Insurance – August 2, 2019

1. SPS. NILO AND STELLA CHA VS. CA

FACTS: Spouses Nilo Cha and Stella Uy-Cha, as lessees, entered into a lease contract with CKS Development
Corporation, as lessor, on 5 October 1988. One of the stipulations of the 1 year lease contract states that “The
LESSEE shall not 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 obtain(s) the insurance thereof without the consent of the LESSOR then the policy is
deemed assigned and transferred to the LESSOR for its own benefit” Notwithstanding the above stipulation in
the lease contract, the Cha spouses insured against loss by fire their merchandise inside the leased premises
for P500,000.00 with the United Insurance Co., Inc. without the written consent of CKS. On the day that the
lease contract was to expire, fire broke out inside the leased premises. When CKS learned of the insurance
earlier procured by the Cha spouses (without its consent), it wrote the insurer (United) a demand letter asking
that the proceeds of the insurance contract (between the Cha spouses and United) be paid directly to CKS,
based on its lease contract with the Cha spouses. United refused to pay CKS. Hence, the latter filed a
complaint against the Cha spouses and United. On 2 June 1992, the Regional Trial Court, Branch 6, Manila,
rendered a decision ordering United to pay CKS the amount of P335,063.11 and the Cha spouses to pay
P50,000.00 as exemplary damages, P20,000.00 as attorney’s fees and costs of suit. On appeal, the Court of
Appeals in CA GR CV 39328 rendered a decision dated 11 January 1996, affirming the trial court decision,
deleting however the awards for exemplary damages and attorney’s fees. A motion for reconsideration by
United was denied on 29 March 1996. The spouses Cha and United filed the petition for review on certiorari.

ISSUE: Whether or not the CKS has insurable interest because the spouses Cha violated the stipulation on the
lease contract.

RULING: NO.

Awarding the proceeds to spouses Cha.

Under Sec. 18 of the Insurance Code of the Philippines which provides that “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 case, the contract of insurance is a mere wager which is void under Section 25 of
the Insurance Code.
In Sec. 25 of the same Code states, “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 wagering, is void”.

Also under Sec. 17 of the same Code provides that the measure of an insurable interest in property is the
extent to which the insured might be damnified by loss of injury thereof.

Hence, 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 spouses. The liability of the Cha spouses to CKS for violating their lease contract in that
Cha spouses obtained a fire insurance policy over their own merchandise, without the consent of CKS, is a
separate and distinct issue which we do not resolve in this case.

2. Great Pacific Life Insurance v. CA

FACTS: There was an existing group life insurance executed between Great Pacific Life Assurance (Grepalife)
and the Development Bank of the Philippines (DBP). Grepalife agreed to insure the lives of eligible housing
loan mortgagors of DBP. In November 1983, Wilfredo Leuterio, mortgagor of DBP applied to be a member of
the group life insurance. He filled out a form where he indicated he never consulted any physician regarding
any illness (heart condition etc) and that he is in good health. He was eventually included in the group life
insurance and he was covered for the amount of his indebtedness (P86,200.00).
In August 1984, Wilfredo died. DBP submitted a death claim but it was denied by Grepalife as it insisted that
Wilfredo actually concealed that he was suffering from hypertension at the time of his insurance application.
Grepalife relied on the statement made by the doctor who issued Wilfredo’s death certificate wherein it was
stated that Wilfredo’s immediate cause of death was massive cerebral hemorrhage secondary to hypertension
or hypertension as a “possible cause of death”.
Since Grepalife refused to pay the insurance claim filed by DBP, Medarda Leuterio (widow) sued Grepalife.
Grepalife assailed the suit and insisted that Medarda is not a proper party in interest. The lower court ruled in
favor of Medarda and the court ordered Grepalife to pay the amount of the insurance to DBP. The Court of
Appeals affirmed this decision in 1993. Grepalife appealed to the Supreme Court. In 1995, pending resolution
of the case in the SC, DBP foreclosed the property of Medarda.

ISSUES and RULINGS:

A.) 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?
No. The rationale of a group 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. Consequently, where the mortgagor pays the insurance premium under the
group insurance policy, making the loss payable to the mortgagee, the insurance is on the mortgagor's
interest, and the mortgagor continues to be a party to the contract. 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. 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.
B.) Whether the Court of Appeals erred in not finding that Dr. Leuterio concealed that he had hypertension,
which would vitiate the insurance contract?
No. Petitioner contends that Dr. Leuterio failed to disclose that he had hypertension, which might have caused
his death. Concealment exists where the assured had knowledge of a fact material to the risk, and honesty,
good faith, and fair dealing requires that he should communicate it to the assured, but he designedly and
intentionally withholds the same. Petitioner merely relied on the testimony of the attending physician, Dr.
Hernando Mejia, as supported by the information given by the widow of the decedent. On the contrary the
medical findings were not conclusive because Dr. Mejia did not conduct an autopsy on the body of the
decedent. As the attending physician, Dr. Mejia stated that he had no knowledge of Dr. Leuterio's any
previous hospital confinement. Dr. Leuterio's death certificate stated that hypertension was only "the possible
cause of death." The private respondent's statement, as to the medical history of her husband, was due to her
unreliable recollection of events. Hence, the statement of the physician was properly considered by the trial
court as hearsay. 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. In the
case at bar, the petitioner failed to clearly and satisfactorily establish its defense, and is therefore liable to
pay the proceeds of the insurance.
C.) 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.
No. 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 private
respondent's memorandum, she states that DBP foreclosed in 1995 their residential lot, in satisfaction of
mortgagor's outstanding loan. Considering this supervening event, the insurance proceeds shall inure to the
benefit of the heirs of the deceased person or his beneficiaries. Equity dictates that DBP should not unjustly
enrich itself at the expense of another (Nemo cum alterius detrimenio protest). Hence, it cannot collect the
insurance proceeds, after it already foreclosed on the mortgage. The proceeds now rightly belong to Dr.
Leuterio's heirs represented by his widow, herein private respondent Medarda Leuterio.

