WHITE GOLD MARINE SERVICES, INC., Petitioners, vs.

PIONEER INSURANCE AND SURETY CORPORATION AND THE STEAMSHIP MUTUAL UNDERWRITING ASSOCIATION (BERMUDA) LTD., Respondents. DECISION QUISUMBING, J.: This petition for review assails the Decision 1 dated July 30, 2002 of the Court of Appeals in CA-G.R. SP No. 60144, affirming the Decision 2 dated May 3, 2000 of the Insurance Commission in I.C. Adm. Case No. RD-277. Both decisions held that there was no violation of the Insurance Code and the respondents do not need license as insurer and insurance agent/broker. The facts are undisputed. White Gold Marine Services, Inc. (White Gold) procured a protection and indemnity coverage for its vessels from The Steamship Mutual Underwriting Association (Bermuda) Limited (Steamship Mutual) through Pioneer Insurance and Surety Corporation (Pioneer). Subsequently, White Gold was issued a Certificate of Entry and Acceptance. 3Pioneer also issued receipts evidencing payments for the coverage. When White Gold failed to fully pay its accounts, Steamship Mutual refused to renew the coverage. Steamship Mutual thereafter filed a case against White Gold for collection of sum of money to recover the latters unpaid balance. White Gold on the other hand, filed a complaint before the Insurance Commission claiming that Steamship Mutual violated Sections 1864 and 1875 of the Insurance Code, while Pioneer violated Sections 299, 63007 and 3018 in relation to Sections 302 and 303, thereof. The Insurance Commission dismissed the complaint. It said that there was no need for Steamship Mutual to secure a license because it was not engaged in the insurance business. It explained that Steamship Mutual was a Protection and Indemnity Club (P & I Club). Likewise, Pioneer need not obtain another license as insurance agent and/or a broker for Steamship Mutual because Steamship Mutual was not engaged in the insurance business. Moreover, Pioneer was already licensed, hence, a separate license solely as agent/broker of Steamship Mutual was already superfluous. The Court of Appeals affirmed the decision of the Insurance Commissioner. In its decision, the appellate court distinguished between P & I Clubs vis--vis conventional insurance. The appellate court also held that Pioneer merely acted as a collection agent of Steamship Mutual. In this petition, petitioner assigns the following errors allegedly committed by the appellate court,

FIRST ASSIGNMENT OF ERROR THE COURT A QUO ERRED WHEN IT RULED THAT RESPONDENT STEAMSHIP IS NOT DOING BUSINESS IN THE PHILIPPINES ON THE GROUND THAT IT COURSED . . . ITS TRANSACTIONS THROUGH ITS AGENT AND/OR BROKER HENCE AS AN INSURER IT NEED NOT SECURE A LICENSE TO ENGAGE IN INSURANCE BUSINESS IN THE PHILIPPINES. SECOND ASSIGNMENT OF ERROR THE COURT A QUO ERRED WHEN IT RULED THAT THE RECORD IS BEREFT OF ANY EVIDENCE THAT RESPONDENT STEAMSHIP IS ENGAGED IN INSURANCE BUSINESS. THIRD ASSIGNMENT OF ERROR THE COURT A QUO ERRED WHEN IT RULED, THAT RESPONDENT PIONEER NEED NOT SECURE A LICENSE WHEN CONDUCTING ITS AFFAIR AS AN AGENT/BROKER OF RESPONDENT STEAMSHIP. FOURTH ASSIGNMENT OF ERROR THE COURT A QUO ERRED IN NOT REVOKING THE LICENSE OF RESPONDENT PIONEER AND [IN NOT REMOVING] THE OFFICERS AND DIRECTORS OF RESPONDENT PIONEER. 9 Simply, the basic issues before us are (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? 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. Petitioner insists that Steamship Mutual as a P & I Club is engaged in the insurance business. To buttress its assertion, it cites the definition of a P & I Club in Hyopsung Maritime Co., Ltd. v. Court of Appeals10 as an association composed of shipowners in general who band together for the specific purpose of providing insurance cover on a mutual basis against liabilities incidental to shipowning that the members incur in favor of third parties. It stresses that as a P & I Club, Steamship Mutuals primary purpose is to solicit and provide protection and indemnity coverage and for this purpose, it has engaged the services of Pioneer to act as its agent. Respondents contend that although Steamship Mutual is a P & I Club, it is not engaged in the insurance business in the Philippines. It is merely an association of vessel owners who have come together to provide mutual protection against liabilities incidental to shipowning.11 Respondents aver Hyopsung is inapplicable in this case because the issue in Hyopsung was the jurisdiction of the court over Hyopsung.
1

Is Steamship Mutual engaged in the insurance business? Section 2(2) of the Insurance Code enumerates what constitutes doing an insurance business or transacting an insurance business. These are: (a) making or proposing to make, as insurer, any insurance contract; (b) making, or proposing to make, as surety, any contract of suretyship as a vocation and not as merely incidental to any other legitimate business or activity of the surety; (c) doing any kind of business, including a reinsurance business, specifically recognized as constituting the doing of an insurance business within the meaning of this Code; (d) doing or proposing to do any business in substance equivalent to any of the foregoing in a manner designed to evade the provisions of this Code. ... The same provision also provides, the fact that no profit is derived from the making of insurance contracts, agreements or transactions, or that no separate or direct consideration is received therefor, shall not preclude the existence of an insurance business.12 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. 13 Basically, an insurance contract is a contract of indemnity. In it, one undertakes for a consideration to indemnify another against loss, damage or liability arising from an unknown or contingent event. 14 In particular, a marine insurance undertakes to indemnify the assured against marine losses, such as the losses incident to a marine adventure. 15 Section 9916 of the Insurance Code enumerates the coverage of marine insurance. Relatedly, a mutual insurance company is a cooperative enterprise where the members are both the insurer and insured. In it, the members all contribute, by a system of premiums or assessments, to the creation of a fund from which all losses and liabilities are paid, and where the profits are divided among themselves, in proportion to their interest.17 Additionally, mutual insurance associations, or clubs, provide three types of coverage, namely, protection and indemnity, war risks, and defense costs. 18 A P & I Club is a form of insurance against third party liability, where the third party is anyone other than the P & I Club and the members. 19 By definition then, Steamship

