Insurance-digest-comp.docx

Insurance 71. ALPHA INSURANCE AND SURETY CO. vs. ARSENIA SONIA CASTOR G.R. No. 198174, September 2, 2013 Facts: Respondent Arsenia Sonia Castor entered into a contract of insurance with petitioner Alpha Insurance and Surety Co, involving her motor vehicle, a Toyota Revo DLX DSL. Respondent, instructed her driver to bring the vehicle to a nearby auto shop for a tune-up, but the driver did not return the said vehicle to the respondent. Respondent promptly report the incident to the police and demanded payment of the insurance proceeds. Petitioner, denied the claim of the respondent because according to them, it is excluded under the policy which states that: the company shall not be liable for any malicious damage caused by the insured, any members of her family or by a person in the insured service. Issue: Whether or not the loss of respondent's vehicle is excluded under the insurance policy. Held: The loss is not excluded since Section III thereof did not qualify as to who would commit the theft. Contracts of insurance, like other contracts, are to be construed according to the sense and meaning of the terms which the parties themselves have used. If such terms are clear and unambiguous, they must be taken and understood in their plain, ordinary and popular sense. The insurance company, subject to the limits of liability, is obligated to indemnify the insured against theft and the said provision does not qualify as to who would commit the theft. Thus, even if the same is committed by the driver of the insured, there being no categorical declaration of exception, the same must be covered.

72. HEIRS OF LORETO MARAMAG v. EVA VERNA DE GUZMAN MARAMAG G.R. no. 181132, June 5, 2009

Facts: Petitioners were the legitimate wife and children of Loreto Maramag (Loreto), while respondents were Loreto's illegitimate family. Petitioner, the illegitimate children of Loreto and his concubine are now claiming for his insurance. Petitioner argued that Eva the concubine should be disqualified because she was suspected of killing him and that the proceeds released to the three illegitimate children of Loreto be reduced because they were inofficious and deprived them of their legitimes In reply, the insurer countered that the insurance proceeds belong exclusively to the designated beneficiaries in the policies, not to the estate or to the heirs of the insured and reiterated that it had disqualified Eva as a beneficiary when it ascertained that Loreto was legally married to the petitioner. Issue: (1) Whether insurance contract

or

not

illegitimate

children

can

be

beneficiaries

in

an

Held: Yes, under Sec. 53 of the Insurance code. 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. Pursuant thereto, it is obvious that the 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. The exception to this rule is a 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. Because no legal proscription exists in naming as beneficiaries the children of illicit relationships by the insured, the shares of Eva in the insurance proceeds, whether forfeited by the court in view of the prohibition on donations under Article 739 of the Civil Code or by the insurers themselves for reasons based on the insurance contracts, must be awarded to the said illegitimate children, the designated beneficiaries, to the exclusion of petitioners. The revocation of Eva as a beneficiary in one policy and her disqualification as such in another are of no moment considering that the designation of the illegitimate children as beneficiaries in Loreto's insurance policies remains valid.

73. COUNTRY BANKERS INSURANCE CORPORATION vs. ANTONIO LAGMAN G.R. No. 165487, July 13, 2011

Facts: Nelson Santos (Santos) applied for a license with the National Food Authority (NFA) to engage in the business of storing not more than 30,000 sacks of palay in his warehouse and conditioned upon posting of a cash bond, a bond secured by real estate, or a bond signed by a duly authorized bonding company./ Country Bankers Insurance Corporation (Country Bankers) issued Warehouse Bond through its agent, Antonio Lagman (Lagman) in favor of Santos as the bond principal, and the NFA as the obligee./ Lagman together with Ban Lee Lim Santos (Ban Lee Lim), Rhosemelita Reguine (Reguine), as co-signors bound themselves jointly and severally liable to Country Bankers for any damages, prejudice, losses, costs, payments, advances and expenses of whatever kind and nature, which it may sustain as a consequence of the said bond; to reimburse Country Bankers of whatever amount it may pay or cause to be paid or become liable to pay thereunder; and to pay interest at the rate of 12% per annum computed and compounded monthly, as well as to pay attorney's fees of 20% of the amount due it./ Later on Santos, using the receipt as collateral obtained a loan and failed to pay it causing Country Bankers to pay by virtue of the surety bonds./ Consequently, Country Bankers filed a claim against respondent who argues that he cannot be held liable since 1) the 1989 Bonds have expired and 2) the 1990 Bond novates the 1989 Bonds. Issue: Whether or not the 1989 bond has expired and was novated by the 1990 bond. Held: No, Sec. 177 of the Insurance code provides that the surety is entitled to payment of the premium as soon as the contract of suretyship or bond is perfected and delivered to the obligor. No contract of suretyship or bonding shall be valid and binding unless and until the premium therefor has been paid, except where the obligee has accepted the bond, in which case the bond becomes valid and enforceable irrespective of whether or not the premium has been paid by the obligor to the surety. This provision in the bonds is but in compliance with the second paragraph of Section 177 of the Insurance Code, which specifies that a continuing bond, as in this case where there is no fixed expiration date, may be cancelled only by the obligee, which is the NFA, by the Insurance Commissioner, and by the court. Thus: In case of a continuing bond, the obligor shall pay the subsequent annual premium as it falls due until the contract of suretyship is cancelled by the obligee or by the Commissioner or by a court of competent jurisdiction, as the case may be.