3 – MISSING CASE - AGUISANDA

4. REGINA EDILLON v. MANILA BANKERS LIFE, COURT OF APPEALS and the CFI of RIZAL
G.R. No. L-34200, 30 September 1982, 117 SCRA 187
FACTS: In April 1969, Carmen Lapuz filled out an application form for insurance under Manila Banker Life
Assurance Corporation. She stated that her date of birth was July 11, 1904. Upon payment of the Php 20.00
premium, she was issued the insurance policy in April 1969. In May 1969, Carmen Lapuz died in a vehicular
accident. Regina Edillon, who was named a beneficiary in the insurance policy sought to collect the insurance
proceeds but Manila Banker denied the claim. Apparently, it is a rule of the insurance company that they were
not to issue insurance policies to “persons who are under the age of sixteen (16) years of age or over the age
of sixty (60) years …” Note, that Lapuz was already 65 years old when she was applying for the insurance
policy.

ISSUE: Whether or not Edillon is entitled to the insurance claim as a beneficiary.

HELD: Yes. The age of the insured Carmen O. Lapuz was not concealed to the insurance company. Her
application for insurance coverage which was on a printed form furnished by private respondent and which
contained very few items of information clearly indicated her age at the time of filing the same to be almost
65 years of age. Despite such information which could hardly be overlooked in the application form,
considering its prominence thereon and its materiality to the coverage applied for, the respondent insurance
corporation received her payment of premium and issued the corresponding certificate of insurance without
question. The accident which resulted in the death of the insured, a risk covered by the policy, occurred on
May 31, 1969 or FORTY-FIVE (45) DAYS after the insurance coverage was applied for. There was sufficient time
for the private respondent to process the application and to notice that the application was over 60 years of
age and thereby cancel the policy on that ground if it was minded to do so. If the private respondent failed to
act, it is either because it was willing to waive such disqualification; or, through the negligence or
incompetence of its employees for which it has only itself to blame, it simply overlooked such fact. Under the
circumstances, the insurance corporation is already deemed in estoppel. Its inaction to revoke the policy
despite a departure from the exclusionary condition contained in the said policy constituted a waiver of such
condition.

5. INSULAR LIFE ASSURANCE vs SERAFIN D. FELICIANO G.R. No. L-47593 September 13, 1941
FACTS:
One Evaristo Feliciano filed an application for insurance with the herein petitioner upon the solicitation
of one of its agents. Two insurance policies to the aggregate amount of P25,000 were issued to him. Feliciano
died on September 29, 1935. The defendant company refused to pay on the ground that the policies were
fraudulently obtained, the insured having given false answers and statements in the application as well as in
the medical report. The present action was brought to recover on said policies. The lower court rendered
judgment in favor of the plaintiffs. The lower court found that at the time Feliciano filed his application and at
the time he was subjected to physical examination by the medical examiner of the herein petitioner, he was
already suffering from tuberculosis. This fact appears in the negative both in the application and in the
medical report. The lower court, after an exhaustive examination of the conflicting testimonies, also found
that Feliciano was made to sign the application and the examiner's report in blank, and that afterwards the
blank spaces therein were filled in by the agent and the medical examiner, who made it appear therein that
Feliciano was a fit subject for insurance. The lower court also held that neither the insured nor any member of
his family concealed the real state of health of the insured. That as a matter of fact the insured, as well as the
members of his family, told the agent and the medical examiner that the applicant had been sick and coughing
for sometime and that he had also gone three times to the Santol Sanatarium. On appeal, this finding of facts
of the lower court was sustained by the Court of Appeals. This concludes the controversy over the facts in so
far as this Court is concerned.

ISSUE: WON the CA is correct in holding that an insurance company has no right to avoid a policy where its
agent knowingly and intentionally wrote down the answers in the application differing from those made by
the insured, in disregard of the exception that when the agent, instead of serving the interests of his principal,
acts in his own or another's interest and adversely to that of his principal, the said principal is not bound by
said acts of the agent?

HELD: YES! The phenomenal growth of insurance from almost nothing a hundred years ago to its present
gigantic proportion is not of the outstanding marvels of present-day business life. It is of common knowledge
that the selling of insurance today is subjected to the whilrlwind pressure of modern salesmanship. Insurance
companies send detailed instructions to their agents to solicit and procure applications. The agents, in short,
do what the company set them to do. In the present case, the agent knew all the time the true state of health
of the insured. The insurer's medical examiner approve the application knowing full well that the applicant
was sick. The situation is one in which one of two innocent parties must bear a loss for his reliance upon a
third person. In this case, it was the insurer who gave the agent authority to deal with the applicant. It was the
one who selected the agent, thus implying that the insured could put his trust on him. It was the one who
drafted and accepted the policy and consummated the contract. It seems reasonable that as between the two
of them, the one who employed and gave character to the third person as its agent should be the one to bear
the loss. The company received the money of the applicant as the price of the risk to be taken by it. If the
policy should be avoided, it must be because it was void from the very beginning, and the result would be that
the insurer, while it received the money, never assumed any risk. The weight of authority is that if an agent of
the insurer, after obtaining from an applicant for insurance a correct and truthful answer to interrogatories
contained in the application for insurance, without knowledge of the applicant fills in false answers, either
fraudulently or otherwise, the insurer cannot assert the falsity of such answers as a defense to liability on the
policy, and this is true generally without regard to the subject matter of the answers or the nature of the
agent's duties or limitations on his authority, at least if not brought to the attention of the applicant.