Mutual as a P & I Club is a mutual insurance association engaged in the marine insurance business. The records reveal Steamship Mutual is doing business in the country albeit without the requisite certificate of authority mandated by Section 18720 of the Insurance Code. It maintains a resident agent in the Philippines to solicit insurance and to collect payments in its behalf. We note that Steamship Mutual even renewed its P & I Club cover until it was cancelled due to non-payment of the calls. Thus, to continue doing business here, Steamship Mutual or through its agent Pioneer, must secure a license from the Insurance Commission. 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. 21 Does Pioneer, as agent/broker of Steamship Mutual, need a special license? Pioneer is the resident agent of Steamship Mutual as evidenced by the certificate of registration22 issued by the Insurance Commission. It has been licensed to do or transact insurance business by virtue of the certificate of authority 23 issued by the same agency. However, a Certification from the Commission states that Pioneer does not have a separate license to be an agent/broker of Steamship Mutual. 24 Although Pioneer is already licensed as an insurance company, it needs a separate license to act as insurance agent for Steamship Mutual. Section 299 of the Insurance Code clearly states: SEC. 299 . . . No person shall act as an insurance agent or as an insurance broker in the solicitation or procurement of applications for insurance, or receive for services in obtaining insurance, any commission or other compensation from any insurance company doing business in the Philippines or any agent thereof, without first procuring a license so to act from the Commissioner, which must be renewed annually on the first day of January, or within six months thereafter. . . Finally, White Gold seeks revocation of Pioneers certificate of authority and removal of its directors and officers. Regrettably, we are not the forum for these issues. WHEREFORE, the petition is PARTIALLY GRANTED. The Decision dated July 30, 2002 of the Court of Appeals affirming the Decision dated May 3, 2000 of the Insurance Commission is hereby REVERSED AND SET ASIDE. The Steamship Mutual Underwriting Association (Bermuda) Ltd., and Pioneer Insurance and Surety Corporation are ORDERED to obtain licenses and to secure proper authorizations to do business as insurer and insurance agent, respectively. The petitioners prayer for the revocation of Pioneers Certificate of Authority and removal of its directors and officers, is DENIED. Costs against respondents.
2

SO ORDERED. PHILAMCARE HEALTH SYSTEMS, INC. VS. COURT OF APPEALS 379 SCRA 356 (G.R. NO. 125678) MARCH 18, 2002 Petitioners: Respondents: Philamcare Health Systems, Inc. Court of Appeals and Julita Trios

After respondents husband was discharged from the hospital he was attended by physical therapist at home and lated admitted to the Chinese General Hospital. Due to financial difficulties respondent brought her husband hime again. Then on April 30, 1990, respondents husband died after having fever and brought to the Chinese General Hospital. Private respondent then instituted an action for damages against petitioner and its president with the RTC of Manila asking for reimbursement for her expenses plus moral damages and attorneys fees. After trial, the lower court rendered a decision in favor of the respondent ordering the petitioner to pay and reimburse the medical and hospital coverage amounting to 76,000.00, moral and exemplary damages of 10,000.00 each plus attorneys fees. On appeal, the Court of Appeals affirmed the decision but deleted all awards for damages and absolved petitioner Reverente (President of the company). Petitioners motion for reconsideration was denied. Hence this instant petition for review. ISSUE: 1) 2) Whether a health care agreement is an insurance contract. Whether or not he commit concealment when he answered no

J. Ynares-Santiago: FACTS: Private respondents husband, Ernani Trios (deceased) applied for a healthcare coverage with the petitioner Philamcare Health Systems, Inc.. In the standard application form private respondents husband answered no to the question. 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? Read more in Medicine The Brain Tissue on The Way to Avoid Loss Cosmetic Surgery Dont Cut Corners When It Comes to Safety The application was approved and a healthcare agreement was issued for a period of one year from March 1, 1988 to March 1, 1989. The healthcare agreement entitles the respondents husband to avail hospitalization benefits and out patients benefits. Upon termination of the agreement the same was extended covering March 1, 1989 to June 1, 1990. The amount of the coverage was increased to a maximum sum of 75,000.00 per disability. During the period of the coverage, private respondents husband suffered a heart attack and was confined at the Manila Medical Center for one month while her husband was in the hospital respondent tried to claim the benefits. However, petitioner denied her claim saying that the healthcare agreement was void because of the concealment made by the respondents husband regarding his medical history. It was alleged that at the time of the respondents husbands confinement, Doctors at MMC discovered, that he was hypertensive, diabetic, and asthmatic contrary to the answer in the application form. Thus private respondent paid the hospitalization expenses amounting to 76,000.00.

HELD: I. 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 insurers promise, the insured pays a premium. Read more in Medicine The Brain Tissue on The Way to Avoid Loss Cosmetic Surgery Dont Cut Corners When It Comes to Safety 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.
3

In the case at bar, the insurable interest of respondents husband in obtaining the health care agreement was his own health. The health care agreement was in the nature of nonlife 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. II The answer assailed by petitioner was in response to the question relating to the medical history of the applicant. This largely depends on opinion rather than fact, especially coming from respondents 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. Thus, (A)lthough false, a representation of the expectation, intention, belief, opinion, or judgment of the insured will not avoid the policy if there is no actual fraud in inducing the acceptance of the risk, or its acceptance at a lower rate of premium, and this is likewise the rule although the statement is material to the risk, if the statement is obviously of the foregoing character, since in such case the insurer is not justified in relying upon such statement, but is obligated to make further inquiry. There is a clear distinction between such a case and one in which the insured is fraudulently and intentionally states to be true, as a matter of expectation or belief, that which he then knows, to be actually untrue, or the impossibility of which is shown by the facts within his knowledge, since in such case the intent to deceive the insurer is obvious and amounts to actual fraud.

