Insurance Digest Written.docx

ROMARICO G. VITUG vs CA G.R. No. 82027 March 29, 1990 FACTS: In January 1985, Romarico filed a motion asking for authorization of the probate court to sell shares of stocks and real property of the estate as reimbursements for advances he made to the estate. Rowena Corona opposed the motion to sell contending that from the said account are conjugal funds, hence part of the estate. Vitug insisted saying that the said funds are his exclusive property acquired by virtue of a survivorship agreement executed with his late wife and the bank previously. In the said agreement, they agreed that in the event of death of either, the funds will become the sole property of the survivor. ISSUE: Whether or not the survivorship agreement is an aleatory contract? RULING: Yes. It is in the nature of an aleatory contract whereby one or both of the parties reciprocally bind themselves to give or to do something in consideration of what the other shall give or do upon the happening of an event which is to occur at an indeterminate time or is uncertain, such as death. Consequently, the Court upheld the validity of the survivorship agreement entered into by the spouses Vitug. As such, Romarico, being the surviving spouse, acquired a vested right over the amounts under the savings account, which became his exclusive property upon the death of his wife pursuant to the survivorship agreement. Thus, the funds of the savings account are not conjugal partnership properties and not part of the estate of the deceased Dolores.

MALAYAN INSURANCE CO., INC. (MICO) vs GREGORIA CRUZ ARNALDO G.R. No. L-67835, October 12, 1987 FACTS: Petitioner, MICO, issued to the private respondent, Coronacion Pinca, Fire Insurance Policy No. F-001-17212 on her property for the amount of 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. ISSUE: Whether or not MICO should be liable. RULING: YES. 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. Payment to an agent having authority to receive or collect payment is equivalent to payment to the principal himself; such payment is complete when the money delivered is into the agent's hands and is a discharge of the indebtedness owing to the principal.

GREAT PACIFIC LIFE ASSURANCE COMPANY vs CA G.R. No. L-31845, April 30, 1979 FACTS: Ngo Hing filed an application with the Great Pacific Life Assurance Company (hereinafter referred to as Pacific Life) for a twenty-year endownment policy in the amount of P50,000.00 on the life of his one-year old daughter Helen Go. Upon the payment of the insurance premium, the binding deposit receipt was issued to private respondent Ngo Hing. Mondragon received a letter from Pacific Life disapproving the insurance application. The letter stated that the said life insurance application for 20-year endowment plan is not available for minors below seven years old, but Pacific Life can consider the same under the Juvenile Triple Action Plan. The non-acceptance of the insurance plan by Pacific Life was allegedly not communicated by petitioner Mondragon to private respondent Ngo Hing. On May 28, 1957 Helen Go died of influenza with complication of bronchopneumonia. Thereupon, private respondent sought the payment of the proceeds of the insurance, but having failed in his effort, he filed the action for the recovery of the same. ISSUE: Whether the binding deposit receipt constituted a temporary contract of the life insurance. RULING: No. The binding deposit receipt is, manifestly, merely conditional and does not insure outright. As held by this Court, where an agreement is made between the applicant and the agent, no liability shall attach until the principal approves the risk and a receipt is given by the agent. The acceptance is merely conditional and is subordinated to the act of the company in approving or rejecting the application. Thus, in life insurance, a "binding slip" or "binding receipt" does not insure by itself. The contract of insurance is one of perfect good faith uberrima fides meaning good faith, absolute and perfect candor or openness and honesty; the absence of any concealment or demotion, however slight is not for the insured alone but equally so for the insurer. We are thus constrained to hold that no insurance contract was perfected between the parties with the noncompliance of the conditions provided in the binding receipt, and concealment, as legally defined, having been committed by herein private respondent. FIELDMEN'S INSURANCE CO., INC. vs. MERCEDES VARGAS VDA. DE SONGCO, ET AL. G.R. No. L-24833, September 23, 1968 FACTS: Federico Songco owned a private jeepney. He was induced by Fieldmen's Insurance Company Pampanga agent Benjamin Sambat to apply for a Common Carrier's Liability Insurance Policy covering his motor vehicle. Upon paying the annual premium, Fieldmen's Insurance Company, Inc. issued a Common Carriers Accident Insurance Policy covering one year. The insured vehicle, while being driven by Rodolfo Songco, duly licensed driver and Federico’s son, collided with a car. The Court of Appeals rendered a decision in favor of the claimants, holding that where inequitable conduct is shown by an insurance firm, it is estopped from enforcing forfeitures in its favor, in order to forestall fraud or imposition on the insured. After Fieldmen's Insurance Co. had led the insured Songco to believe that he could qualify under the common carrier liability insurance policy, it could not, thereafter, be permitted to change its stand to the detriment of the heirs of the insured.

