approve the application the
insurance applied for shall not have been in force at any time and
the sum paid be returned to the applicant upon the surrender of
this receipt. (Emphasis Ours).
The aforequoted provisions printed on Exhibit E show that the
binding deposit receipt is intended to be merely a provisional or
temporary insurance contract and only upon compliance of the
following conditions: (1) that the company shall be satisfied that
the applicant was insurable on standard rates; (2) that if the
company does not accept the application and offers to issue a
policy for a different plan, the insurance contract shall not be
binding until the applicant accepts the policy offered; otherwise,
the deposit shall be reftmded; and (3) that if the applicant is not
ble according to the standard rates, and the company disapproves
the application, the insurance applied for shall not be in force at
any time, and the premium paid shall be returned to the
applicant.
Clearly implied from the aforesaid conditions is that the binding
deposit receipt in question is merely an acknowledgment, on
behalf of the company, that the latter's branch office had received
from the applicant the insurance premium and had accepted the
application subject for processing by the insurance company; and
that the latter will either approve or reject the same on the basis
of whether or not the applicant is "insurable on standard rates."
Page 2 of 8
Since petitioner Pacific Life disapproved the insurance application
of respondent Ngo Hing, the binding deposit receipt in question
had never become in force at any time.
Upon this premise, the binding deposit receipt (Exhibit E) is,
manifestly, merely conditional and does not insure outright. As
held by this Court, where an agreement is made between the
applicant and the agent, no liability shall attach until the principal
approves the risk and a receipt is given by the agent. The
acceptance is merely conditional and is subordinated to the act of
the company in approving or rejecting the application. Thus, in life
insurance, a "binding slip" or "binding receipt" does not insure by
itself (De Lim vs. Sun Life Assurance Company of Canada, 41 Phil.
264).
It bears repeating that through the intra-company communication
of April 30, 1957 (Exhibit 3-M), Pacific Life disapproved the
insurance application in question on the ground that it is not
offering the twenty-year endowment insurance policy to children
less than seven years of age. What it offered instead is another
plan known as the Juvenile Triple Action, which private
respondent failed to accept. In the absence of a meeting of the
minds between petitioner Pacific Life and private respondent Ngo
Hing over the 20-year endowment life insurance in the amount of
P50,000.00 in favor of the latter's one-year old daughter, and with
the non-compliance of the abovequoted conditions stated in the
disputed binding deposit receipt, there could have been no
insurance contract duly perfected between thenl Accordingly, the
deposit paid by private respondent shall have to be refunded by
Pacific Life.
As held in De Lim vs. Sun Life Assurance Company of
Canada, supra, "a contract of insurance, like other contracts, must
be assented to by both parties either in person or by their agents
... The contract, to be binding from the date of the application,
must have been a completed contract, one that leaves nothing to
be dione, nothing to be completed, nothing to be passed upon, or
determined, before it shall take effect. There can be no contract
of insurance unless the minds of the parties have met in
agreement."
We are not impressed with private respondent's contention that
failure of petitioner Mondragon to communicate to him the
rejection of the insurance application would not have any adverse
effect on the allegedly perfected temporary contract
(Respondent's Brief, pp. 13-14). In this first place, there WAS NO
CONTRACT PERFECTED between the parties who had no meeting
of their minds. Private respondet, being an authorized insurance
agent of Pacific Life at Cebu branch office, is indubitably aware
that said company does not offer the life insurance applied for.
When he filed the insurance application in dispute, private
respondent was, therefore, only taking the chance that Pacific Life
will approve the recommendation of Mondragon for the
acceptance and approval of the application in question along with
his proposal that the insurance company starts to offer the 20-
year endowment insurance plan for children less than seven
years. Nonetheless, the record discloses that Pacific Life had
rejected the proposal and recommendation. Secondly, having an
insurable interest on the life of his one-year old daughter, aside
from being an insurance agent and an offense associate of
petitioner Mondragon, private respondent Ngo Hing must have
known and followed the progress on the processing of such
application and could not pretend ignorance of the Company's
rejection of the 20-year endowment life insurance application.