74. THE HEIRS OF GEORGE Y. POE vs. MALAYAN INSURANCE COMPANY, INC. G.R. No. 156302. April 7, 2009 Facts: George Y. Poe (George) while waiting for a ride to work, was run over by a ten- wheeler hauler truck owned by Rhoda Santos (Rhoda), and then being driven by Willie Labrador (Willie). The said truck was insured with respondent MICI. To seek redress for George's untimely death, his heirs and herein petitioners, filed with the RTC a Complaint for damages against Rhoda and respondent MICI. Respondent MICI does not deny that it is the insurer of the truck. Nevertheless, it asserts that its liability is limited, and it should not be held solidarily liable with Rhoda. Issue: Whether or not respondent is solidarily liable with the insured (Rhoda) Held: No, It is settled that where the insurance contract provides for indemnity against liability to third persons, the liability of the insurer is direct and such third persons can directly sue the insurer. The direct liability of the insurer under indemnity contracts against third party liability does not mean, however, that the insurer can be held solidarily liable with the insured and/or the other parties found at fault, since they are being held liable under different obligations. The liability of the insured carrier or vehicle owner is based on tort, in accordance with the provisions of the Civil Code; while that of the insurer arises from contract, particularly, the insurance policy. The third-party liability of the insurer is only up to the extent of the insurance policy and that required by law; and it cannot be held solidarily liable for anything beyond that amount. Any award beyond the insurance coverage would already be the sole liability of the insured and/or the other parties at fault.

77. LALICAN vs. THE INSULAR LIFE ASSURANCE COMPANY LIMITED G.R. No. 183526, August 25, 2009

Facts: Petioner was the widow of the deceased Eulogio. During his lifetime, Eulogio applied for an insurance policy, but after payment of a portion of the premium, he failed to pay the remaining premium even after the lapsed of the grace period hence, the policy became void. Subsequently, Eulogio applied for reinstatement by delivering the application to the respondent’s agent. Before the application was received by the respondent, Eulogio died and petitioner filed a claim against the respondent. Respondent denied the claim because according to them, the policy had already lapsed and Eulogio failed to reinstate the same before his death. Issue: Whether or not the filing of an application for reinstatement reinstated ipso facto reinstated the insurance policy. Held: No, the stipulation in a life insurance policy giving the insured the privilege to reinstate it upon written application does not give the insured absolute right to such reinstatement by the mere filing of an application. The insurer has the right to deny the reinstatement if it is not satisfied as to the insurability of the insured and if the latter does not pay all overdue premium and all other indebtedness to the insurer. After the death of the insured the insurance company cannot be compelled to entertain an application for reinstatement of the policy because the conditions precedent to reinstatement can no longer be determined and satisfied. It does not matter that when he died, Eulogio's Application for Reinstatement and deposits for the overdue premiums and interests were already with Malaluan because Malaluan did not have the authority to approve Eulogio's Application for Reinstatement. Malaluan still had to turn over to Insular Life Eulogio's Application for Reinstatement and accompanying deposits, for processing and approval by the latter.

