Capital Insurance and Surety Co., Inc. vs Plastic Era Co.

, Inc 65 SCRA 134 (1975) DIGEST

G.R.No. L-22375 July 18, 1975

Lessons Applicable: Estoppel and credit extension (Insurance)
Laws Applicable: Article 1249 of the New Civil Code

FACTS:

December 17, 1960: Capital Insurance & Surety Co., Inc. delivered to the respondent Plastic Era
Manufacturing Co., Inc. its open Fire Policy insuring its building, equipments, raw materials, products and
accessories located at Sheridan Street, Mandaluyong, Rizal between December 15, 1960 1 pm - December 15,
1961 1 pm up to P100,000 but Plastic Era did not pay the premium
January 8, 1961: Plastic Era delivered to Capital Insurance its partial payment through
check P1,000 postdated January 16, 1961
February 20, 1961: Capital Insurance tried to deposit the check but it was dishonored due to lack of funds.
According to the records, on January 19, 1961 Plastic Era has had a bank balance of P1,193.41
January 18, 1961: Plastic Era's properties were destroyed by fire amounting to a loss of P283,875. The
property was also insured to Philamgen Insurance Company for P200K.
Capital Insurance refused Plastic Era's claim for failing to pay the insurance premium
CFI: favored Capital Insurance
CA: affirmed
ISSUE: W/N there was a valid insurance contract because there was an extention of credit despite failing to encash
the check payment

HELD: YES. Affirmed

Article 1249 of the New Civil Code

The delivery of promissory notes payable to order, or bills of exchange or other mercantile
documents shall produce the effect of payment only when they have been cashed, or when through the fault of
the creditor they have been impaired
Capital Insurance accepted the promise of Plastic Era to pay the insurance premium within 30 days from
the effective date of policy. Considering that the insurance policy is silent as to the mode of payment, Capital
Insurance is deemed to have accepted the promissory note in payment of the premium. This rendered the policy
immediately operative on the date it was delivered.
By accepting its promise to pay the insurance premium within thirty (30) days from the effectivity date of
the policy December 17, 1960 Capital Insurance had in effect extended credit to Plastic Era.
Where credit is given by an insurance company for the payment of the premium it has no right to cancel the
policy for nonpayment except by putting the insured in default and giving him personal notice
Having held the check for such an unreasonable period of time, Capital Insurance was estopped from
claiming a forfeiture of its policy for non-payment even if the check had been dishonored later.

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Makati Tuscany Condo vs CA, 215 SCRA 462 (1992) DIGEST

G.R. No. 95546 November 6, 1992

Lessons Applicable:
Installments and partial payment (Insurance)
Grounds on Return of Premium: No exposed to peril insured against (Insurance)
FACTS:
Early 1982: American Home Assurance Co. (AHAC), represented by American International Underwriters
(Phils.), Inc., issued in favor of Makati Tuscany Condominium Corporation (Tuscany) on the latter's building
and premises, for a period beginning 1 March 1982 and ending 1 March 1983, with a total premium of
P466,103.05.
Premium were paid on installments on:
March 12 1982
May 20 1982
June 21 1982
November 16 1982
February 10 1983: AHAC replaced and renewed the previous policy, for a term covering 1 March 1983 to 1
March 1984
premium of P466,103.05 was again paid on installments on:
April 13 1983
July 13 1983
August 3 1983
September 9 1983
November 21 1983
January 20 1984: policy was again renewed for the period March 1 1984 to March 1 1985
Tuscany only paid two installment payments
February 6 1984 for P52k
June 6 1984 for P100k
AHAC filed an action to recover the unpaid balance of P314,103.05
RTC: dismissed the complaint
While it is true that the receipts issued to the defendant contained the aforementioned reservations,
it is equally true that payment of the premiums of the three aforementioned policies (being sought to be
refunded) were made during the lifetime or term of said policies, hence, it could not be said, inspite of the
reservations, that no risk attached under the policies
counterclaim for refund is not justified
CA: ordered Tuscany to pay premiums when due is ordinarily as indivisible obligation to pay the entire
premium; insurance contract became valid and binding upon payment of the first premium
ISSUE:
1. W/N payment by installment of the premiums due on an insurance policy invalidates the contract of insurance on
the basis of:
Sec. 77 of the Insurance Code, no contract of insurance is valid and binding unless the premium thereof has been
paid, notwithstanding any agreement to the contrary. As a consequence, petitioner seeks a refund of all premium
payments made on the alleged invalid insurance policies.
2. W/N there is risk attached to the insurance so it cannot be refunded

HELD:

1. NO

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 Section 77 merely precludes the parties from stipulating that the policy is valid even if premiums are not
paid, but does not expressly prohibit an agreement granting credit extension, and such an agreement is not
contrary to morals, good customs, public order or public policy
At the very least, both parties should be deemed in estoppel to question the arrangement they have
voluntarily accepted.
It paid the initial installment and thereafter made staggered payments resulting in full payment of the 1982
and 1983 insurance policies. For the 1984 policy, petitioner paid 2 installments although it refused to pay the
balance. - appearing that they actually intended to make 3 insurance contracts valid
2. NO.
where the risk is entire and the contract is indivisible, the insured is not entitled to a refund of the premiums
paid if the insurer was exposed to the risk insured for any period, however brief or momentary

Phil. Phoenix surety & Insurance Co., Inc. vs Woodworks, Inc., 20 SCRA 1270 (1967) DIGEST

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South Sea Surety & Insurance Co., Inc. vs CA DIGEST