At this juncture, We find it fit to quote with approval, the very apt
observation of then Appellate Associate Justice Ruperto G. Martin
who later came up to this Court, from his dissenting opinion to
the amended decision of the respondent court which completely
reversed the original decision, the following:

Of course, there is the insinuation that neither the memorandum
of rejection (Exhibit 3-M) nor the reply thereto of appellant
Mondragon reiterating the desire for applicant's father to have
the application considered as one for a 20-year endowment plan
was ever duly communicated to Ngo; Hing, father of the minor
applicant. I am not quite conninced that this was so. Ngo Hing, as
father of the applicant herself, was precisely the "underwriter
who wrote this case" (Exhibit H-1). The unchallenged statement of
appellant Mondragon in his letter of May 6, 1957) (Exhibit 4-M),
specifically admits that said Ngo Hing was "our associate" and that
it was the latter who "insisted that the plan be placed on the 20-
year endowment plan." Under these circumstances, it is
inconceivable that the progress in the processing of the
application was not brought home to his knowledge. He must
have been duly apprised of the rejection of the application for a
20-year endowment plan otherwise Mondragon would not have
asserted that it was Ngo Hing himself who insisted on the
application as originally filed, thereby implictly declining the offer
to consider the application under the Juvenile Triple Action Plan.
Besides, the associate of Mondragon that he was, Ngo Hing
should only be presumed to know what kind of policies are
available in the company for minors below 7 years old. What he
and Mondragon were apparently trying to do in the premises was
merely to prod the company into going into the business of
issuing endowment policies for minors just as other insurance
companies allegedly do. Until such a definite policy is however,
adopted by the company, it can hardly be said that it could have
been bound at all under the binding slip for a plan of insurance
that it could not have, by then issued at all. (Amended Decision,
Rollo, pp- 52-53).
2. Relative to the second issue of alleged concealment. this Court
is of the firm belief that private respondent had deliberately
concealed the state of health and piysical condition of his
daughter Helen Go. Wher private regpondeit supplied the
required essential data for the insurance application form, he was
fully aware that his one-year old daughter is typically a mongoloid
child. Such a congenital physical defect could never be ensconced
nor disguished. Nonetheless, private respondent, in apparent bad
faith, withheld the fact materal to the risk to be assumed by the
insurance compary. As an insurance agent of Pacific Life, he ought
to know, as he surely must have known. his duty and
responsibility to such a material fact. Had he diamond said
significant fact in the insurance application fom Pacific Life would
have verified the same and would have had no choice but to
disapprove the application outright.
The contract of insurance is one of perfect good faith uberrima
fides meaning good faith, absolute and perfect candor or
openness and honesty; the absence of any concealment or
demotion, however slight [Black's Law Dictionary, 2nd Edition],
not for the alone but equally so for the insurer (Field man's
Insurance Co., Inc. vs. Vda de Songco, 25 SCRA 70). Concealment
is a neglect to communicate that which a partY knows aDd Ought
to communicate (Section 25, Act No. 2427). Whether intentional
or unintentional the concealment entitles the insurer to rescind
the contract of insurance (Section 26, Id.: Yu Pang Cheng vs. Court
of Appeals, et al, 105 Phil 930; Satumino vs. Philippine American
Life Insurance Company, 7 SCRA 316). Private respondent appears
guilty thereof.
We are thus constrained to hold that no insurance contract was
perfected between the parties with the noncompliance of the
conditions provided in the binding receipt, and concealment, as
legally defined, having been comraitted by herein private
respondent.
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Fieldmen's Insurance v. vda. de Songco
FIELDMEN’S INSURANCE v. MERCEDES VARGAS vda. DE
SONGCO, et al. and CA
1968 / Fernando / Review of CA decision
vehicle is an ‘owner’ private vehicle and not for passengers, but
agent Sambat said that they can insure whatever kind of vehicle
because their company is not owned by the government
Songco paid an annual premium and he was issued a Common
Carriers Accident Insurance Policy
From Qua Chee Gan v. Law Union and Rock Insurance – 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. 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.
