Development Insurance v IAC G.R. No. 71360 July 16, 1986 .

Cruz Facts: A fire occurred in the building of Philippine Union. It sued for recovery of damages from the petitioner on the basis of an insurance contract between them. The petitioner failed to answer on time despite the numerous extensions it asked for. It was declared in default by the trial court. A judgment of default was subsequently rendered on the strength of the evidence given by the private respondent, which was allowed damages. The petitioner moved to lift the order of default. Its motion was denied. It went to the appellate court, which affirmed the decision of the trial court. Hence this appeal. Issue: Was Philippine Union required to jointly indemnify the building? Held: No. Petition dismissed. Ratio: The policy insured the private respondent's building against fire for P2,500,000.00. The petitioner argued that the respondent must share the difference between that amount and the face value of the policy and the loss sustained for 5.8 million under Condition 17 of the policy. The building was insured at P2,500,000.00 by agreement of the insurer and the insured. The agreement is known as an open policy and is subject to the express condition that: In the event of loss, whether total or partial, it is understood that the amount of the loss shall be subject to appraisal and the liability of the company, if established, shall be limited to the actual loss, subject to the applicable terms, conditions, warranties and clauses of this Policy, and in no case shall exceed the amount of the policy. Section 60 of the Insurance Code defines an open policy is one in which the value of the thing insured is not agreed upon but is left to be ascertained in case of loss." This means that the actual loss, as determined, will represent the total indemnity due the insured from the insurer except only that the total indemnity shall not exceed the face value of the policy. The actual loss has been ascertained in this case. Hence, applying the open policy clause as expressly agreed upon, the private respondent is entitled to indemnity in the total amount of P508,867.00. The refusal of its vice-president to receive the private respondent's complaint was the first indication of the petitioner's intention to prolong this case and postpone the discharge of its obligation to the private respondent under this agreement. They still evaded payment for 5 years.

Harding v. Commercial Union Assurance Company- Willful Misstatement 38 PHIL 464 Facts: > Henry Harding bought a car for 2T in 1915. He then gave the car to his wife Mrs. Harding. > While Mrs. Harding was having the car repaired at the Luneta Garage (Luneta was an agent of Smith Bell and Co., which in turn is Commercial Unions agent), the latter induced Mrs. Harding to insure the care with Commercial. > Mrs. Harding agreed, and Smith Bell sent an agent to Luneta Garage, who together with the manager of LUneta, appraised the car and declared that its present value was P3T. This amt was written in the proposal form which Mrs. Harding signed. > Subsequently, the car was damaged by fire. Commercial refused to pay because the cars present value was only 2.8T and not 3T.

Issue: Whether or not Commercial is liable. Held: Commercial is liable. Where it appears that the proposal form, while signed by the insured was made out by the person authorized to solicit the insurance (Luneta and Smith Bell) the facts stated in the proposal, even if incorrect, will not be regarded as warranted by the insured, in the absence of willful misstatement. Under such circumstances, the proposal is to be regarded as the act of the insurer. Cebu Shipyard v William G.R. No. 132607. May 5, 1999 J. Purisima Facts: Cebu Shipyard and Engineering Works, Inc. repaired marine vessels while the Prudential is in the nonlife insurance business. William Lines, Inc., the owner of M/V Manila City, a luxury passenger-cargo vessel, which caught fire and sank. At the time of the incident, subject vessel was insured with Prudential for P45M for hull and machinery. CSEW was insured for only Php 10 million for the shiprepairers liability policy. They entered into a contract where negligence was the only factor that could make CSEW liable for damages. Moreover, liability of CSEW was limited to only Php 1million for damages. The Hull Policy included an Additional Perils (INCHMAREE) Clause covering loss of or damage to the vessel through the negligence of, among others, ship repairmen. William brought Manila City to the dry dock of CSEW for repairs. The officers and cabin crew stayed at the ship while it was being repaired. After the vessel was transferred to the docking quay, it caught fire and sank, resulting to its total loss. William brought suit against CSEW alleging that it was through the latters negligence that the ship caught fire and sank. Prudential was impleaded as co-plaintiff after it had paid the value of insured items. It was subrogated to 45 million, or the value it claimed to indemnify. The trial court brought judgment against CSEW 45 million for the ship indemnity, 65 million for loss of income, and more than 13 million in other damages. The CA affirmed the TC decision. CSEW contended that the cause of the fire was due to Williams hotworks on the said portion of the ship which they didnt ask CSEW permission for. Prudential, on the other hand, blamed the negligence of the CSEW workers in the instance when they didnt mind rubber insulation wire coming out of the air-conditioning unit that was already burning. Hence this MFR. Issue: 1. WON CSEW had management and supervisory control of the ship at the time the fire broke out 2. WON the doctrine of res ipsa loquitur applies against the crew 3. WON Prudential has the right of subrogation against its own insured 4. WON the provisions limiting CSEWs liability for negligence to a maximum of Php 1 million are valid Held: Yes. Yes. Yes. No. Petition denied. Ratio: 1. The that factual findings by the CA are conclusive on the parties and are not reviewable by this

