Del Rosario V. Equitable Ins.

And
Casualty Co., Inc. (1963)
G.R. No. L-16215

June 29, 1963

Lessons Applicable: Ambiguous Provisions Interpreted Against Insurer

(Insurance)

FACTS:

April 13, 1957: Simeon del Rosario, father of the insured who died
from drowning filed a claim for payment with Equitable Ins. and Casualty
Co., Inc. but it refused to pay more than P1,000 php so a case was filed
with the RTC for the P2,000 balance stating that under the policy they

are entitled to P1,000 to P3,000 as indemnity

RTC: entitled to recover P3,000 - policy does not positively state any
definite amount, there is an ambiguity in this respect in the policy, which
ambiguity must be interpreted in favor of the insured and strictly against
the insurer so as to allow greater indemnity

ISSUE: W/N Simeon is entitled to recover P3,000

HELD: YES.

terms in an insurance policy, which are ambiguous, equivocal or

uncertain are to be construed strictly against, the insurer, and liberally in
favor of the insured so as to effect the dominant purpose of indemnity or

payment to the insured, especially where a forfeiture is involved

reason for this rule is that the "insured usually has no voice in the
selection or arrangement of the words employed and that the language
of the contract is selected with great care and deliberation by expert and
legal advisers employed by, and acting exclusively in the interest of, the
insurance company

Misamis v Capital Insurance GR L-21380

May 20, 1966
En Banc
Facts:
Misamis Lumber Company insured its Ford Falcon to Capital Insurance for P 14,000. One day,
the cars crank and flywheel broke when it passed over a water hole in Aurora Boulevard.
Misamis sent it to be repaired at the cost of 302 pesos. However, Capital did not want to pay
the entire amount because the repair limit in the contract stipulated up to 150 pesos only.
Misamis filed suit.
The lower court ruled against the insurance corporation because the company did not show that
the cost was excessive. Also , the court ruled that absolving the company of the excess amount
would make the contract one sided.
Issue: Is the insurance company liable for more than the amount in the repair limit?
Held: No. Insurance company only ordered to pay 150 pesos.
Ratio:
Paragraph 4, subpar a. of the insurance contract is clear and specific. It authorizes up to 150
pesos only as a repair limit.
The lower court did not heed the express stipulation in the agreement. The policy specifically
noted the mechanics for repair in par. 2 and the limits of the liability in par 4. The company didnt
notify the insurance provider before it did the repairs. Also, even if the contract is onerous, this
doesnt justify its abrogation.

Insurance Case Digest: Philamcare

Health Systems, Inc. V. CA (2002)
March 18, 2002

G.R. No. 125678

Lessons Applicable:

Elements (Insurance)

Blood Relationship (Insurance)

FACTS:

Ernani Trinos, deceased husband of Julita Trinos, applied for a health care
coverage with Philamcare Health Systems, Inc.

He answered the standard application form: Have you or any of your family
members ever consulted or been treated for high blood pressure, heart trouble,
diabetes, cancer, liver disease, asthma or peptic ulcer? (If Yes, give details). NO
the application was approved for a period of one year from March 1,

1988 to March 1, 1989. Accordingly, he was issued Health Care Agreement No.
P010194
Under the agreement, respondents husband was entitled to

avail of hospitalization benefits, whether ordinary or emergency, listed therein.

He was also entitled to avail of "out-patient benefits" such as annual physical
examinations, preventive health care and other out-patient services.

Upon the termination of the agreement, the same was extended for another
year from March 1, 1989 to March 1, 1990, then from March 1, 1990 to June 1,
1990. The amount of coverage was increased to a maximum sum of P75,000.00
per disability.

During the period of his coverage, Ernani suffered a heart attack and was
confined at the Manila Medical Center (MMC) for 1 month beginning March 9,
1990.

While her husband was in the hospital, Julina Trinos tried to claim the

benefits under the health care agreement.