(Exhs. "1-D", "2-D", "3-A", "4-B", "5-A", "6-D" and "7-C"). In Exhibit "7-C" the word "included" above the underlined portion was deleted. On July 16, 1990 an earthquake struck Central Luzon and Northern Luzon and plaintiffs properties covered by Policy No. 31944 issued by defendant, including the two swimming pools in its Agoo Playa Resort were damaged. Petitioner advised respondent that it would be making a claim under its Insurance Policy 31944 for damages on its properties. Respondent denied petitioners claim on the ground that its insurance policy only afforded earthquake shock coverage to the two swimming pools of the resort. The trial court ruled in favor of respondent. In its ruling, the schedule clearly shows that petitioner paid only a premium of P393.00 against the peril of earthquake shock, the same premium it had paid against earthquake shock only on the two swimming pools in all the policies issued by AHAC. Issue: Whether or not the policy covers only the two swimming pools owned by Gulf Resorts and does not extend to all properties damaged therein Held: YES. All the provisions and riders taken and interpreted together, indubitably show the intention of the parties to extend earthquake shock coverage to the two swimming pools only. An insurance premium is the consideration paid an insurer for undertaking to indemnify the insured against a specified peril. In fire, casualty and marine insurance, the premium becomes a debt as soon as the risk attaches. In the subject policy, no premium payments were made with regard to earthquake shock coverage except on the two swimming pools. There is no mention of any premium payable for the other resort properties with regard to earthquake shock. This is consistent with the history of petitioners insurance policies with AHAC. FACTS:

Read more: http://healthmad.com/medicine/philamcare-health-systems-inc-vs-court-ofappeals/#ixzz1zqLKqj9Q

Gulf Resorts Inc. v. Philippine Charter Insurance Corp

Facts: Gulf Resorts is the owner of the Plaza Resort situated at Agoo, La Union and had its properties in said resort insured originally with the American Home Assurance Company (AHAC). In the first 4 policies issued, the risks of loss from earthquake shock was extended only to petitioners two swimming pools. Gulf Resorts agreed to insure with Phil Charter the properties covered by the AHAC policy provided that the policy wording and rates in said policy be copied in the policy to be issued by Phil Charter. Phil Charter issued Policy No. 31944 to Gulf Resorts covering the period of March 14, 1990 to March 14, 1991 for P10,700,600.00 for a total premium of P45,159.92. the break-down of premiums shows that Gulf Resorts paid only P393.00 as premium against earthquake shock (ES). In Policy No. 31944 issued by defendant, the shock endorsement provided that In consideration of the payment by the insured to the company of the sum included additional premium the Company agrees, notwithstanding what is stated in the printed conditions of this policy due to the contrary, that this insurance covers loss or damage to shock to any of the property insured by this Policy occasioned by or through or in consequence of earthquake

Gulf Resorts, Inc at Agoo, La Union was insured with American Home Assurance Company which includes loss or damage to shock to any of the property insured by this Policy occasioned by or through or in consequence of earthquake July 16, 1990: an earthquake struck Central Luzon and Northern Luzon so the properties and 2 swimming pools in its Agoo Playa Resort were damaged August 23, 1990: Gulf's claim was denied on the ground that its insurance policy only afforded earthquake shock coverage to the two swimming pools of the resort o Petitioner contends that pursuant to this rider, no qualifications were placed on the scope of the earthquake shock coverage. Thus, the policy extended earthquake shock coverage to all of the insured properties. RTC: Favored American Home - endorsement rider means that only the two swimming pools were insured against earthquake shock CA: affirmed RTC

ISSUE: W/N Gulf can claim for its properties aside from the 2 swimming pools
4

HELD: YES. Affirmed.

It is basic that all the provisions of the insurance policy should be examined and interpreted in consonance with each other. o All its parts are reflective of the true intent of the parties.

Insurance Code Section 2(1) 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 premium is the consideration paid an insurer for undertaking to indemnify the insured against a specified peril. o In the subject policy, no premium payments were made with regard to earthquake shock coverage, except on the two swimming pools. ETERNAL GARDENS MEMORIAL PARK CORPORATION vs. T H E PHILIPPINE AMERICAN LIFE INSURANCE COMPANYG.R. No. 166245, 9 April 2008 FACTS: :R e s p o n d e n t i n s u r a n c e c o m p a n y e n t e r e d i n t o a C r e d i t o r Gr o up L i f e P o l i c y a g r e e m e n t w i t h E t e r n a l G a r d e n s M e m o r i a l . U n d e r said policy, the clients of Eternal who purchased burial lots fromi t o n i n s t a l l m e n t basis would be insured by Philamlife. T h e amount of insurance coverage depended upon the existingb a l a n c e o f t h e p u r c h a s e d b u r i a l l o t s . T h e p o l i c y w a s t o b e effective for a period of one year, renewable on a yearly basis.As required under the said policy, Eternal submitted a list of allnew lot purchasers, including the application of each purchaserand their corresponding unpaid balances. Included in this list isa certain John Chuang.W h e n Chuang died, Eternal sent a letter, together with t h e p e r t i n e n t p a p e r s , t o P h i l a m l i f e w h i c h s e r v e d a s a n i n s ur a n c e c l a i m for Chuangs death. Philamlife required that E t e r n a l submit certain documents relative to its insurance claim forChuangs death. Eternal transmitted said documents w h i c h Philamlife was able to received. However, after more than oney e a r , P h i l a m l i f e d i d n o t a n y m o r e r e p l y t o E t e r n a l s i n s ur a n c e c l a i m . T hi s p r o m p t e d E t e r n a l t o de m a n d t h e i n s u r a n c e cl a i m s . However, Philamlife denied the said claim, prompting Eternal tofile a case before the RTC of Makati. ISSUE:W h e t h e r o r n o t P h i l a m l i f e w i t h o u t approving the application. assumed the risk of loss