ISSUE: Whether or not the insurance claim is proper. RULING: Yes. The fact that the insured owned a private vehicle, not a common carrier, was something which the company knew all along. In fact, it exerted the utmost pressure on the insured, a man of scant education, to enter into the contract of insurance. As estoppel is primarily based on the doctrine of good faith and the avoidance of harm that will befall the innocent party due to its injurious reliance, the failure to apply it in this case would result in a gross travesty of justice. "The contract of insurance is one of perfect good faith (uberrima fides) not for the insured alone, but equally so for the insurer; in fact, it is more so for the latter, since its dominant bargaining position carries with it stricter responsibility." WHITE GOLD MARINE SERVICES, INC., vs. PIONEER INSURANCE AND SURETY CORPORATION AND THE STEAMSHIP MUTUAL UNDERWRITING ASSOCIATION (BERMUDA) LTD. G.R. No. 154514. July 28, 2005 FACTS: White Gold Marine Services, Inc. (White Gold) procured a protection and indemnity coverage for its vessels from The Steamship Mutual Underwriting Association (Bermuda) Limited (Steamship Mutual) through Pioneer Insurance and Surety Corporation (Pioneer). When White Gold failed to fully pay its accounts, Steamship Mutual refused to renew the coverage. Steamship Mutual thereafter filed a case against White Gold for collection of sum of money to recover the latters unpaid balance. White Gold on the other hand, filed a complaint before the Insurance Commission claiming that Steamship Mutual violated Sections 186 and 187 of the Insurance Code, while Pioneer violated Sections 299, 300, and 301 in relation to Sections 302 and 303, thereof. The Insurance Commission dismissed the complaint. It said that there was no need for Steamship Mutual to secure a license because it was not engaged in the insurance business. It explained that Steamship Mutual was a Protection and Indemnity Club (P & I Club). The Court of Appeals affirmed the decision of the Insurance Commissioner. ISSUES: (1) Is Steamship Mutual, a P & I Club, engaged in the insurance business in the Philippines? Yes. (2) Does Pioneer need a license as an insurance agent/broker for Steamship Mutual? Yes. RULING: Section 2(2) of the Insurance Code enumerates what constitutes doing an insurance business or transacting an insurance business. The same provision also provides, the fact that no profit is derived from the making of insurance contracts, agreements or transactions, or that no separate or direct consideration is received therefor, shall not preclude the existence of an insurance business. The test to determine if a contract is an insurance contract or not, depends on the nature of the promise, the act required to be performed, and the exact nature of the agreement in the light of the occurrence, contingency, or circumstances under which the performance becomes requisite. It is not by what it is called.

PHILAMCARE HEALTH SYSTEMS, INC., petitioner, vs. COURT OF APPEALS and JULITA TRINOS, respondents. G.R. No. 125678