Philamcare denied her claim saying that the Health Care

Agreement was void for concealing Ernanis medical history so she paid the
hospitalization expenses of P76,000.00 herself.
Doctors at the MMC allegedly discovered at the time of

Ernanis confinement that he was hypertensive, diabetic and asthmatic, contrary

to his answer in the application form.

After being discharged from the MMC, he was attended by a physical

therapist at home.
Later, he was admitted at the Chinese General Hospital.

Due to financial difficulties, however, he was brought home

again.

April 13, 1990 morning: Ernani had fever and was feeling very weak
He was brought to Chinese General Hospital where he died
July 24, 1990: She brought action for damages against Philamcare Health
Systems Inc. and its president, Dr. Benito Reverente

RTC: Philamcare and Dr. Benito Reverent to pay and reimburse P76k plus
interest, moral damages, exemplary damages, attorney's fees and cost of suit

CA: affirmed the decision of RTC but deleted all awards for damages and
absolved Philamcare

Philamcare brought an instant petition for review arguing that:

health care agreement is not an insurance contract; hence the
"incontestability clause" under the Insurance Code does not apply.

grants "living benefits," such as medical check-ups and hospitalization

which a member may immediately enjoy so long as he is alive upon effectivity
of the agreement until its expiration one-year thereafter

only medical and hospitalization benefits are given under the

agreement without any indemnification, unlike in an insurance contract where
the insured is indemnified for his loss

since Health Care Agreements are only for a period of one year, as
compared to insurance contracts which last longer; incontestability clause does
not apply, as the same requires an effectivity period of at least two years

insurance company is governed by the Insurance Commission, but a

Health Maintenance Organization under the authority of the Department of

Health
ISSUE:
1.

W/N the health care agreement is a contract of insurance. - YES

2.

W/N the spouse being "not" legal wife can claim - YES

HELD: Petition is DENIED. CA AFFIRMED.

1. YES.

P.D. 612 Insurance Code

Sec. 2 (1)
(1) A "contract of insurance" is an agreement whereby one undertakes for a
consideration to indemnify another against loss, damage or liability arising from an
unknown or contingent event.
Sec. 3
Sec. 3. Any contingent or unknown event, whether past or future, which may
damnify a person having an insurable interest, or create a liability against him, may
be insured against, subject to the provisions of this chapter.

The consent of the husband is not necessary for the validity of an insurance policy
taken out by a married woman on her life or that of her children.

Any minor of the age of eighteen years or more, may, notwithstanding such
minority, contract for life, health and accident insurance, with any insurance
company duly authorized to do business in the Philippines, provided the insurance is
taken on his own life and the beneficiary appointed is the minor's estate or the
minor's father, mother, husband, wife, child, brother or sister.

The married woman or the minor herein allowed to take out an insurance policy may
exercise all the rights and privileges of an owner under a policy.

All rights, title and interest in the policy of insurance taken out by an original owner
on the life or health of a minor shall automatically vest in the minor upon the death
of the original owner, unless otherwise provided for in the policy.

In the case at bar, the insurable interest of respondent's husband in obtaining

the health care agreement was his own health.

in the nature of non-life insurance, which is primarily a contract of indemnity

Once the member incurs hospital, medical or any other expense

arising from sickness, injury or other stipulated contingent, the health care
provider must pay for the same to the extent agreed upon under the contract.

The answer in response to the question relating to the medical history of the
applicant largely depends on opinion rather than fact, especially coming from
respondent's husband who was not a medical doctor.

Where matters of opinion or judgment are called for, answers made in

good faith and without intent to deceive will not avoid a policy even though they
are untrue.

The fraudulent intent on the part of the insured must be

established to warrant rescission of the insurance contract.

Concealment as a defense for the health care provider or insurer to avoid

liability is an affirmative defense and the duty to establish such defense by
satisfactory and convincing evidence rests upon the provider or insurer.
P.D. 612 Insurance Code
Sec. 27

Sec. 27. A concealment whether intentional or unintentional entitles the injured

party to rescind a contract of insurance.

cancellation of health care agreements as in insurance policies require the

concurrence of the following conditions: - none of these was made
1. Prior notice of cancellation to insured;

2. Notice must be based on the occurrence after effective date of the policy of
one or more of the grounds mentioned;
3. Must be in writing, mailed or delivered to the insured at the address shown in
the policy;
4. Must state the grounds relied upon provided in Section 64 of the Insurance
Code and upon request of insured, to furnish facts on which cancellation is
based.

