concealment to loss cases

7/24/2019 Concealment to Loss Cases

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CONCEALMENT AND REPRESENTATION (SECTIONS 26-47)

G.R. No. 92492. June 17, 199.1. T!ELMA "DA. DE CANILANG, #e$%$%one&, '. !ON. CORT O* APPEALS +n GREATPACI*IC LI*E ASSRANCE CORPORATION, &e#onen$.

Inu&+ne L+/ Cone+0en$/The information which Jaime Canilang failed to disclose wasmaterial to the ability of Great Pacic to estimate the probable risk he presented as a subject oflife insurance.e agree with the Court of !ppeals that the information which Jaime Canilangfailed to disclose was material to the ability of Great Pacic to estimate the probable risk hepresented as a subject of life insurance. "ad Canilang disclosed his #isits to his doctor$ thediagnosis made and the medicines prescribed by such doctor$ in the insurance application$ itmay be reasonably assumed that Great Pacic would ha#e made further in%uiries and wouldha#e probably refused to issue a non&medical insurance policy or$ at the #ery least$ re%uired ahigher premium for the same co#erage. The materiality of the information withheld by GreatPacic did not depend upon the state of mind of Jaime Canilang. ! man's state of mind orsubjecti#e belief is not capable of proof in our judicial process$ e(cept through proof of e(ternalacts or failure to act from which inferences as to his subjecti#e belief may be reasonably drawn.)either does materiality depend upon the actual or physical e#ents which ensue. *aterialityrelates rather to the +probable and reasonable in,uence of the facts- upon the party to whomthe communication should ha#e been made$ in assessing the risk in#ol#ed in making or omittingto make further in%uiries and in accepting the application for insurance that +probable andreasonable in,uence of the facts- concealed must$ of course$ be determined objecti#ely$ by the

judge ultimately.

*ELICIANO, J.*ACTS /n 01 June 0213$ Jaime Canilang consulted 4r. ilfredo 5. Claudio and was diagnosed assu6ering from +sinus tachycardia.- The doctor prescribed the following for him7 Tra8epam$ atran%uili8er and !ptin$ a beta&blocker drug. *r. Canilang consulted the same doctor again on 9!ugust 0213 and this time was found to ha#e +acute bronchitis.-

/n the ne(t day$ : !ugust 0213$ Jaime Canilang applied for a +non&medical- insurance policy

with respondent Great Pacic ;ife !ssurance Company 0?9$ with the face #alue of P02$@AA$ e6ecti#e as of 2 !ugust 0213.

/n > !ugust 0219$ Jaime Canilang died of +congesti#e heart failure$- +anemia$- and +chronicanemia.-3 Petitioner$ widow and beneciary of the insured$ led a claim with Great Pacic whichthe insurer denied on > 4ecember 0219 upon the ground that the insured had concealedmaterial information from it.

Petitioner then led a complaint against Great Pacic with the Bnsurance Commission forreco#ery of the insurance proceeds. 4uring the hearing called by the Bnsurance Commissioner$petitioner testied that she was not aware of any serious illness su6ered by her late husband9

and that$ as far as she knew$ her husband had died because of a kidney disorder.: ! depositiongi#en by 4r. ilfredo Claudio was presented by petitioner. There 4r. Claudio stated that he wasthe family physician of the deceased Jaime Canilang> and that he had pre#iously treated him for+sinus tachycardia- and +acute bronchitis.-? Great Pacic for its part presented 4r. speran8aDuismorio$ a physician and a medical underwriter working for Great Pacic.@ Ehe testied thatthe deceased's insurance application had been appro#ed on the basis of his medicadeclaration.1 Ehe e(plained that as a rule$ medical e(aminations are re%uired only in caseswhere the applicant has indicated in his application for insurance co#erage that he haspre#iously undergone medical consultation and hospitali8ation. Bn a decision dated > )o#ember021>$ Bnsurance Commissioner !rmando !nsaldo ordered Great Pacic to pay [email protected] pluslegal interest and P3$AAA.AA as attorney's fees after holding that7


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0. the ailment of Jaime Canilang was not so serious that$ e#en if it had been disclosed$ it wouldnot ha#e a6ected Great Pacic's decision to insure him3. Great Pacic had wai#ed its right to in%uire into the health condition of the applicant by theissuance of the policy despite the lack of answers to +some of the pertinent %uestions- in theinsurance application9. there was no intentional concealment on the part of the insured Jaime Canilang as he hadthought that he was merely su6ering from a minor ailment and simple cold0A and:. 5atas Pambansa 5lg. 1@: which #oids an insurance contract$ whether or not concealment wasintentionally made$ was not applicable to Canilang's case as that law became e6ecti#e only on 0

June 021>.

/n appeal by Great Pacic$ the Court of !ppeals re#ersed and set aside the decision of theBnsurance Commissioner and dismissed Thelma Canilang's complaint and Great Pacic'scounterclaim. The Court of !ppeals found that the use of the word +intentionally- by theBnsurance Commissioner in dening and resol#ing the issue agreed upon by the parties at pre&trial before the Bnsurance Commissioner was not supported by the e#idence that the issueagreed upon by the parties had been whether the deceased insured$ Jaime Canilang$ made amaterial concealment as to the state of his health at the time of the ling of insuranceapplication$ justifying respondent's denial of the claim. The Court of !ppeals also found that thefailure of Jaime Canilang to disclose pre#ious medical consultation and treatment constitutedmaterial information which should ha#e been communicated to Great Pacic to enable the latterto make proper in%uiries. The Court of !ppeals nally held that the )g Gan Fee case which hadin#ol#ed misrepresentation was not applicable in respect of the case at bar which in#ol#esconcealment.

G.R. No. 131. June 22, 199.2. SNLI*E ASSRANCE COMPAN5 O* CANADA, #e$%$%one&, '. Te !on. CORT O*APPEALS +n S#oue ROLANDO +n ERNARDA ACANI, &e#onen$.

Inu&+ne L+/ Cone+0en$/ 8o& +n P&+e/ A ne0e$ $o oun%+$e $+$% + #+&$: ;no +n ou$ $o oun%+$e % +00e one+0en$.< Bn weighing thee#idence presented$ the trial court concluded that indeed there was concealment andmisrepresentation$ howe#er$ the same was made in +good faith- and the facts concealed ormisrepresented were irrele#ant since the policy was +non&medical.- e disagree. Eection 3? of

The Bnsurance Code is e(plicit in re%uiring a party to a contract of insurance to communicate tothe other$ in good faith$ all facts within his knowledge which are material to the contract and asto which he makes no warranty$ and which the other has no means of ascertaining. Eaid Eectionpro#ides7 +! neglect to communicate that which a party knows and ought to communicate$ iscalled concealment.-

S+e/ S+e/ M+$e&%+0%$:/ M+$$e& &e0+$%n $o $e e+0$ o= $e %nu&e +&e +$e&%+0+n &e0e'+n$ $o $e +##&o'+0 +n %u+ne o= $e 0%=e %nu&+ne #o0%: + $eee>n%$e0: +?e$ $e %nu&e&@ +$%on on $e +##0%+$%on.The terms of the contract are

clear. The insured is specically re%uired to disclose to the insurer matters relating to his health.The information which the insured failed to disclose were material and rele#ant to the appro#aland issuance of the insurance policy. The matters concealed would ha#e denitely a6ectedpetitioner's action on his application$ either by appro#ing it with the corresponding adjustmentfor a higher premium or rejecting the same. *oreo#er$ a disclosure may ha#e warranted amedical e(amination of the insured by petitioner in order for it to reasonably assess the riskin#ol#ed in accepting the application.