South Sea v CA G.R. No. 102253 June 2, 1995

J. Vitug

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Facts:
Valenzuela Hardwood entered into an agreement with the defendant Seven Brothers whereby the latter undertook to
load the former's 940 lauan logs for shipment to Manila.
South Sea insured the logs for P2,000,000.00 in its marine policy. Valenzuela then gave the check in payment of the
premium on the insurance policy to Mr. Victorio Chua.
Seven Brothers ship sank resulting in the loss of the logs.
A check for P5,625.00 to cover payment of the premium tendered to the insurer but was not accepted. Instead, the
South Sea Surety and Insurance Co., Inc. cancelled the insurance policy it issued as of the date of inception for non-
payment of the premium due in accordance with Section 77 of the Insurance Code.
Valenzuela demanded from South Sea the payment of the proceeds of the policy but the latter denied liability under
the policy. Plaintiff likewise filed a formal claim with defendant Seven Brothers Shipping Corporation for the value
of the lost logs but the latter denied the claim.
Valenzuela filed a complaint a complaint for the recovery of the value of lost logs and freight charges from Seven
Brothers Shipping Corporation or from South Sea Surety and Insurance Company, the insurer.
The trial court rendered judgment in favor of plaintiff Valenzuela. The Court of Appeals affirmed the judgment only
against the insurance corporation and absolved the shipping entity from liability. The court held that there was a
stipulation in the charter party exempted the ship owner from liability in case of loss.
In the SC petition, petitioner argues that it should have been freed from any liability to Hardwood. It faults
the appellate court (a) for having disregarded Section 77 of the insurance Code and (b) for holding Victorio Chua to
have been an authorized representative of the insurer.

Issue:
WON Mr. Chua acted as an agent of the surety company or of the insured when he received the check for insurance
premiums.

Held: Agent of the surety. Petition denied.

Ratio:
To determine if there was a valid contract of insurance, it must be determine if the premium was validly paid to the
company or its agents at the time of the loss.
The appellate and trial courts have found that Chua acted as an agent.
South Sea insisted that Chua has been an agent for less than ten years of the Columbia Insurance Brokers, a different
company. Appellant argued that Mr. Chua, having received the premiums, acted as an agent under Section 301 of the
Insurance Code which provides:
Sec. 301. Any person who for any compensation, commission or other thing of value, acts, or aids in soliciting,
negotiating or procuring the making of any insurance contract or in placing risk or taking out insurance, on behalf of
an insured other than himself, shall be an insurance broker within the intent of this Code, and shall thereby become
liable to all the duties requirements, liabilities and penalties to which an insurance broker is subject.
Valenzuela claimed that the second paragraph of Section 306 of the Insurance Code provided:
Sec. 306 Any insurance company which delivers to an insurance agent or insurance broker a policy or contract of
insurance shall be deemed to have authorized such agent or broker to receive on its behalf payment of any premium
which is due on such policy of contract of insurance at the time of its issuance or delivery or which becomes due
thereon.
Mr. Chua testified that the marine cargo insurance policy logs was by South Sea to be given to the wood company.
When South Sea delivered to Mr. Chua the marine cargo insurance policy for Valenzuelas logs, he is deemed to
have been authorized by former to receive the premium which is due on its behalf.
When the logs were lost, the insured had already paid the premium to an agent of the South Sea Surety and
Insurance Co., Inc., which is consequently liable to pay the insurance proceeds under the policy it issued to the
insured.
The court followed the factual evidence of the lower courts and held that they didnt try questions of fact.

Malayan Insurance Co., Inc. vs Cruz Arnaldo DIGEST

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Facts of the Case: On June 7, 1981, the petitioner (hereinafter called (MICO) issued to the private respondent,
P14,000.00 effective July 22, 1981, until July 22, 1982. On October 15,1981, MICO allegedly cancelled the policy
for non-payment, of the premium and sent the corresponding notice to Pinca. On December 24, 1981, payment of
the premium for Pinca was received by Domingo Adora, agent of MICO. On January 15, 1982, Adora remitted this
payment to MICO,together with other payments. On January 18, 1982, Pinca's property was completely burned. On
February 5, 1982, Pinca's payment was returned by MICO to Adora on the ground that her policy had been cancelled
earlier. But Adora refused to accept it. In due time, Pinca made the requisite demands for payment, which MICO
rejected. She then went to the Insurance Commission. It is because she was ultimately sustained by the public
respondent that the petitioner has come to us for relief.

Issue of the Case:

Whether or not petitioner liable, for it alleged that the insurance policy was already cancelled due to non-payment of
premium.

Ruling: On the merits, it must also fail. MICO's arguments that there was no payment of premium and that the
policy had been cancelled before the occurence of the loss are not acceptable. Its contention that the claim was
allowed without proof of loss is also untenable. The petitioner relies heavily on Section 77 of the Insurance Code
providing that: SEC. 77. An insurer is entitled to payment of the premium as soon as the thing is exposed to the peril
insured against. Notwithstanding any agreement to the contrary, no policy or contract of insurance issued by an
insurance company is valid and binding unless and until the premium thereof has been paid, except in the case of a
life or an industrial life policy whenever the grace period provision applies. The above provision is not applicable
because payment of the premium was in fact eventually made in this case. Notably, the premium invoice issued to
Pinca at the time of the delivery of the policy on June 7, 1981 was stamped "Payment Received" of the amoung of
P930.60 on "12-24-81" by Domingo Adora. This is important because it suggests an understanding between MICO
and the insured that such payment could be made later, as agent Adora had assured Pinca. In any event, it is not
denied that this payment was actually made by Pinca to Adora, who remitted the same to MICO. It is not disputed
that the premium was actually paid by Pinca to Adora on December 24, 1981, who received it on behalf of MICO, to
which it was remitted on January 15, 1982. What is questioned is the validity of Pinca's payment and of Adora's
authority to receive it. MICO's acknowledgment of Adora as its agent defeats its contention that he was not
authorized to receive the premium payment on its behalf. It is clearly provided in Section 306 of the Insurance Code
that:

SEC. 306. xxx xxx xxx Any insurance company which delivers to an insurance agant or insurance broker a policy or
contract of insurance shall be demmed to have authorized such agent or broker to receive on its behalf payment of
any premium which is due on such policy or contract of insurance at the time of its issuance or delivery or which
becomes due thereon.

Page 6 of 17
On the other hand Article 64 (except "nonpayment of premium") provided the cancellation was made in accordance
therewith and with Article 65. Section 64 reads as follows: SEC. 64. No policy of insurance other than life shall be
cancelled by the insurer except upon prior notice thereof to the insured, and no notice of cancellation shall be
effective unless it is based on the occurrence, after the effective date of the policy, of one or more of the following:
(a) non-payment of premium; (b) conviction of a crime arising out of acts increasing the hazard insured against; (c)
discovery of fraud or material misrepresentation; (d) discovery of willful, or reckless acts or commissions increasing
the hazard insured against; (e) physical changes in the property insured which result in the property becoming
uninsurable; or (f) a determination by the Commissioner that the continuation of the policy would violate or would
place the insurer in violation of this Code. As for the method of cancellation, Section 65 provides as follows: SEC.
65. All notices of cancellation mentioned in the preceding section shall be in writing, mailed or delivered to the
named insured at the address shown in the policy, and shall state (a) which of the grounds set forth in section sixty-
four is relied upon and (b) that, upon written request of the named insured, the insurer will furnish the facts on which
the cancellation is based. A valid cancellation must, therefore, require concurrence of the following conditions: (1)
There must be prior notice of cancellation to the insured; (2) The notice must be based on the occurrence, after the
effective date of the policy, of one or more of the grounds mentioned; (3) The notice must be (a) in writing, (b)
mailed, or delivered to the named insured, (c) at the address shown in the policy; (4) It must state (a) which of the
grounds mentioned in Section 64 is relied upon and (b) that upon written request of the insured, the insurer will
furnish the facts on which the cancellation is based. There is no proof that the notice, assuming it complied with the
other requisites mentioned above, was actually mailed to and received by Pinca. All MICO's offers to show that the
cancellation was communicated to the insured is its employee's testimony that the said cancellation was sent "by
mail through our mailing section." without more. The petitioner then says that its "stand is enervated (sic) by the
legal presumption of regularity and due performance of duty." (not realizing perhaps that "enervated" means
"debilitated" not "strengthened"). On the other hand, there is the flat denial of Pinca, who says she never received
the claimed cancellation and who, of course, did not have to prove such denial Considering the strict language of
Section 64 that no insurance policy shall be cancelled except upon prior notice, it behooved MICO's to make sure
that the cancellation was actually sent to and received by the insured. Adora. incidentally, had not been informed of
the cancellation either and saw no reason not to accept the said payment. Petition denied. Malayan Insurance Co.,
Inc. is liable.

Geagonia vs CA GR 114427 February 6 1995 DIGEST

Facts:

Page 7 of 17
Geagonia, owner of a store, obtained from Country Bankers fire insurance policy for P100,000.00. The 1 year policy
and covered thestock trading of dry goods.
The policy noted the requirement that
"3. The insured shall give notice to the Company of any insurance or insurances already effected, or which may
subsequently be effected, covering any of the property or properties consisting of stocks in trade, goods in process
and/or inventories only hereby insured, and unless notice be given and the particulars of such insurance or
insurances be stated therein or endorsed in this policy pursuant to Section 50 of the Insurance Code, by or on behalf
of the Company before the occurrence of any loss or damage, all benefits under this policy shall be
deemed forfeited, provided however, that this condition shall not apply when the total insurance or insurances in
force at the time of the loss or damage is not more than P200,000.00."
The petitioners stocks were destroyed by fire. He then filed a claim which was subsequently denied because the
petitioners stocks were covered by two other fire insurance policies for Php 200,000 issued by PFIC. The basis of
the private respondent's denial was the petitioner's alleged violation of Condition 3 of the policy.
Geagonia then filed a complaint against the private respondent in the Insurance Commission for the recovery of
P100,000.00 under fire insurance policy and damages. He claimed that he knew the existence of the other two
policies. But, he said that he had no knowledge of the provision in the private respondent's policy requiring him to
inform it of the prior policies and this requirement was not mentioned to him by the private respondent's agent.
The Insurance Commission found that the petitioner did not violate Condition 3 as he had no knowledge of the
existence of the two fire insurance policies obtained from the PFIC; that it was Cebu Tesing Textiles w/c procured
the PFIC policies w/o informing him or securing his consent; and that Cebu Tesing Textile, as his creditor, had
insurable interest on the stocks.
The Insurance Commission then ordered the respondent company to pay complainant the sum of P100,000.00 with
interest and attorneys fees.
CA reversed the decision of the Insurance Commission because it found that the petitioner knew of the existence of
the two other policies issued by the PFIC.