When the terms of insurance contract contain limitations on liability, courts

should construe them in such a way as to preclude the insurer from noncompliance with his obligation.

Being a contract of adhesion, the terms of an insurance contract are to be

construed strictly against the party which prepared the contract - the insurer.

(U)nder the title Claim procedures of expenses, the defendant Philamcare

Health Systems Inc. had twelve months from the date of issuance of the
Agreement within which to contest the membership of the patient if he had
previous ailment of asthma, and six months from the issuance of the agreement
if the patient was sick of diabetes or hypertension. The periods having expired,

the defense of concealment or misrepresentation no longer lie.

2. YES.

P.D. 612 Insurance Code

Sec. 10
Sec. 10. Every person has an insurable interest in the life and health:
(1) of himself, of his spouse and of his children;
(2) of any person on whom he depends wholly or in part for education or support, or
in whom he has a pecuniary interest;
(3) of any person under a legal obligation to him for the payment of money,
respecting property or service, of which death or illness might delay or prevent the
performance; and

(4) of any person upon whose life any estate or interest vested in him depends.

not the legal wife (deceased was previously married to another woman who
was still alive)
health care agreement is in the nature of a contract of indemnity.

payment should be made to the party who incurred the

expenses

Insurance Case Digest: Commissioner

Of Internal Revenue V. Lincoln Philippine
Life Insurance Co., Inc (2002)
G.R. No. 119176

March 19, 2002

Lessons Applicable: Measure of Indemnity (Insurance Code)

Section 173,Section 183 of the National Internal

Revenue Code, Section 49,Section 50 Title VI of the Insurance Code
Laws Applicable:

FACTS:

Lincoln Philippine Life Insurance Co., Inc., (now Jardine-CMA Life Insurance
Company, Inc.) issued a special kind of life insurance policy known as the
"Junior Estate Builder Policy" with a distinguishing feature. It had a "automatic
increase clause" upon attainment of a certain age by the insured.

Commissioner of Internal Revenue issued deficiency documentary stamps tax

assessment for the year 1984 pertaining to the amount in the

increase clause

Lincoln questioned the deficiency assessments

automatic

Court of Tax Appeals: found no valid basis and cancelled it

CA: affirmed CTA

CIR claims that "automatic increase clause" in the subject insurance policy is
separate

ISSUE: W/N the "automatic increase clause" should not be taxed with the main
policy

HELD: NO. CA set aside

Section 49, Title VI of the Insurance Code defines an insurance policy as the
written instrument in which a contract of insurance is set forth

Section 50 of the same Code provides that the policy, which is required to be
in printed form, may contain any word, phrase, clause, mark, sign, symbol,
signature, number, or word necessary to complete the contract of insurance.

any rider, clause, warranty or endorsement pasted or attached to the policy

is considered part of such policy or contract of insurance

Section 173 that the payment of documentary stamp taxes is done at the
time the act is done or transaction had and the tax base for the computation of
documentary stamp taxes on life insurance policies under Section 183 is the
amount fixed in policy, unless the interest of a person insured is susceptible of
exact pecuniary measurement

the amount fixed in the policy is the figure written on its face and whatever
increases will take effect in the future by reason of the "automatic increase
clause" embodied in the policy without the need of another contract

the amount insured by the policy at the time of its issuance necessarily
included the additional sum covered by the automatic increase clause because
it was already determinable at the time the transaction was entered into and
formed part of the policy

to claim that the increase in the amount insured (by virtue of the automatic
increase clause incorporated into the policy at the time of issuance) should not
be included in the computation of the documentary stamp taxes due on the
policy would be a clear evasion of the law requiring that the tax be computed on
the basis of the amount insured by the policy