S+e/ S+e/ Goo =+%$ % no e=ene %n one+0en$.Thus$ +good faith- is no defensein concealment. The insured's failure to disclose the fact that he was hospitali8ed for two weeksprior to ling his application for insurance$ raises gra#e doubts about his bona des. Bt appearsthat such concealment was deliberate on his part.


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Eame Eame )on&*edical Bnsurance Contracts The wai#er of a medical e(amination in a non&medical insurance contract renders e#en more material the information re%uired of the applicantconcerning pre#ious condition of health and diseases su6ered.The argument$ that petitioner'swai#er of the medical e(amination of the insured debunks the materiality of the facts concealedis untenable. e reiterate our ruling in Eaturnino #. Philippine !merican ;ife Bnsurance Company$@ EC! 90?

/n June 3?$ 021@$ the insured died in a plane crash. espondent 5ernarda 5acani led a claimwith petitioner$ seeking the benets of the insurance policy taken by her son. Petitionerconducted an in#estigation and its ndings prompted it to reject the claim.

Bn its letter$ petitioner informed respondent 5ernarda 5acani$ that the insured did not disclosematerial facts rele#ant to the issuance of the policy$ thus rendering the contract of insurance#oidable. ! check representing the total premiums paid in the amount of [email protected] wasattached to said letter.Petitioner claimed that the insured ga#e false statements in his application when he answeredthe following %uestions7+>. ithin the past > years ha#e you7a= consulted any doctor or other health practitionerLb= submitted to7 CGL K&raysL blood testsL other testsLc= attended or been admitted to any hospital or other medical facilityL

+?. "a#e you e#er had or sought ad#ice for7((( ((( (((b= urine$ kidney or bladder disorderL-9=.

The deceased answered %uestion )o. >


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failure. 4uring his connement$ the deceased was subjected to urinalysis$ ultra&sonography andhematology tests.

/n )o#ember 0@$ 0211$ respondent 5ernarda 5acani and her husband$ respondent olando5acani$ led an action for specic performance against petitioner with the egional Trial Court$5ranch 020$ Nalen8uela$ *etro *anila. Petitioner led its answer with counterclaim and a list ofe(hibits consisting of medical records furnished by the ;ung Center of the Philippines.

/n January 0:$ 022A$ pri#ate respondents led a +Proposed Etipulation with Prayer for EummaryJudgment- where they

Bn its letter$ petitioner informed respondent 5ernarda 5acani$ that the insured did not disclosematerial facts rele#ant to the issuance of the policy$ thus rendering the contract of insurance#oidable. ! check representing the total premiums paid in the amount of [email protected] wasattached to said letter.

Petitioner claimed that the insured ga#e false statements in his application when he answeredthe %uestions.

The deceased answered %uestion )o. >


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S+e/ S+e/ S+e/ S$+$een$ o= %nu&e $+$ $uo& e + o#e&+$e on ++o%+$e %$ u0e& o= $e $o+, +n eF#&e%on +e %n oo =+%$ + $o $en+$u&e o= % +%0en$ +n o#e&+$%on +n %$ou$ ;no0ee o= %$ %no&&e$ne +n%$ou$ +n: e0%e&+$e %n$en$ $o %0e+ $e %nu&e&.Bt bears emphasis that wong )amhad informed the appellant's medical e(aminer that the tumor for which he was operated on was+associated with ulcer of the stomach.- Bn the absence of e#idence that the insured hadsucient medical knowledge as to enable him to distinguish between +peptic ulcer- and +atumor-$ his statement that said tumor was +associated with ulcer of the stomach$- should beconstrued as an e(pression made in good faith of his belief as to the nature of his ailment andoperation. Bndeed$ such statement must be presumed to ha#e been made by him withoutknowledge of its incorrectness and without any deliberate intent on his part to mislead theappellant.

ESCOLIN, J.*ACTS/n *ay 03$ 02?3$ wong )am applied for a 3A&year endowment insurance on his life fothe sum of P3A$AAA.AA$ with his wife$ appellee )g Gan Fee$ as beneciary. /n the same date$appellant$ upon receipt of the re%uired premium from the insured$ appro#ed the application andissued the corresponding policy. /n 4ecember ?$ 02?9$ wong )am died of cancer of the li#erwith metastasis. !ll premiums had been religiously paid at the time of his death.

/n January 0A$ 02?:$ his widow )g Gan Fee presented a claim in due form to appellant forpayment of the face #alue of the policy. /n the same date$ she submitted the re%uired proof ofdeath of the insured. !ppellant denied the claim on the ground that the answers gi#en by theinsured to the %uestions appearing in his application for life insurance were untrue.

!ppellee brought the matter to the attention of the Bnsurance Commissioner$ the "on. MranciscoQ. *andamos$ and the latter$ after conducting an in#estigation$ wrote the appellant that he had

found no material concealment on the part of the insured and that$ therefore$ appellee should bepaid the full face #alue of the policy. This opinion of the Bnsurance Commissionernotwithstanding$ appellant refused to settle its obligation.

!ppellant alleged that the insured was guilty of misrepresentation when he answered +)o- to thefollowing %uestion appearing in the application for life insurance+"as any life insurancecompany e#er refused your application for insurance or for reinstatement of a lapsed policy oro6ered you a policy di6erent from that applied forL Bf$ so$ name company and date.-Bn its brief$ appellant rationali8ed its thesis thus7+( ( ( !s pointed out in the foregoing summary of the essential facts in this case$ the insuredhad in January$ 02?3$ applied for reinstatement of his lapsed life insurance policy with the Bnsular;ife Bnsurance Co.$ ;td. but this was declined by the insurance company$ although later onappro#ed for reinstatement with a #ery high premium as a result of his medical e(amination.

Thus notwithstanding$ the said insured answered O)o' to the Habo#eI %uestion propounded tohim$ ( ( (.-

No. L-1616. *e&u+&: 2, 196.4. IGNACIO SATRNINO, %n % on e+0= +n + $e JDICIAL GARDIAN O* CARLOSSATRNINO, %no&, #0+%n$%?-+##e00+n$, '. T!E P!ILIPPINE AMERICAN LI*EINSRANCE COMPAN5, e=en+n$-+##e00ee.

Inu&+ne/ Non-e%+0 %nu&+ne/ Me%+0 %$o&: +$e&%+0 $o %nu&+%0%$: o=+##0%+n$.Bn non&medical insurance$ the wai#er of medical e(amination renders e#en morematerial the information re%uired of the applicant concerning pre#ious condition of health anddiseases su6ered$ for such information necessarily constitutes an important factor which theinsurer takes into consideration in deciding whether to issue the policy or not.


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S+e/ S+e/ Cone+0en$ o= #&e'%ou o#e&+$%on.AA.AA as attorney's fees.4efendant$ now appellee$ set up special defenses in its answer$ with a counterclaim for damagesallegedly sustained as a result of the unwarranted presentation of this case. 5oth the complaintand the counterclaim were dismissed by the trial court but appellants were declared entitled tothe return of the premium already paid plus interest at ?R up to January 1$ 02>2$ when a checkfor the corresponding amount P9>2.?> was sent to them by appellee.