d i s a p p r o v i n g t h e i n s u r a n c e a p p l i c a t i o n . T h e second sentence of Creditor Group Life Policy No. P-1920 on theE f f e c t i v e D a t e o f B e n e f i t i s i n t h e n a t u r e o f a r e s o l u t o r y condition which would lead to the cessation of the insurancecontract. Moreover, the mere inaction of the i n s u r e r o n t h e insurance application must not work to prejudice the insured; itc a n n o t b e i n t e r p r e t e d a s a t e r m i n a t i o n o f t h e i n s u r a n c e contract. The termination of the insurance c o n t r a c t b y t h e insurer must be explicit and unambiguous. M o r e o f t e n t h a n n o t , i n s u r a n c e c o n t r a c t s a r e c o n t r a c t s o f adhesion containing technical terms a n d c o n d i t i o n s o f t h e i n d us t r y , c o n f u s i n g i f a t a l l un d e r s t a n d a b l e t o l a y p e r s o n s , t h a t a r e i m p o s e d o n t h o s e w h o wi s h t o a v a i l o f i n s ur a n c e . A s s uc h , i n s u r a n c e c o n t r a c t s ar e i m b ue d wi t h p ub l i c i n t e r e s t t h a t m us t b e c o n s i d e r e d w h e n e v e r t h e r i g h t s a n d o b l i g a t i o n s o f t h e insurer and the insured are to be delineated. Hence, in order top r o t e c t t h e i n t e r e s t o f i n s u r a n c e a p p l i c a n t s , i n s u r a n c e companies must be obligated to act with haste upon insurancea p p l i c a t i o n s , t o e i t h e r d e n y o r a p p r o v e t h e s a m e , o r o t h e r w i s e b e bound to honor the application as a valid, binding, a n d effective insurance contract.WHEREFORE, we GRANT the petition.

ENRIQUEZ VS. SUN LIFE ASSURANCE CO. OF CANADA

41 PHIL 269 (G.R. NO. L-15895) NOVEMBER 29, 1920 Petitioner/Appellant: Rafael Enriquez (as administrator of the estate of the late Joaquin Ma. Herrer) Respondent/Appellee: Sun Life Assurance Company of Canada FACTS: On September 24, 1917, Mr Joaquin Herrer made an application to Sun Life Assurance Company of Canada through its office in Manila for a life annuity. Two day later he paid the sum of 6,000.00 to the manager of the companys Manila office and was given a receipt therefor. On November 26, 1917, the head office of the insurance company gave notice of acceptance by cable to Manila. On the same date the Manila office prepared a letter notifying Mr. Herrer that his application had been accepted and this was placed in the
5

HELD: YES. An insurance contract covering the lot purchaser is createdand the same is effective, valid, and binding until terminated byP h i l a m l i f e by

ordinary channels for transmission, but as far known, was never actually mailed and was never received by the applicant. Mr. Herrer died on December 20, 1917. Read more in Business Eternal Gardens Memorial Park Corporation vs.. Philippine American Life Insurance Company Great Pacific Life Assurance Company vs.. Court of Appeals ISSUE: Whether the contract of life annuity was perfected. HELD - The court held that the contract for a life annuity was not perfected because it had not been proved satisfactorily that the acceptance of the application even came to the knowledge of the applicant. An acceptance of an offer of insurance not actually or constructively communicated to the proposer does not make a contract. Only the mailing of acceptance completes the contract of insurance, as the locus pnitenti is ended when the acceptance has passed beyond the control of the party. When a letter or other mail matter is addressed and mailed with postage prepaid there is a rebuttable presumption of fact that it was received by the addressee as soon as it could have been transmitted to him in the ordinary course of the mails. But if any one of these elemental facts fails to appear, it is fatal to the presumption.

The non-acceptance of the insurance plan was allegedly not communicated by Mondragon to respondent. Mondragon again asserted his strong recommendation. Helen Go died of influenza. Thereupon, respondent sought the payment of the proceeds of the insurance, but having failed in his effort, he filed an action for the recovery of the same. Hence the case at bar. Issue: Whether or not the insurance contract has been perfected on the ground that a binding receipt has been issued? Held: NO, it was not perfected. The binding deposit receipt is merely an acknowledgement, on behalf of the company, that the latters 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. The binding deposit receipt is merely conditional and does not insure outright. 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.

Great Pacific Life Assurance Co. v Court of Appeals

89 SCRA 543 April 30, 1979 Facts: Respondent Ngo Hing filed an application with petitioner Great Pacific Life Assurance Company (Pacific Life) for a twenty-year endowment policy in the life of Helen Go, his one year old daughter. Petitioner Lapulapu D. Mondragon, the branch manager, prepared application form using the essential data supplied by respondent. The latter paid the annual premium and Mondragon retained a portion of it as his commission. The binding deposit receipt was issued to respondent. Mondragon wrote his strong recommendation for the approval of the insurance application. However, Pacific Life disapproved the application since the plan was not available for minors below 7 years old but it can consider the same under another plan.