Issues:
1. WON the petitioner had not disclosed the two insurance policies when he obtained the fire insurance and thereby
violated Condition 3 of the policy.
2. WON he is prohibited from recovering

Held: Yes. No. Petition Granted

Ratio:
1. The court agreed with the CA that the petitioner knew of the prior policies issued by the PFIC. His letter of 18
January 1991 to the private respondent conclusively proves this knowledge. His testimony to the contrary before the
Insurance Commissioner and which the latter relied upon cannot prevail over a written admission made ante litem
motam. It was, indeed, incredible that he did not know about the prior policies since these policies were not new or
original.
2. Stated differently, provisions, conditions or exceptions in policies which tend to work a forfeiture of insurance
policies should be construed most strictly against those for whose benefits they are inserted, and most favorably
toward those against whom they are intended to operate.
With these principles in mind, Condition 3 of the subject policy is not totally free from ambiguity and must be
meticulously analyzed. Such analysis leads us to conclude that (a) the prohibition applies only to double insurance,
and (b) the nullity of the policy shall only be to the extent exceeding P200,000.00 of the total policies obtained.
Furthermore, by stating within Condition 3 itself that such condition shall not apply if the total insurance in force at
the time of loss does not exceed P200,000.00, the private respondent was amenable to assume a co-insurer's liability
up to a loss not exceeding P200,000.00. What it had in mind was to discourage over-insurance. Indeed, the rationale
behind the incorporation of "other insurance" clause in fire policies is to prevent over-insurance and thus avert the
perpetration of fraud. When a property owner obtains insurance policies from two or more insurers in a total amount
that exceeds the property's value, the insured may have an inducement to destroy the property for the purpose of
collecting the insurance. The public as well as the insurer is interested in preventing a situation in which a fire would
be profitable to the insured.

Page 8 of 17
Malayan Insurance Co., Inc. vs Philippine First Insurance, Co., Inc., et. al., GR 184300, July 11, 2012
DIGEST

Q. When is there double insurance?A. By the express provision of Section 93 of the Insurance Code, double
insurance exists wherethe same person is insured by several insurers separately in respect to the same subject
andinterest. The requisites in order for double insurance to arise are as follows:1. The person insured is the same;2.
Two or more insurers insuring separately;3. There is identity of subject matter;4. There is identity of interest insured;
and5. There is identity of the risk or peril insured against. ( Malayan Insurance Co., Inc. vs.Philippine
First Insurance, Co., Inc., et al., G.R. No. 184300, July 11, 2012)

Facts: Since 1989, Wyeth Philippines, Inc. (Wyeth) and respondent Reputable Forwarder Services, Inc. (Reputable)
had been annually executing a contract of carriage, whereby the latter undertook to transport and deliver the
formers products to its customers, dealers or salesmen. On November 18, 1993, Wyeth procured Marine Policy No.
MAR 13797 (Marine Policy) from respondent Philippines First Insurance Co., Inc. (Philippines First) to secure its
interest over its own products. Philippines First thereby insured Wyeths nutritional, pharmaceutical and other
products usual or incidental to the insureds business while the same were being transported or shipped in the
Philippines. The policy covers all risks of direct physical loss or damage from any external cause, if by land, and
provides a limit of P6,000,000.00 per any one land vehicle. On December 1, 1993, Wyeth executed its annual
contract of carriage with Reputable. It turned out, however, that the contract was not signed by Wyeths
representative/s. Nevertheless, it was admittedly signed by Reputables representatives, the terms thereof faithfully
observed by the parties and, as previously stated, the same contract of carriage had been annually executed by the
parties every year since 1989. Under the contract, Reputable undertook to answer for all risks with respect to the
goods and shall be liable to the COMPANY (Wyeth), for the loss, destruction, or damage of the goods/products due
to any and all causes whatsoever, including theft, robbery, flood, storm, earthquakes, lightning, and other force
majeure while the goods/products are in transit and until actual delivery to the customers, salesmen, and dealers of
the COMPANY. The contract also required Reputable to secure an insurance policy on Wyeths goods. Thus, on
February 11, 1994, Reputable signed a Special Risk Insurance Policy (SR Policy) with petitioner Malayan for the
amount of P1,000,000.00. On October 6, 1994, during the effectivity of the Marine Policy and SR Policy, Reputable
received from Wyeth 1,000 boxes of Promil infant formula worth P2,357,582.70 to be delivered by Reputable to
Mercury Drug Corporation in Libis, Quezon City. Unfortunately, on the same date, the truck carrying Wyeths
products was hijacked by about 10 armed men. They threatened to kill the truck driver and two of his helpers should
they refuse to turn over the truck and its contents to the said highway robbers. The hijacked truck was recovered two
weeks later without its cargo. Malayan questions its liability based on sections 5 and 12 of the SR Policy.
Issue: Whether or not there is double insurance in this case such that either Section 5 or Section 12 of the SR Policy
may be applied.
Held: No. By the express provision of Section 93 of the Insurance Code, double insurance exists where the same
person is insured by several insurers separately in respect to the same subject and interest. The requisites in order for
double insurance to arise are as follows:
1. The person insured is the same;
2. Two or more insurers insuring separately;
3. There is identity of subject matter;
4. There is identity of interest insured; and
5. There is identity of the risk or peril insured against.

In the present case, while it is true that the Marine Policy and the SR Policy were both issued over the same subject
matter, i.e. goods belonging to Wyeth, and both covered the same peril insured against, it is, however, beyond cavil
that the said policies were issued to two different persons or entities. It is undisputed that Wyeth is the recognized
insured of Philippines First under its Marine Policy, while Reputable is the recognized insured of Malayan under the

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SR Policy. The fact that Reputable procured Malayans SR Policy over the goods of Wyeth pursuant merely to the
stipulated requirement under its contract of carriage with the latter does not make Reputable a mere agent of Wyeth
in obtaining the said SR Policy.