The policy sued upon is one for 3A&year endowment non&medical insurance. This kind of policydispenses with the medical e(amination of the applicant usually re%uired in ordinary life policies"owe#er$ detailed information is called for in the application concerning the applicant's healthand medical history. The written application in this case was submitted by Eaturnino to appelleeon )o#ember 0?$ 02>@$ witnessed by appellee's agent dward !. Eantos. The policy was issuedon the same day$ upon payment of the rst year's premium of P992.3>. /n Eeptember 02$ 02>1Eaturnino died of pneumonia$ secondary to in,uen8a. !ppellants here$ who are her sur#i#inghusband and minor child$ respecti#ely$ demanded payment of the face #alue of the policy. Theclaim was rejected and this suit was subse%uently instituted.

Bt appears that two months prior to the issuance of the policy or on Eeptember 2$ 02>@Eaturnino was operated on for cancer$ in#ol#ing complete remo#al of the right breast$ includingthe pectoral muscles and the glands found in the right armpit. Ehe stayed in the hospital for aperiod of eight days$ after which she was discharged$ although according to the surgeon whooperated on her she could not be considered denitely cured$ her ailment being of the malignanttype.)otwithstanding the fact of her operation stefania !. Eaturnino did not make a disclosurethereof in her application for insurance. /n the contrary$ she stated therein that she did notha#e$ nor had she e#er had$ among other ailments listed in the application$ cancer or othertumors that she had not consulted any physician$ undergone any operation or su6ered anyinjury within the preceding #e years and that she had ne#er been treated for nor did she e#erha#e any illness or disease peculiar to her se($ particularly of the breast$ o#aries$ uterus$ andmenstrual disorders. The application also recites that the foregoing declarations constituted +afurther basis for the issuance of the policy.-

The %uestion at issue is whether or not the insured made such false representations of materialfacts as to a#oid the policy.

No. L-4233. Se#$ee& 3, 192.. REGINA L. EDILLON, + +%$e : e& u+n, MARCIAL EDILLON, #e$%$%one&-+##e00+n$, '. MANILA ANERS LI*E INSRANCE CORPORATION +n $e CORT O**IRST INSTANCE O* RIAL, RANC! ", EON CIT5, &e#onen$-+##e00ee.

Coe&%+0 L+/ Inu&+ne/ Cone+0en$ o= +e, no$ + +e o=/ E$o##e0/ Ae#$+ne: %nu&+ne oo&+$%on o= $e #&e%u +n %u+ne o= o&&e#on%n e&$%>+$e o=


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%nu&+ne %n =+'o& o= $e %nu&e + eee + +%'e& o= $e eF0u%on+&: on%$%ono= o'e&+e $+$e %n +% e&$%>+$e o= %nu&+ne.The age of the insured Carmen /;apu8 was not concealed to the insurance company. "er application for insurance co#eragewhich was on a printed form furnished by pri#ate respondent and which contained #ery fewitems of information clearly indicated her age at the time of ling the same to be almost ?>years of age. 4espite such information which could hardly be o#erlooked in the application form$considering its prominence thereon and its materiality to the co#erage applied for$ therespondent insurance corporation recei#ed her payment of premium and issued thecorresponding certicate of insurance without %uestion. The accident which resulted in the deathof the insured$ a risk co#ered by the policy$ occurred on *ay 90$ 02?2 or M/TQ&MBN = 4!QEafter the insurance co#erage was applied for. There was sucient time for the pri#aterespondent to process the application and to notice that the application was o#er ?A years of ageand thereby cancel the policy on that ground if it was minded to do so. Bf the pri#ate respondentfailed to act$ it is either because it was willing to wai#e such dis%ualication or$ through thenegligence or incompetence of its employees for which it has only itself to blame$ it simplyo#erlooked such fact. Snder the circumstances$ the insurance corporation is already deemed inestoppel. Bts inaction to re#oke the policy despite a departure from the e(clusionary conditioncontained in the said policy constituted a wai#er of such condition.

"ASE, J.*ACTSEometime in !pril 02?2$ Carmen /$ ;apu8 applied with respondent insurance corporatiofor insurance co#erage against accident and injuries. Ehe lled up the blank application formgi#en to her and led the same with the respondent insurance corporation. Bn the saidapplication form which was dated !pril 0>$ 02?2$ she ga#e the date of her birth as July 00$ 02A:./n the same date$ she paid the sum of P3A.AA representing the premium for which she wasissued the corresponding receipt signed by an authori8ed agent of the respondent insurancecorporation.


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G.R. No. 169. *e&u+&: 22, 2312.6. MA. LORDES S. *LORENDO, #e$%$%one&, '. P!ILAM PLANS, INC., PERLA ACEDE +nMA. CELESTE ACEDE, &e#onen$.Inu&+ne L+/ Cone+0en$ *anuel had been taking medicine for his heart condition anddiabetes when he submitted his pension plan application Pursuant to Eection 3@ of theBnsurance Code$ *anuel's concealment entitles Philam Plans to rescind its contract of insurancewith him.!s already stated$ *anuel had been taking medicine for his heart condition anddiabetes when he submitted his pension plan application. These clearly fell within the #e&yearperiod. *ore$ e#en if Perla's knowledge of *anuel's pacemaker may be applied to Philam Plansunder the theory of imputed knowledge$ it is not claimed that Perla was aware of his two otheraVictions that needed medical treatments. Pursuant to Eection 3@ of the Bnsurance Code*anuel's concealment entitles Philam Plans to rescind its contract of insurance with him.

S+e/ S+e/ Inu&e #e&on +: +e#$ #o0%%e %$ou$ &e+%n $e, +n $+$ $%% no$ ne0%ene #e& e. u$, $% % no$ %$ou$ +n: eFe#$%on. and the contract concerns indemnity in case of loss in his money&making trade of which important consideration he could not ha#e been unaware as it wasprecisely the reason for his procuring the same. The same may be said of *anuel$ a ci#ilengineer and manager of a construction company. "e could be e(pected to know that one mustread e#ery document$ especially if it creates rights and obligations a6ecting him$ before signingthe same. *anuel is not unschooled that the Court must come to his succor. Bt could reasonablybe e(pected that he would not tri,e with something that would pro#ide additional nancialsecurity to him and to his wife in his twilight years.

S+e/ S+e/ Inon$e$+%0%$: C0+ue/ An %non$e$+%0%$: 0+ue #&e0ue $e %nu&e&=&o %on%n 0%+%0%$: une& $e #o0%: %$ %ue on $e &oun o= one+0en$ o&%&e#&een$+$%on.


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/n /ctober 39$ 022@ *anuel Mlorendo led an application for comprehensi#e pension plan withrespondent Philam Plans$ Bnc. A.AA$ payable in 0A years$ and had a maturity #alue ofP3$12A$AAA.AA after 3A years.0 *anuel signed the application and left to Perla the task ofsupplying the information needed in the application.3 espondent *a. Celeste !bcede$ Perla'sdaughter$ signed the application as sales counselor.