Spouses Cha vs. CA

Facts: Spouses Cha, as lessees, entered into a lease contract with C K S D e v e l o p m e n t Corporation, as lessor, with a stipul ation that "The LESSEE shall not insure against fire thechattels, merchandi se, 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 theLESSEE obtain(s) the insurance thereof without the consent of the LESSOR then the policy isdeemed assigned and transferred to the LESSOR for its own benefit" Notwithstanding the abovestipulati on in the lease contract, the Cha spouses insured against loss by fire their merchandise i n s i d e t h e l e a s e d p r e m i s e s f o r P 5 0 0 , 0 0 0 . 0 0 w i t h t h e U n i t e d I n s u r a n c e C o . , I n c . w i t h o u t t h e written consent of CKS. On the day that the lease contract was to expire, fire broke out inside thel e a s e d p r e m i s e s . When CKS learned of the insurance earlier procured by the Cha spouses(without its consent), it wrote the insurer a demand letter a s k i n g t h a t t h e p r o c e e d s o f t h e insurance contract be paid directl y to CKS, based on its lease contract with the Cha spouses. United refused to pay CKS. The latter filed a complaint against the Cha spouses and United.
6

Issue: Whether the stipulation in the lease contract, that any fire insurance policy obtained by thelessee over their merchandise inside the leased premises is deemed assigned or transferred to thelessor if said policy is obtained without the prior written consent of the latter, is valid. Held: NO. It is basic in the law on contracts that the stipulations contained in a contract cannot b e c o n t r a r y t o l a w , m o r a l s , g o o d c u s t o m s , p u b l i c o r d e r o r public policy. Section 18 of theI n s u r a n c e C o d e p r o v i d e s t h a t " N o c o n t r a c t o r p o l i c y o f i n s u r a n c e o n p r o p e r t y s h a l l b e 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 the spouses over their merchandise is primarily a contract of indemnity. Insurable interest in the property insuredmust exist at the time the insurance takes effect and at the time the loss occurs. Herein, it cannot be denied that CKS has no insurable interest in the goods and merchandi se inside the leased premises under the provisions of Section 17 of the Insurance Code which provides that "The measure of an insurable interest in property is the extent to which the insured might be damnified b y loss of injury thereof." Therefore, CKS cannot, under the Insurance Code be validly a beneficiary of the fire insurance policy taken by the spouses over their merchandise. Thisinsurable interest over said m e r c h a n d i s e r e m a i n s w i t h t h e i n s u r e d , t h e C h a s p o u s e s . T h e automatic assignment of the policy to CKS under the provision of the lease contract previouslyquoted is void for being contrary to law and/or public policy

Gaisano Cagayan, Inc: not be held liable because it was destroyed due to fortuities event or force majeure RTC: IMC and LSPI retained ownership of the delivered goods until fully paid, it must bear the loss (res perit domino) CA: Reversed - sales invoices is an exception under Article 1504 (1) of the Civil Code to res perit domino

ISSUE: W/N Insurance Company of North America can claim against Gaisano Cagayan for the debt that was isnured HELD: YES. petition is partly GRANTED. order to pay P535,613 is DELETED

insurance policy is clear that the subject of the insurance is the book debts and NOT goods sold and delivered to the customers and dealers of the insured ART. 1504. Unless otherwise agreed, the goods remain at the seller's risk until the ownership therein is transferred to the buyer, but when the ownership therein is transferred to the buyer the goods are at the buyer's risk whether actual delivery has been made or not, except that: (1) Where delivery of the goods has been made to the buyer or to a bailee for the buyer, in pursuance of the contract and the ownership in the goods has been retained by the seller merely to secure performance by the buyer of his obligations under the contract, the goods are at the buyer's risk from the time of such delivery;

Gaisano Cagayan, Inc. v. Insurance Company of North America (2006)

FACTS:

Intercapitol Marketing Corporation (IMC) is the maker of Wrangler Blue Jeans. while Levi Strauss (Phils.) Inc. (LSPI) is the local distributor of products bearing trademarks owned by Levi Strauss & Co IMC and LSPI separately obtained from Insurance Company of North America fire insurance policies for their book debt endorsements related to their ready-made clothing materials which have been sold or delivered to various customers and dealers of the Insured anywhere in the Philippines which are unpaid 45 days after the time of the loss February 25, 1991: Gaisano Superstore Complex in Cagayan de Oro City, owned by Gaisano Cagayan, Inc., containing the ready-made clothing materials sold and delivered by IMC and LSPI was consumed by fire. February 4, 1992: Insurance Company of North America filed a complaint for damages against Gaisano Cagayan, Inc. alleges that IMC and LSPI filed their claims under their respective fire insurance policies which it paid thus it was subrogated to their rights

IMC and LSPI did not lose complete interest over the goods. They have an insurable interest until full payment of the value of the delivered goods. Unlike the civil law concept of res perit domino, where ownership is the basis for consideration of who bears the risk of loss, in property insurance, one's interest is not determined by concept of title, but whether insured has substantial economic interest in the property Section 13 of our Insurance Code defines insurable interest as "every interest in property, whether real or personal, or any relation thereto, or liability in respect thereof, of such nature that a contemplated peril might directly damnify the insured." Parenthetically, under Section 14 of the same Code, an insurable interest in property may consist in: (a) an existing interest; (b) an inchoate interest founded on existing interest; or (c) an expectancy, coupled with an existing interest in that out of which the expectancy arises. Anyone has an insurable interest in property who derives a benefit from its existence or would suffer loss from its destruction. o it is sufficient that the insured is so situated with reference to the property that he would be liable to loss should it be injured or destroyed by the peril against which it is insured o an insurable interest in property does not necessarily imply a property interest in, or a lien upon, or possession of, the subject
7

matter of the insurance, and neither the title nor a beneficial interest is requisite to the existence of such an interest insurance in this case is not for loss of goods by fire but for petitioner's accounts with IMC and LSPI that remained unpaid 45 days after the fire - obligation is pecuniary in nature o obligor should be held exempt from liability when the loss occurs thru a fortuitous event only holds true when the obligation consists in the delivery of a determinate thing and there is no stipulation holding him liable even in case of fortuitous event Article 1263 of the Civil Code in an obligation to deliver a generic thing, the loss or destruction of anything of the same kind does not extinguish the obligation (Genus nunquan perit) The subrogation receipt, by itself, is sufficient to establish not only the relationship of respondent as insurer and IMC as the insured, but also the amount paid to settle the insurance claim Art. 2207. If the plaintiff's property has been insured, and he has received indemnity from the insurance company for the injury or loss arising out of the wrong or breach of contract complained of, the insurance company shall be subrogated to the rights of the insured against the wrongdoer or the person who has violated the contract. As to LSPI, no subrogation receipt was offered in evidence. o Failure to substantiate the claim of subrogation is fatal to petitioner's case for recovery of the amount of P535,613

the

claim.

