FILIPINAS COMPAIA DE SEGUROS, petitioner, vs. CHRISTERN HUENEFELD and CO., INC., respondent.

G.R. No. L-2294

May 25, 1951


FACTS:

Christern Huenefeld Corporation bought a fire insurance policy from Filipinas Compania de Seguros to cover
merchandise contained in a building. During the Japanese military occupation, this same merchandise and the
building were burned, so Huenefeld filed a claim under the policy.

However, Filipinas Compania de Seguros refused to pay alleging that the policy had ceased to be in force when the
United States declared war against Germany. Filipinas Compania contended that although organized and created
under Philippine laws, Huenefeld is a German subject, and hence, a public enemy, since majority of its
stockholders are Germans. On the other hand, Filipinas Compania is under American jurisdiction.

The Director of Bureau of Financing, Philippine Executive Commission ordered Filipinas Compania to pay, so
Filipinas Compania did pay. The case at bar is about the recovery of that sum paid.

ISSUES:
1. Whether or not Christern Huenefeld is a German subject.
2. Whether the fire insurance policy is enforceable against an enemy state.

HELD:

1. There is no question that majority of the stockholders of the respondent corporation were German subjects.
This being so, we have to rule that said respondent became an enemy corporation upon the outbreak of the war
between the United States and Germany.


2. The Philippine Insurance Law (Act No. 2427, as amended,) in section 8, provides that "anyone except a public
enemy may be insured." It stands to reason that an insurance policy ceases to be allowable as soon as an insured
becomes a public enemy.

The respondent having become an enemy corporation on December 10, 1941, the insurance policy issued in its
favor on October 1, 1941, by the petitioner (a Philippine corporation) had ceased to be valid and enforcible, and
since the insured goods were burned after December 10, 1941, and during the war, the respondent was not
entitled to any indemnity under said policy from the petitioner. However, elementary rules of justice (in the
absence of specific provision in the Insurance Law) require that the premium paid by the respondent for the period
covered by its policy from December 11, 1941, should be returned by the petitioner.










INSULAR LIFE VS. EBRADO
> Buenaventura Ebrado was issued al life plan by Insular Company. He designated Capriona as his beneficiary, referring to her as
his wife.
> The insured then died and Carponia tried to claim the proceeds of the said plan.
> She admitted to being only the common law wife of the insured.
> Pascuala, the legal wife, also filed a claim asserting her right as the legal wife. The company then filed an action for interpleader.
Issue:
Whether or not the common law wife named as beneficiary can collect the proceeds.
Held:
NO.
The civil code prohibitions on donations made between persons guilty of adulterous concubinage applies to insurance contracts. On
matters not specifically provided for by the Insurance Law, the general rules on Civil law shall apply. A life insurance policy is no
different from a civil donation as far as the beneficiary is concerned, since both are founded on liberality.
WHY WAS THE COMMON LAW WIFE NOT ED TO COLLECT THE PROCEEDS DESPITE THE FACT THAT SHE WAS THE
BENEFICIARY? ISNT THIS AGAINST SEC. 53?
It is true that SC went against Sec. 53. However, Sec. 53 is NOT the only provision that the SC had to consider. Art. 739 and 2012
of CC prohibit persons who are guilty of adultery or concubinage from being beneficiaries of the life insurance policies of the
persons with whom they committed adultery or concubinage. If the SC used only Sec. 53, it would have gone against Art. 739 and
2012
The Insular Life Assurance Company vs Ebrado, 80 SCRA 181
Fact:
On September 1, 1968, Buenaventura Ebrado issued by the Insular Life Assurance Policy No 009929 a whole-life plan with a rider
for Accidental Death. Buenaventura designated Carponia Ebrado as the revocable beneficiary in his policy. He referred her as his
wife.