!side from pension benets$ the comprehensi#e pension plan also pro#ided life insuranceco#erage to Mlorendo.: This was co#ered by a Group *aster Policy that Philippine !merican ;ifeBnsurance Company Snder the master policy$ Philam ;ifewas to automatically pro#ide life insurance co#erage$ including accidental death$ to all whosigned up for Philam Plans' comprehensi#e pension plan.? Bf the plan holder died before thematurity of the plan$ his beneciary was to instead recei#e the proceeds of the life insurance$e%ui#alent to the pre&need price. Murther$ the life insurance was to take care of any unpaidpremium until the pension plan matured$ entitling the beneciary to the maturity #alue of thepension plan.

/n /ctober 9A$ 022@ Philam Plans issued Pension Plan !greement PP:9AA>>1:1 to *anuel$ withpetitioner *a. ;ourdes E. Mlorendo$ his wife$ as beneciary. Bn time$ *anuel paid his %uarterlypremiums.

le#en months later or on Eeptember 0>$ 0221$ *anuel died of blood poisoning. Eubse%uently$;ourdes led a claim with Philam Plans for the payment of the benets under her husband'splan.0A 5ecause *anuel died before his pension plan matured and his wife was to get only thebenets of his life insurance$ Philam Plans forwarded her claim to Philam ;ife.

/n *ay 9$ 0222 Philam Plans wrote ;ourdes a letter$03 declining her claim. Philam ;ife found that*anuel was on maintenance medicine for his heart and had an implanted pacemaker. Murther$ hesu6ered from diabetes mellitus and was taking insulin. ;ourdes renewed her demand forpayment under the plan09 but Philam Plans rejected it$0: prompting her to le the presentaction against the pension plan company before the egional Trial Court


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contract. Bn this type of policy insurance$ the mortgagee is simply an appointee of the insurancefund$ such loss&payable clause does not make the mortgagee a party to the contract.

S+e/ S+e/ S+e/ P+&$%e/ Re+0 P+&$: %n In$e&e$/ Te %nu&e +: e &e+&e +$e &e+0 #+&$: %n %n$e&e$, +0$ou e + +%ne $e #o0%: =o& $e #uoe o=o00e$%on, o& + +%ne + o00+$e&+0 eu&%$: +n: uen$ e +: o$+%n.


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o00e$ $e %nu&+ne #&oee their residential lot$in satisfaction of mortgagor's outstanding loan. Considering this super#ening e#ent$ theinsurance proceeds shall inure to the benet of the heirs of the deceased person or hisbeneciaries. %uity dictates that 45P should not unjustly enrich itself at the e(pense of another$ 0219$ Grepalife issued Certicate )o. 5&01>>1$ as insurance co#erage of 4r.;euterio$ to the e(tent of his 45P mortgage indebtedness amounting to eighty&si( thousand$ twohundred $ 0219Grepalife insisted that 4r. ;euterio did not disclose he had been su6ering from hypertension$which caused his death. !llegedly$ such non&disclosure constituted concealment that justied thedenial of the claim.

/n /ctober 3A$ 021?$ the widow of the late 4r. ;euterio$ respondent *edarda N. ;euterio$ led acomplaint with the egional Trial Court of *isamis /riental$ 5ranch 01$ against Grepalife for+Epecic Performance with 4amages.-> 4uring the trial$ 4r. "ernando *ejia$ who issued thedeath certicate$ was called to testify. 4r. *ejia's ndings$ based partly from the informationgi#en by the respondent widow$ stated that 4r. ;euterio complained of headaches presumablydue to high blood pressure. The inference was not conclusi#e because 4r. ;euterio was notautopsied$ hence$ other causes were not ruled out.

/n Mebruary 33$ 0211$ the trial court rendered a decision in fa#or of respondent widow andagainst Grepalife. /n *ay 0@$ 0229$ the Court of !ppeals sustained the trial court's decision.

. SOLIMAN ". S LI*E- RESCIND CONTRACT O* INSRANCE (134 P!IL 1346)*ACTS SE ;ife issued a 3A yr endowment life policy on the joint li#es of Patricio Eoliman and hiswife osario$ each of them being the beneciary of the other. Bn *ar. 02:2$ the spouses wereinformed that the premium for Jan 02:2 was still unpaid notwithstanding that the 90&day graceperiod has already e(pired$ and they were furnished at the same time long&form healthcerticates for the reinstatement of the policies.


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Bn !pr 02:2$ they submitted the certicates and paid the premiums. Bn Jan. 02>A$ osario died ofacute dilation of the heart$ and thereafter$ Patricio led a claim for the proceeds of the insurance.

SE life denied the claim and led for the rescission of the contract on the ground that thecerticates failed to disclose that osario had been su6ering from bronchial asthma for 9 yearsprior to their submission.

ISSE hether or not the contract can still be rescinded.

!ELD5e.The insurer is once again gi#en two years from the date of reinstatement toin#estigate into the #eracity of the facts represented by the insured in the application forreinstatement. hen SE life sought to rescind the contract on the ground ofconcealmentWmisrepresentation$ two years had not yet elapsed. "ence$ the contract can still berescinded.

No. 12737. Auu$ 13, 191.9. MRS. !ENR5 E. !ARDING +n e& u+n, #0+%n$%? +n +##e00ee, '.COMMERCIAL NION ASSRANCE COMPAN5, e=en+n$ +n +##e00+n$.

1.INSRANCE/ INSRALE INTEREST.

2.ID./ 8ARRANT5/ PROPOSAL 8RITTEN 5 INSRERS AGENT.here it appears that theproposal form$ while signed by the insured$ was made out by the person authori8ed to solicit theinsurance$ the facts stated in the proposal$ e#en if incorrect$ will not be regarded as warranted bythe insured$ in the absence of willful misstatement. Snder such circumstances the proposal is tobe regarded as the act of the insurer.

.ID./ "ALED POLIC5.


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re%uest of plainti6$ *rs. "enry . "arding$ issued to the said plainti6 the policy of insurance onan automobile alleged by the said plainti6 to be her property that the said re%uest for theissuance of said policy of insurance was made by means of a proposal in writing signed anddeli#ered by said plainti6 to the defendant$ guaranteeing the truth of the statements containedtherein which said proposal is referred to in the said policy of insurance and made a part thereof


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The e#idence further shows that on *arch 3:$ 020?$ the said automobile was totally destroyedby re$ and that the iron and steel portions of said automobile which did not burn were taken intothe possession of the defendant by and through its agent Emith$ 5ell X Company $ was su6ering with ad#ancepulmonary tuberculosis when he signed his application for insurance with the petitioner on/ctober 03$ 029:. /n that same date 4octor Trepp$ who had taken K&ray pictures of his lungs$informed the respondent 4r. Eeran 4. Meliciano$ brother of #aristo$ that the latter was alreadyin a #ery serious and practically hopeless condition. )e#ertheless the %uestion contained in theapplication"a#e you e#er su6ered from any ailment or disease of the lungs$ pleurisy$pneumonia or asthmaL appears to ha#e been answered$ )o. !nd abo#e the signature of theapplicant$ following the answers to the #arious %uestions propounded to him$ is the followingprinted statement7

