CASE DIGEST

DELFIN NARIO et al v. PHILAM LIFE

G.R. No. L-22796, June 26, 1967

Facts:
Mrs. Alejandra Santos-Nario applied for a 20-year endowment plan with Philippine American Life Insurance
Co. Her life insurance policy was issued on June 12, 1959, with a face value of P 5,000.00. She designated thereon
her husband , Delfin Nario, and their unemancipated minor son, Ernesto Nario, as her irrevocable beneficiaries. In
June 1963, Mrs. Nario applied for a loan on the said policy bore the written signature and consent of her husband
as father-guardian of her son and as one of the beneficiaries of the policy.
The Insurance Company denied said application, manifesting to the policy holder that the written consent for
the minor son must not only be given by his father as legal guardian but it must be authorized by the court in a
competent guardianship proceeding. After the denial of the said policy loan application, Mrs. Nario signified her
decision to surrender her policy to the Insurance Company, which she was entitled to avail of provided in the policy,
and demanded its cash value which then amounted to P 520.00.
However. the Insurance Company also denied the surrender of the policy, on the same ground as that
given in disapproving the policy loan application, hence they filed a suit against the Philippine American Life
Insurance Co., before the Court of First Instance, seeking to grant their policy loan application and/or to accept the
surrender of said policy in exchange of its cash value.
The Insurance Company contended that the policy loan application and the surrender of policy involved
acts of disposition and alienation of the property rights of the minor, which are not within the powers of the legal
administrator. The lower court dismissed the plaintiffs complaint. Hence, this petition.

Issue:
Whether or not policy loan and surrender of the policy constitute an act of disposition or alienation of
property rights of irrevocable beneficiary.

Held:
Irrevocable beneficiaries acquired a vested right to all benefits accruing to the policy, including that of
obtaining a policy loan to the extent stated in the policy. Policy loan and surrender of policy involved acts of
disposition or alienation of the minors properties for which the consent given by a father-guardian for and in behalf of
the minor son, must be with the requisite court authority.
Wherefore, the decision appealed from is affirmed.

Case Digest
Philippine American Life Insurance Company vs. Ansaldo
G.R. No. 76452, July 26, 1994

Facts:
Private respondent Ramon M. Paterno, sent a letter-complaint to respondent Insurance Commissioner
Armando Ansaldo, alleging certain problems encountered by agents, supervisors, managers and public consumers
of the Philippine American Life Insurance Company (Philamlife) as a result of certain practices by said company. A
hearing on the letter-complaint was held by respondent Commissioner on the validity of the Contract of Agency
complained of by the private respondent.
In October 1986, Manuel Ortega , Philamlifes Senior Assistant Vice-President and Executive Assistant to
the President, asked the respondent Commission to first rule on the questions of the jurisdiction of the Insurance
Commissioner over the subject matter of the letters-complaint and the legal standing of private respondent.
On November 3, or two days before the scheduled hearing set by the respondent Commissioner, Ortega
filed a Motion to Quash Subpoena/Notice on the grounds that it has no legal basis and that the Insurance
Commissioner has no jurisdiction over the subject matter. However, respondent Commissioner denied the Motion
to Quash. Hence , this petition.

Issue:
Whether or not the resolution of the legality of the Contract of Agency falls within the jurisdiction of the
Insurance Commissioner.

Held:
The Insurance Code does not have provisions governing the relations between insurance companies and
their agents. It follows that the Insurance Commissioner cannot in the exercise of its quasi-judicial powers,
assume jurisdiction over controversies between the insurance companies and their agents.
It should be noted that an insurance company may have two classes of agents who sell its insurance
policies: (a) salaried employees who keep definite hours and work under the control and supervision of the
company; and (b) registered representatives, who work on commission basis.
Under the first category, the relationship between the insurance company and its agents is governed by the
Contract of Agency and the provisions of the New Civil Code on Agency. Disputes involving the agent are cognizable
by the regular courts.
The petition is GRANTED. The Order of the Insurance Commission is set aside.

Case Digest

Great Pacific Life Assurance Company vs. Court of Appeals

G.R. No. L-31845 April 30, 1979

Facts:
On March 14, 1967, Ngo Hing filed an application with the Great Pacific Life Assurance Company for a 20year endowment policy in the amount of P50,000.00 on the life of his one-year old daughter Helen Go. Said
respondent supplied the essential data which petitioner Lapulapu D. Mondragon, Branch Manager of the Pacific Life
in Cebu City wrote on the corresponding form in his own handwriting. Upon the payment of the insurance premium,
the binding deposit receipt was issued to private respondent Ngo Hing.
On April 30, 1957, Mondragon received a letter from Pacific Life disapproving the insurance application, for
the reason that said life insurance application for 20-year endowment plan is not available for minors below seven
years old. The non-acceptance of the insurance plan by Pacific Life was allegedly not communicated by petitioner
Mondragon to private Ngo Hing.
On May 28, 1957, Helen Go died of influenza with complication of bronchopneumonia. Thereupon, private
respondent sought the payment of the proceeds of the insurance, but having failed in his effort he filed the action for
the recovery of the same before the Court of First Instance of Cebu, which rendered the adverse decision against
herein petitioners. Hence , this petition.

Issue:
Whether or not private respondent Ngo Hing concealed the state of health and physical condition of Helen
Go.

Held:
Private respondent Ngo Hing had deliberately concealed the state of health and physical condition of his
daughter Helen Go. When private respondent supplied the required essential data for the insurance application
form, he was aware that his one-year old daughter is typically a mongoloid child. Such congenital physical defect
could never be ensconced nor disguised. Nonetheless, private respondent, in apparent bad faith, withheld the fact
material to the risk to be assumed by the insurance company. As an insurance agent of Pacific Life, he ought to
know, as he surely must have known his duty and responsibility to such a material fact.
The contract of insurance is one of perfect good faith, absolute and perfect candor or openness and
honesty. 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.
Wherefore the decision appealed from is hereby set aside.