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

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

Ruling:
In essence, a life insurance is no different from a civil donation insofar as the beneficiary is concerned. Both are founded upon
the same consideration: liberality. A beneficiary is like a donee because from the premiums of the policy which the insured pays
out of liberality, the beneficiary will receive the proceeds or profits of said insurance. As a consequence, the proscription in
Article739 of the New Civil Code should equally operate in life insurance contracts. The mandate of Article 2012 cannot be laid
aside: any person who cannot receive a donation cannot be named a beneficiary in the life insurance policy of the persons who
cannot make the donation.


Note following Articles from the Civil Code:
Article 2011 - "The contract of insurance is governed by special laws. Matters not expressly provided for in such special laws shall
be regulated by this Code."

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

Article 739- "The donations shall be void:

1. Those made between persons who were guilty of adultery or concubinage at the title of donation.xx
In the case provided to in No.1, the action for declaration of nullity may be brought by the spouse of the donor or donee; and the
guilt of the donee may be provided by preponderance of evidence in same action."
Heirs Of Loreto C. Maramag V Maramag (2009)
FACTS:
Loreto Maramag designated as beneficiary his concubine Eva de Guzman Maramag
Vicenta Maramag and Odessa, Karl Brian, and Trisha Angelie (heirs of Loreto Maramag) and his
concubine Eva de Guzman Maramag, also suspected in the killing of Loreto and his illegitimate
children are claiming for his insurance.
Vicenta alleges that Eva is disqualified from claiming
RTC: Granted - civil code does NOT apply
CA: dismissed the case for lack of jurisdiction for filing beyond reglementary period
ISSUE: W/N Eva can claim even though prohibited under the civil code against donation


HELD: YES. Petition is DENIED.
Any person who is forbidden from receiving any donation under Article 739 cannot be named
beneficiary of a life insurance policy of the person who cannot make any donation to him
If a concubine is made the beneficiary, it is believed that the insurance contract will still remain
valid, but the indemnity must go to the legal heirs and not to the concubine, for evidently, what is
prohibited under Art. 2012 is the naming of the improper beneficiary.
SECTION 53. The insurance proceeds shall be applied exclusively to the proper interest of the
person in whose name or for whose benefit it is made unless otherwise specified in the policy.
GR: only persons entitled to claim the insurance proceeds are either the insured, if still alive;
or the beneficiary, if the insured is already deceased, upon the maturation of the policy.
EX: situation where the insurance contract was intended to benefit third persons who are not
parties to the same in the form of favorable stipulations or indemnity. In such a case, third parties
may directly sue and claim from the insurer
It is only in cases where the insured has not designated any beneficiary, or when the designated
beneficiary is disqualified by law to receive the proceeds, that the insurance policy proceeds shall
redound to the benefit of the estate of the insured


Filipino Merchants Insurance v CA G.R. No. 85141
November 28, 1989
J. Regalado

Facts:
Choa insured 600 tons of fishmeal for the sum of P267,653.59 from Bangkok, Thailand to Manila against all risks
under warehouse to warehouse terms. What was imported in the SS Bougainville was 59.940 metric tons at $395.42
a ton. The cargo was unloaded from the ship and 227 bags were found to be in bad condition by the arrastre.
Choa made a formal claim against the defendant Filipino Merchants Insurance Company for P51,568.62 He also
presented a claim against the ship, but the defendant Filipino MerchantsInsurance Company refused to pay the
claim. The plaintiff brought an action against the company and presented a third party complaint against the
vessel and the arrastre contractor.
The court below, after trial on the merits, rendered judgment in favor of private respondent, for the sum of P51,568.62
with interest at legal rate.
The common carrier, Compagnie, was ordered to pay as a joint debtor.
On appeal, the respondent court affirmed the decision of the lower court insofar as the award on the complaint is
concerned and modified the same with regard to the adjudication of the third-party complaint. A motion for
reconsideration of the aforesaid decision was denied. The AC made Filipino Merchants pay but absolved the
common carrier, Compagnie. Hence this petition.