We have not been insensible to the appeal that the course we have followed may lead to fraud and
work hardship on insurance companies, for it would be easy for insurance agents and applicants to insert false
answers in their applicants to insert false answers in their applications for insurance. This means that it is to
the particular interest of these companies to exercise greater care in the selection of their agents and
examiners. Their protection is still in their own hands and which may be achieved by other means. Withal, the
attainment of a common good may involve impairment and even sacrifice of beneficial interests of a particular
group, but in life, compromise is inevitable until the hour of doom strikes.

6. SUNLIFE ASSURANCE COMPANY OF CANADA vs. COURT OF APPEALS G.R. No. 105135, 22 June 1995
FACTS: Robert John Bacani procured a life insurance contract for himself from petitioner-company,
designating his mother Bernarda Bacani, herein private respondent, as the beneficiary. He was issued a policy
valued at P100,000.00 with double indemnity in case of accidental death. Sometime after, the insured died in
a plane crash. Bernarda filed a claim with petitioner, seeking the benefits of the insurance policy taken by her
son. However, said insurance company rejected the claim on the ground that the insured did not disclose
material facts relevant to the issuance of the policy, thus rendering the contract of insurance voidable.
Petitioner discovered that two weeks prior to his application for insurance, the insured was examined and
confined at the Lung Center of the Philippines, where he was diagnosed for renal failure. The RTC, as affirmed
by the CA, this fact was concealed, as alleged by the petitioner. But the fact that was concealed was not the
cause of death of the insured and that matters relating to the medical history of the insured is deemed to be
irrelevant since petitioner waived the medical examination prior to the approval and issuance of the insurance
policy.

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

HELD: YES. Section 26 of the Insurance Code is explicit in requiring a party to a contract of insurance to
communicate to the other, in good faith, all facts within his knowledge which are material to the contract and
as to which he makes no warranty, and which the other has no means of ascertaining. Anent the finding that
the facts concealed had no bearing to the cause of death of the insured, it is well settled that the insured need
not die of the disease he had failed to disclose to the insurer. It is sufficient that his non-disclosure misled the
insurer in forming his estimates of the risks of the proposed insurance policy or in making inquiries. The SC,
therefore, ruled that petitioner properly exercised its right to rescind the contract of insurance by reason of
the concealment employed by the insured. It must be emphasized that rescission was exercised within the
two-year contestability period as recognized in Section 48 of The Insurance Code. WHEREFORE, the petition is
GRANTED and the Decision of the Court of Appeals is REVERSED and SET ASIDE.

7. Thelma Vda. De Canilang v. CA

Facts: Canilang consulted Dr. Claudio and was diagnosed as suffering from "sinus tachycardia." Mr. Canilang
consulted the same doctor again on 3 August 1982 and this time was found to have "acute bronchitis."

On the next day, 4 August 1982, Canilang applied for a "non-medical" insurance policy with Grepalife
naming his wife, as his beneficiary. Canilang was issued ordinary life insurance with the face value of P19,700.

On 5 August 1983, Canilang died of "congestive heart failure," "anemia," and "chronic anemia." The
wife as beneficiary, filed a claim with Grepalife which the insurer denied on the ground that the insured had
concealed material information from it.

Vda Canilang filed a complaint with the Insurance Commissioner against Grepalife contending that as
far as she knows her husband was not suffering from any disorder and that he died of kidney disorder.

Grepalife was ordered to pay the widow by the Insurance Commissioner holding that there was no
intentional concealment on the Part of Canilang and that Grepalife had waived its right to inquire into the
health condition of the applicant by the issuance of the policy despite the lack of answers to "some of the
pertinent questions" in the insurance application. CA reversed.

Issue: WON Grepalife is liable.

Held: SC took note of the fact that Canilang failed to disclose that hat he had twice consulted Dr. Wilfredo B.
Claudio who had found him to be suffering from "sinus tachycardia" and "acute bronchitis. Under the relevant
provisions of the Insurance Code, the information concealed must be information which the concealing party
knew and "ought to [have] communicate[d]," that is to say, information which was "material to the contract.

The information which Canilang failed to disclose was material to the ability of Grepalife to estimate
the probable risk he presented as a subject of life insurance. Had Canilang disclosed his visits to his doctor, the
diagnosis made and the medicines prescribed by such doctor, in the insurance application, it may be
reasonably assumed that Grepalife would have made further inquiries and would have probably refused to
issue a non-medical insurance policy or, at the very least, required a higher premium for the same coverage.

The materiality of the information withheld by Canilang from Grepalife did not depend upon the state
of mind of Jaime Canilang. A man's state of mind or subjective belief is not capable of proof in our judicial
process, except through proof of external acts or failure to act from which inferences as to his subjective belief
may be reasonably drawn. Neither does materiality depend upon the actual or physical events which ensue.
Materiality relates rather to the "probable and reasonable influence of the facts" upon the party to whom the
communication should have been made, in assessing the risk involved in making or omitting to make further
inquiries and in accepting the application for insurance; that "probable and reasonable influence of the facts"
concealed must, of course, be determined objectively, by the judge ultimately.

SC found it difficult to take seriously the argument that Grepalife had waived inquiry into the
concealment by issuing the insurance policy notwithstanding Canilang's failure to set out answers to some of
the questions in the insurance application. Such failure precisely constituted concealment on the part of
Canilang. Petitioner's argument, if accepted, would obviously erase Section 27 from the Insurance Code of
1978.