Fieldmen’s Insurance incurred legal liability under the
policy. Since some of the conditions in the policy were impossible
to comply with under the existing conditions at the time and
inconsistent with the known facts, the insurer is estopped from
asserting breach of such conditions. Except for the fact that the
passengers were not fare-paying, their status as beneficiaries
under the policy is recognized. Even if the be assumed that there
was an ambiguity, such must be strictly interpreted against the
party that caused them.
The contract of insurance is one of perfect good faith (uberrima
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.
White Gold Marine Services Inc. v Pioneer Insurance & Surety
Corporation (Insurance)
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 latter’s unpaid balance.
DECISION OF LOWER COURTS:
ISSUES:
(1) Is Steamship Mutual, a P & I Club, engaged in the insurance
business in the Philippines? (2) Does Pioneer need a license as an
insurance agent/broker for Steamship Mutual?
RULING:
(1) Yes. To continue doing business here, Steamship Mutual or
through its agent Pioneer, must secure a license from the
Insurance Commission.
SINCE A CONTRACT OF INSURANCE INVOLVES PUBLIC INTEREST,
REGULATION BY THE STATE IS NECESSARY. Thus, no insurer or
insurance company is allowed to engage in the insurance business
without a license or a certificate of authority from the Insurance
Commission.
The parties admit that Steamship Mutual is a P & I Club.
Steamship Mutual admits it does not have a license to do business
in the Philippines although Pioneer is its resident agent. This
relationship is reflected in the certifications issued by the
Insurance Commission.

The test to determine if a contract is an insurance contract or not,
depends on the nature of the promise, the act required to be
performed, and the exact nature of the agreement in the light of
the occurrence, contingency, or circumstances under which the
performance becomes requisite. It is not by what it is called.
Relatedly, a mutual insurance company is a cooperative
enterprise where the members are both the insurer and insured.
(2) Yes. Although Pioneer is already licensed as an insurance
company, it needs a separate license to act as insurance agent for
Steamship Mutual
Philamcare Health Systems, Inc. V. CA (2002)
W/N the health care agreement is a contract of insurance. - YES
W/N the spouse being "not" legal wife can claim - YES
HELD: Petition is DENIED. CA AFFIRMED.
1. YES.
P.D. 612 Insurance Code
Sec. 2 (1)
(1) A "contract of insurance" is an agreement whereby one
undertakes for a consideration to indemnify another against loss,
damage or liability arising from an unknown or contingent event.
Sec. 3
Sec. 3. Any contingent or unknown event, whether past or future,
which may damnify a person having an insurable interest, or
create a liability against him, may be insured against, subject to
the provisions of this chapter.
All rights, title and interest in the policy of insurance taken out by
an original owner on the life or health of a minor shall
automatically vest in the minor upon the death of the original
owner, unless otherwise provided for in the policy.
the INSURABLE INTEREST of respondent's husband in obtaining
the health care agreement was his own health.
in the nature of non-life insurance, which is primarily a contract of
indemnity
Once the 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.
answer in response to the question relating to the medical history
of the applicant largely depends on opinion rather than fact,
especially coming from respondent's husband who was not a
medical doctor.
Where matters of opinion or judgment are called for, answers
made in good faith and without intent to deceive will not avoid a
policy even though they are untrue.
The fraudulent intent on the part of the insured must be
established to warrant rescission of the insurance contract.
Concealment as a defense for the health care provider or insurer
to avoid liability is an affirmative defense and the duty to
establish such defense by satisfactory and convincing evidence
rests upon the provider or insurer.
. operate a prepaid group practice health care delivery system or a
cancellation of health care agreements as in insurance policies
require the concurrence of the following conditions: - none of
these was made
1. Prior notice of cancellation to insured;
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2. Notice;
3. Must be in writing;
4. Must state the grounds
When the terms of insurance contract contain limitations on
liability, courts should construe them in such a way as to preclude
the insurer from non-compliance with his obligation.