Court. They are entitled to great weight and respect when the CA affirmed the factual findings arrived at by the trial court. The CA and the Cebu RTC are agreed that the fire which caused the total loss of subject M/V Manila City was due to the negligence of the employees and workers of CSEW. Furthermore, in petitions for review on certiorari, only questions of law may be put into issue. Questions of fact cannot be entertained. 2. For the doctrine of res ipsa loquitur to apply to a given situation, the following conditions must concur: (1) the accident was of a kind which does not ordinarily occur unless someone is negligent; and (2) that the instrumentality or agency which caused the injury was under the exclusive control of the person charged with negligence. The facts and evidence reveal the presence of these conditions. First, the fire would not have happened in the ordinary course of things if reasonable care and diligence had been exercised. Second, the agency charged with negligence, as found by the trial court and the CA and as shown by the records, is CSEW, which had control over subject vessel when it was docked for annual repairs. What is more, in the present case the trial court found direct evidence to prove that the workers didnt exercise due diligence in the care of subject vessel. The direct evidence substantiates the conclusion that CSEW was really negligent even without applying such doctrine. 3. Petitioner contends that Prudential is not entitled to be subrogated to the rights of William Lines, Inc., theorizing that (1) the fire which gutted M/V Manila City was an excluded risk and (2) it is a coassured under the Marine Hull Insurance Policy. This was wrong. The one who caused the fire has already been adjudicated by the courts as CSEW. Upon proof of payment by Prudential to William Lines, Inc., the former was subrogated to the right of the latter to indemnification from CSEW. As aptly ruled by the Court of Appeals, the law says: Art. 2207. If the plaintiffs 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. If the amount paid by the insurance company does not fully cover the injury or loss, the aggrieved party shall be entitled to recover the deficiency from the person causing the loss or injury. When Prudential paid the latter the total amount covered by its insurance policy, it was subrogated to the right of the latter to recover the insured loss from the liable party, CSEW. Petitioner theorizes further that there can be no right of subrogation as it is deemed a co-assured under the subject insurance policy with reliance on Clause 20 of the Work Order which states: 20. The insurance on the vessel should be maintained by the customer and/or owner of the vessel during the period the contract is in effect. Clause 20 of the Work Order in question is clear in the sense that it requires William Lines to maintain insurance on the vessel during the period of dry-docking or repair. However, the fact that CSEW benefits from the said stipulation does not automatically make it as a co-assured of William Lines. The intention of the parties to make each other a co-assured under an insurance policy is to be read from the insurance contract or policy itself and not from any other contract or agreement because the insurance policy denominates the beneficiaries of the insurance. The hull and machinery insurance procured by William Lines, Inc. from Prudential named only William Lines, Inc. as the assured. There was no manifestation of any intention of William Lines, Inc. to constitute CSEW as a co-assured under subject policy. The claim of CSEW that it is a co-assured is unfounded. Then too, in the Additional Perils Clause of the same Marine Insurance Policy, it is provided that this insurance also covers loss of or damage to vessel directly caused by the negligence of charterers and repairers who are not assured. As correctly pointed out by respondent Prudential, if CSEW were deemed a co-assured under the policy, it would nullify any claim of William Lines, Inc. from Prudential for any loss or damage caused

by the negligence of CSEW. Certainly, no shipowner would agree to make a shiprepairer a co-assured under such insurance policy; otherwise, any claim for loss or damage under the policy would be invalidated. 4. Although in this jurisdiction, contracts of adhesion have been consistently upheld as valid per se; as binding as an ordinary contract, the Court recognizes instances when reliance on such contracts cannot be favored especially where the facts and circumstances warrant that subject stipulations be disregarded. Thus, in ruling on the validity and applicability of the stipulation limiting the liability of CSEW for negligence to P1M only, the facts and circumstances vis-a-vis the nature of the provision sought to be enforced should be considered, bearing in mind the principles of equity and fair play. It is worthy to note that M/V Manila City was insured with Prudential for P45M. Upon thorough investigation by its hull surveyor, M/V Manila City was found to be beyond economical salvage and repair. The evaluation of the average adjuster also reported a constructive total loss. The said claim of William Lines, Inc., was then found to be valid and compensable such that Prudential paid the latter the total value of its insurance claim. Furthermore, it was ascertained that the replacement cost of the vessel, amounts to P55M. Considering the circumstances, it would unfair to limit the liability of petitioner to One Million Pesos only. To allow CSEW to limit its liability to P1M notwithstanding the fact that the total loss suffered by the assured and paid for by Prudential amounted to P45M would sanction the exercise of a degree of diligence short of what is ordinarily required because, then, it would not be difficult for petitioner to escape liability by the simple expedient of paying an amount very much lower than the actual damage suffered by William.

Paulino vs Capital Ins. & Surety Co. [105 Phil. 1315, May 15, 1959] Facts: Plaintiff Paulino secured a fire insurance policy issued by defendant Capital Insurance on Feb. 8, 1952. On April 30, 1952 the Plaintiff wrote the defendant requesting cancellation of the policy, which the latter received on May 10, 1952. The plaintiff did not return the policy nor de4manded for the return of the proportionate premium and neither did the defendant offer to breturn the premium. The property covered by the policy was destroyed by fire on aug. 15, 1952. The defendant refused to pay plaintiffs claim on the ground that the policy was cancelled as of May 10, 1952. Plaintiff contends in this appeal that her letter, dated April 30, 1952, was a mere request orb offer to cancel the policy and did not terminate the same since it was not accompanied by the surrender of the policy for cancellation, Issue: Whether the policy as effectively cancelled or not. Held: This case hinges on the interpretation of paragraph 10of the policy, reading:This insurance may be terminated anytime at the request of the Insured, in which case the Company will retain the customary period rate for the time the policy has been enforced. This insurance may also at any time be terminated at the option of the Company, on notice to that effect being given to the insured, in which case the Company shall be liable to repay on demand a ratable proportion of the premium for the expired term from the date of cancellment Pursuant to this stipulation,the contract in question could be terminated at any time upon the unilateral act of either party. Whichever party exercised the option did not need the approval.

Consent nor concurrence of the other thereto, That consent was given at the making of the contract. Moreover, pursuant to her letter, plaintiff considered the contract terminated upon receipt of said letter by the defendant (deade el recibo de la presente0, Decision of the lower court dismissing the4 action to recover the amount pf fire insurance policy is affirmed.