8. PHILAMCARE HEALTH SYSTEMS, INC., petitioner, vs. COURT OF APPEALS and JULITA TRINOS, respondents.

Ernani Trinos, deceased husband of respondent Julita Trinos, applied for a health care coverage with
petitioner Philamcare Health Systems, Inc. Under the agreement, respondent’s husband was entitled to avail
of hospitalization benefits. He answered no to the following question in the application: Have you or any of
your family members ever consulted or been treated for high blood pressure, heart trouble, diabetes, cancer,
liver disease, asthma or peptic ulcer? Upon the termination of the agreement, the same was extended. During
the period of his coverage, Ernani suffered a heart attack and was confined at the Manila Medical Center
(MMC). Respondent tried to claim the benefits under the health care agreement. However, petitioner denied
her claim saying that the Health Care Agreement was void. According to petitioner, there was a concealment
regarding Ernani’s medical history. Doctors at the MMC allegedly discovered at the time of Ernani’s
confinement that he was hypertensive, diabetic and asthmatic, contrary to his answer in the application form.
Thus, respondent paid the hospitalization expenses herself for P76,000.00. After being discharged he was
again admitted at the Chinese General Hospital. Due to financial difficulties, respondent brought her husband
home again. However, Respondent was constrained to bring him back to the Chinese General Hospital where
he died.

Respondent instituted with the Regional Trial Court of Manila, Branch 44, an action for reimbursement
of her expenses against petitioner and its president, Dr. Beneto Reverente. Lower court ruled against
petitioners to pay P76,000.00 plus interest. CA affirmed the decision. Petitioner argues that the agreement
grants "living benefits, ie hospitalization which a member may immediately enjoy so long as he is alive upon
effectivity of the agreement until its expiration. Petitioner also points out that only medical and hospitalization
benefits are given under the agreement without any indemnification, unlike in an insurance contract where
the insured is indemnified for his loss. Petitioner alleges that respondent was not the legal wife of the
deceased member considering that at the time of their marriage, the deceased was previously married to
another woman who was still alive.

Issue: Whether or not the respondent is entitled to the claimed reimbursement

Ruling: Yes. Section 3 of the Insurance Code states that any contingent or unknown event, whether past or
future, which may damnify a person having an insurable interest against him, may be insured against. Every
person has an insurable interest in the life and health of himself. Section 10 provides: Every person has an
insurable interest in the life and health: (1) of himself, of his spouse and of his children; (2) of any person on
whom he depends wholly or in part for education or support, or in whom he has a pecuniary interest; (3) of
any person under a legal obligation to him for the payment of money, respecting property or service, of which
death or illness might delay or prevent the performance; and (4) of any person upon whose life any estate or
interest vested in him depends. In the case at bar, the insurable interest of respondent’s husband in obtaining
the health care agreement was his own health. The health care agreement was 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.

With regard the alleged concealment of a material fact in his application. Where matters of opinion are
called for, answers made in good faith and without intent to deceive will not avoid a policy even though they
are untrue. In such case the insurer is not justified in relying upon such statement, but is obligated to make
further inquiry. This largely depends on opinion rather than fact, especially coming from respondent’s
husband who was not a medical doctor.

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

Rescission in insurance Under Section 27 of the Insurance Code, “a concealment entitles the injured party to
rescind a contract of insurance.” The right to rescind should be exercised previous to the commencement of
an action on the contract. In this case, no rescission was made. Elements: 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.

With regard the issue of not being the legal wife of the deceased. Since a health care agreement is in the
nature of a contract of indemnity, payment should be made to the party who incurred the expenses. The
records adequately prove the expenses incurred by respondent for the deceased’s hospitalization. It is not
controverted that respondent paid all the hospital and medical expenses. She is therefore entitled to
reimbursement.

Construction. The rule that by reason of the exclusive control of the insurance company over the terms and
phraseology of the insurance contract, ambiguity must be strictly interpreted against the insurer and liberally
in favor of the insured, especially to avoid forfeiture, is equally applicable to Health Care Agreements.

Insurance and its elements 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. An insurance contract exists where the following elements
concur: 1. The insured has an insurable interest; 2. The insured is subject to a risk of loss by the happening of
the designated 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.

(Sorry guys ang haba, nilagay ko na lahat about insurance since di xa under specific topic and particular si
doc sa facts.)

9. Pacific Banking Corporation vs. CA & Oriental Assurance

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

Ruling: (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.

10. Guingon vs. Capital Insurance

Julio Aguilar owned and operated several jeepneys in the City of Manila among which was one with plate
number PUJ-206-Manila, 1961. He entered into a contract with the Capital Insurance & Surety Co., Inc.
insuring the operation of his jeepneys against accidents with third-party liability. As a consequence thereof an
insurance policy was executed, the pertinent provisions of which in so far as this case is concerned contains
the following:

Section II —LIABILITY TO THE PUBLIC

1. The Company, will, subject to the limits of liability, indemnify the Insured in the event of accident caused by
or arising out of the use of the Motor Vehicle/s or in connection with the loading or unloading of the Motor
Vehicle/s, against all sums including claimant's costs and expenses which the Insured shall become legally
liable to pay in respect of:
a. death of or bodily injury to any person
b. damage to property
During the effectivity of such insurance policy, Iluminado del Monte, one of the drivers of the jeepneys
operated by Aguilar, bumped with the jeepney abovementioned one Gervacio Guingon who had just alighted
from another jeepney and as a consequence the latter died some days thereafter.
A corresponding information for homicide thru reckless imprudence was filed against Iluminado del Monte,
who pleaded guilty. (4months imprisonment)

The heirs of Gervacio Guingon filed an action for damages praying that the sum of P82,771.80 be paid to them
jointly and severally by the defendants, driver Iluminado del Monte, owner and operator Julio Aguilar, and the
Capital Insurance & Surety Co., Inc. Capital Insurance & Surety Co., Inc. answered, alleging that the plaintiff has
no cause of action against it.