79. MALAYAN INSURANCE COMPANY, INC. vs. PAP CO., LTD G.R. No. 200784. August 7, 2013.

Facts: Malayan Insurance Company (Malayan) issued Fire Insurance Policy to PAP Co for the latter's machineries and equipment. The insurance, which was for Fifteen Million Pesos (P15,000,000.00) and effective for a period of one (1) year, was procured by PAP Co. for Rizal Commercial Banking Corporation (RCBC), the mortgagee of the insured machineries and equipment. During the subsistence of the renewal policy, the insured machineries and equipment were totally lost by fire. Hence, PAP Co. led a fire insurance claim with Malayan in the amount insured. Malayan denied the claim upon the ground that, at the time of the loss, the insured machineries and equipment were transferred by PAP Co. to a location different from that indicated in the policy Issue: Whether or not Petitioner is entitled to rescind the contract

Held: Yes, it can also be said that with the transfer of the location of the subject properties, without notice and without Malayan's consent, after the renewal of the policy, PAP clearly committed concealment, misrepresentation and a breach of a material warranty. Section 26 of the Insurance code provides, “a neglect to communicate that which a party knows and ought to communicate, is called a concealment”. Under Section 27 of the Insurance Code, "a concealment entitles the injured party to rescind a contract of insurance." Moreover, Section 168 of the insurance code provides, “An alteration in the use or condition of a thing insured from that to which it is limited by the policy made without the consent of the insurer, by means within the control of the insured, and increasing the risks, entitles an insurer to rescind a contract of fire insurance.” Accordingly, an insurer can exercise its right to rescind an insurance contract when the following conditions are present, to wit: 1) the policy limits the use or condition of the thing insured; 
 2) there is an alteration in said use or condition; 
 3) the alteration is without the consent of the insurer; 
 4) the alteration is made by means within the insured's control; and 
 5) the alteration increases the risk of loss. 


80. ARMANDO GEAGONIA vs. COURT OF APPEALS G.R. No. 114427. February 6, 1995

Facts: The petitioner obtained from the private respondent fire insurance policy for P100,000.00 covering stock-in-trade consisting principally of dry goods such as RTW's for men and women wear and other usual to assured's business. Petitioner declared in the policy under the subheading entitled CO- INSURANCE that Mercantile Insurance Co., Inc. was the co-insurer for P50,000.00. The policy contained a condition which states that: 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. On 27 May 1990, fire of accidental origin broke out and the petitioner's insured stocks-intrade were completely destroyed prompting him to file with the private respondent a claim under the policy. the private respondent denied the claim because it found that at the time of the loss the petitioner's stocks-in-trade were likewise covered by fire insurance policies obtained by the petitioner’s mortgagee. Issue: Whether or not there was double insurance. Held: There was no double insurance. A double insurance exists where the same person is insured by several insurers separately in respect of the same subject and interest. As earlier stated, the insurable interests of a mortgagor and a mortgagee on the mortgaged property are distinct and separate. Since the two policies of the PFIC do not cover the same interest as that covered by the policy of the private respondent, no double insurance exists. The non-disclosure then of the former policies was not fatal to the petitioner's right to recover on the private respondent's policy.

81. GREAT PACIFIC LIFE ASSURANCE CORP vs. COURT OF APPEALS G.R. No. 113899, October 13, 1999

Facts: A contract of group insurance was executed between the petitioner GrePa Life and DBP, wherein petitioner agreed to insure the lives of the eligible housing loan mortgagors of DBP. Dr. Leuterio, one of the mortgagor of DBP applied to the group insurance policy of the petitioner and answered in his application that he never consulted any physician for any heart condition, hypertension, diabetes or any other physical impairment. less than a year after, Dr. Leuterio died because of “cerebral hemorrhage” allegedly due to hypertension. Consequently, her widow filed a claim in the RTC against the petitioner. Petitioner contends that the insured was guilty of concealment as he was suffering hypertension when he applied for insurance, and further argue that the court did not acquire jurisdiction over the case since the real party in interest to file the case is DBP and not the widow. Issue: Whether or not the mortgagee is an indispensable party in a claim for a group insurance Held: No, where the mortgagor pays the insurance premium under the group insurance policy, making the loss payable to the mortgagee, the insurance is on the mortgagor's interest, and the mortgagor continues to be a party to the contract. In this type of policy insurance, the mortgagee is simply an appointee of the insurance fund, such loss-payable clause does not make the mortgagee a party to the contract. Here, the insured private respondent did not cede to the mortgagee all his rights or interests in the insurance, the policy stating that: "In the event of the debtor's death before his indebtedness with the Creditor [DBP] shall have been fully paid, an amount to pay the outstanding indebtedness shall first be paid to the creditor and the balance of sum assured, if there is any, shall then be paid to the beneficiary/ies designated by the debtor.