B declare on behalf of myself and of any person who shall ha#e or claim any interest in any

policy issued hereunder$ that each of the abo#e answers is full$ complete and true$ and that tothe best of my knowledge and belief B am a proper subject for life insurance.

ach of the policies sued upon contains the following stipulations7This policy and the application herefor constitute the entire contract between the parties hereto.Y Y Y /nly the President$ or the *anager$ acting jointly with the Eecretary or !ssistantEecretary


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The application contains$ among others$ the following statements701. B Hthe applicantI hereby declare that all the abo#e statements and answers as well as althose that B may make to the CompanyUs *edical (aminer in continuation of this application$ tobe complete$ true and correct to the best of my knowledge and belief$ and B hereby agree asfollows70. That this declaration$ with the answers to be gi#en by me to the *edical (aminer$ shall bethe basis of the policy and form part of same.YYYYYYYYYYY9. That the said policy shall not take e6ect until the rst premium has been paid and the policyhas been deli#ered to and accepted by me$ while B am in good health.:. That the agent taking this application has no authority to make$ modify or dischargecontracts$ or to wai#e any of the CompanyUs rights or re%uirements.>. *y acceptance of any policy issued on this application will constitute a ratication by me ofany corrections in or$ additions to this application made by the Company in the space pro#idedUMor "ome /ce Corrections or !dditions /nly.U B agree that photographic copy of this applicationas corrected or added to shall constitute sucient notice to me of the changes made.

The petitioner insists that upon the facts of the case the policies in %uestion are null and #oid abinitio and that all that the respondents are entitled to is the refund of the premiums paid thereon.!fter a careful re&e(amination of the facts and the law$ we are persuaded that petitionerUscontention is correct. To the reasons adduced in the dissenting opinion heretofore published$ weonly desire to add the following considerations7hen #aristo Meliciano$ the applicant for insurance$ signed the application in blank andauthori8ed the soliciting agent andWor the medical e(aminer of the Company to write the answersfor him$ he made them his own agents for that purpose$ and he was responsible for their actsin(that connection. Bf they falsied the answers for him$ he could not e#ade the responsibility forthe falsication. "e was not supposed to sign the application in blank. "e knew that the answersto the %uestions therein contained would be the basis of the policy$ and for that #ery reason hewas re%uired with his signature to #ouch for the truth thereof.

*oreo#er$ from the facts of the case we cannot escape the conclusion that the insured acted inconni#ance with the soliciting agent and the medical e(aminer of the Company in accepting thepolicies in %uestion. !bo#e the signature of the applicant is the printed statement orrepresentation7 Y Y Y B am a proper subject for life insurance. Bn another sheet of the sameapplication and abo#e another signature of the applicant was also printed this statement7 Thatthe said policy shall not take e6ect until the rst premium has been paid and the policy has beendeli#ered to and accepted by me$ while B am in good health. hen the applicant signed theapplication he was ha#ing diculty in breathing$ Y Y Y with a #ery high fe#er. "e had gonethree times to the Eantol Eanatorium and had K&ray pictures taken of his lungs. "e thereforeknew that he was not a proper subject for life insurance. hen he accepted the policy$ he knewthat he was not in good health. )e#ertheless$ he not only accepted the rst policy of P3A$AAA butthen and there applied for and later accepted another policy of P>$AAA.

e cannot bring oursel#es to belie#e that the insured did not take the trouble to read the

answers contained in the photostatic copy of the application attached to and made a part of thepolicy before he accepted it and paid the premium thereon. "e must ha#e noticed that theanswers to the %uestions therein asked concerning his clinical history were false$ and yet heaccepted the rst policy and applied for another. Bn any e#ent$ he obligated himself to read thepolicy when he subscribed to this statement7 *y acceptance of any policy issued on thisapplication will constitute a ratication by me of any corrections in or additions to this applicationmade by the Company Y Y Y 5y accepting the policy he became charged with knowledge of itscontents$ whether he actually read it or not. "e could not ostrich&like hide his head from it inorder to a#oid his part of the bargain and at the same time claim the benet thereof. "e knew$ orwas chargeable with knowledge$ from the #ery terms of the two policies sued upon


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therefore$ had no right to relyand we cannot belie#e he relied in good faithupon the oralrepresentation of said agent and medical e(aminer that he


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nding of facts of the lower court was sustained by the Court of !ppeals. This concludes thecontro#ersy o#er the facts in so far as this Court is concerned.

No. L-4611. Deee& 17, 1912. A C!EE GAN, #0+%n$%? +n +##e00ee, '. LA8 NION AND ROC INSRANCE Co.,LTD., &e#&een$e : %$ +en$, 8ARNER, ARNES AND Co., LTD., e=en+n$ +n+##e00+n$.

1.INSRANCE/ REAC! O* 8ARRANT5/ 8!EN INSRER ARRED *ROM CLAIMINGPOLICIES "OID A INITIO.


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totalling P9@A$AAA$ issued by the ;aw Snion X ock Bnsurance Co.$ ;td.$ through its agentarner$ 5arnes X Co.$ ;td.$ upon certain bodegas and merchandise of the insured that wereburned on June 30$ 02:A. The records of the original case were destroyed during the liberation ofthe region$ and were reconstituted in 02:?. !fter a trial that lasted se#eral years$ the Court ofMirst Bnstance rendered a decision in fa#or of the plainti6.

The record shows that before the last war$ plainti6&appellee owned four warehouses or bodegas


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fraudulent claims$ and that the re had been deliberately caused by the insured or by otherpersons in conni#ance with him.

ith counsel for the insurance company acting as pri#ate prosecutor$ Dua Chee Gan$ with hisbrother$ Dua Chee Pao$ and some employees of his$ were indicted and tried in 02:A for the crimeof arson$ it being claimed that they had set re to the destroyed warehouses to collect theinsurance. They were$ howe#er$ ac%uitted by the trial court in a nal decision dated July 2$ 02:0.

INCONTESTAILIT5 (SECTION 4)

No. 2741. No'ee& 21, 19271. TAN C!A5 !ENG, #0+%n$%? +n +##e00ee, '. T!E 8EST COAST LI*E INSRANCECOMPAN5, e=en+n$ +n +##e00+n$.NATRE O* ACTION TO RESCIND.

8!EN SECTION 47 O* INSRANCE ACT % NOT A AR.

NATRE O* T!AT DE*ENSE.

*ACTS Plainti6 alleges that he is of age and a resident of 5acolod$ /ccidental )egros that thedefendant is a foreign insurance corporation duly organi8ed by the laws of the Philippines toengage in the insurance business$ its main oce of which is in the City of *anila that in themonth of !pril$ 023>$ on his application the defendant accepted and appro#ed a life insurancepolicy on Tan Caeng for the sum of L0A$AAA in which the plainti6 was the sole beneciary thatthe policy was issued upon the payment by the said Tan Caeng of the rst yearUs premiumamounting to P29? that in and by its terms$ the defendant agreed to pay the plainti6 asbeneciary the amount of the policy upon the receipt of the proofs of the death of the insuredwhile the policy was in force that without any premium being due or unpaid$ Tan Caeng died on*ay 0A$ 023> that in June$ 023>$ plainti6 submitted the proofs of the death of Tan Caeng with aclaim for the payment of the policy which the defendant refused to pay$ for which he prays for acorresponding judgment$ with legal interest from the date of the policy$ and costs.