Appellant contends that the "no action" clause in the policy closes the avenue to any third party which may be
injured in an accident wherein the jeepney of the insured might have been the cause of the injury of third
persons, alleging the freedom of contracts.

Issue: W/N Capital Insurance is liable to pay the heirs of Guingon

Ruling: Yes.

Insurance; Right of injured person to sue insurer of party at fault; Condition.—The right of the person injured
to sue the insurer of the party at fault (insured) depends on whether the contract of insurance is intended to
benefit third persons also or only the insured. The test applied is this: Where the contract provides for
indemnity against liability to third persons, then third persons to whom the insured is liable. can sue the
insurer. Where the contract is for indemnity against actual loss or payment, then third persons cannot
proceed against the insurer, the contract being solely to reimburse the insured for liability actually discharged
by him through payment to third persons, said third persons' recourse being thus limited to the insured alone.

Same; Pleading and Practice; Joinder of parties; When "no action" clause in insurance policy cannot prevail
over procedural rule as to joinder of parties.—Where the insurer agreed to indemnify the insured "against all
sums x x x which the Insured shall become legally liable to pay in respect of: a death of or bodily injury to any
person", the insurance is one for indemnity against liability, From the fact then that the insured is liable to the
third-person, such third-person is entitled to sue the insurer. The "no action" clause in the policy of insurance
cannot prevail over the Rules of Court provision aimed at avoiding multiplicity of suits.

11. CAPITAL INSURANCE & SURETY CO. v PLASTIC ERA CO.

FACTS: On December 17, 1960, petitioner delivered to the respondent its open Fire Policy wherein the former
undertook to insure the latter’s building, equipments, raw materials, products and accessories located at
Mandaluyong, Rizal. The policy expressly provides that; 1) if the property insured would be destroyed or
damaged by fire after the payment of the premiums, at any time between the 15th day of December 1960 and
one o’clock in the afternoon of the 15th day of December 1961, the insurance company shall make good all
such loss or damage in an amount not exceeding P100,000.00; and 2), it is only upon payment of the
premiums by Plastic Era that Capital Insurance agrees to insure the properties of the former against loss or
damage in an amount not exceeding P100,000.00.

When the policy was delivered, Plastic Era failed to pay the corresponding insurance premium. However,
through its duly authorized representative, it executed an acknowledgment receipt. On January 8, 1961, in
partial payment of the insurance premium, Plastic Era delivered to Capital Insurance, a check for the amount
of P1,000.00 postdated January 16, 1961 payable to the order of the latter and drawn against the Bank of
America. However, Capital Insurance tried to deposit the check only on February 20, 1961 and the same was
dishonored by the bank for lack of funds.

Two days after the insurance premium became due, at about 4:00 to 5:00 o’clock in the morning, the property
insured by Plastic Era was destroyed by fire. In due time, the latter notified Capital Insurance of the loss of the
insured property by fire and accordingly filed its claim for indemnity thru the Manila Adjustment Company.
The loss and/or damage suffered by Plastic Era was estimated by the Manila Adjustment Company to be
P283,875.

Plastic Era demanded from Capital Insurance the payment of the sum of P100,000.00 as indemnity for the loss
of the insured property under Policy, but the latter refused for the reason that, among others, Plastic Era
failed to pay the insurance premium.

On August 25, 1961, Plastic Era filed its complaint against Capital Insurance for the recovery of the sum of
P100,000.00.

ISSUE: W/N a contract of insurance has been duly perfected between the petitioner and respondent

RULING: YES. It appears on record that on the day the insurance policy was delivered, Plastic Era did not pay
Capital Insurance, but instead executed an acknowledgment receipt of Policy. In said receipt Plastic Era
promised to pay the premium within 30 days from the effectivity date of the policy on December 17, 1960 and
Capital Insurance accepted it.

(What then is the effect of accepting such acknowledgment receipt from the Plastic Era? Did the Capital
Insurance mean to agree to make good its undertaking under the policy if the premium could be paid on or
before January 16, 1961? And what would be the effect of the delivery to Capital Insurance on January 8, 1961
of a postdated check (January 16, 1961) in the amount of P1,000.00, payable to the order of the latter? Could
not this have been considered a valid payment of the insurance premium? )

The mere delivery of a bill of exchange in payment of a debt does not immediately effect payment. It simply
suspends the action arising from the original obligation in satisfaction of which it was delivered, until payment
is accomplished either actually or presumptively. Tender of draft or check in order to effect payment that
would extinguish the debtor’s liability should be actually cashed.

In this case, Capital Insurance accepted the promise of Plastic Era to pay the insurance premium within 30
days from the effective date of policy. By so doing, it has implicitly agreed to modify the tenor of the insurance
policy and in effect, waived the provision therein that it would only pay for the loss or damage in case the
same occurs after the payment of the premium. Considering that the insurance policy is silent as to the mode
of payment, Capital Insurance is deemed to have accepted the promissory note in payment of the premium.
This rendered the policy immediately operative on the date it was delivered.