82. MALAYAN INSURANCE CO., INC vs. PHILIPPINES FIRST INSURANCE CO., INC. G.R. No. 184300, July 11, 2012 Facts: Wyeth entered into a contract of carriage with Reputable, whereby the latter undertook to deliver the product of the former to its dealer and distributor and at the same time procured marine insurance from respondent Philippine first. Under the contract of carriage Reputable undertook to answer all the risk of loss, damage or destruction to the goods of Wyeth and signed a special risk insurance with petitioner Malayan Insurance. During the effectivity of all the contracts, the truck carrying the products of Wyeth were hijacked and all of the cargoes were lost. Philippine First indemnify Wyeth for the damage suffered and demanded reimbursement from Reputable and Petitioner. Disclaiming any liability, petitioner argued, among others, that inasmuch as there was already a marine policy issued by Philippines First securing the same subject matter against loss and that since the monetary coverage/value of the Marine Policy is more than enough to indemnify the hijacked cargo, Philippines First alone must bear the loss. Issue: Whether or not there was a double insurance and thus petitioner will not be liable to pay or contribute more than its ratable proportion of such loss or damage. Held: No, there was no double insurance. The requisite in order for double insurance to arise are as follows: 1. The person insured is the same; 2. Two or more insurers insuring separatele; 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 policy 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 SR Policy.

83. MALAYAN INSURANCE CO., INC. (MICO) vs. GREGORIA CRUZ ARNALDO, in her capacity as the INSURANCE COMMISSIONER G.R. No. L-67835, October 12, 1987 Facts: On June 7, 1981, the petitioner (hereinafter called (MICO) issued to the private respondent, Coronacion Pinca, Fire Insurance Policy her property for the amount of P100,000.00, 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 and thereafter remitted this payment to MICO, together with other payments on January 15, 1982. On January 18, 1982, Pinca's property was completely burned and thus, Pinca made the requisite demands for payment. MICO rejected the demand because they alleged sent notice to Pinca that the policy was already cancelled on October 15, 1981 for non-payment, of the premium, Issue: 1. Whether or not the payment made to the agent of the insurer was valid 2. Whether or not there was a valid cancellation of the insurance policy Held: 1. Yes, the payment was valid. It is clearly provided in Section 306 of the Insurance Code that: "SEC. 396. . . . "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 or contract of insurance at the time of its issuance or delivery or which becomes due thereon." 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. 2. No, the cancellation was not valid. 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. Here, 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 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.

84. PACIFIC TIMBER EXPORT CORPORATION vs. THE HONORABLE COURT OF APPEALS and WORKMEN'S INSURANCE COMPANY, INC. G.R. No. L-38613. February 25, 1982 Facts: On March 19, 1963, the petitioner a secured Cover Note No. 1010 from the defendant for its exportation logs to be shipped from the Diapitan Bay, Quezon Province to Okinawa and Tokyo, Japan. On April 2, 1963, two regular marine cargo policies were issued by the defendant in favor of the petitioner. After the issuance of Cover Note No. 1010 but before the issuance of the two marine policies some of the logs intended to be exported were lost during loading operations in the Diapitan Bay. On April4, 1963 the petitioner submitted a 'Claim Statement' demanding payment of the loss under the two marine policies. The respondent denied the claim on the grounds the entire shipment of logs covered by the two marine policies were received in good order at their point of destination and Cover Note No. 1010 had become 'null and void by because of lack of valuable consideration Issue: Whether or not the cover note was null and void due to lack of valuable consideration Held: No, the Cover Note was not without consideration for which the respondent court 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 petitioner's 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. At any rate, it is not disputed that petitioner paid in full all the premiums as called for by the statement issued by private respondent after the issuance of the two regular marine insurance policies, thereby leaving no account unpaid by petitioner 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. As a logical consequence, no separate premiums are intended or required to be paid on a Cover Note.

87. JOSE MARQUES and MAXILITE TECHNOLOGIES, INC. vs. FAR EAST BANK AND TRUST COMPANY G.R. No. 171379, January 10, 2011 Facts: On 17 June 1993, Maxilite and Marques entered into a trust receipt transaction with FEBTC, in the sum of US$80,765.00, for the shipment of various high-technology equipment from the United States, with the merchandise serving as collateral. Through a debit arrangement, Maxilite procured insurance policy over the trust receipts merchandise from Makati Insurance Company (Makati Insurance) which was facilitated by Far East Bank Insurance Brokers, Inc. (FEBIBI) under the advice of Far East Bank and Trust Company (FEBTC). After Maxilite fully settled its trust receipts accounts, a fire burned down its office and warehouse and as a result filed a claim against Makati Insurance. Makati insurance denied his claim on the grounds that Maxilite failed to pay the insurance premium, and alleged that FEBIBI sent written reminders to FEBTC, dated 19 October 1994, 16 24 January 1995, 17 and 6 March 1995, to debit Maxilite's account. FEBTC and FEBIBI disclaimed any responsibility for the denial of the claim. Issue: Whether or not FEBTC is estopped from denying its liabilities Held: Yes, FEBTC is estopped from claiming that the insurance premium has been unpaid. Art. 1431 of the New Civil Code provides, through estoppel an admission or representation is