March 18, 2002

FACTS: Ernani Trinos, deceased husband of respondent Julita Trinos, applied for a health care coverage with petitioner Philamcare Health Systems, Inc. During the period of his coverage, Ernani suffered a heart attack . Doctors at the MMC allegedly discovered at the time of Ernani’s confinement that he was hypertensive, diabetic and asthmatic, contrary to his answer in the application form. Thus, respondent paid the hospitalization expenses herself, amounting to about P76,000.00. ISSUE: Whether or not the concealment of Ernani Trinos of his medical history invalidates the health care agreement. RULING: NO. In the case at bar, the insurable interest of respondent’s husband in obtaining the health care agreement was his own health. The health care agreement was 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 assailed by petitioner was in response to the question relating to the medical history of the applicant. This 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. BLUE CROSS HEALTH CARE, INC. v. NEOMI and DANILO OLIVARES G.R. No. 169737 February 12, 2008 FACTS: Neomi T. Olivares applied for a health care program with Blue Cross Health Care, Inc., a health maintenance firm. In the health care agreement, ailments due to pre-existing conditions were excluded from the coverage. Neomi suffered a stroke and was admitted at the Medical City. During her confinement, she incurred hospital expenses. Consequently, she requested from the representative of Blue Cross at Medical City a letter of authorization in order to settle her medical bills. But Blue Cross refused to issue the letter and suspended payment pending the submission of a certification from her attending physician that the stroke she suffered was not caused by a preexisting condition. ISSUE: Whether Blue Cross has the burden to prove that the stroke of Neomi was excluded from the health care coverage. RULING: Yes. In Philamcare Health Systems, Inc. v. CA, the Court ruled that a health care agreement is in the nature of a nonlife insurance. It is an established rule in insurance contracts that when their terms contain limitations on liability, they should be construed strictly against the insurer. These are contracts of adhesion the terms of which must be interpreted and enforced stringently against the insurer which prepared the contract. This doctrine is equally applicable to health care agreements. Blue Cross never presented any evidence to prove that Neomi's stroke was due to a pre-existing condition. It merely speculated that Dr. Saniel's report would be adverse to Neomi, based on her invocation of the doctor-patient privilege. This was a disputable presumption at best.

PHILIPPINE HEALTH CARE PROVIDERS, INC., Petitioner, vs. COMMISSIONER OF INTERNAL REVENUE, Respondent. G.R. No. 167330

September 18, 2009

FACTS: Petitioner is a domestic corporation whose primary purpose is "[t]o establish, maintain, conduct and operate a prepaid group practice health care delivery system or a health maintenance organization to take care of the sick and disabled persons enrolled in the health care plan and to provide for the administrative, legal, and financial responsibilities of the organization." Respondent Commissioner of Internal Revenue [CIR] sent petitioner a formal demand letter and the corresponding assessment notices demanding the payment of deficiency taxes, including surcharges and interest, for the taxable years 1996 and 1997 in the total amount of ₱224,702,641.18. ISSUES: W/N a Health Care Agreement is an insurance contract. No. RULING: Health Maintenance Organizations Are Not Engaged In The Insurance Business One test that they have applied is whether the assumption of risk and indemnification of loss (which are elements of an insurance business) are the principal object and purpose of the organization or whether they are merely incidental to its business. If these are the principal objectives, the business is that of insurance. But if they are merely incidental and service is the principal purpose, then the business is not insurance. Overall, petitioner appears to provide insurance-type benefits to its members (with respect to its curative medical services), but these are incidental to the principal activity of providing them medical care. The "insurance-like" aspect of petitioner’s business is miniscule compared to its noninsurance activities. Therefore, since it substantially provides health care services rather than insurance services, it cannot be considered as being in the insurance business. VIRGINIA A. PEREZ, petitioner, vs. COURT OF APPEALS and BF LIFEMAN INSURANCE CORPORATION, respondents. G.R. No. 112329. January 28, 2000 An agent of the insurance corporation, visited Perez in Quezon and convinced him to apply for additional insurance coverage of P50,000.00. Virginia A. Perez, Primitivo’s wife, paid P2,075.00 to the agent. The receipt issued indicated the amount received was a "deposit." The agent sent the application for additional insurance of Perez to the Quezon office. Such was supposed to forwarded to the Manila office. Perez drowned. His application papers for the additional insurance of P50,000.00 were still with the Quezon. Without knowing that Perez died, BF Lifeman Insurance Corporation approved the application and issued the corresponding policy for the P50,000.00. Petitioner Virginia Perez went to Manila to claim the benefits under the insurance policies of the deceased. She was paid P40,000.00 under the first insurance policy for P20,000.00 but the insurance company refused to pay the claim under the additional policy coverage of P50,000.00. The insurance company maintained that the insurance for P50,000.00 had not been perfected at the time of the death of Primitivo Perez. ISSUE: WON the widow can receive the proceeds of the 2nd insurance policy

RULING:

No. Perez application was subject to the acceptance of private respondent BF Lifeman Insurance Corporation. BF Lifeman didn’t give its assent when it merely received the application form and all the requisite supporting papers of the applicant. This happens only when it gives a policy. A contract of insurance, like other contracts, must be assented to by both parties either in person or by their agents. So long as an application for insurance has not been either accepted or rejected, it is merely an offer or proposal to make a contract. The contract, to be binding from the date of application, must have been a completed contract. FILIPINAS COMPANIA DE SEGUROS vs. CHRISTERN HUENEFELD and CO., INC. 89 Phil 54 On October 1, 1941, the respondent corporation, Christern Huenefeld, & Co., Inc., after payment of corresponding premium, obtained from the petitioner, Filipinas Cia. de Seguros, a fire policy, covering merchandise contained in a building located at No. 711 Roman Street, Binondo Manila. On February 27, 1942, or during the Japanese military occupation, the building and insured merchandise were burned. In due time the, respondent submitted to the petitioner its claim under the policy. The petitioner refused to pay the claim on the ground that the policy in favor of the respondent had ceased to be in force on the date the United States declared war against Germany, the respondent Corporation being controlled by the German subjects and the petitioner being a company under American jurisdiction when said policy was issued on October 1, 1941. ISSUES: 1) Whether or not the respondent corporation is a corporation of public enemy 2) If so, whether or not the fire insurance policy is enforceable against an enemy state RULING: The Philippine Insurance Law (Act No 2427, as amended), in Section 8, provides that “anyone except a public enemy may be insured”. It stands to reason that an insurance policy ceases to be allowable as soon as an insured becomes a public enemy. The respondent having an enemy corporation on December 10, 1941, the insurance policy issued in its favor on October 1, 1941, by the petitioner had ceased to be valid and enforceable, and since the insured good were burned during the war, the respondent was not entitled to any indemnity under said policy from the petitioner. However, premium paid by the respondent for the period covered by its policy from December 11, 1941, should be returned by the petitioner.

ARMANDO GEAGONIA vs. COURT OF APPEALS and COUNTRY BANKERS INSURANCE CORPORATION G.R. No. 114427 February 6, 1995 The petitioner obtained from the private respondent a fire insurance policy for P100,000. The period of the policy was from 22 December 1989 to 22 December 1990 and covered the following: "Stock-in-trade consisting principally of dry goods such as RTW's for men and women wear and other usual to assured's business." On 27 May 1990, fire broke out. The petitioner's insured stock-in-trade were completely destroyed prompting him to file with the private respondent a claim under the policy. On 28 December 1990, 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 another fire insurance policy, for P100,000.00 each, issued by PFIC. ISSUE:

W/N failure to notify the respondent would preclude petitioner from claiming from the former’s insurance policy. No. RULING: Section 75 of the Insurance Code which provides that "[a] policy may declare that a violation of specified provisions thereof shall avoid it, otherwise the breach of an immaterial provision does not avoid the policy." Such a condition is a provision which invariably appears in fire insurance policies and is intended to prevent an increase in the moral hazard. It is commonly known as the additional or "other insurance" clause and has been upheld as valid and as a warranty that no other insurance exists. Its violation would thus avoid the policy. However, in order to constitute a violation, the other insurance must be upon same subject matter, the same interest therein, and the same risk. 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. Spouses NILO CHA and STELLA UY CHA, and UNITED INSURANCE CO., INC. vs. COURT OF APPEALS and CKS DEVELOPMENT CORPORATION G.R. No. 124520 August 18, 1997 Spouses Nilo Cha and Stella Uy-Cha, as lessees, entered into a lease contract with private respondent CKS Development Corporation (CKS), as lessor, stipulating in the 1 year lease contract that the LESSEES shall not insure against fire the merchandise placed inside the leased premises without first obtaining the written consent and approval of the LESSOR. If the LESSEE obtain(s) the insurance without the consent of the LESSOR then the policy is deemed assigned and transferred to the LESSOR for its own benefit. However, the Cha spouses still insured against loss by fire their merchandise inside the leased premises for P500,000.00 with the United Insurance Co., Inc. . CKS sent a demand letter to the insurer United Insurance asking for the proceeds of the insurance contract based on its lease contract with Cha spouses. Since United refused to pay, CKS filed a complaint which both the RTC and CA solved in its favor. ISSUE: Whether or not the aforementioned provision in the lease contract was valid – NO RULING: The Supreme Court ruled in favor of the Cha spouses stating that CKS has no insurable interest in the goods and merchandise inside the leased premises under the provisions of Section 17 of the Insurance Code. The insurable interest over said merchandise remains with the insured, the Cha spouses. Insurable interest in the property insured must exist at the time the insurance takes effect and at the time the loss occurs. The basis of such requirement of insurable interest in property insured is based on sound public policy: to prevent a person from taking out an insurance policy on property upon which he has no insurable interest and collecting the proceeds of said policy in case of loss of the property. In such a case, the contract of insurance is a mere wager which is void under Section 25 of the Insurance Code