Being a contract of adhesion, the terms of an insurance contract
are to be construed strictly against the party which prepared the
contract - the insurer.
2. YES.
Sec. 10. Every person has an insurable interest in the life and
not the legal wife (deceased was previously married to another
woman who was still alive)
health care agreement is in the nature of a contract of indemnity.
payment should be made to the party who incurred the expenses
Blue Cross v Olivares
Issues:
1. Whether petitioner was able to prove that respondent Neomi's
stroke was caused by a pre-existing condition and therefore was
excluded from the coverage of the health care agreement. - NO
Held: No. Yes. Petition dismissed.
Ratio:
1. “Philamcare Health Systems, Inc. v. CA- a health care
agreement is in the nature of a non-life insurance. It is an
established rule in insurance contracts that when their terms
contain limitations on liability, they should be construed strictly
against the insurer. These are contracts of adhesion the terms of
which must be interpreted and enforced stringently against the
insurer which prepared the contract. This doctrine is equally
applicable to health care agreements.”
The agreement defined a pre-existing condition as:
“a disability which existed before the commencement date of
membership whose natural history can be clinically determined,
whether or not the Member was aware of such illness or
condition. Such conditions also include disabilities existing prior to
reinstatement date in the case of lapse of an Agreement.”
“Under this provision, disabilities which existed before the
commencement of the agreement are excluded from its coverage
if they become manifest within one year from its effectivity.”
Petitioners still averred that the non-disclosure of the pre-existing
condition made a presumption in its favor. Respondents still
maintained that the petitioner had the duty to prove its
accusation.
Petitioner never presented evidence to prove its presumption
that the Doctor’s report would work against Neomi. They only
perceived that the invocation of the privilege made the report
adverse to Neomi and such was a disreputable presumption. They
should have made an independent assessment of Neomi’s
condition when it failed to obtain the report. They shouldn’t have
waited for the attending physician’s report to come out.
Philippine Health Care Providers, Inc. V. CIR
Lessons Applicable: Elements (Insurance)
Philippine Health Care Providers, Inc. is a domestic corporation
whose primary purpose is "[t]o establish, maintain, conduct and
health maintenance organization to take care of the sick and
disabled persons enrolled in the health care plan and to provide
for the administrative, legal, and financial responsibilities of the
organization."

ISSUE:
W/N the Philippine Health Care Providers, Inc (HMO) was engaged
in the business of insurance during the pertinent taxable years -
NO
W/N the Philippine Health Care Providers, Inc enters into an
insurance contract - NO
HELD: motion for reconsideration is GRANTED
2. NO
MEDICAL SERVICE CORPORATIONS - undertake to provide prepaid
medical services through participating physicians, thus relieving
subscribers of any further financial burden,
ORDINARY HEALTH AND ACCIDENT INSURERS- only undertake to
indemnify an insured for medical expenses up to, but not beyond,
the schedule of rates contained in the policy
HMO, - More on Prevention not Indemnification
- obligation to maintain the good health of its members
its undertaking under its agreements is not to indemnify its
members against any loss or damage arising from a medical
condition but, on the contrary, to provide the health and medical
services needed to prevent such loss or damage
Overall,
HMO appears to provide insurance-type benefits to its members
(with respect to its curative medical services), but these are
incidental to the principal activity of providing them medical care.
The "insurance-like" aspect of petitioner’s business is miniscule
compared to its noninsurance activities. Therefore, since it
substantially provides health care services rather than insurance
services, it cannot be considered as being in the insurance
business.