The interest of Wyeth over the property subject matter of both insurance contracts is also different and distinct from
that of Reputables. The policy issued by Philippines First was in consideration of the legal and/or equitable interest
of Wyeth over its own goods. On the other hand, what was issued by Malayan to Reputable was over the latters
insurable interest over the safety of the goods, which may become the basis of the latters liability in case of loss or
damage to the property and falls within the contemplation of Section 15 of the Insurance Code.
Therefore, even though the two concerned insurance policies were issued over the same goods and cover the same
risk, there arises no double insurance since they were issued to two different persons/entities having distinct
insurable interests. Necessarily, over insurance by double insurance cannot likewise exist. Hence, as correctly ruled
by the RTC and CA, neither Section 5 nor Section 12 of the SR Policy can be applied.

Sun Life vs CA GR 105135 DIGEST

Facts:
Robert John B. Bacani procured a life insurance contract for himself from Sunlife. He was issued a policy for
P100,000.00, with double indemnity in case of accidental death. The designated beneficiary was his mother,
Bernarda Bacani.
The insured died in a plane crash. Respondent Bernarda Bacani filed a claim with petitioner, seeking the benefits of
the insurance policy taken by her son. Petitioner conducted an investigation and its findings prompted it to reject the
claim.
Sunlife informed Bacani that the insured did not disclose material facts relevant to the issuance of the policy, thus
rendering the contract of insurance voidable. A check representing the total premiums paid in the amount of
P10,172.00 was attached to said letter.
Petitioner claimed that the insured gave false statements in his application. The deceased answered claimed that he
consulted a Dr. Raymundo of the Chinese General Hospital for cough and flu complications. The other questions
were answered in the negative.
Petitioner discovered that two weeks prior to his application for insurance, the insured was examined and confined
at the Lung Center of the Philippines, where he was diagnosed for renal failure. During his confinement, the
deceased was subjected to urinalysis tests.
Bernarda Bacani and her husband filed an action for specific performance against petitioner with the RTC. The court
ruled in favor of the spouses and ordered Sunlife to pay P100,000.00.
In ruling for private respondents, the trial court concluded that the facts concealed by the insured were made in good
faith and under a belief that they need not be disclosed. The court also held that the medial history was irrelevant
because it wasnt medical insurance.
The Court of Appeals affirmed the decision of the trial court. The appellate court ruled that petitioner cannot avoid
its obligation by claiming concealment because the cause of death was unrelated to the facts concealed by the
insured. Petitioner's motion for reconsideration was denied. Hence, this petition.

Issue: WON the insured was guilty of misrepresentation which made the contract void.

Held: Yes. Petition dismissed.

Ratio:
Section 26 of The Insurance Code required a party to a contract of insurance to communicate to the other, in good
faith, all facts within his knowledge which are material to the contract and as to which he makes no warranty, and
which the other has no means of ascertaining.
A neglect to communicate that which a party knows and ought to communicate, is called concealment.
Materiality is to be determined not by the event, but solely by the probable and reasonable influence of the facts
upon the party to whom communication is due, in forming his estimate of the disadvantages of the proposed contract
or in making his inquiries.

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The terms of the contract are clear. The insured is specifically required to disclose to the insurer matters relating to
his health.
The information which the insured failed to disclose were material and relevant to the approval and issuance of the
insurance policy. The matters concealed would have definitely affected petitioner's action on his application, either
by approving it with the corresponding adjustment for a higher premium or rejecting the same. Moreover, a
disclosure may have warranted a medical examination of the insured by petitioner in order for it to reasonably assess
the risk involved in accepting the application.
Vda. de Canilang v. Court of Appeals- materiality of the information withheld does not depend on the state of mind
of the insured. Neither does it depend on the actual or physical events which ensue.
Good faith" is no defense in concealment. The insured's failure to disclose the fact that he was hospitalized raises
grave doubts about his eligibility. Such concealment was deliberate on his part.
The argument, that petitioner's waiver of the medical examination of the insured debunks the materiality of the facts
concealed, is untenable.
Saturnino v. Philippine American Life Insurance " . . . the waiver of a medical examination [in a non-medical
insurance contract] renders even more material the information required of the applicant concerning previous
condition of health and diseases suffered, for such information necessarily constitutes an important factor which the
insurer takes into consideration in deciding whether to issue the policy or not . . . "
Anent the finding that the facts concealed had no bearing to the cause of death of the insured, it is well settled that
the insured need not die of the disease he had failed to disclose to the insurer. 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 as
held in Henson.

Philam vs CA GR 126223, NOVEMBER 15 2000

This petition for review on certiorari seeks to reverse the Decision of the Special Second Division of the Court of
Appeals dated August 27, 1996,1 which affirmed in toto the Decision of the Regional Trial Court of Baguio
City,2allowing herein private respondent, the beneficiary under a life insurance policy issued by petitioner, to recover
the face amount of the said policy.

Briefly, the antecedent facts are:

On January 9, 1989, petitioner received from one Florence Pulido an application for life insurance, dated December
16, 1988, in the amount of P100,000.00 which designated her sister, herein private respondent, as its principal
beneficiary. Because the insurance applied for was non-medical, petitioner did not require a medical examination
and issued a policy on the sole basis of the application on February 11, 1989. On April 1992, petitioner received
private respondents claim, which declared that the insured, Florence Pulido, died of acute pneumonia on September
10, 1991.