Hence, when the damage or loss of the insured property occurred, the insurance policy was in full force and
effect. The fact that the check issued by Plastic Era in partial payment of the promissory note was later on
dishonored did not in any way operate as a forfeiture of its rights under the policy, there being no express
stipulation therein to that effect.

By accepting its promise to pay the insurance premium within 30 days from the effectivity date of the policy—
December 17, 1960 Capital Insurance had in effect extended credit to Plastic Era. The payment of the
premium on the insurance policy therefore became an independent obligation the non-fulfillment of which
would entitle Capital Insurance to recover. It could just deduct the premium due and unpaid upon the
satisfaction of the loss under the policy. It did not have the right to cancel the policy for nonpayment of the
premium except by putting Plastic Era in default and giving it personal notice to that effect. This Capital
Insurance failed to do.

12. Makati Tuscany v. CA, G.R. No. 95546

Facts: Early 1982: American Home Assurance Co. (AHAC), represented by American International Underwriters
(Phils.), Inc., issued in favor of Makati Tuscany Condominium Corporation (Tuscany) on the latter's building
and premises, for a period beginning 1 March 1982 and ending 1 March 1983, with a total premium of
P466,103.05. Premium were paid on installments on: March 12 1982, May 20 1982, June 21 1982, November
16 1982.

February 10 1983: AHAC replaced and renewed the previous policy, for a term covering 1 March 1983 to 1
March 1984 premium of P466,103.05 was again paid on installments on: April 13 1983, July 13 1983, August 3
1983, September 9 1983, November 21 1983.

January 20 1984: Policy was again renewed for the period March 1 1984 to March 1 1985. Tuscany only paid
two installment payments: February 6 1984 for P52k, June 6 1984 for P100k.

AHAC filed an action to recover the unpaid balance of P314,103.05. RTC dismissed the complaint. While it is
true that the receipts issued to the defendant contained the aforementioned reservations, it is equally true
that payment of the premiums of the three aforementioned policies (being sought to be refunded) were made
during the lifetime or term of said policies, hence, it could not be said, despite of the reservations, that no risk
attached under the policies counterclaim for refund is not justified.

CA ordered Tuscany to pay premiums when due is ordinarily as indivisible obligation to pay the entire
premium; insurance contract became valid and binding upon payment of the first premium.

Issue:: WON payment by installment of the premiums due on an insurance policy invalidates the contract of
insurance on the basis of Sec. 77 of the Insurance Code.

Ruling: Waiver of the condition of prepayment of premium

No. While the import of Section 77 is that prepayment of premiums is strictly required as a condition to the
validity of the contract, Section 78 of the Insurance Code in effect allows waiver by the insurer of the
condition of prepayment by making an acknowledgment in the insurance policy of receipt of premium as
conclusive evidence of payment so far as to make the policy binding despite the fact that premium is
actually unpaid. Section 77 merely precludes the parties from stipulating that the policy is valid even if
premiums are not paid, but does not expressly prohibit an agreement granting credit extension, and such an
agreement is not contrary to morals, good customs, public order or public policy. At the very least, both
parties should be deemed in estoppel to question the arrangement they have voluntarily accepted. It paid the
initial installment and thereafter made staggered payments resulting in full payment of the 1982 and 1983
insurance policies. For the 1984 policy, petitioner paid 2 installments although it refused to pay the balance.

13. YOUNG vs. Midland Textile Insurance Co.

FACTS: The purpose of the present action is to recover the sum of P3,000 upon an insurance policy. The lower
court rendered a judgment in favor of the plaintiff and against the defendant for the sum of P2,708.78, and
costs. From that judgment the defendant appealed to this court. The plaintiff occupied a building at ‘321 Calle
Claveria, as a residence and bodega (storehouse).On the 29th of May, 1912, the defendant, in consideration of
the payment of a premium of P60, entered into a contract of insurance with the plaintiff promising to pay to
the plaintiff the sum of P3,000, in case said residence and bodega and contents should be destroyed by fire.
One of the conditions of said contract was that no hazardous goods be stored or kept in the building. On the
4th or 5th of February, 1913, the plaintiff placed in said residence and bodega three boxes which belonged to
him and which were filled with fireworks for the celebration of the Chinese new year. On the 18th day of
March, 1913, said residence and bodega and the contents thereof were partially destroyed. Fireworks were
found in a part of the building not destroyed by the fire; that they in no way contributed to the fire, or to the
loss occasioned thereby.
Issue:
Whether or not the placing of said fireworks in the building insured, under the conditions above enumerated,
they being “hazardous goods,” is a violation of the terms of the contract of insurance.

Ruling: Yes. The word “stored” has been defined to be a deposit in a store or warehouse for preservation or
safe keeping; to put away for future use, especially for future consumption; to place in a warehouse or other
place of deposit for safe keeping. Said definition does not include a deposit in a store, in small quantities, for
daily use. “Daily use” precludes the idea of deposit for preservation or safe keeping, as well as a deposit for
future consumption or safe keeping. A violation of the terms of a contract of insurance, by either party, will
constitute the basis for a termination of the contractual relations, at the election of the other. The right to
terminate the contractual relations exists even though the violation was not the direct cause of the loss. In the
present case, the deposit of the “hazardous goods,” in the building insured, was a violation of the terms of the
contract. Although the hazardous goods did not contribute to the loss, the insurer, at his election, was relieved
from liability Said deposit created a new risk, not included in the terms of the contract. The insurer had neither
been paid, nor had he entered into a contract, to cover the increased risk.

14. PHILIPPINE PRYCE ASSURANCE COMPANY v. CA

FACTS:

Gregroco, Inc. filed a collection suit against the petitioner, Interworld Assurance Corporation ( now Philippine Pryce
Assurance Corporation. The complaint alleged that Phil. Pryce issued two surety bonds in behalf of its principal Sagum
General Merchandise for P 500,000 and P 1,000,000, respectively.