PRINCIPAL PURPOSE TEST
purpose of determining what "doing an insurance business"
means, we have to scrutinize the operations of the business as a
whole and not its mere components
letter dated September 3, 2000, the Insurance Commissioner
confirmed that petitioner is not engaged in the insurance
business. This determination of the commissioner must be
accorded great weight
An insurance contract exists where the following elements
concur: - NOT present P-I-L-A-R
1. The insured has an insurable INTEREST;
2. The insured is subject to a risk of LOSS by the happening of the
designed peril;
3. The insurer assumes the RISK;
4. Such ASSUMPTION of risk is part of a general scheme to
distribute actual losses among a large group of persons bearing a
similar risk and
5. In consideration of the insurer’s promise, the insured pays a
PREMIUM.
indemnity of the insured was not the focal point of the agreement
but the extension of medical services to the member at an
affordable cost, it did not partake of the nature of a contract of
insurance
HMO, undertakes a business risk when it offers to provide health
services. But it is not the risk of the type peculiar only to insurance
companies. Insurance risk, also known as actuarial risk, is the risk
Page 5 of 8
that the cost of insurance claims might be higher than the
premiums paid.
PURPOSE PREVAILS
In our jurisdiction, a commentator of our insurance laws has
pointed out that, even if a contract contains all the elements of an
insurance contract, if its primary purpose is the rendering of
service, it is not a contract of insurance. The primary purpose of
the parties in making the contract may negate the existence of an
insurance contract.
health care agreements are clearly not within the ambit of Section
185 of the NIRC and there was never any legislative intent to
impose the same on HMOs
PEREZ V. CA
Perfection of the Contract of Insurance
Issue:
Whether or not there was a perfected additional insurance
contract.
Held:
The contract was not perfected.
The perfection of the contract of insurance between the deceased
and respondent corporation was further conditioned upon
compliance with the following requisites stated in the application
form:
"there shall be no contract of insurance unless and until a policy is
issued on this application and that the said policy shall not take
effect until the premium has been paid and the policy delivered to
and accepted by me/us in person while I/We, am/are in good
health."
- Consequently, there was absolutely no way the
acceptance of the application could have been
communicated to the applicant for the latter to accept
inasmuch as the applicant at the time was already
dead.
Xxxxxxxxxxxxxx
FILIPINAS COMPANIA DE SEGUROS V. CHRISTERN HUENEFELD
A corporation borrows its citizenship from the citizenship of
majority of its stockholders, regardless of the country under
whose laws it was organized and created.
ISSUES:
W/N Christern Huenefeld is a German subject because majority of
its stockholders are under German jurisdiction, despite the fact
that it was organized and created under Philippine laws
If so,
W/N the fire insurance policy is enforceable against an enemy
state
HELD:
Christern Huenefeld is an enemy corporation since majority of its
stockholders are German subjects.
The Philippine Insurance Law provides that ANYONE, EXCEPT A
PUBLIC ENEMY, MAY BE INSURED. It stands to reason that an
insurance policy ceases to be allowable as soon as the insured
becomes a public enemy.

Since Christern Huenefeld became a public enemy on Dec. 10,
1941, then the policy has ceased to be enforcible and therefore
Huenefeld is not entitled to indemnity. However, elementary
rules of justice require that the premium paid from Dec. 11, 1941
should be returned.
Thus, Filipinas Compania is allowed to recover the sum paid but
only its equivalent in actual Philippine currency, minus the
premium that Huenefeld paid after Dec. 11.
Geagonia v CA
Issues:
1. WON the petitioner had not disclosed the two insurance
policies when he obtained the fire insurance and thereby violated
Condition 3 of the policy.
2. WON he is prohibited from recovering
Held: Yes. No. Petition Granted
Ratio:
1. The court agreed with the CA that the petitioner knew of the
prior policies issued by the PFIC. His letter of 18 January 1991 to
the private respondent conclusively proves this knowledge. His
testimony to the contrary before the Insurance Commissioner and
which the latter relied upon cannot prevail over a written
admission made ante litem motam. It was, indeed, incredible that
he did not know about the prior policies since these policies were
not new or original.
2. Stated differently, PROVISIONS, CONDITIONS OR EXCEPTIONS in
policies which tend to work a forfeiture of insurance policies
should be construed most strictly against those for whose
benefits they are inserted, and most favorably toward those
against whom they are intended to operate.
Favored si dumadawat over humahatag!