Issues:
1. WON the "all risks" clause of the marine insurance policy held the petitioner liable to the private respondent for the
partial loss of the cargo, notwithstanding the clear absence of proof of some fortuitous event, casualty, or accidental
cause to which the loss is attributable.
2. WON The Court of Appeals erred in not holding that the private respondent had no insurable interest in
the subject cargo, hence, the marine insurance policy taken out by private respondent is null and void.

Held: No. No. Petition denied.

Ratio:
1. The "all risks clause" of the Institute Cargo Clauses read as follows:
5. This insurance is against all risks of loss or damage to the subject-matter insured but shall in no case be deemed
to extend to cover loss, damage, or expense proximately caused by delay or inherent vice or nature of the subject-
matter insured. Claims recoverable hereunder shall be payable irrespective of percentage.
An "all risks policy" should be read literally as meaning all risks whatsoever and covering all losses by an accidental
cause of any kind. Accident is construed by the courts in their ordinary and common acceptance.
The very nature of the term "all risks" must be given a broad and comprehensive meaning as coveri ng any loss other
than a willful and fraudulent act of the insured. This is pursuant to the very purpose of an "all risks" insurance to give
protection to the insured in those cases where difficulties of logical explanation or some mystery surround the loss or
damage to property.
Institute Cargo Clauses extends to all damages/losses suffered by the insured cargo except (a) loss or damage or
expense proximately caused by delay, and (b) loss or damage or expense proximately caused by the inherent vice or
nature of the subject matter insured.
Generally, the burden of proof is upon the insured to show that a loss arose from a covered peril, but under an "all
risks" policy the burden is not on the insured to prove the precise cause of loss or damage for which i t seeks
compensation. The insured under an "all risks insurance policy" has the initial burden of proving that the cargo was in
good condition when the policy attached and that the cargo was damaged when unloaded from the vessel. The
burden then shifts to the insurer to show the exception to the coverage. This creates a special type
of insurance which extends coverage to risks not usually contemplated and avoids putting upon the insured the
burden of establishing that the loss was due to the peril falling within the policy's coverage; the insurer can avoid
coverage upon demonstrating that a specific provision expressly excludes the loss from coverage.
Under an 'all risks' policy, it was sufficient to show that there was damage occasioned by some accidental cause of
any kind, and there is no necessity to point to any particular cause.
2. Section 13 of the Insurance Code- anyone has an insurable interest in property who derives a benefit from its
existence or would suffer loss from its destruction
Insurable interest in property may consist in (a) an existing interest; (b) an inchoate interestfounded on an
existing interest; or (c) an expectancy, coupled with an existing interest in that out of which the expectancy arises.
Choa, as vendee/consignee of the goods in transit, has such existing interest as may be the subject of a valid
contract of insurance. His interest over the goods is based on the perfected contract of sale. The perfected contract of
sale between him and the shipper of the goods operates to vest in him an equitable title even before delivery or
before conditions have been performed.
Further, Article 1523 of the Civil Code provides that where, in pursuance of a contract of sale, the seller is authorized
or required to send the goods to the buyer, delivery of the goods to a carrier, for the purpose of transmission to the
buyer is deemed to be a delivery of the goods to the buyer. The Court has heretofore ruled that the delivery of the
goods on board the carrying vessels partake of the nature of actual delivery since, from that time, the foreign buyers
assumed the risks of loss of the goods and paid the insurance premium covering them.