Petitioner withheld payment on the ground that the policy claimed under was void from the start for having been
procured in fraud. It is petitioners contention that even before they received private respondents claim for death
benefits, their investigation concerning the subject policy yielded the information that the insured, Florence Pulido,
died in 1988, before the application for insurance on her life was made.3 While this was communicated to private
respondent in a letter dated April 29, 1992,4 private respondent had already filed her claim earlier that month.5 In
another letter dated July 27, 1992, however, petitioner confirmed to private respondent receipt of the claim papers
and assured her that her case was "being given preferential attention and prompt action".6

Following the filing by private respondent of her claim, petitioner caused another investigation respecting the
subject policy. Pursuant to the findings of this second investigation, petitioner stood by its initial decision to treat the
policy as void and not to honor the claim. On November 9, 1992, private respondent enlisted the services of counsel
in reiterating her claim for death benefits.7 Petitioner still refused to make payment and thus, this action.

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The complaint before the lower court sought payment of the face amount of the policy, equivalent to P100,000.00,
with interest at 24% per annum for undue delay in payment pursuant to Section 244 of the Insurance Code, and for
P5,000.00 as "consequential damages".

For its part, petitioner interposed that it was legally justified in denying plaintiffs claim, the results of its
investigations having indicated that the insured was already dead at the time the policy was applied for. It also
counterclaimed for attorneys fees.

To substantiate its defense, petitioner submitted copies of the reports of its investigators. The first report, 8 prepared
by one Dr. Benedicto Briones, was dated April 1, 1992, and had attached to it a questionnaire, responded to by one
Ramon Piganto,9 who represented to be the brother-in-law of the insured and the barangay chairman of Cardiz,
Bagulin, La Union. To the question "Where does [Florence Pulido] reside now?", Piganto had replied that Florence
Pulido used to live in Cardiz, but was dead since 1988. Pigantos statement was signed by him, and witnessed by his
wife, Nenita Piganto. This report was petitioners basis for treating the disputed policy as void since April 1992,
even before receipt of private respondents claim. The next two reports pertained to the investigation petitioner
commenced after private respondent filed her claim. One report, dated October 2, 1992, was submitted by Ferdinand
Tanchoco, another of petitioners investigators, and dealt with Tanchocos interview with a certain Remylyn Piganto,
a 14-year old high school student who was the niece of the insured and daughter of Ramon Piganto. Remylyn
purportedly told Tanchoco that her auntie Florence Pulido died young a long time ago, before Remylyn was even
born.10 Remylyn, however, did not execute any written statement. The other report, dated December 28, 1992,11 was
prepared by Dr. Benedicto Briones, who also prepared the first report dated April 1, 1992. This last report intimated
the claim of some neighbors of the Pulido family that Florence Pulido died in a car accident in 1985. These persons,
however, refused to give their names or execute statements on the matter, as they were reportedly afraid of Ramon
Piganto, the insureds brother-in-law.12

During the trial, plaintiff-private respondent testified that the insured died of acute pneumonia on September 10,
1991 in Barangay Cardiz, Bagulin, La Union and was buried two days after within their own yard. Plaintiff next
presented as a witness Dr. Irineo Gutierrez, who testified that he attended to the ailing Florence Pulido on September
8, and 9, 1991 at their house in Cardiz. Dr. Gutierrez then authenticated a Certificate of Death,13 issued on
September 12, 1991 by the Local Civil Registrar of Bagulin, La Union, which bore his signature in his capacity as
then Municipal Health Officer of Bagulin, La Union. The death certificate declared that Florence Pulido died on
September 10, 1991 at around 4:00 in the afternoon.

A neighbor of the Pulidos, Francisco Villano, also testified in support of plaintiff that the insured died of illness on
September 1991. Villano claimed that he was at the Pulidos house when Dr. Gutierrez attended to the insured. He
also said that he went to the wake of Florence Pulido and was able to view her remains. 14

Meanwhile, defendant-petitioner presented Pablito Angalot, petitioners Life Claims Manager, who said that even
before the filing of private respondents claim, petitioners Claims Committee had already declared the disputed
policy null and void in light of the investigative report dated April 1, 1992. However, petitioner was unable to
present Dr. Benedicto Briones, the investigator who prepared the April 1, 1992 report. Also, when it presented
Ramon Piganto, whose statement attached to Dr. Brioness report dated April 1, 1992 was the basis for petitioners
treating the subject policy as void, Piganto denied giving the statement that Florence Pulido died in 1988, and said
that he was made to sign a blank coupon bond.15

Ferdinand Tanchoco, petitioners other investigator, identified his investigative report 16 and recounted the results of
his investigation focusing particularly on the interview with Remylyn Piganto. Tanchoco also reported that private
respondents information on the insureds death, as declared in her claim certificate, tallied with the entries of the
death certificate as found in the records of the Local Civil Register of Bagulin, La Union.

The dispositive portion of the decision of the Regional Trial Court, which was affirmed in toto by the Court of
Appeals, states:

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WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendant, ordering the latter to
pay the former the amount of P100,000.00, representing the face value of the insurance policy sued upon, with
interest thereon at the legal rate from January 8, 1993, the date of the filing of the complaint, until fully paid, plus
P20,000.00 for and as attorneys fees and costs of suit.