Indeed, the rationale behind the incorporation of "other
insurance" clause in fire policies is to prevent over-insurance and
thus avert the perpetration of fraud. When a property owner
obtains insurance policies from two or more insurers in a total
amount that exceeds the property's value, the insured may have
an inducement to destroy the property for the purpose of
collecting the insurance. The public as well as the insurer is
interested in preventing a situation in which a fire would be
profitable to the insured.
Cha V. CA
Effect of Lack of Insurable Interest (Insurance)
ISSUE: W/N the CKS has insurable interest because the spouses
Cha violated the stipulation= no
Sec. 18. No contract or policy of insurance on property shall be
enforceable except for the benefit of some person having an
insurable interest in the property insured
A non-life insurance policy such as the fire insurance policy taken
by petitioner-spouses over their merchandise is primarily a
contract of indemnity. Insurable interest in the property insured
must exist a t the time the insurance takes effect and at the time
the loss occurs. The basis of such requirement of insurable
interest in property insured is based on sound public policy: to
prevent a person from taking out an insurance policy on property
upon which he has no insurable interest and collecting the
proceeds of said policy in case of loss of the property. In such a
Page 6 of 8
case, the contract of insurance is a mere wager which is void
under Section 25 of the Insurance Code.
SECTION 25. every policy executed by way of gaming or wagering,
is void
Section 17. The measure of an insurable interest =extent to which
the insured might be damnified by loss of injury thereof
The automatic assignment of the policy to CKS under the
provision of the lease contract previously quoted is void for being
contrary to law and/or public policy. The proceeds of the fire
insurance policy thus rightfully belong to the spouse
Gaisano Cagayan, Inc. V. Insurance Company Of North America
Lessons Applicable: Existing Interest (Insurance)
Section 13 of Insurance Code
FACTS:
ISSUE: W/N Insurance Company of North America can claim
against Gaisano Cagayan for the debt that was isnured
HELD: YES.
- insurance policy is clear that the subject of the insurance is the
book debts and NOT goods .
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.
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 xxx
Anyone has an insurable interest in property who derives a
benefit from its existence or would suffer loss from its
destruction.
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
not necessarily imply a property interest in, or a lien upon, or
possession of, the subject
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
The Policy
Primitivo died on November 25, 1987, his application papers
for additional insurance coverage no way the acceptance of
the application could have been communicated.
On the contrary, the health of the applicant Rather, the
condition is a suspensive one whereby the acquisition of
rights depends upon the happening of an event which
constitutes the condition. In this case, the suspensive

Hence, the non-fulfillment of the condition resulted in the
non-perfection of the contract
True, rescission presupposes the existence of a valid
contract. A contract which is null and void is no contract at all
and hence could not be the subject of rescission.
Gulf Resorts Inc. V. Philippine Charter Insurance Corp.
Lessons Applicable: Stipulations Cannot Be Segregated
(Insurance)
ISSUE: W/N Gulf can claim for its properties aside from the
2 swimming pools
HELD: YES. Affirmed.
It is basic that all the provisions of the insurance policy
should be examined and interpreted in consonance with
each other.
All its parts are reflective of the true intent of the parties.
Insurance Code
Section 2(1)
xx Applying the rule on construction, the SC held that each
of the provisions of the insurance policy must be interpreted
in consonance with each other. A reading of the policy
including RIDERS AND CLAUSES taken all together show
that the intention of the parties is to extend the earthquake
shock clause only to the two swimming pools. The evidence
presented to the trial court readily showed that only the
swimming pools are intended to be covered by the
earthquake shock clause. Aside from this, no premiums
were paid for other properties in consideration for the
earthquake shock clause other than for the two swimming
pools in violation of Sec 77 of the ICP.
Pacific Timber Export Corporation vs Court of Appeals
ISSUE: Whether or not a separate premium is needed for
cover notes. noooo
HELD: As a logical consequence, no separate premiums are
intended or required to be paid on a Cover Note. At any rate,
it is not disputed that PTEC paid in full all the premiums as
called for by the statement issued by WIC after the issuance
of the two regular marine insurance policies, thereby leaving
no account unpaid by PTEC due on the insurance coverage,
which must be deemed to include the Cover Note. If the
Note is to be treated as a separate policy instead of
integrating it to the regular policies subsequently
issued, the purpose and function of the Cover Note
would be set at naught or rendered meaningless, for it is
in a real sense a contract, not a mere application for
insurance which is a mere offer.