FACTS:
Choa Tiek Seng, consignee of the shipment of fishmeal loaded, insured in "all risks policy" 600 metric tons of fishmeal in
new gunny bags of 90 kilos each from Bangkok, Thailand to Manila against all risks under warehouse towarehouse terms but
only 59.940 metric tons was imported
When it was unloaded unto the arrastre contractor E. Razon, Inc. and Filipino
Merchants's surveyor ascertained and certified that in such discharge 105 bags were in bad order
condition which was reflected in the survey report of Bad Order cargoes
Before delivery to Choa, E. Razon's Bad Order Certificate showed that a total of 227 bags in bad
order condition
Choa brought an action against Filipino Merchants Insurance Co. who brought a third party complaint against Compagnie
Maritime Des Chargeurs Reunis and/or E. Razon, Inc.
RTC: Ordered Filipino Merchants to pay Choa and reimbursefrom Compagnie Maritime Des
Chargeurs Reunis and third party defendant E. Razon, Inc.
CA: Affirmed but modified by adjudicating the third party complaint
Filipino Merchants contended that Chao has no insurable interest and therefore the policy should
be void and that it was fraud that it did not disclose of such fact

ISSUE: W/N Choa Tiek Seng as consignee of the shipment has insurable interest

HELD: YES. CA affirmed.
GR: the burden of proof is upon the insured to show that a loss arose from a covered peril, but under an "all risks" policy the
burden is not on the insured to prove the precise cause of loss or damage for which it seeks compensation. The insured under
an "all risks insurance policy" has the initial burden of proving that the cargo was in good condition when the policy attached
and that the cargo was damaged when unloaded from the vessel; thereafter, the burden then shifts to the insurer to show the
exception to the coverage. - none was shown = liable
Section 13 of the Insurance Code defines insurable interest in property 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.
As vendee/consignee of the goods in transit has such existing interest. Hisinterest over the goods is based on the perfected
contract of sale. The perfected contract of sale between him and the shipper of the goods operates to
vest in him an equitable title even before delivery or before be performed the conditions of the
sale. The contract of shipment, whether under F.O.B., C.I.F., or C. & F. as in this case, is
immaterial in the determination of whether the vendee has an insurable interest or not in the
goods in transit.
Article 1523 of the Civil Code provides that where, in pursuance of a contract of sale, the seller is authorized or required to
send the goods to the buyer, delivery of the goods to a carrier, whether named by the buyer or not, for, the purpose of
transmission to the buyer is deemed to be a delivery of the goods to the buyer, the exceptions to said rule not obtaining in the
present case. The Court has heretofore ruled that the delivery of the goods on board the carrying vessels partake of the nature
of actual delivery since, from that time, the foreign buyers assumed the risks of loss of the goods and paid the
insurance premium covering them
C & F contracts are shipment contracts. The term means that the price fixed includes in a lump sum the cost of the goods and
freight to the named destination. It simply means that the seller must pay the costs and freight necessary to bring the goods to
the named destination but the risk of loss or damage to the goods is transferred from the seller to the buyer when the goods
pass the ship's rail in the port of shipment.
Moreover, the issue of lack of insurable interest was not among the defenses averred in petitioners answer.
Ong Lim Sing V. FEB Leasing And Finance Corp.
(2007)
FACTS:
FEB Leasing and Finance Corporation (FEB) leased equipment and motor vehicles to JVL
Food Products with a monthly rental of P170,494
At the same date, Vicente Ong Lim Sing, Jr. (Lim) an executed an Individual
Guaranty Agreement with FEB to guarantee the prompt and faithful
performance of the terms and conditions of the lease agreement
JVL defaulted in the payment of the monthly rentals resulting to arrears of P3,414,468.75
and refused to pay despite demands
FEB filed a complaint for damages and replevin against JVL, Lim and John
Doe
JVL and Lim admitted the existence of the lease agreement but asserted that it is in reality a
sale of equipment on installment basis, with FEB acting as the financier
RTC: Sale on installment and the FEB elected full payment of the obligation so for the unreturned
units and machineries the JVL and Lim are jointly and severally liable to pay
CA: granted FEB appeal that it is a financial lease agreement under Republic Act
(R.A.) No. 8556 and ordered JVL and Lim jointly and severally to
pay P3,414,468.75
ISSUE: W/N JVL and Lim should jointly and severally be liable for the insured financial lease