Sun Life v Ingersoll G.R. No. 16475 November 8, 1921 J. Street Facts: Sun Life issued a policy on Dy Pocos life for US$12,500. The contract stipulated that it would be payable to the said assured or his assigns on the 21st day of February, 1938, and if he should die before that date, then it would be given to his legal representatives. The payment of a stipulated annual premium during the period of the policy, or until the premiums had been completely paid for twenty years, Dy Poco, was adjudged an insolvent by the trial court and Frank B. Ingersoll was appointed assignee of his estate. Poco died, and Tan Sit, was appointed as the administratrix of his intestate estate. Both Ingersoll, as assignee, and Tan Sit, as administratix of Dy Poco's estate, asserted claims to the proceeds of the policy. The lower court found that Ingersoll had a better right and ordered Sun Life to pay. The polic stipulated that after the payment of three full premiums, the assured could surrender the policy to the company for a "cash surrender value." Butno more than two premiums had been paid upon the policy up to the time of the death of the assured. Hence this provision had not become effective. It must therefore be accepted that this policy had no cash surrender value, at the time of the assured's death, either by contract or by convention practice of the company in such cases. Issue: WON Ingersoll, as assignee, has a right to the proceeds of the insurance Held: No. Sunlife must pay to the administratrix. Ratio: The property and interests of the insolvent which become vested in the assignee of the insolvent are specified in section 32 of the Insolvency Law. Sec 32 declares that the assignment to be made by the clerk of the court "shall operate to vest in the assignee all of the estate of the insolvent debtor not exempt by law from execution." Moreover, by section 24, the court is required, upon making an order adjudicating any person insolvent, to stay any civil proceedings pending against him; and it is declared in section 60 that no creditor whose debt is provable under the Act shall be allowed, after the commencement of proceedings in insolvency, to prosecute to final judgment any action therefor against the debtor. In connection with the foregoing may be mentioned subsections 1 and 2 of section 36, as well as the opening words of section 33, to the effect that the assignee shall have the right and power to recover and to take into his possession, all of the estate, assets, and claims belonging to the insolvent, except such as are exempt by law from execution. These provisions clearly evince an intention to vest in the assignee, for the benefit of all the creditors of the insolvent, such elements of property and property right as could be reached and subjected by process of law by any single creditor suing alone. "leviable assets" and "assets in insolvency" are

practically coextensive terms. Hence, in determining what elements of value constitute assets in insolvency, the court is at liberty to consider what elements of value are subject to be taken upon execution, and vice versa. Section 48 of the Insolvency Law, didnt declare items from the ownership of which the assignee is excluded. Moreover, all life insurance policies are declared by law to be assignable, regardless of whether the assignee has an insurable interest in the life of the insured or not. The assignee in insolvency acquired no beneficial interest in the policy of insurance in question; that its proceeds are not liable for any of the debts provable against the insolvent in the pending proceedings, and that said proceeds should therefore be delivered to his administratrix. In re McKinney: no beneficial interest in this policy had ever passed to the assignee over and beyond what constituted the surrender value, and that the legal title to the policy was vested in the assignee merely in order to make the surrender value available to him. The conclusion therefore was that the assignee should surrender the policy upon the payment to him of said value, as he was in fact directed to do. A surrender value of a policy "arises from the fact that the fixed annual premiums is much in excess of the annual risk during the earlier years of the policy, an excess made necessary in order to balance the deficiency of the same premium to meet the annual risk during the latter years of the policy. This is the practical, though not the legal, relation of the company to this fund. "Upon the surrender of the policy before the death of the assured, the company, to be relieved from all responsibility for the increased risk, which is represented by this accumulating reserve, could well afford to surrender a considerable part of it to the assured, or his representative. A return of a part in some form or other is now Usually made." The stipulation providing for a cash surrender value is a comparatively recent innovation in life insurance. Furthermore, the practice is common among insurance companies even now to concede nothing in the character of cash surrender value, until three full premiums have been paid, as in this case. The courts are therefore practically unanimous in refusing to permit the assignee in insolvency to wrest from the insolvent a policy of insurance which contains in it no present realizable assets.

GREPALIFE vs. CA G.R. No. 113899, October 13, 1999. Thursday, January 29, 2009 Posted by Coffeeholic Writes Labels: Case Digests, Commercial Law Facts: A contract of group life insurance was executed between petitioner and DBP wherein the former agreed to insure the lives of eligible housing loan mortgages of the latter. Dr. Leuterio was one of those who applied for membership in the said insurance plan. In the application for, when asked whether he is suffering from any physical impairment, he answered in the negative; and when asked whether he is good health to the best of his knowledge, he answered in the affirmative. Petitioner approved the application and issued the corresponding certificate. Dr. Leuterio died due to massive cerebral hemorrhage. When DBP submitted a claim to petitioner, it was denied on the ground that Dr. Leuterio was not physically healthy when he applied for an insurance coverage and that he did not disclose he had been suffering from hypertension. Allegedly such non-disclosure constituted concealment. The widow of Dr. Leuterio filed a complaint against petitioner for specific performance with damages. Issues: 1) Is the widow of the insured-mortgagor a real party in interest in a claim under the life insurance

contract? 2) Is there concealment that will vitiate the insurance contract? 3) Can the mortgagor of DBP hold the insurer liable without proof of the actual outstanding mortgage payable? Held: 1) Yes. Where the mortgagor pays the insurance premium under the group insurance policy, making the loans payable to the mortgagee, the insurance is on the mortgagors interest (because (a) the proceeds will be applied to the payment of mortgage debt, thereby relieving the heirs of mortgagor from paying the obligation; and (b) in the event of death, the mortgage obligation will be extinguished by the application of insurance proceeds to mortgage indebtedness), 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 incurred might have recovered, the widow of Dr. Leuterio may file the suit against the insurer Grepalife. 2) No. Concealment exists where the assured had knowledge of a fact material to the risk, and with honesty, good faith and fair dealing requires that he should communicate it to the assured, but he designedly and intentionally withheld the same. The fraudulent intent on the part of the insured need be established to entitle the insurers to rescind the contract. Misrepresentation as the 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. 3) Yes. A life insurance 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 death is the sum fixed in the policy.