Phil. Pryce admitted having executed the said bonds, but denied liability because allegedly 1) The checks which were to
pay for the premiums bounced and were dishonored hence there is no contract to speak of between petitioner and its
supposed principal; and 2) that the bonds were merely to guarantee payment of its principal’s obligation, thus,
excussion is necessary.

Phil. Pryce filed a “ Motion with Leave to Admit Third-Party Complaint” with the Third-Party Complaint attached when
the case was called for Pre-Trial conference on February 1, 1989, petitioner was again nor presented by its officer or its
counsel, despite being duly notified. Hence, upon motion of respondent, petitioner was considered as in default and
respondent was allowed to present evidence ex-parte. Regional Trial Court ruled in favor of Gregroco Inc and affirmed
Regional Trial Court. Hence, this appeal.

ISSUE:

Whether or not Phil. Pryce should be liable for the surety bond that it issued as payment for the premium.

HELD:

YES.

There is reason to believe that petitioner does not really have a good defense. Petitioner hinges its defense on two
arguments, namely; a) That the checks issued by its principal which were supposed to pay for the premiums, bounced,
hence, there is no contract of surety to speak of; and b) That as early as 1986 and covering the time of the Surety Bond,
Interworld Assurance Company ( now Phil. Pryce ) was not yet authorized by the insurance commission to issue such
bonds.

Section 177. The surety is entitled to payment of the premium as soon as the contract of suretyship or bond is perfected
and delivered to the obligor. No contract of suretyship or bonding shall be valid and binding unless and until the
premium therefore has been paid, except where the obligee has accepted the bond, in which case the bond becomes
valid and enforceable irrespective of whether or not the premium has been paid by the obligor to the surety.

The above provision outrightly negates petitioner’s first defense. In a desperate attempt to escape liability, petitioner
further asserts that the above provision is not applicable because the respondent allegedly had not accepted the surety
bond, hence could not have delivered the goods to Sagum Enterprises. This statement clearly intends to muddle the
facts as found by the trial court and which are on record.

Likewise, attached to the record are exhibits C to C-18 consisting of delivery invoices addressed to Sagum General
Merchandise proving that parts were purchased, delivered and received.

On the other hand, petitioner’s defense that it did not have authority to issue a Surety Bond when it did is an admission
of fraud committed against respondent. No person can claim benefit from the wrong he himself committed. A
representation made is rendered conclusive upon the person making it and cannot be denied or disproved as against the
person relying thereon.
Wherefore, in view of the foregoing, the decision of the Court of Appeals dismissing the petition before them and
affirming the decision of the trial court and its order denying petitioner’s Motion For Reconsideration are hereby
AFFIRMED. The present petition is dismissed for lack of merit.

15. Arce v Capital Surety and Insurance Co., Inc., 117 SCRA 63
FACTS:
The INSURED was the owner of a residential house in Tondo, Manila, which had been insured with the
COMPANY since 1961.In1965, the COMPANY sent to the INSURED Renewal to cover the period December 5,
1965 to December 5, 1966. The COMPANY also requested payment of the corresponding premium in the
amount of P 38.10. Anticipating that the premium could not be paid on time, the INSURED, thru his wife,
promised to pay it on January 4, 1966 but the premium was still not paid. Thereafter, the house of the
INSURED was totally destroyed by fire.

The INSURED's wife presented a claim for indemnity but was told that no indemnity was due because
the premium on the policy was not paid. Nonetheless the COMPANY tendered a check for P300.00 as financial
aid which was received by the INSURED's daughter, Evelina R. Arce. The voucher for the check which Evelina
signed stated that it was "in full settlement (ex gratia) of the fire loss. Thereafter the INSURED and his wife
went to the office of the COMPANY to have his signature on the check Identified preparatory to encashment.
At that time the COMPANY reiterated that the check was given "not as an obligation, but as a concession"
because the renewal premium had not been paid, The INSURED cashed the check but then sued the
COMPANY on the policy.

The court a quo held that since the COMPANY could have demanded payment of the premium,
mutuality of obligation requires that it should also be liable on its policy. The court a quo also held that the
INSURED was not bound by the signature of Evelina on the check voucher because he did not authorize her to
sign the waiver.

ISSUE: Whether or not the Company can be held on its policy?

RULING: No. Sec. 72 of the Insurance Act, as amended by R.A. No. 3540 reads:
SEC. 72. An insurer is entitled to payment of premium as soon as the thing insured is exposed to the
perils insured against, unless there is clear agreement to grant credit extension for the premium due.
No policy issued by an insurance company is valid and binding unless and until the premium thereof has been
paid " .

It is obvious from both the Insurance Act, as amended, and the stipulation of the parties that time is of
the essence in respect of the payment of the insurance premium so that if it is not paid the contract does not
take effect unless there is still another stipulation to the contrary. In the instant case, the INSURED was given
a grace period to pay the premium but the period having expired with no payment made, he cannot insist
that the COMPANY is nonetheless obligated to him.

It is not necessary to dwell that the INSURED had not authorized his daughter Evelina to make a waiver
because the INSURED had nothing to waive; his policy ceased to have effect when he failed to pay the
premium.