HELD: YES. CA affirmed.
contract of adhesion is as binding as any ordinary contract
The Lease Contract with corresponding Lease Schedules with Delivery and Acceptance
Certificates is, in point of fact, a financial lease within the purview of R.A. No. 8556
FEB leased the subject equipment and motor vehicles to JVL in consideration of
a monthly periodic payment of P170,494.00. The periodic payment by petitioner is sufficient
to amortize at least 70% of the purchase price or acquisition cost of the said movables in
accordance with the Lease Schedules with Delivery and Acceptance Certificates.
JVL entered into the lease contract with full knowledge of its terms and conditions.
Lim, as a lessee, has an insurable interest in the equipment and motor vehicles leased.
In the financial lease agreement, FEB did not assume responsibility as to the quality,
merchantability, or capacity of the equipment. This stipulation provides that, in case of defect
of any kind that will be found by the lessee in any of the equipment, recourse should be made
to the manufacturer. The financial lessor, being a financing company, i.e., an extender of
credit rather than an ordinary equipment rental company, does not extend a warranty of the
fitness of the equipment for any particular use. Thus, the financial lessee was precisely in a
position to enforce such warranty directly against the supplier of the equipment and not
against the financial lessor. We find nothing contra legem or contrary to public policy in such
a contractual arrangement

Gaisano Cagayan, Inc. V. Insurance Company Of North America
FACTS:
Intercapitol Marketing Corporation (IMC) is the maker of Wrangler Blue Jeans. while Levi Strauss (Phils.) Inc.
(LSPI) is the local distributor of products bearing trademarks owned by Levi Strauss & Co
IMC and LSPI separately obtained from Insurance Company of North America fire insurance policies for their book debt
endorsements related to their ready-made clothing materials which have been sold or delivered to
various customers and dealers of the Insured anywhere in the Philippines which are unpaid 45
days after the time of the loss
February 25, 1991: Gaisano Superstore Complex in Cagayan de Oro City, owned by Gaisano Cagayan, Inc., containing the
ready-made clothing materials sold and delivered by IMC and LSPI was consumed by fire.
February 4, 1992: Insurance Company of North America filed a complaint for damages against Gaisano
Cagayan, Inc. alleges that IMC and LSPI filed their claims under their respective fire insurance
policies which it paid thus it was subrogated to their rights
Gaisano Cagayan, Inc: not be held liable because it was destroyed due to fortuities event or force
majeure
RTC: IMC and LSPI retained ownership of the delivered goods until fully paid, it must bear the loss
(res perit domino)
CA: Reversed - sales invoices is an exception under Article 1504 (1) of the Civil Code to res perit
domino
ISSUE: W/N Insurance Company of North America can claim against Gaisano Cagayan for the debt
that was isnured

HELD: YES. petition is partly GRANTED. order to pay P535,613 is DELETED
insurance policy is clear that the subject of the insurance is the book debts and NOT goods sold and delivered to the
customers and dealers of the insured
ART. 1504. Unless otherwise agreed, the goods remain at the seller's risk until the ownership therein is transferred to the
buyer, but when the ownership therein is transferred to the buyer the goods are at the buyer's risk whether actual delivery has
been made or not, except that:

(1) Where delivery of the goods has been made to the buyer or to a bailee for the buyer, in pursuance of the contract and the
ownership in the goods has been retained by the seller merely to secure performance by the buyer of his obligations under the
contract, the goods are at the buyer's risk from the time of such delivery;
IMC and LSPI did not lose complete interest over the goods. They have an insurable interest until full payment of the value
of the delivered goods. Unlike the civil law concept of res perit domino, where ownership is the basis for consideration of
who bears the risk of loss, in property insurance, one'sinterest 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 interestin property, whether real or personal, or any
relation thereto, or liability in respect thereof, of such nature that a contemplated peril might directly damnify the insured."
Parenthetically, under Section 14 of the same Code, an insurable interest in property may consist in: (a) an existing interest;
(b) an inchoate interest founded on existing interest; or (c) an expectancy, coupled with an existing interest in that out of
which the expectancy arises.
Anyone has an insurable interest in property who derives a benefit from its existence or would suffer loss from its
destruction.
it is sufficient that the insured is so situated with reference to the property that he would be liable to loss should it be injured
or destroyed by the peril against which it is insured
an insurable interest in property does not necessarily imply a property interestin, or a lien upon, or possession of, the subject
matter of the insurance, and neither the title nor a beneficial interest is requisite to the existence
of such an interest
insurance in this case is not for loss of goods by fire but for petitioner's accounts with IMC and LSPI that remained unpaid 45
days after the fire - obligation is pecuniary in nature
obligor should be held exempt from liability when the loss occurs thru a fortuitous event only holds true when the obligation
consists in the delivery of a determinate thing and there is no stipulation holding him liable even in case of fortuitous event
Article 1263 of the Civil Code in an obligation to deliver a generic thing, the loss or destruction of
anything of the same kind does not extinguish the obligation (Genus nunquan perit)
The subrogation receipt, by itself, is sufficient to establish not only the relationship of respondent as insurer and IMC as the
insured, but also the amount paid to settle the insurance claim
Art. 2207. If the plaintiff's property has been insured, and he has received indemnity from the insurance company for the
injury or loss arising out of the wrong or breach of contract complained of, the insurance company shall be subrogated to the
rights of the insured against the wrongdoer or the person who has violated the contract.
As to LSPI, no subrogation receipt was offered in evidence.
Failure to substantiate the claim of subrogation is fatal to petitioner's case for recovery of the
amount of P535,613

Grepalife vs CA 1999
HB
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 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


Grepalife vs CA
Mongoloid
Insurance Law Concealment Insurance Contract as an Uberrima Fides Contract
In March 1957, Ngo Hing filed an application for a 20-year endowment policy for the life of his one-year old daughter with the Great
Pacific Life Assurance Corporation (Grepalife). Lapulapu Mondragon was the insurance agent who assisted Ngo Hing. The
insurance policy was for P50,000.00. The proper form was filled out and Ngo Hing paid the insurance premium. He received a
binding deposit receipt in return. Said receipt however was subject to certain conditions, among which is the acceptance of
Grepalife.
Grepalife eventually denied the insurance application because the endowment plan by Grepalife is not offered for minors below
seven years old. Grepalife, instead made a counter-offer which Ngo Hing failed to accept because Mondragon, instead of
communicating the said denial to Ngo Hing, wrote a letter to Grepalife trying to convince Grepalife to allow one-year olds to be
covered by endowment plans.
In May 1957, Ngo Hings one-year old daughter died. Ngo Hing tried to collect the insurance claim but Grepalife refused as it
claimed that the insurance contract was never perfected sans their acceptance.
ISSUE: Whether or not Grepalife should pay the insurance claim.
HELD: No. As properly ruled by the lower court as well as the Court of Appeals, the insurance contract was never completed
because Grepalife never accepted the insurance offer. The binding deposit receipt issued to Ngo Hing is only acknowledgement of
his application and receipt of his payment for the insurance premium.
The Supreme Court also noted that Ngo Hing failed to disclose the fact that his one-year old daughter was a mongoloid. Such
congenital defect was withheld by Ngo Hing with bad faith and such risk to be assumed by the insurance company.
The contract of insurance is one of perfect good faith uberrima fides meaning good faith, absolute and perfect candor or openness
and honesty; the absence of any concealment or demotion, however slight not for the insured alone but equally so for the insurer.
Concealment is a neglect to communicate that which a party knows and ought to communicate. Whether intentional or unintentional
the concealment entitles the insurer to rescind the contract of insurance.









PHILAMCARE vs COURT OF APPEALS
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.