Argente v West Coast G.R. No. L-24899 March 19, 1928 J. Malcolm Facts: Bernardo Argente signed an application for joint insurance with his wife in the sum of P2,000. The wife, Vicenta de Ocampo, signed for the same. All the information contained in the applications was furnished the agent by Bernardo Argente. Argente was examined by Dr. Sta. Ana, a medical examiner for the West Coast. The result was recorded in the Medical Examiner's Report, and with the exception of the signature of Bernardo Argente, was in the hand-writing of Doctor Sta. Ana. But the information or answers to the questions contained on the face of the Medical Examiner's Report were furnished the doctor by Argente. Vicenta de Ocampo, wife of the plaintiff, was examined at her residence by the same doctor. The spouses submitted to West Coast Life an amended application, increasing the amount to P15,000, and asked that the policy be dated May 15, 1925. The amended application was accompanied by the

documents entitled "Short Form Medical Report." In both of these documents appear certain questions and answers. A temporary policy for P15,000 was issued to Bernardo Argente and his wife as of May 15, but it was not delivered until the first quarterly premium on the policy was paid. More than thirty days had elapsed since the applicants were examined. Each of them was required to file a certificate of health before the policy was delivered. Vicenta de Ocampo died of cerebral apoplexy. Argente presented a claim in due form to the West Coast Life Insurance Co. for the payment of the sum of P15,000. It was apparently disclosed that the answers given by the insured in their medical examinations with regard to their health were untrue. West Coastrefused to pay the claim and wrote Argente to the effect that the claim was rejected due to fraud. The trial court held the policy null and void, hence this appeal. Issue: WON Argente and Ocampo were guilty of concealment and thereby misled the insurer into accepting the risk? Held: Yes. Petition dismissed. Ratio: Vicenta de Ocampo, in response to the question asked by the medical examiner, answered no to "Have you ever consulted a physician for or have you ever suffered from any ailment or disease of the brain or nervous system?" She also answered none as to the question whether she consumed alcohol of not. To the question, "What physician or physicians, if any, not named above, have you consulted or been treated by, within the last five years and for what illness or ailment?" she answered "None." But the facts show that she was taken to San Lazaro Hospital, her case was diagnosed by the admitting physician as "alcoholism, moreover, she was diagnosed with "phycho-neurosis." Section 25 of the Insurance Code defined concealment as "a neglect to communicate that which a party knows and ought to communicate." The court held that the alleged concealment was not immaterial and insufficient to avoid the policy. In an action on a life insurance policy where the evidence conclusively shows that the answers to questions concerning diseases were untrue, the truth of falsity of the answers become the determining factor. If the true facts been disclosed by the assured, the insurance would never have been granted. Concealment must, in the absence of inquiries, be not only material, but fraudulent, or the fact must have been intentionally withheld. If no inquiries are made and no fraud or design to conceal enters into the concealment the contract is not avoided. The assurer is entitled to know every material fact of which the assured has exclusive or peculiar knowledge, as well as all material facts which directly tend to increase the hazard or risk which are known by the assured, or which ought to be or are presumed to be known by him. And a concealment of such facts vitiates the policy. If the assured has exclusive knowledge of material facts, he should fully and fairly disclose the same, whether he believes them material or not. The determination of the point whether there has or has not been a material concealment must rest largely in all cases upon the exact terms of the contract. Great Pacific Life Assurance Corp vs Court of Appeals Post under case digests, Commercial Law at Saturday, February 25, 2012 Posted by Schizophrenic Mind Facts: A contract of group life insurance was executed between Grepalife and DBP. The former agreed to insure the lives of eligible housing loan mortgagors of DBP. Dr. Leuterio applied membership in the group life insurance plan. He answered in the application form that he has never consulted a physician

for heart condition, high blood pressure, cancer, diabetes, lung, kidney, or stomach disorder or any other physical impairment, and that to the best of his knowledge he is in good condition. During the subsistence of the insurance he died from massive cerebral hemorrhage. Grepalife denied the claim because of concealment since it was discovered that he had high blood. His widow filed a claim. Issue: Whether or not there was misrepresentaion so as to warrant denial of claim; Whether or not the widow of Leuterio is a real party in interest Held: The Supreme Court ruled that there was no sufficient proof that the insured suffered from hypertension. It is a well-settled ruled that the fraudulent intent on the part of the insured must be established to entitle the insurer to rescind the contract. As regards the second issue, the widow can be regarded as real party in interest because in mortgage redemption insurance the mortgagor and not the mortgagee is the contracting party. The mortgagor merely assigns the proceeds to the mortgagee. Therefore, since by principle of succession the widow may claim.

Ng v Asian Crusader G.R. No. L-30685 May 30, 1983 J. Escolin: Facts: Kwong Nam applied for a 20-year endowment insurance on his life for the sum of P20,000.00, with his wife, appellee Ng Gan Zee as beneficiary. On the same date, Asian Crusader, upon receipt of the required premium from the insured, approved the application and issued the corresponding policy. Kwong Nam died of cancer of the liver with metastasis. All premiums had been paid at the time of his death. Ng Gan Zee presented a claim for payment of the face value of the policy. On the same date, she submitted the required proof of death of the insured. Appellant denied the claim on the ground that the answers given by the insured to the questions in his application for life insurance were untrue. Appellee brought the matter to the attention of the Insurance Commissioner. The latter, after conducting an investigation, wrote the appellant that he had found no material concealment on the part of the insured and that, therefore, appellee should be paid the full face value of the policy. The company refused to settle its obligation. Appellant alleged that the insured was guilty of misrepresentation when he answered "No" to the following question appearing in the application for life insuranceHas any life insurance company ever refused your application for insurance or for reinstatement of a lapsed policy or offered you a policy different from that applied for? If, so, name company and date. The lower court ruled against the company on lack of evidence. Appellant further maintains that when the insured was examined in connection with his application for life insurance, he gave the appellant's medical examiner false and misleading information as to his ailment and previous operation. The company contended that he was operated on for peptic ulcer 2 years before the policy was applied for and that he never disclosed such an operation. Issue: WON Asian Crusader was deceived into entering the contract or in accepting the risk at the rate of premium agreed upon because of insured's representation? Held: No. Petition dismissed. Ratio:

Section 27 of the Insurance Law: Sec. 27. Such party a contract of insurance must communicate to the other, in good faith, all facts within his knowledge which are material to the contract, and which the other has not the means of ascertaining, and as to which he makes no warranty. "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 assurer, but he designedly and intentionally withholds the same." It has also been held "that the concealment must, in the absence of inquiries, be not only material, but fraudulent, or the fact must have been intentionally withheld." Fraudulent intent on the part of the insured must be established to entitle the insurer to rescind the contract. And as correctly observed by the lower court, "misrepresentation as a defense of the insurer to avoid liability is an 'affirmative' defense. The duty to establish such a defense by satisfactory and convincing evidence rests upon the defendant. The evidence before the Court does not clearly and satisfactorily establish that defense." It bears emphasis that Kwong Nam had informed the appellant's medical examiner of the tumor. His statement that said tumor was "associated with ulcer of the stomach" should be construed as an expression made in good faith of his belief as to the nature of his ailment and operation. While the information communicated was imperfect, the same was sufficient to have induced appellant to make further inquiries about the ailment and operation of the insured. Section 32 of Insurance Law: Section 32. The right to information of material facts maybe waived either by the terms of insurance or by neglect to make inquiries as to such facts where they are distinctly implied in other facts of which information is communicated. Where a question appears to be not answered at all or to be imperfectly answered, and the insurers issue a policy without any further inquiry, they waive the imperfection of the answer and render the omission to answer more fully immaterial. The company or its medical examiner did not make any further inquiries on such matters from the hospital before acting on the application for insurance. The fact of the matter is that the defendant was too eager to accept the application and receive the insured's premium. It would be inequitable now to allow the defendant to avoid liability under the circumstances."

Vda Canilang v CA G.R. No. 92492 June 17, 1993 J. Feliciano Facts: Canilang was found to have suffered from sinus tachycardia then bronchitis after a check-up from his doctor. The next day, he applied for a "non-medical" insurance policy with respondent Grepalife naming his wife, Thelma Canilang, as his beneficiary. This was to the value of P19,700. He died of "congestive heart failure," "anemia," and "chronic anemia." The widow filed a claim with Great Pacific which the insurer denied on the ground that the insured had concealed material information from it. Petitioner then filed a complaint against Great Pacific for recovery of the insurance proceeds. Petitioner testified that she was not aware of any serious illness suffered by her late husband and her husband had died because of a kidney disorder. The doctor who gave the check up stated that he treated the deceased for sinus tachycardia and "acute bronchitis." Great Pacific presented a physician who testified that the deceased's insurance application had been approved on the basis of his medical declaration. She explained that as a rule, medical examinations are

required only in cases where the applicant has indicated in his application for insurance coverage that he has previously undergone medical consultation and hospitalization. The Insurance Commissioner ordered Great Pacific to pay P19,700 plus legal interest and P2,000.00 as attorney's fees. On appeal by Great Pacific, the Court of Appeals reversed. It found that the failure of Jaime Canilang to disclose previous medical consultation and treatment constituted material information which should have been communicated to Great Pacific to enable the latter to make proper inquiries. Hence this petition by the widow. Issue: Won Canilang was guilty of misrepresentation Held: Yes. Petition denied. Ratio: There was a right of the insurance company to rescind the contract if it was proven that the insured committed fraud in not affirming that he was treated for heart condition and other ailments stipulated. Apart from certifying that he didnt suffer from such a condition, Canilang also failed to disclose in the that he had twice consulted a doctor who had found him to be suffering from "sinus tachycardia" and "acute bronchitis." Under the Insurance Code: Sec. 26. A neglect to communicate that which a party knows and ought to communicate, is called a concealment. Sec. 28. Each party to a contract of insurance must communicate to the other, in good faith, all factors within his knowledge which are material to the contract and as to which he makes no warranty, and which the other has not the means of ascertaining. The information concealed must be information which the concealing party knew and should have communicated. The test of materiality of such information is contained in Section 31: Sec. 31. Materiality is to be determined not by the event, but solely by the probable and reasonable influence of the facts upon the party to whom the communication is due, in forming his estimate of the disadvantages of the proposed contract, or in making his inquiries. 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 he disclosed his visits to his doctor, the diagnosis made and 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. 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. The Insurance Commissioner had also ruled that the failure of Great Pacific to convey certain information to the insurer was not "intentional" in nature, for the reason that Canilang believed that he was suffering from minor ailment like a common cold. Section 27 stated that: Sec. 27. A concealment whether intentional or unintentional entitles the injured party to rescind a contract of insurance. The failure to communicate must have been intentional rather than inadvertent. Canilang could not have been unaware that his heart beat would at times rise to high and alarming levels and that he had consulted a doctor twice in the two (2) months before applying for non-medical insurance. Indeed, the last medical consultation took place just the day before the insurance application was filed. In all probability, Jaime Canilang went to visit his doctor precisely because of the ailment.

Canilang's failure to set out answers to some of the questions in the insurance application constituted