GREAT PASCIFIC LIFE ASSURANCE COMPANY V CA
1979- see other
Coquia v. Fieldmen’s Insurance
26 SCRA 172
Issue:Whether or not plaintiffs have the right to collect on the
policy.
Held:YES.
AIn the case at bar, the policy under consideration is typical
of contracts pour autrui this character being made more
manifest by the fact that the deceased driver paid fifty
percent (50%) of the corresponding premiums, which were
deducted from his weekly commissions. Under these
Page 7 of 8
conditions, it is clear that the Coquias — who, admittedly,
are the sole heirs of the deceased — have a direct cause of
action against the Company, and, since they could have
maintained this action by themselves, without the assistance
of the insured it goes without saying that they could and did
properly join the latter in filing the complaint herein.
Great Pacific v CA 1999
Facts:
A contract of group life insurance was executed between
petitioner Great Pacific and Development Bank Grepalife
agreed to insure the lives of eligible housing loan mortgagors
of DBP.
Wilfredo Leuterio, a physician and a housing debtor of DBP,
applied for membership in the group life insurance plan. In
an application form, Dr. Leuterio answered questions
concerning his health condition as follows:
“7. Have you ever had, or consulted, a physician for a heart
condition, high blood pressure, cancer, diabetes, lung,
kidney or stomach disorder or any other physical
impairment?
8. Are you now, to the best of your knowledge, in good
health?”
Grepalife issued a coverage to the value of P86,200.00
pesos.
Dr. Leuterio died due to “massive cerebral hemorrhage.”
DBP submitted a death claim to Grepalife. Grepalife denied
the claim alleging that Dr. Leuterio was not physically
healthy when he applied for an insurance
coverage. Grepalife insisted 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.
The widow, respondent Medarda V. Leuterio, filed against
Grepalife.
The trial court rendered a decision in favor of respondent
widow and against Grepalife. The Court
of Appeals sustained the trial court’s decision.
Issues:
1. Whether the Court of Appeals erred in holding petitioner
liable to DBP as beneficiary in a group life insurance contract
from a complaint filed by the widow of the
decedent/mortgagor?
2. Whether the Court of Appeals erred in not finding that Dr.
Leuterio concealed that he had hypertension, which would
vitiate the insurance contract?
3. Whether the Court of Appeals erred in holding Grepalife
liable in the amount of eighty six thousand, two hundred
(P86,200.00) pesos without proof of the actual outstanding
mortgage payable by the mortgagor to DBP.
Held: No to all three. Petition dismissed.
Ratio:
1. Petitioner alleges that the complaint was instituted by the
widow of Dr. Leuterio, not the real party in interest, hence
the trial court acquired no jurisdiction over the
case. It argues that when the Court of Appeals affirmed the
trial court’s judgment, Grepalife was held liable to pay the
proceeds of insurance contract in favor of DBP, the
indispensable party who was not joined in the suit.
The insured private respondent did not cede to the
mortgagee all his rights or interests in the insurance, the
policy stating that: “In the event of the debtor’s death before
his indebtedness with the Creditor [DBP] shall have been
fully paid, an amount to pay the outstanding indebtedness
shall first be paid to the creditor and the balance of sum
 Page 8 of 8

assured, if there is any, shall then be paid to the

beneficiary/ies designated by the debtor.” When DBP’s claim Espinas & Associates Law Office for Private
was denied, it collected the debt from the mortgagor and Respondent.
took the necessary action of foreclosure on the residential lot
of private respondent.