Ng Gan Zee v. Asian Crusader Life

Insurance Law Concealment Misrepresentation Duty of Insurance Company to Make Inquiry
In May 1962, Kwong Nam applied for a 20-year endowment policy with Asian Crusader. Asian Crusader asked the following
question:
Has 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.
Kwong Nam answered No to the above question.
Kwong Nam was also examined by Asian Crusaders medical examiner to whom he disclosed that he was once operated and a
tumor was removed from his stomach and such was associated with ulcer of the stomach.
Kwong Nams application was approved. In May 1963, he died. His widow, Ng Gan Zee, filed an insurance claim but Asian
Crusader refused her claim as it insisted that Kwong Nam concealed material facts from them when he was applying for the
insurance; that he misrepresented the fact that he was actually denied application by Insular Life when he was renewing his
application with them; that Kwong Nam was actually operated for peptic ulcer.
ISSUE: Whether or not Ng Gan Zee can collect the insurance claim.
HELD: Yes. Asian Crusader was not able to prove that Kwong Nams statement that Insular Life did not deny his insurance renewal
with them is untrue. In fact, evidence showed that in April 1962, Insular Life approved Kwong Nams request of reinstatement only
with the condition that Kwong Nams plan will be lowered from P50,000.00 to P20,000.00 considering his medical history.
Kwong Nam did not conceal anything from Asian Crusader. His statement that his operation, in which a tumor the size of a hen s
egg was removed from his stomach, was only associated with ulcer of the stomach and not peptic ulcer can be considered as an
expression made in good faith of his belief as to the nature of his ailment and operation. Indeed, such statement must be presumed
to have been made by him without knowledge of its incorrectness and without any deliberate intent on his part to mislead Asian
Crusader.
While it may be conceded that, from the viewpoint of a medical expert, the information communicated was imperfect, the same was
nevertheless sufficient to have induced Asian Crusader to make further inquiries about the ailment and operation of Kwong Nam. It
has been held that where, upon the face of the application, 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.


MA. LOURDES S. FLORENDO,
Petitioner,vs.
PHILAM PLANS, INC., PERLA ABCEDE MA. CELESTE ABCEDE,
Respondents.
FACTS:
Manuel Florendo filed an application for comprehensive pension plan with respondent PhilamPlans, Inc. (Philam Plans) Manuel signed the
application and left to Perla the task of supplying
the information needed in the application. Respondent Ma. Celeste Abcede, Perlas daughter,
signed the application as sales counselor. Philam Plans issued Pension Plan Agreement toManuel, with petitioner Ma. Lourdes S. Florendo,
his wife, as beneficiary. In time, Manuel paidhis quarterly premiums. Eleven months later, Manuel died of blood poisoning.
Subsequently,Lourdes filed a claim with Philam Plans for th
e payment of the benefits under her husbands
plan but Philam Plans declined her claim prompting her to file the present action against thepension plan company before the Regional Trial
Court (RTC) of Quezon City and ruled in favor of Ma. Lourdes. However, the Court of Appeals then reversed the RTC decision. Hence
thisappeal.
ISSUE:
Whether or not Ma. Lourdes could claim benefits as the beneficiary of her husband under theinsurance plan despite consideration that her
husband Manuel concealed the true condition of his health.
RULING:
The Supreme Court answers this to the negative and the AFFIRMED in its entirety the decisionof the Court of Appeals.The comprehensive
pension plan that Philam Plans issued contains a one-year incontestabilityperiod. It states:
VIII. INCONTESTABILITY
After this Agreement has remained in force for one (1) year, we can no longer contest for health reasons any claim for
insurance under this Agreement, except for the reason thatinstallment has not been paid (lapsed), or that you are not insurable at the time
you bought thispension program by reason of age. If this Agreement lapses but is reinstated afterwards, theone (1) year contestability period
shall start again on the date of approval of your request for reinstatement.The above
incontestability clause
precludes the insurer from disowning liability under thepolicy it issued on the ground of concealment or misrepresentation regarding the
health of theinsured after a year of its issuance.Since
Manuel died on the eleventh month
following the issuance of his plan, the one year incontestability period has not yet set in. Consequently, Philam Plans was not barred from
questioning Lourdes entitlement to the benefits of her husbands pension plan




