Bn Mebruary$ 023?$ the defendant led an answer to the complaint in which it made a general andspecic denial$ and then announced its intention to le an amended answer$ alleging specialdefense$ and on !ugust 90$ 023?.

5y way of special defense$ defendant alleges7That the insurance policy on the life of Tan Caeng$ upon which plainti6Us action is based$ was

obtained by the plainti6 in confabulation with one Go Chulian$ of 5acolod$ )egros /ccidentalMrancisco Eanche8 of the same place and 4r. N. E. ;ocsin$ of ;a Carlota$ )egros /ccidental$ thrufraud and deceit perpetrated against this defendant in the following manner$ to wit70. That on or about the 33d day of Mebruary$ 023>$ in the municipality of Pulupandan$ /ccidenta)egros$ the present plainti6 and the said Go Chulian$ Mrancisco Eanche8 and 4r. N. E. ;ocsin$conspiring and confederating together for the purpose of defrauding and cheating the defendantin the sum of P0A$AAA$ caused one Tan Caeng to sign an application for insurance with thedefendant in the sum of P0A$AAA$ in which application it was falsely represented to the defendantthat the said Tan Caeng was single and was a merchant$ and that the plainti6 Tan Chai "eng$ thebeneciary$ was his nephew$ whereas in truth and in fact$ and as the plainti6 and his saidcoconspirators well knew$ the said Tan Caeng was not single but was legally married to *arcelinaPatalita with whom he had se#eral children and that he was not a merchant but was a mere


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employee of another Chinaman by the name of Tan Duina from whom he recei#ed only a meagersalary$ and that the present plainti6 was not a nephew of the said Tan Caeng.

3. That on said date$ Mebruary 33$ 023>$ the said Tan Caeng was seriously ill$ su6ering frompulmonary tuberculosis of about three yearsU duration$ which illness was incurable and was wellknown to the plainti6 and his said coconspirators.9. That on or about the same date$ Mebruary 33$ 023>$ the said 4r. N. E. ;ocsin$ in his capacity asmedical e(aminer for the defendant insurance company$ pursuant to the conspiracy abo#ementioned$ prepared and falsied the necessary medical certicate$ in which it was made toappear$ among other things$ that the said Tan Caeng had ne#er used morphine$ cocaine or anyother drug that he was then in good health and had ne#er consulted any physician that he hadne#er spit blood and that there was no sign of either present or past disease of his lungswhereas in truth and in fact$ as the plainti6 and his said coconspirators well knew$ the said TanCaeng was addicted to morphine$ cocaine$ and opium and had been con#icted and imprisonedtherefor$ and was then$ and for about three years prior thereto had been su6ering frompulmonary tuberculosis.

:. That on or about the same date$ to wit$ Mebruary 33$ 023>$ the plainti6 and his saidcoconspirators$ pursuant to the conspiracy abo#e mentioned$ caused a condential report to thedefendant insurance company to be signed by one N. Ey Qock ian$ who was an employee of GoChulian$ in which condential report$ among other things$ it was falsely represented to thedefendant insurance company that the said Tan Caeng was worth about P:A$AAA$ had an annualincome of from eight to ten thousand pesos net$ had the appearance of good health$ and ne#erhad tuberculosis that the plainti6 and his said coconspirators well knew that saidrepresentations were false and that they were made for the purpose of decei#ing the defendantand inducing it to accept the said application for insurance.

>. That after the said application for insurance$ medical certicate and condential report hadbeen prepared and falsied$ as aforesaid$ the plainti6 and his said coconspirators caused thesame to be forwarded to the defendant at its oce in *anila$ the medical certicate thru the said4r. N. E. ;ocsin as medical e(aminer$ and said application for insurance and condential reportthru the said Mrancisco Eanche8 in his capacity as one of the agents of the defendant insurancecompany in the Pro#ince of /ccidental )egros that the defendant$ belie#ing that therepresentations made in said document were true$ and relying thereon$ pro#isionally acceptedthe said application for insurance on the life of Tan Caeng in the sum of P0A$AAA and issued atemporary policy pending the nal appro#al or disappro#al of said application by defendantUshomeoce in Ean Mrancisco$ California$ where in case of appro#al a permanent policy was to beissued that such permanent policy was ne#er deli#ered to the plainti6 because defendantdisco#ered the fraud before its deli#ery.

?. That the rst agreed annual premium on the insurance in %uestion of P29?.>A not ha#ingbeen paid within si(ty


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That the plainti6 Tan Chai "eng$ on the dates hereinabo#e mentioned$ was$ like N. Ey Qock ianwho signed the condential report abo#e mentioned$ an employee of the said Go Chulian thatthe latter was the ringleader of a gang of malefactors who$ during$ and for some years pre#iousto the dates abo#e mentioned$ were engaged in the illicit enterprise of procuring fraudulent lifeinsurances from the present defendant$ similar to the one in %uestion$ and which enterprise wascapitali8ed by him by furnishing the funds with which to pay the premium on said fraudulentinsurance that the said Go Chulian was the one who furnished the money with which to pay therst and only annual premium on the insurance here in %uestion$ amounting to P29?.>A that thesaid Go Chulian$ on !ugust 31$ 023?$ was con#icted by the Court of Mirst Bnstance of the City of*anila$ in criminal case )o. 90:3> of that court$ of the crime of falsication of pri#ate documentsin connection with a fraudulent insurance$ similar to the present$ committed against thisdefendant in the month of Eeptember$ 023: that in the same case the said Mrancisco Eanche8was one of the coaccused of the said Go Chulian but was discharged from the complaintbecause he o6ered himself and was utili8ed as a stateUs witness that there is another ci#il actionnow pending against Go Chulian and Eanche8 in the Court of Mirst Bnstance of *anila


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*ACTSThis is an action upon a joint life insurance policy for P0>$AAA issued by the defendanthe est Coast ;ife Bnsurance Co.$ on *ay 0>$ 023>$ in fa#or of the plainti6$ 5ernardo !rgente$and his wife$ Nicenta de /campo$ the latter ha#ing died on )o#ember 01$ 023>. Mraud inobtaining the policy was pleaded by way of special defense. /n the issue thus suggested$ thecourt adopted the theory of the defendant$ and held the insurance policy null and #oid$ with theresult that the complaint was dismissed$ with costs.

/n Mebruary 2$ 023>$ 5ernardo !rgente signed an application for joint insurance with his wife inthe sum of P3$AAA. The wife$ Nicenta de /campo$ signed a like application for the same policy.5oth applications$ with the e(ception of the names and the signatures of the applicants$ werewritten by Jose Geronimo del osario$ an agent for the est Coast ;ife Bnsurance Co. 5ut all theinformation contained in the applications was furnished the agent by 5ernardo !rgente.

Pursuant to his application$ 5ernardo !rgente was e(amined by 4r. Cesareo Eta. !na$ a medicale(aminer for the est Coast ;ife Bnsurance Co.$ on Mebruary 0A$ 023>$ in the oce of theCustoms "ouse. The result of such e(amination was recorded in the *edical (aminerUs eport$and with the e(ception of the signature of 5ernardo !rgente$ was in the hand&writing of 4octorEta. !na. 5ut the information or answers to the %uestions contained on the face of the *edical(aminerUs eport were furnished the doctor by the applicant$ 5ernardo !rgente.