GAISANO CAGAYAN, INC. vs. INSURANCE COMPANY OF NORTH AMERICA

G.R. No. 147839 June 8, 2006 IMC and LSPI separately obtained from respondent fire insurance policies with book debt endorsements. The insurance policies provide for coverage on "book debts in connection with ready-made clothing materials which have been sold or delivered to various customers and dealers of the Insured anywhere in the Philippines." The Gaisano Superstore Complex owned by petitioner, was consumed by fire. Included in the items lost or destroyed in the fire were stocks sold and delivered by IMC and LSPI. Respondent filed a complaint for damages against petitioner. Petitioner contends that it could not be held liable because the property covered by the insurance policies were destroyed due to fortuities event or force majeure that IMC and LSPI never communicated to it that they insured their properties; that it never consented to paying the claim of the insured. ISSUE: WON a fire insurance policy on book debts cover the unpaid accounts of IMC and LSPI since such insurance applies to loss of the ready-made clothing materials sold and delivered to petitioner. RULING: Yes. Nowhere is it provided in the questioned insurance policies that the subject of the insurance is the goods sold and delivered to the customers and dealers of the insured. Thus, what were insured against were the accounts of IMC and LSPI with petitioner which remained unpaid 45 days after the loss through fire, and not the loss or destruction of the goods delivered. When the seller retains ownership only to insure that the buyer will pay its debt, the risk of loss is borne by the buyer. Accordingly, petitioner bears the risk of loss of the goods delivered. IMC and LSPI did not lose complete interest over the goods. They have an insurable interest until full payment of the value of the delivered goods. Unlike the civil law concept of res perit domino, where ownership is the basis for consideration of who bears the risk of loss, in property insurance, one's interest is not determined by concept of title, but whether insured has substantial economic interest in the property. Section 13 of our Insurance Code defines insurable interest as "every interest in property, whether real or personal, or any relation thereto, or liability in respect thereof, of such nature that a contemplated peril might directly damnify the insured." Parenthetically, under Section 14 of the same Code, an insurable interest in property may consist in: (a) an existing interest; (b) an inchoate interest founded on existing interest; or (c) an expectancy, coupled with an existing interest in that out of which the expectancy arises. EMILIO TAN et.al. vs CA G.R. No. 48049 June 29, 1989 Tan Lee Siong, father of herein petitioners, applied for life insurance. Said application was approved and Policy No. 1082467 was issued effective November 6,1973, with petitioners the beneficiaries thereof . Tan Lee Siong died of hepatoma. Petitioners then filed with respondent company their claim for the proceeds of the life insurance policy. However respondent company denied petitioners' claim and rescinded the policy by reason of the alleged misrepresentation and concealment of material facts made by the deceased Tan Lee Siong in his application for insurance. The premiums paid on the policy were thereupon refunded . The petitioners contend that the respondent company no longer had the right to rescind the contract of insurance as rescission must allegedly be done during the lifetime of the insured within two years and prior to the commencement of action.

ISSUE:

Whether or not respondent insurer has the right to rescind the policy contract. RULING: YES. Section 48. Whenever a right to rescind a contract of insurance is given to the insurer by any provision of this chapter, such right must be exercised previous to the commencement of an action on the contract. The so-called "incontestability clause" precludes the insurer from raising the defenses of false representations or concealment of material facts insofar as health and previous diseases are concerned if the insurance has been in force for at least two years during the insured's lifetime. As noted by the Court of Appeals, to wit: The policy was issued on November 6,1973 and the insured died on April 26,1975. The policy was thus in force for a period of only one year and five months. Considering that the insured died before the two-year period had lapsed, respondent company is not, therefore, barred from proving that the policy is void ab initio by reason of the insured's fraudulent concealment or misrepresentation. Moreover, respondent company rescinded the contract of insurance and refunded the premiums paid on September 11, 1975, previous to the commencement of this action on November 27,1975.