Sunlife Assurance v. CA Tags: concealment, digest, insurance, sunlife assurance, sunlife assurance v. ca SUNLIFE ASSURANCE v. CA and SPS. ROLANDO and BERNARDA BACANI 1995 / Quiason / Petition for review on certiorari of a CA decision FACTS On April 1986, Robert John Bacani procured for himself a life insurance contract from Sunlife. He was issued a policy valued at 100k with double indemnity in case of accidental death, and his beneficiary was his mother, Bernarda. On June 1987, Robert died in a plane crash. Bernarda filed a claim with Sunlife, seeking the benefits of her sons insurance policy. The findings of the investigation conducted by Sunlife prompted it to reject the claim. Sunlife informed Bernarda that Robert did not disclose material facts relevant to the policy issuance, thus rendering the contract voidable. Sunlife claimed that Robert gave false statements in his application when he answered questions regarding consulting doctors [re: urine, kidney, bladder disorder], submitting to medical exams, and being admitted to a hospital within the past 5 years. Robert only said that he consulted a doctor for cough and flu complications. Sunlife discovered that 2 weeks prior to Roberts application for insurance, he was examined and confined at the Lung Center where he was diagnosed for renal failure. A check representing the premiums paid was attached to the letter. Sps. Bacani filed an action for specific performance against Sunlife. RTC ruled in favor of Sps. Bacani, saying that the facts concealed by Robert were made in good faith and under a belief that they need not be disclosed. It also held that Roberts health history was immaterial since the insurance policy was non-medical. CA affirmed RTC. SUNLIFE PROPERLY EXERCISED ITS RIGHT TO RESCIND THE CONTRACT BY REASON OF ROBERTS CONCEALMENT RATIO Good faith is no defense in concealment. Materiality is to be determined solely by the probable and reasonable influence of the facts upon the party to whom communication is due, in forming his estimate of the disadvantages of the proposed contract or in making his inquiries. Materiality does not depend on the insureds state of mind, nor does it depend on the actual or physical events that ensue. The matters concealed would have affected Sunlifes action on Roberts application, as it would have approved it with the corresponding adjustment for a higher premium or it would have rejected it. A disclosure may have warranted a medical examination by Sunlife in order for it to assess the risk involved in accepting the application. In addition, Roberts failure to disclose his hospitalization raises grave doubts about his good faith. The argument that Sunlifes waiver of the medical examination debunks the materiality of the facts concealed is untenable. The waiver of a medical examination [in a non-medical insurance contract] renders even more material the information required of the applicant, for such information constitutes an important factor which the insurer takes into consideration in deciding WON to issue the policy. Moreover, this argument by Sps. Bacani would make ineffective the provision that allows rescission where there is concealment.

The insured need not die of the disease he had failed to disclose. 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. CA DECISION REVERSED; SUNLIFES PETITION GRANTED

Grepalife v. CA 89 SCRA 543 Facts: > On March 14, 1957, respondent Ngo Hing filed an application with Grepalife for a 20-yr endowment policy for 50T on the life of his one year old daughter Helen Go. > All the essential data regarding Helen was supplied by Ngo to Lapu-Lapu Mondragon, the branch manager of Grepalife-Cebu. Mondragon then typed the data on the application form which was later signed by Ngo. > Ngo then paid the insurance premium and a binding deposit receipt was issued to him. The binding receipt contained the following provision: If the applicant shall not have been insurable xxx and the Company declines to approve the application, the insurance applied for shall not have been in force at any time and the sum paid shall be returned to the applicant upon the surrender of this receipt. > Mondragon wrote on the bottom of the application form his strong recommendation for the approval of the insurance application. > On Apr 30, 1957, Mondragon received a letter from Grepalife Main office disapproving the insurance application of Ngo for the simple reason that the 20yr endowment plan is not available for minors below 7 yrs old. > Mondragon wrote back the main office again strongly recommending the approval of the endowment plan on the life of Helen, adding that Grepalife was the only insurance company NOT selling endowment plans to children. > On may 1957, Helen died of influenza with complication of broncho pneumonia. Ngo filed a claim with Gepalife, but the latter denied liability on the ground that there was no contract between the insurer and the insured and a binding receipt is NOT evidence of such contract. Issue: Whether or not the binding deposit receipt, constituted a temporary contract of life insurance. Held: NO. The binding receipt in question was 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. Since Grepalife disapproved the insurance application of Ngo, the binding deposit receipt had never became on force at any time, pursuant to par. E of the said receipt. A binding receipt is manifestly 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.

Yu v CA G.R. No. L-12465 May 29, 1959 J. Bautista Facts: Yu Pang Eng submitted application for insurance consisting of the medical declaration made by him to the medical examiner and the report. Yu then paid the premium in the sum of P591.70. The insured, in his application for insurance, said no to ever having stomach disease, cancer, and fainting-spells. He also claimed to not have consulted a physician regarding such diseases. After submitting the form, he entered the hospital where he complained of dizziness, anemia, abdominal pains and tarry stools. He was found to have peptic ulcer. The insured entered another hospital for medical treatment but he died of "infiltrating medullary carcinoma, Grade 4, advanced cardiac and of lesser curvature, stomach metastases spleen." Yu Pang Cheng aimed to collect P10,000.00 on life of one Yu Pang Eng from an insurance company. The company set up the defense that the insured was guilty of misrepresentation and concealment of material facts. They subsequently refused to give the indemnity. The trial court rendered judgment ordering defendant to pay plaintiff the sum of P10,000.00, plus P2,000.00 as attorney's fees. The Court of Appeals reversed the decision of the trial court, holding that the insured was guilty of concealment of material facts. Hence the present petition. Issue: Whether or not the insured is guilty of concealment of some facts material to the risk insured that consequently avoids the policy. Held: Yes. Petition dismissed. Ratio: The first confinement took place from January 29, 1950 to February 11, while his application was submitted on September 5, 1950. When he gave his answers to the policy, he concealed the ailment of which he was treated in the hospital. The negative answers given by the insured regarding his previous ailment deprived defendant of the opportunity to make the necessary inquiry as to the nature of his past illness so that as it may form its estimate relative to the approval of his application. Had defendant been given such opportunity, the company would probably had never consented to the issuance of the policy in question. In fact, according to the death certificate, the insureds death may have direct connection with his previous illness. Under the law, a neglect to communicate that which a party knows and ought to communicate, is called concealment. This entitles the insurer to rescind the contract. The insured is required to communicate to the insurer all facts within his knowledge which are material to the contract and which the other party has not the means of ascertaining. The materiality is to be determined not by the event but solely by the probable and reasonable influence of the facts upon the party to whom the communication is due. Argente vs. West Coast- One ground for the rescission of a contract of insurance under the insurance Act is "a concealment", which in section 25 is defined "A neglect to communicate that which a party knows and ought to communicate." In an action on a life insurance policy where the evidence conclusively shows that the answers to questions concerning diseases were untrue, the truth or falsity of the answers become the determining

factor. If the policy was procured by fraudulent representations, the contract of insurance was never legally existent. It can fairly be assumed that had the true facts been disclosed by the assured, the insurance would never have been granted.