Pursuant to her application$ Nicenta de /campo$ wife of the plainti6$ was e(amined by 4r.Cesareo Eta. !na on Mebruary 0A$ 023>$ at her residence in *anila. The result of the medicale(amination$ including$ among other things$ the answers gi#en by Nicenta de /campo to the%uestions propounded$ to her by the physician$ appears in the *edical (aminerUs eport.

/n *ay 2$ 023>$ 5ernardo !rgente and his wife submitted to the est Coast ;ife Bnsurance Co.an amended application for insurance$ increasing the amount thereof to P0>$AAA$ and asked thatthe policy be dated *ay 0>$ 023>. The amended application was accompanied by the documentsentitled Ehort Morm *edical eport. Bn both of these documents appear certain %uestions andanswers.

! temporary policy for P0>$AAA was issued to 5ernardo !rgente and his wife as of *ay 0>$ 023>$but it was not deli#ered to 5ernardo !rgente until July 3$ 023>$ when the rst %uarterly premiumon the policy was paid. Bn #iew of the fact that more than thirty days had elapsed since theapplicants were e(amined by the companyUs physician$ each of them was re%uired to le acerticate of health before the policy was deli#ered to them.

/n )o#ember 01$ 023>$ Nicenta de /campo died of cerebral apople(y. Thereafter 5ernardo!rgente presented a claim in due form to the est Coast ;ife Bnsurance Co. for the payment ofthe sum of P0>$AAA the amount of the joint life insurance policy. Mollowing in#estigationconducted by the *anager of the *anila oce of the insurance company$ it was apparentlydisclosed that the answers gi#en by the insured in their medical e(aminations with regard totheir health and pre#ious illnesses and medical attendance were untrue. Mor that reason$ theest Coast ;ife Bnsurance Co. refused to pay the claim of 5ernardo !rgente$ and A30 *ay 3>$

023?$ wrote him to the e6ect that the claim was rejected because the insurance was obtainedthrough fraud and misrepresentation.

G.R. No. 1267. M+& 1, 2332.. P!ILAMCARE !EALT! S5STEMS, INC., #e$%$%one&, '. CORT O* APPEALS +n JLITATRINOS, &e#onen$.Inu&+ne/ E0een$/ 8o& +n P&+e/ A on$&+$ o= %nu&+ne % +n +&eeen$e&e: one une&$+;e =o& + on%e&+$%on $o %nen%=: +no$e& ++%n$ 0o,++e o& 0%+%0%$: +&%%n =&o +n un;non o& on$%nen$ e'en$.


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contingent e#ent. !n insurance contract e(ists where the following elements concur7 0. Theinsured has an insurable interest 3. The insured is subject to a risk of loss by the happening ofthe designated peril 9. The insurer assumes the risk :. Euch assumption of risk is part of ageneral scheme to distribute actual losses among a large group of persons bearing a similar riskand >. Bn consideration of the insurer's promise$ the insured pays a premium.

S+e/ E'e&: #e&on + +n %nu&+0e %n$e&e$ %n $e 0%=e +n e+0$ o= %e0=.

e=ene : +$%=+$o&: +n on'%n%n e'%ene &e$ u#on $e #&o'%e& o& %nu&e&/Te 0%+%0%$: o= $e e+0$ +&e #&o'%e& +$$+e one $e ee& % o#%$+0%e =o&$e %e+e o& %nu&: o'e&e : $e +&eeen$ o& ene'e& e +'+%0 o= $e o'e&eene>$ % e + #&e#+%.


24/84

S+e/ S+e/ S+e/ Re%%on/ Te &%$ $o &e%n ou0 e eFe&%e #&e'%ou $o$e oeneen$ o= +n +$%on on $e on$&+$.


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4uring the period of his co#erage$ rnani su6ered a heart attack and was conned at the *anila*edical Center 9@2>. Ehe asked for reimbursement of her e(penses plus moradamages and attorney's fees.

4. SOLIMAN ". S LI*E (134 P!IL 1346) -efer to Case )o. 1 in Concealment and epresentation

G.R. No. 4349. June 29, 199.. EMILIO TAN, JANITO TAN, ALERTO TAN +n ARTRO TAN, #e$%$%one&, '. T!ECORT O* APPEALS +n T!E P!ILIPPINE AMERICAN LI*E INSRANCE COMPAN5,&e#onen$.Coe&%+0 L+/ Inu&+ne/ Eene o= $e #&+e Inon$e$+%0%$: 0+ue.-The so&called +incontestability clause- precludes the insurer from raising the defenses of falserepresentations or concealment of material facts insofar as health and pre#ious diseases areconcerned if the insurance has been in force for at least two years during the insured's lifetime.

The phrase +during the lifetime- found in Eection :1 simply means that the policy is no longerconsidered in force after the insured has died. The key phrase in the second paragraph of Eection:1 is +for a period of two years.-

S+e/ S+e/ S+e/ Re#onen$ o#+n: no$ +&&e =&o #&o'%n $+$ $e #o0%: %'o% + %n%$%o : &e+on o= $e %nu&e@ =&+uu0en$ one+0en$ o& %&e#&een$+$%on!s noted by the Court of !ppeals$ to wit7 +The policy was issued on )o#ember ?$ 02@9 and theinsured died on !pril 3?$ 02@>. The policy was thus in force for a period of only one year and #emonths. Considering that the insured died before the two&year period had lapsed$ respondentcompany is not$ therefore$ barred from pro#ing that the policy is #oid ab initio by reason of theinsured's fraudulent concealment or misrepresentation. *oreo#er$ respondent companyrescinded the contract of insurance and refunded the premiums paid on Eeptember 00$ 02@>$

pre#ious to the commencement of this action on )o#ember 3@$ 02@>.-

S+e/ S+e/ S+e/ Inon$e$+%0%$: 0+ue % + u%en$ +ne& $o $e '+&%ou $+$%e#0o:e : %nu&+ne o#+n%e $o +'o% 0%+%0%$:.


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GTIERRE, JR., J.*ACTSThis is a petition for re#iew on certiorari of the Court of !ppeals' decision arming thdecision of the Bnsurance Commissioner which dismissed the petitioners' complaint againstrespondent Philippine !merican ;ife Bnsurance Company for the reco#ery of the proceeds fromtheir late father's policy.

The facts of the case as found by the Court of !ppeals are7+Petitioners appeal from the 4ecision of the Bnsurance Commissioner dismissing hereinpetitioners' complaint against respondent Philippine !merican ;ife Bnsurance Company for thereco#ery of the proceeds of Policy )o. 0A13:?@ in the amount of P1A$AAA.AA.