Hence, the widow of the late Dr. Leuterio filed a complaint against Grepalife for Specific Performance with Damages. Both the trial court and the Court of Appeals found in favor of the widow and ordered Grepalife to pay DBP. ISSUE:

Whether the CA erred in holding Grepalife liable to DBP as beneficiary in a group life insurance contract from a complaint filed by the widow of the decedent/mortgagor

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

Great Pacific Life vs. CA

316 SCRA 677 (1999)

INSURANCE LAW: Parties in Insurance Contract

FACTS: Great Pacific Life Assurance Corporation (Grepalife) executed a contract of group life insurance with Development Bank of the Philippines (DBP) wherein Grepalife agreed to insure the lives of eligible housing loan mortgagors of DBP. One such loan mortgagor is Dr. Wilfredo Leuterio. In an application form, Dr. Leuterio answered questions concerning his test, attesting among others that he does not have any heart conditions and that he is in good health to the best of his knowledge. However, after about a year, Dr. Leuterio died due to massive cerebral hemorrhage. When DBP submitted a death claim to Grepalife, the latter denied the claim, alleging that Dr. Leuterio did not disclose he had been suffering from hypertension, which caused his death. Allegedly, such non-disclosure constituted concealment that justified the denial of

SUNLIFE ASSURANCE COMPANY OF CANADA vs. The Hon. COURT OF APPEALS and Spouses ROLANDO andBERNARDA BACANIG.R. No. 105135 June 22, 1995Principle found in the case:
8

Element of concealment non disclosure of material fact that could mislead the insurerand affect in forming his estimates of the proposed insurance policy or in making inquiries. Facts: Robert John B. Bacani procured a life insurance contract for himself from Sunlife. He was issued a Policy valued atP100,000.00, with double indemnity in case of accidental death. The designated beneficiary was his mother, BernardaBacani.In his application for insurance Robert was asked if within 5 years he (a) consul ted any doctor or other health practitioner (b) subjected to different test i.e. blood, x-rays etc. (c) attended or been admitted to any hospital or othermedical facility. Robert answered yes in letter a. but limited his answer to a consultation with a certain Dr. Reinaldo D.Raymundo of the Chinese General Hospital on February 1986, for cough and flu complications.Sunlife discovered that two weeks prior to Roberts application for insurance, that Robert was examined and confinedat the Lung Center of the Philippines, where he was diagnosed for renal failure. During his confinement, the deceasedwas subjected to urinalysis, ultra-sonography and hematology tests.Robert died in a plane crash. Bernarda filed a claim with sunlife, seeking the benefits of the insurance policy taken byher son. Sunlife conducted an investigation and its findings prompted it to reject the claim.Sunlife informed Bernarda that Robert did not disclose material facts relevant to the issuance of the policy, thusrendering the contract of insurance voidable. A check representing the total premiums paid in the amount of P10,172.00 was attached to said letter.Bernarda subsequently filed an action for specific performance against Sunlife. Sunlife filed a counter claim and a listof exhibits consisting of medical records furnished by the Lung Center of the Philippines. Bernarda filed a "ProposedStipulation with Prayer for Summary Judgment" where they manifested that they "have no evidence to refute the documentary evidence of concealment/misrepresentation by the decedent of his health condition. Sunlife also filed amotion for summary judgement. Trial court ruled in favor of Bernarda and concluded that although there was concealment and misrepresentation thefacts concealed by the insured were made in good faith and under a belief that they need not be disclosed. Moreover,it held that the health history of the insured was immaterial since the insurance policy was "non-medical". Court of Appeals affirmed the decision and stated that the cause of death was unrelated to the facts concealed by the insured.Issue: WON there was concealment and can goodfaith be used as a defense.Ruling: Yes there was concealment and No the defense of goodfaith is not applicable.Rationale: Section 26 of The Insurance Code requires a party to a contract of insurance to communicate to the other, in goodfaith, 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 and thus it provides that A neglect to communicate that whicha party knows and ought to communicate, is called concealment.Materiality is to be determined not by the event, but solely by the probable and reasonable influence of the facts upon the party to whom communication is due, in forming his estimate of the disadvantages of the proposed contract or in making his inquiriesThe informati on which the insured failed to disclose were material and relevant to the approval andissuance of the insurance policy. The matters concealed would have definitely affected Sunlife's actionon Roberts application, either by approving it with the corresponding adjustment for a higher premiumor rejecting the same.

Moreover, a disclosure may have warranted a medical examination of the insured by Sunlifein order for it to reasonably assess the risk involved in accepting the application. It is well settled that the insured need not die of the disease he had failed to disclose to the insurer. It issufficient that his non-disclosure misled the insurer in forming his estimates of the risks of the proposedinsurance policy or in making inquiries. Thus, " good faith" is no defense in concealment . The insured's failure to disclose the fact that he was hospitalizedfor two weeks prior to filing his application for insurance, raises grave doubts about his bonafides . It appears that suchconcealment was deliberate on his part.

PRUDENTIAL GUARANTEE and ASSURANCE INC., vs. TRANS-ASIA SHIPPING LINES, INCG.R. No. 151890 June 20, 2006P r i n c i p l e found in the case:
a warranty is a statement or promise set forth in the policy, or b y r e f e r e n c e incorporated therein, the untruth or non-fulfillment of which in any respect, and without reference to whetherthe insurer was in fact prejudiced by such untruth or non-fulfillment, renders the policy voidable by the insurer.However it must be first duly proven by the one who alleges that there was a breach of warranty.