Edillon v Manila Bankers Life G.R. No. L-34200 September 30, 1982 J. Vasquez Facts: Carmen O, Lapuz applied with Manila Bankers for insurance coverage against accident and injuries. She gave the date of her birth as July 11, 1904. She paid the sum of P20.00 representing the premium for which she was issued the corresponding receipt. The policy was to be effective for 90 days. During the effectivity, Carmen O. Lapuz died in a vehicular accident in the North Diversion Road. Petitioner Regina L. Edillon, a sister of the insured and the beneficiary in the policy, filed her claim for the proceeds of the insurance. Her claim having been denied, Regina L. Edillon instituted this action in the trial court. The insurance corporation relies on a provision contained in the contract excluding its liability to pay claims under the policy in behalf of "persons who are under the age of sixteen (16) years of age or over the age of sixty (60) years" They pointed out that the insured was over sixty (60) years of age when she applied for the insurance coverage, hence the policy became void. The trial court dismissed the complaint and ordered edillon to pay P1000. The reason was that a policy of insurance being a contract of adhesion, it was the duty of the insured to know the terms of the contract he or she is entering into. The insured could not have been qualified under the conditions stated in said contract and should have asked for a refund of the premium. Issue: Whether or not the acceptance by the insurance corporation of the premium and the issuance of the corresponding certificate of insurance should be deemed a waiver of the exclusionary condition of coverage stated in the policy. Held: Yes. Petition granted. Ratio: The age of Lapuz was not concealed to the insurance company. Her application clearly indicated her age of the time of filing the same to be almost 65 years of age. Despite such information which could hardly be overlooked, the insurance corporation received her payment of premium and issued the corresponding certificate of insurance without question. There was sufficient time for the private respondent to process the application and to notice that the applicant was over 60 years of age and cancel the policy. Under the circumstances, the insurance corporation is already deemed in estoppel. It inaction to revoke the policy despite a departure from the exclusionary condition contained in the said policy constituted a waiver of such condition, similar to Que Chee Gan vs. Law Union Insurance. The insurance company was aware, even before the policies were issued, that in the premises insured there were only two fire hydrants contrary to the requirements of the warranty in question. It is usually held that where the insurer, at the time of the issuance of a policy of insurance, has knowledge of existing facts which, if insisted on, would invalidate the contract from its very inception, such knowledge constitutes a waiver of conditions in the contract inconsistent with the known facts,

and the insurer is stopped thereafter from asserting the breach of such conditions. To allow a company to accept one's money for a policy of insurance which it then knows to be void and of no effect, though it knows as it must, that the assured believes it to be valid and binding, is so contrary to the dictates of honesty and fair dealing. Capital Insurance & Surety Co., Inc. vs. - involved a violation of the provision of the policy requiring the payment of premiums before the insurance shall become effective. The company issued the policy upon the execution of a promissory note for the payment of the premium. A check given subsequent by the insured as partial payment of the premium was dishonored for lack of funds. Despite such deviation from the terms of the policy, the insurer was held liable. ... is that although one of conditions of an insurance policy is that "it shall not be valid or binding until the first premium is paid", if it is silent as to the mode of payment, promissory notes received by the company must be deemed to have been accepted in payment of the premium. In other words, a requirement for the payment of the first or initial premium in advance or actual cash may be waived by acceptance of a promissory note...

Pacific v CA G.R. No. L-41014 November 28, 1988 J. Paras Facts: An open fire insurance policy, was issued to Paramount Shirt Manufacturing by Oriental Assurance Corporation to indemnify P61,000.00, caused by fire to the factorys stocks, materials and supplies. The insured was a debtor of Pacific Banking in the amount of (P800,000.00) and the goods described in the policy were held in trust by the insured for Pacific Banking under trust receipts. The policy was endorsed to Pacific Banking as mortgagee/ trustor of the properties insured, with the knowledge and consent of private respondent to the effect that "loss if any under this policy is payable to the Pacific Banking Corporation". A fire broke out on the premises destroying the goods contained in the building. The bank sent a letter of demand to Oriental for indemnity. The company wasnt ready to give since it was awaiting the adjusters report. The company then made an excuse that the insured had not filed any claim with it, nor submitted proof of loss which is a clear violation of Policy Condition No.11, as a result, determination of the liability of private respondent could not be made. Pacific Banking filed in the trial court an action for a sum of money for P61,000.00 against Oriental Assurance. At the trial, petitioner presented communications of the insurance adjuster to Asian Surety revealing undeclared co-insurances with the following: P30,000 with Wellington Insurance; P25,000 with Empire Surety and P250,000 with Asian Surety undertaken by insured Paramount on the same property covered by its policy with Oriental whereas the only co-insurances declared in the subject policy are those of P30,000.00 with Malayan P50,000.00 with South Sea and P25.000.00 with Victory. The defense of fraud, in the form of non-declaration of co-insurances which was not pleaded in the answer, was also not pleaded in the Motion to Dismiss. The trial court denied the respondents motion. Oriental filed another motion to include additional evidence of the co-insurance which could amount to fraud. The trial court still made Oriental liable for P 61,000. The CA reversed the trial court decision. Pacific Banking filed a motion for reconsideration of the said decision of the respondent Court of Appeals, but this was denied for lack of merit.