LIM V. SUN LIFE
41 PHIL 263
Facts:
> On July 6, 1917, Luis Lim Y Garcia of Zamboanga applied for a policy of life insurance with Sunlife in the amount
of 5T.
> He designated his wife Pilar Lim as the beneficiary. The first premium of P433 was paid by Lim and company
issued a provisional policy
> Such policy contained the following provisions xx the abovementioned life is to be assured in accordance with the
terms and conditions contained or inserted by the Company in the policy which may be granted by it in this particular
case for 4 months only from the date of the application, PROVIDED that the company shall confirm this agreement by
issuing a policy on said application xxx. Should the company NOT issue such a policy, then this agreement shall be
null and void ab initio and the Company shall be held not to have been on the risk at all, but in such case, the amount
herein shall be returned.
> Lim died on Aug. 23, 1917 after the issuance of the provisional policy but before the approval of the application by
the home office of the insurance company.
> The instant action is brought by the beneficiary to recover from Sun Life the sum of 5T.

Issue:
Whether or not the beneficiary can collect the 5T.

Held:
NO.
The contract of insurance was not consummated by the parties. The above quoted agreement clearly stated that the
agreement should NOT go into effect until the home office of the Company shall confirm it by issuing a policy. It was
nothing but an acknowledgment by the Company that it has received a sum of money agreed upon as the first years
premium upon a policy to be issued upon the application if it is accepted by the Company.

When an agreement is made between the applicant and the agent whether by signing an application containing such
condition or otherwise, that no liability shall attach until the principal approves the risk and a receipt is given by the
agent, such acceptance is merely conditional and is subordinated to the companys act in approving or rejecting; so in
life insurance a binding slip or receipt does not insure itself











pacific timber export vs ca

Insurance Law The Policy Separate Premiums Not Required for Cover Notes
In 1963, Pacific Timber Export Corporation (PTEC) applied for a temporary marine insurance from Workmens Insurance Company
(WIC) in order for the latter to insure 1,250,000 board feet of logs to be exported to Japan. In March 1963, WIC issued a cover note
to PTEC for the said logs. On April 2, 1963, WIC issued two policies for the logs. However, the total board feet covered this time is
only 1,195,498. On April 4, 1963, while the logs were in transit to Japan, bad weather prevailed and this caused the loss of 32
pieces of logs.
WIC then asked an adjuster to investigate the loss. The adjuster submitted that the logs lost were not covered by the two pol icies
issued on April 2, 1963 but said logs were included in the cover note earlier issued.
WIC however denied the insurance claim of PTEC as it averred that the cover note became null and void when the two policies
were subsequently issued. The Court of Appeals ruled that the cover note is void for lack of valuable consideration as it appeared
that no premium payment therefor was made by PTEC.
ISSUE: Whether or not a separate premium is needed for cover notes.
HELD: No. The Cover Note was not without consideration for which the Court of Appeals held the Cover Note as null and void, and
denied recovery therefrom. The fact that no separate premium was paid on the Cover Note before the loss insured against occurred,
does not militate against the validity of PTECs contention, for no such premium could have been paid, since by the nature of the
Cover Note, it did not contain, as all Cover Notes do not contain particulars of the shipment that would serve as basis for the
computation of the premiums. As a logical consequence, no separate premiums are intended or required to be paid on a Cover
Note.
At any rate, it is not disputed that PTEC paid in full all the premiums as called for by the statement issued by WIC after the issuance
of the two regular marine insurance policies, thereby leaving no account unpaid by PTEC due on the insurance coverage, which
must be deemed to include the Cover Note. If the Note is to be treated as a separate policy instead of integrating it to the regular
policies subsequently issued, the purpose and function of the Cover Note would be set at naught or rendered meaningless, for it is
in a real sense a contract, not a mere application for insurance which is a mere offer.