rendered conclusive upon the person making it, and cannot be denied or disproved as against the person relying thereon. The fact that FEBTC induced Maxilite and Marques to believe that the insurance premium has in fact been debited from Maxilite's account is grounded on the following facts: (1) FEBTC represented and committed to handle Maxilite's financing and capital requirements, including the related transactions such as the insurance of the trust receipted merchandise; (2) prior to the subject Insurance Policy No. 1024439, the premiums for the three separate fire insurance policies had been paid through automatic debit arrangement; (3) FEBIBI sent FEBTC, not Maxilite nor Marques, written reminders dated 19 October 1994, 24 January 1995, and 6 March 1995 to debit Maxilite's account, establishing FEBTC's obligation to automatically debit Maxilite's account for the premium amount; (4) there was no written demand from FEBTC or Makati Insurance Company for Maxilite or Marques to pay the insurance premium; (5) the subject insurance policy was released to Maxilite on 19 August 1994; and (6) the subject insurance policy remained uncancelled despite the alleged non-payment of the premium, making it appear that the insurance policy remained in force and binding.

89. GREAT PACIFIC LIFE INSURANCE CORPORATION vs. COURT OF APPEALS G.R. No. L – 57308, April 23, 1990

Facts: Private respondent Teodoro Cortez, upon the solicitation of Margarita Siega, an underwriter for the applied for a 20-year endowment policy for P30,000. His application, with the requisite medical examination, was accepted and approved by the company and in due course, Endowment Policy was issued in his name. Respondent was able to pay the first annual premium in three installments. The petitioner advised private respondent on June 1, 1973, four months after he had paid the first premium, that his policy had never been in force, and that he must pay another premium and undergo another medical examination to make the policy effective.

Respondent reaction to the company's act was to immediately inform it that he was cancelling the policy and he demanded the return of his premium plus damages. Issue: Whether or not the respondent is entitled to the return of premium Held: Yes, by accepting his premiums without giving him the corresponding protection, the company acted in bad faith. Since his policy was in fact inoperative or ineffectual from the beginning, the company was never at risk, hence, it is not entitled to keep the premium. Petitioner should have informed Cortez of the deadline for paying the first premium before or at least upon delivery of the policy to him, so he could have complied with what was needful and would not have been misled into believing that his life and his family were protected by the policy, when actually they were not. And, if the premium paid by Cortez was unacceptable for being late, it was the company's duty to return it.

90. NG GAN ZEEvs. ASIAN CRUSADER LIFE ASSURANCE CORPORATION G.R. No. L-30685, May 30, 1983

Facts: Kwong Nam applied for a 20-year endowment insurance on his life for the sum of P20,000.00, with his wife, appellee Ng Gan Zee, as beneficiary. On the same date, appellant, upon receipt of the required premium from the insured, approved the application and issued the corresponding policy. On December 6, 1963, Kwong Nam died of cancer of the liver with metastasis and all premiums had been religiously paid at the time of his death. His widow Ng Gan Zee presented a claim in due form to appellant for payment of the face value of the policy and submitted the required proof of death of the insured.

Appellant denied the claim on the ground that the answers given by the insured to the questions appearing in his application for life insurance were untrue and alleged that the insured was guilty of misrepresentation when he answered “no” to some essential question in the application for insurance. Issue: Was the insured guilty of concealment when he applied for an insurance contract Held: No, concealment exists where the assured had knowledge of a fact material to the risk, and honesty, good faith, and fair dealing requires that he should communicate it to the assurer, but he designedly and intentionally withholds the same." It has also been held "that the concealment must, in the absence of inquiries, be not only material, but fraudulent, or the fact must have been intentionally withheld. In the absence of evidence that the insured had sufficient medical knowledge as to enable him to distinguish between "peptic ulcer" and "a tumor", his statement that said tumor was "associated with ulcer of the stomach," should be construed as an expression made in good faith of his belief as to the nature of his ailment and operation. 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 the appellant.