Issues: 1. WON unrevealed co-insurances Violated policy conditions No. 3 2. WON the insured failed to file the required proof of loss prior to court action. Held: Yes. Petition dismissed. Ratio: 1. Policy Condition No. 3 explicitly provides: 3. The Insured shall give notice to the Company of any insurance already effected, or which may subsequently be effected, covering any of the property hereby insured, and unless such notice be given and the particulars of such insurance or insurances be stated in or endorsed on this Policy by or on behalf of the Company before the occurrence of any loss or damage, all benefit under this policy shall be forfeited. The insured failed to reveal before the loss three other insurances. Had the insurer known that there were many co-insurances, it could have hesitated or plainly desisted from entering into such contract. Hence, the insured was guilty of clear fraud. Concrete evidence of fraud or false declaration by the insured was furnished by the petitioner itself when the facts alleged in the policy under clauses "Co-Insurances Declared" and "Other Insurance Clause" are materially different from the actual number of co-insurances taken over the subject property. As the insurance policy against fire expressly required that notice should be given by the insured of other insurance upon the same property, the total absence of such notice nullifies the policy. Petitioner points out that Condition No. 3 in the policy in relation to the "other insurance clause" supposedly to have been violated, cannot certainly defeat the right of the petitioner to recover the insurance as mortgagee/assignee. Hence, they claimed that the purpose for which the endorsement or assignment was made was to protect the mortgagee/assignee against any untoward act or omission of the insured. It would be absurd to hold that petitioner is barred from recovering the insurance on account of the alleged violation committed by the insured. It is obvious that petitioner has missed all together the import of subject mortgage clause which specifically provides: Loss, if any, under this policy, shall be payable to the PACIFIC BANKING CORPORATION Manila mortgagee/trustor as its interest may appear, it being hereby understood and agreed that this insurance as to the interest of the mortgagee/trustor only herein, shall not be invalidated by any act or neglect except fraud or misrepresentation, or arsonof the mortgagor or owner/trustee of the property insured; provided, that in case the mortgagor or owner/ trustee neglects or refuses to pay any premium, the mortgagee/ trustor shall, on demand pay the same. The paragraph clearly states the exceptions to the general rule that insurance as to the interest of the mortgagee, cannot be invalidated; namely: fraud, or misrepresentation or arson. Concealment of the aforecited co-insurances can easily be fraud, or in the very least, misrepresentation. Undoubtedly, it is but fair and just that where the insured who is primarily entitled to receive the proceeds of the policy has by its fraud and/or misrepresentation, forfeited said right. Petitioner further stressed that fraud which was not pleaded as a defense in private respondent's answer or motion to dismiss, should be deemed to have been waived. It will be noted that the fact of fraud was tried by express or at least implied consent of the parties. Petitioner did not only object to the introduction of evidence but on the contrary, presented the very evidence that proved its existence. 2. Generally, the cause of action on the policy accrues when the loss occurs, But when the policy provides that no action shall be brought unless the claim is first presented extrajudicially in the manner provided in the policy, the cause of action will accrue from the time the insurer finally rejects the claim for payment

In the case at bar, policy condition No. 11 specifically provides that the insured shall on the happening of any loss or damage give notice to the company and shall within fifteen (15) days after such loss or damage deliver to the private respondent (a) a claim in writing giving particular account as to the articles or goods destroyed and the amount of the loss or damage and (b) particulars of all other insurances, if any. Twenty-four days after the fire did petitioner merely wrote letters to private respondent to serve as a notice of loss. It didnt even furnish other documents. Instead, petitioner shifted upon private respondent the burden of fishing out the necessary information to ascertain the particular account of the articles destroyed by fire as well as the amount of loss. Since the required claim by insured, together with the preliminary submittal of relevant documents had not been complied with, it follows that private respondent could not be deemed to have finally rejected petitioner's claim and therefore there was no cause of action. It appearing that insured has violated or failed to perform the conditions under No. 3 and 11 of the contract, and such violation or want of performance has not been waived by the insurer, the insured cannot recover, much less the herein petitioner.

EGUARAS vs. GREAT EASTERN33 PHIL 263, 24 January 1916NATURE: Appeal filed through bill of exceptions from the judgment of the CFI FACTS: y Francisca Eguaras filed a written complaint in court, alleging as a cause of action that her son-in-law Dominador Albay had applied in writing to the defendant insurance company to insure hislife for the sum of P5,000, naming as the beneficiary in case of his death the plaintiff FranciscaEguaras; that after compliance with the requisites and the investigation carried on by thedefendant company, it accepted the application for insurance and issued the policy; that, saidpolicy being in force, the insured died, and despite the fact that the beneficiary submittedsatisfactory proofs of his death and that the defendant company investigated the event, still itrefused and continues to refuse to pay to the plaintiff the value of the policy. y Defendant set forth in special defense that the insurance policy issued in the name of Dominador Albay had been obtained through fraud and deceit known and consent to by theinterested parties and is therefore completely illegal, void, and ineffective. y A criminal case for frustrated estafa was filed by defendant against Ponciano Remigio, CastorGarcia and Francisca Eguaras. They were acquitted, and claim that the judgment produces theeffect of res judicata in the present suit. ISSUE: y WON the life insurance obtained by Dominador Albay was issued through fraud and deceit HELD: y

YES.Ratio In a contract where one of the contracting parties may have given his consent through error,violence, intimidation, or deceit, and in any of such cases the contract is void, even though, despite thisnullity, no crime was committed. There may not have been estafa in the case at bar, but it wasconclusively demonstrated by the trial that deceit entered into the insurance contract, fulfillmentwhereof is claimed, and therefore the conclusions reached by the court in the judgment it rendered inthe criminal proceedings for estafa do not affect this suit, nor can they produce in the present suit theforce ofres adjudicata. Reasoning: It is proven that the signatures on the insurance applications reading "Dominado Albay" arefalse and forged; that the person who presented himself to Dr. Vidal to be examined was not the realDominador Albay, but Castor Garcia who was positively identified by Dr. Vidal; that at the time of theapplication for insurance and the issuance of the policy which is the subject matter of this suit the realDominador Albay was informed of all those machinations, wherefore it is plain that the insurancecontract between the defendant and Dominador Albay is null and void because it is false, fraudulent andillegal. Disposition :The judgment appealed from is reversed and the defendant absolved from the complaintwithout special finding as to the costs.