Facts: TRANS-ASIA is the owner of the vessel M/V Asia Korea. In consideration of payment of premiums, PRUDENTIAL insuredM/V Asia Korea for loss/damage of the hull and machinery arising from perils, inter alia, of fire and explosion for thesum of P40 Million, beginning from the period of July 1, 1993 up to July 1, 1994.On October 25, 1993, while the policy was in force, a fire broke out while [M/V Asia Korea was] undergoing repairs atthe port of Cebu. On October 26, 1993 TRANS- ASIA filed its notice of claim for damage sustained by the vessel evidenced by a letter/formal claim. TRANS-ASIA reserved its right to subsequently notify PRUDENTIAL as to the fullamount of the claim upon final survey and determination by average adjuster Richard Hogg International (Phil.) of thedamage sustained by reason of fire. TRANS-ASIA executed a document denominated "Loan and Trust receipt", a portion of which states that Receivedfrom Prudential Guarantee and Assurance, Inc., the sum of PESOS THREE MILLION ONLY (P3,000,000.00) as a loanwithout interest under Policy No. MH 93/1353 [sic], repayable only in the event and to the extent that any net recoveryis made by TransAsia Shipping Corporation, from any person or persons, corporation or corporations, or other parties,on account of loss by any casualty for which they may be liable occasioned by the 25 October 1993: Fire on Board."PRUDENTIAL later on denied Trans-Asias claim in stated in a letter that "After a careful review and evaluation of yourclaim arising from the abovecaptioned incident, it has been ascertained that you are in breach of policy conditions,among them "WARRANTED VESSEL CLASSED AND CLASS MAINTAINED". Accordingly, we regret to advise that yourclaim is not compensable and hereby DENIED." and asked for the return of the 3,000,000. TRANS-ASIA filed a Complaint for Sum of Money against PRUDENTIAL with the RTC of Cebu City, wherein TRANS-ASIAsought the amount of P8,395,072.26 from PRUDENTIAL, alleging that the same represents the balance of the indemnity due upon the insurance policy in the total amount of
9

P11,395,072.26. TRANS-ASIA similarly sought interestat 42% per annum citing Section 243 of Presidential Decreee No. 1460, otherwise known as the "Insurance Code," asamended.PRUDENTIAL denied the material allegations of the Complaint and interposed the defense that TRANS-ASIA breachedinsurance policy conditions, in particular: PRUDENTIAL posits that TRANS- ASIA violated an express and material warranty in the subject insurance contract, i.e., Marine Insurance Policy No. MH93/1363, specifically Warranty ClauseNo. 5 thereof, which stipul ates that the insured vessel, "M/V ASIA KOREA" is required to be CLASSED AND CLASS MAINTAINED. According to PRUDENTIAL, on 25 October 1993, or at the time of the occurrence of the fire, "M/V ASIAKOREA" was in violation of the warranty as it was not CLASSED AND CLASS MAINTAINED. PRUDENTIAL submits thatWarranty Clause No. 5 was a condition precedent to the recovery of TRANS-ASIA under the policy, the violation of which entitled PRUDENTIAL to rescind the contract under Sec. 74 of the Insurance Code. By way of a counterclaim,PRUDENTIAL sought a refund of P3,000,000.00, which it allegedly advanced to TRANS-ASIA by way of a loan withoutinterest and without prejudice to the final evaluation of the claim, including the amounts of P500,000.00, for surveyfees and P200,000.00, representing attorneys fees. Trial court ruled in favor of Prudential. It ruled that a determination of the parties liabilities hinged on whether TRANS-ASIA violated and breached the policy conditi ons on WARRANTED VESSEL CLASSED AND CLASS MAINTAINED. Itinterpreted the provision to mean that TRANS-ASIA is required to maintain the vessel at a certain class at all timespertinent during the life of the policy. According to the court a quo, TRANS- ASIA failed to prove compliance of the terms of the warranty, the violation thereof entitled PRUDENTIAL to rescind the contract. The court of appeals reversed the decision. It ruled that PRUDENTIAL, as the party asserting the non-compensability of the loss had the burden of proof to show that TRANS-ASIA breached the warranty, which burden it failed to discharge.P R U D E N T I A L cannot rely on the lack of certification to the effect that TRANS- ASIA w a s C L A S S E D A N D C L A S S MAINTAINED as its sole basis for reaching the conclusion that the warranty was breached. It opined that the lack of acertification does not necessarily mean that the warranty was breached by TRANS- ASIA. Instead, it consi deredPRUDENTIALs admission that at the time the insurance contract was entered into between the parties, the vessel wasproperly classed by Bureau Veritas, a classification society recognized by the industry. It similarly gave weight to thef a c t t h a t i t w a s t h e responsibility of Richards Hogg International (Phils.) Inc., the a v e r a g e a d j u s t e r h i r e d b y PRUDENTIAL, to secure a copy of such certification to support its conclusion that mere absence of a certification doesnot warrant denial of TRANSASIAs claim under the insurance policy. Issue: WON Trans-Asia breached the warranty stated in the insurance policy, thus absolving Prudential from paying Trans-Asia. Ruling: No.Rationale:A s f o u n d b y t h e C o u r t o f A p p e a l s a n d a s s u p p o r t e d b y the records, Bureau Veritas is a classification society recognized in the marine industry. As it is undisputed that TRANS-ASIA was properly classed at the time the contract of insurance was entered into, thus , it becomes incumbent upon PRUDENTIAL to show evidence that the statusof TRANSASIA as being properly CLASSED by Bureau Veritas had shifted in violation of the warranty.