In ruling in favor of plaintiff-private respondent, the trial court found no reason to doubt the correctness of the
entries in the Certificate of Death, which declared that Florence Pulido died on September 10, 1991. It is also found
that defendant, petitioner herein, failed to discharge the burden of proving its affirmative defense that fraud attended
the issuance of the policy sued upon. Contrarily, as the lower court observed, the evidence defendant presented
sustained the validity of the policy instead of establishing its alleged fraud.1wphi1

The lower court also struck down as hearsay the two reports prepared by Dr. Benedicto Briones, the said investigator
not having been presented as a witness in court. It also held as hearsay the alleged declaration of Remylyn Piganto,
as recounted by Ferdinand Tanchoco in his report and on testimony, since Remylyn herself did not take the witness
stand.

However, the lower court found plaintiff-private respondent entitled to legal interest only, and not to 24% per
annum as prayed for. Under Section 242 of the Insurance Code, the refusal of the insurer to pay a life insurance
claim within the period prescribed will entitle the beneficiary to collect interest on the proceeds "at the rate of twice
the ceiling prescribed by the Monetary Board" for the duration of the delay, unless the refusal to pay is based on the
ground that the claim is fraudulent. Fraud being the ground invoked by petitioner for refusing to honor the claim, the
lower court found no unreasonable delay in petitioners decision to withhold payment.

The petition is without merit.

As a rule, a petition for review on certiorari may raise only questions of law which must be distinctly set
forth.17 This Court does not countenance the elevation of patently factual questions disguised by a loose and general
wording of the assignment of errors.

It is clear that the only issue the petition raises for review is respondent courts negative finding of fraud in the
obtainment of Florence Pulidos insurance policy. Fraud is a question of fact which must be alleged and proved at
the level of the lower court.18 The records bear out that since the onset of this case, the main issue has always been
whether there was fraud in the obtainment of the disputed policy, or put differently, whether the insured, Florence
Pulido, was in fact dead before the application for insurance on her life was made. This the lower courts had effected
ruled on, upon a preponderance of the evidence duly received from both parties. We see no reversible error in the
finding of both respondent court and the trial court in favor of the correctness of the entries in Certificate of Death,
duly registered with the Local Civil Registrar of Bagulin, La Union, which declared that Florence Pulido died of
acute pneumonia on September 10, 1991. Dr. Irineo Gutierrez, the Municipal Health Officer of Bagulin, La Union
whose signature appeared in the death certificate, testified in addition that he ministered to the ailing Florence
Pulido for two days immediately prior to her death. This fact is likewise noted in the death certificate.

Death certificates, and notes by a municipal health officer prepared in the regular performance of his duties,
are prima facie evidence of facts therein stated.19 A duly-registered death certificate is considered a public document
and the entries found therein are presumed correct, unless the party who contests its accuracy can produce positive
evidence establishing otherwise.20 Petitioners contention that the death certificate is suspect because Dr. Gutierrez
was not present when Florence Pulido died, and knew of Florences death only through Ramon Piganto, does not
merit a conclusion of fraud. No motive was imputed to Dr. Gutierrez for seeking to perpetuate a falsity in public
records. Petitioner was likewise unable to make out any clear motive as to why Ramon Piganto would purposely lie.
Mere allegations of fraud could not substitute for the full and convincing evidence that is required to prove it. 21 A
failure to do so would leave intact the presumption of good faith and regularity in the performance of public duties,
which was the basis of both respondent court and the trial court in finding the date of Florence Pulidos death to be
as plaintiff-private respondent maintained.

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We cannot likewise give credence to petitioners submission that the inconsistencies in the testimonies of the
witnesses for plaintiff-private respondent are in themselves evidence of fraud. Such alleged inconsistencies are
matters of credibility which had been ably passed upon by the lower court.

The absence of fraud, as a factual finding of the lower court adopted by the Court of Appeals, entirely consistent
with the evidence on record, will not be reversed and, hence, is final and conclusive upon this Court.

WHEREFORE, the instant petition is DENIED. Costs against petitioners.

SO ORDERED.

Melo, (Chairman), Vitug, and Panganiban, JJ., concur.

Manila Bankers vs Aban Jr 175666, July 29 2013 DIGEST

Facts:

On July 3, 1993, Delia Sotero (Sotero) took out a life insurance policy from Manila Bankers Life Insurance
Corporation (Bankers Life), designating respondent Cresencia P. Aban (Aban), her niece, as her beneficiary.
Petitioner issued Insurance Policy No. 747411 (the policy), with a face value of P 100,000.00, in Soteros favor on
August 30, 1993, after the requisite medical examination and payment of the insurance premium. On April 10, 1996,
when the insurance policy had been in force for more than two years and seven months, Sotero died. Respondent
filed a claim for the insurance proceeds on July 9, 1996. Petitioner conducted an investigation into the claim, and
came out with the following findings: 1. Sotero did not personally apply for insurance coverage, as she was
illiterate; 2. Sotero was sickly since 1990; 3. Sotero did not have the financial capability to pay the insurance
premiums on Insurance Policy No. 747411; 4. Sotero did not sign the July 3, 1993 application for insurance; and 5.
Respondent was the one who filed the insurance application, and x x x designated herself as the beneficiary. For the
above reasons, petitioner denied respondents claim on April 16, 1997 and refunded the premiums paid on the
policy.

Issue:
Whether or not Manila Bankers is barred from denying the insurance claims based on fraud or concealment.