Gonzales vs. Yek Tong Lin- Insured, being the person with SYLLABUS
whom the contract was made, is primarily the proper person
to bring suit thereon. Insured may thus sue, although the
policy is taken wholly or in part for the benefit of another 1. MERCANTILE LAW; INSURANCE; RECOVERY OF
person named or unnamed, and although it is expressly DAMAGES DUE TO LOSS OR INJURY; ONE-YEAR
made payable to another as his interest may appear or PRESCRIPTIVE PERIOD COUNTED FROM DATE OF
otherwise. Although a policy issued to a mortgagor is taken REJECTION; REASON. — The one-year period under
out for the benefit of the mortgagee and is made payable to Section 384 should be counted not from the date of the
him, yet the mortgagor may sue thereon in his own name, accident but from the date of the rejection of the claim by
especially where the mortgagee’s interest is less than the full The insurer. The Court further held that it is only from the
amount recoverable under the policy. Insured may be rejection of the claim by the insurer that the insured’s cause
regarded as the real party in interest, although he has of action accrued since a cause of action does not accrue
assigned the policy for the purpose of collection, or has until the party obligated refuse, expressly or impliedly, to
assigned as collateral security any judgment he may obtain. comply with its duty.
And since a policy of insurance upon life or health may pass
by transfer, will or succession to any person, whether he has 2. ID.; ID.; ID.; CLAIM MUST BE FILED WITHIN ONE YEAR
an insurable interest or not, and such person may recover it FROM DATE OF ACCIDENT; REASON BEHIND. — The
whatever the insured might have recovered,[14] the widow of requirement that any claim or action for recovery of damage
the decedent Dr. Leuterio may file the suit against the under an insurance policy must be brought within one year
insurer, Grepalife. from the date of the accident was intended to ensure that
2. The medical findings were not conclusive because Dr. suits be brought by the insured while evidence as to the
Mejia did not conduct an autopsy on the body of the origin and cause of destruction have not yet disappeared.
decedent. The medical certificate stated that hypertension
was “the possible cause of death.” Hence, the statement of 3. ID.; ID.; ID.; ACTION NO YET PRESCRIBED WHERE
the physician was properly considered by the trial court as THE DELAY WAS ATTRIBUTABLE TO THE INSURER. —
hearsay. Where the delay in bringing the suit against the insurance
Contrary to appellant’s allegations, there was no sufficient company was not caused by the insured or its subrogee but
proof that the insured had suffered from hypertension. Aside by the insurance company itself, it is unfair to penalize the
from the statement of the insured’s widow who was not even insured or its subrogee by dismissing its action against the
sure if the medicines taken by Dr. Leuterio were for insurance company on the ground of prescription. The latter
hypertension, the appellant had not proven nor produced should bear the consequences of its failure to act promptly
any witness who could attest to Dr. Leuterio’s medical on the insured’s claim.
history.
Appellant insurance company had failed to establish that
there was concealment made by the insured, hence, it
cannot refuse payment of the claim.”
The fraudulent intent on the part of the insured must be
established to entitle the insurer to rescind the contract.
Misrepresentation as a defense of the insurer to avoid
liability is an affirmative defense and the duty to establish
such defense by satisfactory and convincing evidence rests
upon the insurer.
3. A life insurance policy is a valued policy. Unless the
interest of a person insured is susceptible of exact pecuniary
measurement, the measure of indemnity under a policy of
insurance upon life or health is the sum fixed in the policy.
The mortgagor paid the premium according to the coverage
of his insurance.
In the event of the debtor’s death before his indebtedness
with the creditor shall have been fully paid, an amount to pay
the outstanding indebtedness shall first be paid to the
creditor.
DBP foreclosed one of the deceased person’s lots to satisfy
the mortgage. Hence, the insurance proceeds shall inure to
the benefit of the heirs of the deceased person or his
beneficiaries.

COUNTRY BANKERS INSURANCE CORP., (Formerly

Country Bankers Insurance & Surety Co.
Inc.), Petitioner, v. THE TRAVELERS INSURANCE AND
SURETY CORP., and THE HONORABLE COURT OF
APPEALS, Respondents.

Romeo G. Velasquez for Petitioner.