16. James Mcguire v. Manufacturers life insurance co

Facts: Manufacturers life insurance co issued an insurance policy on the life of Jaime McGuire for the sum of
$5,000, and an additional sum of $5,000 as double indemnity accident benefit, payable to the plaintiff as
beneficiary. The insured paid the premiums on said policy up to and including that due on July 19, 1940. On
June 22, 1940, the insured secured from the defendant a loan of $760 on said insurance policy.

upon the default of the insured to pay the premiums due on July 19, 1941, and subsequent ones, the
defendant insurance company applied the stipulation contained in clause 8 (Automatic Premium Loan) the
policy was carried on under said non forfeiture clause of the policy up to and including March 1, 1942, the
date said policy lapsed, as shown in the letter of the defendant company of January 17, 1946

Jaime McGuire died on August 4, 1943, in a motorcycle accident at Borongan, Samar, Philippines

That during the interim period between March 1, 1942, the date the policy lapsed, to August 4, 1943, the date
of the death of the insured, the insured attempted to reinstate the policy but his attempts failed because of
his inability to communicate with defendant's branch office at Manila due to the then existence of war and the
occupation of the Philippines by enemy forces from January 1, 1942, to February, 1945.

trial court ordered the defendant to pay McGuire the sum of P20,000, minus the premiums due and unpaid up
to the date of the death of the insured. the trial court being of the opinion that the war legally suspended the
obligation of the insured to pay the premiums up to the time of the death of the. Insured.

Issues: WON the non-payment of premium during the period of war is a valid ground to suspend the
obligation of the insured to pay the premiums due.

Ruling: No. The trial court’s judgment is erroneous. According to the complaint, plaintiff's theory is that,
although the policy lapsed on March 1, 1942, the insured had the privilege of reinstating it so as to keep it in
force up to the time of his death upon a written application within three years from the date of lapse and
upon production of evidence of insurability, but that the insured was unable to exercise that privilege because
of the war. The trial court held that it was unnecessary for the plaintiff to invoke the reinstatement clause of
the policy because it had not lapsed inasmuch as the failure to pay the premiums was due to the war.

The Supreme Court adopted the United States rule which declares that the contract is not merely suspended,
but is abrogated by reason of nonpayment of premiums, since the time of the payments is peculiarly of the
essence of the contract. The incontestability of the insurance policy is rebutted by the defense of nonpayment
of premium. Thus the fundamental character of the undertaking to pay premiums and high importance of the
defense of nonpayment thereof was specifically recognized regardless of the existence of war.
Scra: LIFE INSURANCE; REINSTATEMENT OF POLICY.—The stipulation in a life insurance policy giving' the
insured the privilege to reinstate it upon written application within three years from the date it lapses and
upon production of evidence of insurability satisfactory to the insurance company and the payment of all
overdue premiums and any other indebtedness to the company, does not give the insured absolute right to
such reinstatement by the mere filing of an application therefor. The company has the right to deny the
reinstatement if it is not satisfied as to the insurability of the insured and if the latter does not pay all overdue
premiums and all other indebtedness to the company. After the death of the insured the insurance company
cannot be compelled to entertain an application for reinstatement of the policy because the conditions
precedent to reinstatement can no longer be determined and satisfied.

NONPAYMENT OF PREMIUMS TERMINATES CONTRACT OF INSURANCE.—As held in Lopez de Constantino vs.

Asia Life Insurance Company, and Peralta vs. Asia Life Insurance Company, G. R. Nos. L-1669 and L-1670, the
payment of premiums on a life insurance policy is not suspended by war. The United States rule which
declares that the contract of insurance is not merely suspended, but is abrogated by reason of nonpayment of
premiums, since the time of the payments is peculiarly of the essence of the contract, is adopted in this
jurisdiction. McGuire vs. Manufacturers Life Ins. Co., 87 Phil. 370, No. L-3581 September 21, 1950

17. Phil Phoenix Surety and Insurance v Woodworks Inc.

Facts: On April 1, 1960, plaintiff Philippine Phoenix Surety & Insurance Co., Inc issued to defendant
Woodworks, Inc Fire Policy No. 9652 for the amount of P300,000.00. Plaintiff commenced an action in the
Municipal Court of Manila to recover from defendant the sum of P3,522.09, representing the unpaid balance
of the premiums on the said insurance policy for a term of one year from April 1, 1960 to April 1, 1961. MTC
favored plaintiff. Defendant Woodworks, Inc. appealed to the Court of First Instance of Manila contending
that no contract was made when it only made partial payment and that their nonpayment of premium
cancelled the policy.

Issues:

Whether there was a perfected contract of insurance notwithstanding partial payment was only made

Whether nonpayment of premium due cancels the contract of insurance

Rulings:

Yes. After the Fire Insurance Policy No. 9652 was issued by plaintiff and delivered to defendant, on September
22 of the same year, the latter paid to the former the sum of P3,000.00 on account of the total premium of
P6,051.95 due thereon. There is, consequently, no doubt at all that, as between the insurer and the insured,
there was not only a perfected contract of insurance but a partially performed one as far as the payment of
the agreed premium was concerned. Thereafter the obligation of the insurer to pay the insured the amount
for which the policy was issued in case the conditions therefor had been complied with, arose and became
binding upon it, while the obligation of the insured to pay the remainder of the total amount of the premium
due became demandable.

No. Nonpayment of the premium due does not produce the cancellation of the contract of insurance. Such
theory would place exclusively in the hands of one of the contracting parties the right to decide whether the
contract should stand or not. Rather the correct view would seem to be this: as the contract had become
perfected, the parties. could demand from each other the performance of whatever obligations they had
assumed. In the case of the insurer, it is obvious that it had the right to demand from the insured the
completion of the payment of the premium due or sue for the rescission of the contract. As it chose to
demand specific performance of the insured's obligation to pay the balance of the premium, the latter's duty
to pay is indubitable.