Unfortunately, PRUDENTIAL failed to support the allegation. The lack of a certification in PRUDENTIALs records to the effect that TRANS-ASIAs "M/V Asia Korea" was CLASSED ANDCLASS MAINTAINED at the time of the occurrence of the fire cannot be tantamount to the conclusion that TRANS-ASIAin fact breached the warranty contained in the policy.It was likewise the responsibility of the average adjuster, Richards Hogg International (Phils.), Inc., to secure a copy of such certification, and the alleged breach of TRANS- ASIA cannot be gleaned from the average adjusters survey report , or adjustment of particular average per "M/V Asia Korea" of the 25 October 1993 fire on board. The Supreme Court is not unmindful of the clear language of Sec. 74 of the Insurance Code which provides that ,"the violation of a material warranty, or other material provision of a policy on the part of either party thereto, entitles the other to rescind." It is generally accepted that "a warranty is a statement or promiseset forth in the policy, or by reference incorporated therein, the untruth or non- fulfillment of which inany respect, and without reference to whether the insurer was in fact prejudiced by such untruth or non-fulfillment, renders the policy voidable by the insurer." However, it is similarly indubitable that for the breach of a warranty to avoid a policy, the same must be dulys h o w n b y t h e party alleging the same. We cannot sustai n an allegation that is unfounded. Consequently, PRUDENTIAL, not having shown that TRANS-ASIA breached the warranty condition, CLASSED AND CLASSMAINTAINED, it remains that TRANS-ASIA must be allowed to recover its rightful claims on the policy. Assuming arguendo that TRANS- ASIA violated the policy condi tion on WARRANTED VESSEL CLASSED AND CLASS MAINTAINED, PRUDENTIAL made a valid waiver of the same.PRUDENTIAL can be deemed to have made a valid waiver of TRANSASIAs breach of warranty as alleged. Becauseafter the loss, Prudential renewed the insurance policy of Trans-Asia for two (2) consecutive years, from noon of 01 July1994 to noon of 01 July 1995, and then again until noon of 01 July 1996. This renewal is deemed a waiver of anybreach of warranty.PRUDENTIAL, in renewing TRANS-ASIAs insurance policy for two consecutive years after the loss covered by Policy No.MH93/1363, was considered to have waived TRANS-ASIAs breach of the subject warranty, if any. Breach of a warrantyor of a condi tion renders the contract defeasible at the option of the insurer; but if he so elects, he may waive his privilege and power to rescind by the mere expression of an intention so to do. In that event his liability under thepolicy continues as before. There can be no clearer intention of the waiver of the alleged breach than the renewal of the policy insurance granted by PRUDENTIAL to TRANS-ASIA in MH94/1595 and MH95/1788, issued in the years 1994and 1995, respectively.

Philamcare Health Systems Inc. vs Court of Appeals

On January 15, 2012
10

Insurance Law Representation Concealment Rescission of an Insurance Contract In 1988, Ernani Trinos applied for a health care insurance under the Philamcare Health Systems. He was asked if he was ever treated for high blood, heart trouble, diabetes, cancer, liver disease, asthma, or peptic ulcer; he answered no. His application was approved and it was effective for one year. His coverage was subsequently renewed twice for one year each. While the coverage was still in force in 1990, Ernani suffered a heart attack for which he was hospitalized. The cost of the hospitalization amounted to P76,000.00. Julita Trinos, wife of Ernani, filed a claim before Philamcare for them to pay the hospitalization cost. Philamcare refused to pay as it alleged that Ernani failed to disclose the fact that he was diabetic, hypertensive, and asthmatic. Julita ended up paying the hospital expenses. Ernani eventually died. In July 1990, Julita sued Philamcare for damages. Philamcare alleged that the health coverage is not an insurance contract; that the concealment made by Ernani voided the agreement. ISSUE: Whether or not Philamcare can avoid the health coverage agreement. HELD: No. The health coverage agreement entered upon by Ernani with Philamcare is a non-life insurance contract and is covered by the Insurance Law. It 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. There is no concealment on the part of Ernani. He answered the question with good faith. He was not a medical doctor hence his statement in answering the question asked of him when he was applying is an opinion rather than a fact. Answers made in good faith will not void the policy. Further, Philamcare, in believing there was concealment, should have taken the necessary steps to void the health coverage agreement prior to the filing of the suit by Julita. Philamcare never gave notice to Julita of the fact that they are voiding the agreement. Therefore, Philamcare should pay the expenses paid by Julita.

a non-medical insurance policy with Great Pacific Life Assurance Company naming his wife Thelma Canilang as his beneficiary. On August 2, 1983, he died of congested heart failure, anemia and chronic anemia. The widow and beneficiary, petitioner herein, filed a claim with Great Pacific which the insured denied on December 5, 1983 upon the ground that the insured had concealed material information from it. At the hearing of the complaint she filed with Insurance Commission, she testified that she was not aware of any serious illness suffere by her late husband and that, as far as she knew, her husband had died because of kidney disorder. The Commission ruled in her favor but was reversed on appeal. ISSUE: Whether the deceased insured made a material concealment as the state of his health at the time of the filing of insurance application. HELD: We agree with the Court of Appeals that the information which Jaime Canilang failed to disclose was material to the ability of Great Pacific to estimate the probable risk he 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 Great Pacific would have made further inquiries and would have probably refused to issue a non-medical insurance policy or, at the very least, required a higher premium for the same coverage. The materiality of the information withheld by Great Pacific did not depend upon the state of mind of Jaime Canilang. A mans 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.

VDA. DE CANILANG VS. COURT OF APPEALS 223 SCRA 443 (G.R. NO. 92492)
JUNE 17, 1993 Petitioner: Respondent: FACTS: On June 18, 1982, Jaime Canilang consulted Dr. Wilfredo B. Claudio. He was diagnosed as from sinus tachycardia. He again consulted the same doctor on August 3, 1982 and this time was found to have acute bronchitis. On the next day, August 4, 1982, hw applied for Thelma Vda. De Canilang Court of Appeals and Great Pacific Life Assurance Corporation

11