Held:

Yes. The incontestability clause is a provision in law that after a policy of life insurance made payable on the
death of the insured shall have been in force during the lifetime of the insured for a period of two (2) years from the
date of its issue or of its last reinstatement, the insurer cannot prove that the policy is void ab initio or is rescindible
by reason of fraudulent concealment or misrepresentation of the insured or his agent.

The purpose of the law is to give protection to the insured or his beneficiary by limiting the rescinding of the
contract of insurance on the ground of fraudulent concealment or misrepresentation to a period of only two (2) years
from the issuance of the policy or its last reinstatement.

The insurer is deemed to have the necessary facilities to discover such fraudulent concealment or misrepresentation
within a period of two (2) years. It is not fair for the insurer to collect the premiums as long as the insured is still
alive, only to raise the issue of fraudulent concealment or misrepresentation when the insured dies in order to defeat
the right of the beneficiary to recover under the policy.

Section 48 serves a noble purpose, as it regulates the actions of both the insurer and the insured. Under the
provision, an insurer is given two years from the effectivity of a life insurance contract and while the insured is
alive to discover or prove that the policy is void ab initio or is rescindible by reason of the fraudulent concealment
or misrepresentation of the insured or his agent. After the two-year period lapses, or when the insured dies within the
period, the insurer must make good on the policy, even though the policy was obtained by fraud, concealment, or

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misrepresentation. This is not to say that insurance fraud must be rewarded, but that insurers who recklessly and
indiscriminately solicit and obtain business must be penalized, for such recklessness and lack of discrimination
ultimately work to the detriment of bona fide takers of insurance and the public in general.

Great Pacific Life Assurance Corp vs CA 375 Phil 142 (1999) DIGEST

113899 October 13, 1999

Lessons Applicable:

Credit in Life and Health Insurance (Insurance)

Mortgagor (Insurance)
Laws Applicable: Sec. 8 of Insurance Code

FACTS:

A contract of group life insurance was executed between Great Pacific Life Assurance Corporation
Grepalife) and Development Bank of the Philippines (DBP)
Grepalife agreed to insure the lives of eligible housing loan mortgagors of DBP
November 11, 1983: Dr. Wilfredo Leuterio, a physician and a housing debtor of DBP applied for
membership in the group life insurance plan
Dr. Leuterio answered questions concerning his health condition as follows:

7. Have you ever had, or consulted, a physician for a heart condition, high blood pressure, cancer, diabetes,
lung, kidney or stomach disorder or any other physical impairment?

Answer: No. If so give details ___________.

8. Are you now, to the best of your knowledge, in good health?

Answer: [ x ] Yes [ ] No.[4]

November 15, 1983: Grepalife issued Certificate No. B-18558, as insurance coverage of Dr. Leuterio, to
the extent of his DBP mortgage indebtedness amounting to P86,200
August 6, 1984: Dr. Leuterio died due to massive cerebral hemorrhage.
DBP submitted a death claim to Grepalife
Grepalife denied the claim alleging that Dr. Leuterio was not physically healthy when he
applied
RTC: Favored Medarda V. Leuterio (widow) and held Grepalife (insurer) liable to pay DBP (creditor of the
insured Dr. Wilfredo Leuterio)
CA sustained
ISSUE:
1. W/N DBP has insurable interest as creditor - YES
2. W/N Grepalife should be held liable - YES

HELD:
1. YES
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
Section 8 of the Insurance Code provides:

Unless the policy provides, where a mortgagor of property effects insurance in his own name providing that the
loss shall be payable to the mortgagee, or assigns a policy of insurance to a mortgagee, the insurance is deemed to be

Page 15 of 17
upon the interest of the mortgagor, who does not cease to be a party to the original contract, and any act of his, prior
to the loss, which would otherwise avoid the insurance, will have the same effect, although the property is in the
hands of the mortgagee, but any act which, under the contract of insurance, is to be performed by the mortgagor,
may be performed by the mortgagee therein named, with the same effect as if it had been performed by the
mortgagor.
The insured Dr. Wilfredo Leuterio did not cede to the mortgagee all his rights or interests in the
insurance. When Grepalife denied payment, DBP collected the debt from the mortgagor and took the necessary
action of foreclosure on the residential lot of Dr. Wilfredo Leuterio
Insured may be regarded as the real party in interest, although he has assigned the policy for the purpose of
collection, or has assigned as collateral security any judgment he may obtain
2. YES
medical findings were not conclusive because Dr. Mejia did not conduct an autopsy
widow who was not even sure if the medicines taken by Dr. Leuterio were for hypertension
Grepalife failed to establish that there was concealment made by the insured, hence, it cannot refuse
payment of the claim
fraudulent intent on the part of the insured must be established to entitle the insurer to rescind the contract.
Misrepresentation as a 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
The policy states that upon receipt of due proof of the Debtors death during the terms of this insurance, a
death benefit in the amount of P86,200.00 shall be paid. In the event of the debtors death before his
indebtedness with the creditor shall have been fully paid, an amount to pay the outstanding indebtedness shall
first be paid to the Creditor and the balance of the Sum Assured, if there is any shall then be paid to the
beneficiary/ies designated by the debtor.
DBP foreclosed in 1995 their residential lot, in satisfaction of mortgagors outstanding loan
insurance proceeds shall inure to the benefit of the heirs of the deceased person or his beneficiaries
Equity dictates that DBP should not unjustly enrich itself at the expense of another (Nemo cum
alterius detrimenio protest). Hence, it cannot collect the insurance proceeds, after it already foreclosed on the
mortgage

Far Eastern Surety and Insurance Co. vs VDA De Misa 25 SCRA 662 (1968) DIGEST

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