+/n Eeptember 39$ 02@9$ Tan ;ee Eiong$ father of herein petitioners$ applied for life insurance inthe amount of P1A$AAA.AA with respondent company. Eaid application was appro#ed and Policy)o. 0A13:?@ was issued e6ecti#e )o#ember ?$ 02@9$ with petitioners the beneciaries thereof$ Tan ;ee Eiong died of hepatoma


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S+e/ Inu&+ne u%ne/ Inu&e& +nno$ e +00oe $o o00e$ #&e%u on%nu&+ne #o0%%e, ue $ee +oun$ o00e$e +n %n'e$ $e +e $&ou $e:e+&, ene&+$%n #&o>$ +n &e$u&n $e&e=&o =o& $e%& on ene>$, +n $e&e+=$e&on'en%en$0: en: %nu&+ne 0+% : Bue$%on%n $e +u$o&%$: o& %n$e&%$: o= $e%&on +en$ o& $e %nu&+ne #o0%%e $e: %ue $o $e%& #&e%u-#+:%n 0%en$. Bfinsurers cannot #ouch for the integrity and honesty of their insurance agentsWsalesmen and theinsurance policies they issue$ then they should cease doing business. Bf they could not properlyscreen their agents or salesmen before taking them in to market their products$ or if they do notthoroughly in#estigate the insurance contracts they enter into with their clients$ then they ha#eonly themsel#es to blame. /therwise said$ insurers cannot be allowed to collect premiums oninsurance policies$ use these amounts collected and in#est the same through the yearsgenerating prots and returns therefrom for their own benet$ and thereafter con#eniently denyinsurance claims by %uestioning the authority or integrity of their own agents or the insurancepolicies they issued to their premium&paying clients. This is e(actly one of the schemes whichEection :1 aims to pre#ent.

S+e/ S+e/ Con$&+$ o= Ae%on/ An %nu&+ne on$&+$ % + on$&+$ o= +e%on% u$ e on$&ue 0%e&+00: %n =+'o& o= $e %nu&e +n $&%$0: ++%n$ $e%nu&e& %n o&e& $o +=eu+& $e =o&e&@ %n$e&e$. Bnsurers may not be allowed to delaythe payment of claims by ling fri#olous cases in court$ hoping that the ine#itable may be put o6for years or e#en decades by the pendency of these unnecessary court cases. Bn themeantime$ they benet from collecting the interest andWor returns on both the premiumspre#iously paid by the insured and the insurance proceeds which should otherwise go to theirbeneciaries. The business of insurance is a highly regulated commercial acti#ity in the country$and is imbued with public interest. +H!In insurance contract is a contract of adhesion which mustbe construed liberally in fa#or of the insured and strictly against the insurer in order to safeguardthe Hformer'sI interest.-

DEL CASTILLO, J.*ACTSThe ultimate aim of Eection :1 of the Bnsurance Code is to compel insurers to solicbusiness from or pro#ide insurance co#erage only to legitimate and bona de clients$ byre%uiring them to thoroughly in#estigate those they insure within two years from e6ecti#ity ofthe policy and while the insured is still ali#e. Bf they do not$ they will be obligated to honor claimson the policies they issue$ regardless of fraud$ concealment or misrepresentation. The lawassumes that they will do just that and not sit on their laurels$ indiscriminately soliciting andaccepting insurance business from any Tom$ 4ick and "arry.

/n July 9$ 0229$ 4elia Eotero


28/84

Mor the abo#e reasons$ petitioner denied respondent's claim on !pril 0?$ 022@ and refunded thepremiums paid on the policy.

/n !pril 3:$ 022@$ petitioner led a ci#il case for rescission andWor annulment of the policy$ whichwas docketed as Ci#il Case )o. 2@&1?@ and assigned to 5ranch 09: of the *akati egional TrialCourt. The main thesis of the Complaint was that the policy was obtained by fraud$ concealmentandWor misrepresentation under the Bnsurance Code$03 which thus renders it #oidable under!rticle 092A09 of the Ci#il Code.

espondent led a *otion to 4ismiss0: claiming that petitioner's cause of action was barred byprescription pursuant to Eection :1 of the Bnsurance Code$ which pro#ides as follows7hene#er a right to rescind a contract of insurance is gi#en to the insurer by any pro#ision ofthis chapter$ such right must be e(ercised pre#ious to the commencement of an action on thecontract.!fter a policy of life insurance made payable on the death of the insured shall ha#e been in forceduring the lifetime of the insured for a period of two years from the date of its issue or of its lastreinstatement$ the insurer cannot pro#e that the policy is #oid ab initio or is rescindible by reasonof the fraudulent concealment or misrepresentation of the insured or his agent.

4uring the proceedings on the *otion to 4ismiss$ petitioner's in#estigator testied in court$stating among others that the insurance underwriter who solicited the insurance is a cousin ofrespondent's husband$ 4indo !ban$0> and that it was the respondent who paid the annuapremiums on the policy.

T!E POLIC5 (SECTIONS 49-66 AND SECTIONS 22 AND 2)

No. 19. No'ee& 29, 1923.1. RA*AEL ENRIE, + +%n%$&+$o& o= $e e$+$e o= $e 0+$e Jo+Bu%n M+. !e&&e&,#0+%n$%? +n +##e00+n$, '. SN LI*E ASSRANCE COMPAN5 O* CANADA, e=en+n$+n +##e00ee.

1.INSRANCE/ P!ILIPPINE LA8.


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presumption of fact that it was recei#ed by the addressee as soon as it could ha#e beentransmitted to him in the ordinary course of the mails. 5ut if any one of these elemental factsfails to appear$ it is fatal to the presumption.

MALCOLM, J.*ACTS/n Eeptember 3:$ 020@$ Joa%uin "errer made application to the Eun ;ife !ssurancCompany of Canada through its oce in *anila for a life annuity. Two days later he paid the sumof P?$AAA to the manager of the companyUs *anila oce and was gi#en a receipt.

The application was immediately forwarded to the head oce of the company at *ontreal$Canada. /n )o#ember 3?$ 020@$ the head oce ga#e notice of acceptance by cable to *anila.will of the debtor$ the conditional obligation shall be #oid. Bn the case at bar$ the followingconditions were imposed by the respondent company for the perfection of the contract ofinsurance7


30/84

constitutes the condition. Bn this case$ the suspensi#e condition was the policy must ha#e beendeli#ered and accepted by the applicant while he is in good health. There was non&fulllment ofthe condition$ howe#er$ inasmuch as the applicant was already dead at the time the policy wasissued. "ence$ the nonfulllment of the condition resulted in the non&perfection of the contract.

S+e/ S+e/ S+e/ A on$&+$ o= %nu&+ne u$ e +en$e $o : o$ #+&$%ee%$e& %n #e&on o& : $e%& +en$.! contract of insurance$ like other contracts$ must beassented to by both parties either in person or by their agents. Eo long as an application forinsurance has not been either accepted or rejected$ it is merely an o6er or proposal to make acontract. The contract$ to be binding from the date of application$ must ha#e been a completedcontract$ one that lea#es nothing to be done$ nothing to be completed$ nothing to be passedupon$ or determined$ before it shall take e6ect. There can be no contract of insurance unless theminds of the parties ha#e met in agreement.

S+e/ S+e/ S+e/ A on$&+$ % % nu00 +n 'o% % no on$&+$ +$ +00 +n eneou0 no$ e $e ue$ o= &e%%on.! nal note. Bt has not escaped our notice that theCourt of !ppeals declared Bnsurance Policy A>?9AA for P>A$AAA.AA null and #oid and rescinded.

The Court of !ppeals corrected this in its esolution of the motion for reconsideration led bypetitioner$ thus7 +!nent the appearance of the word Orescinded' in the dispositi#e portion of thedecision$ to which defendant&appellee attaches undue signicance and makes capital of$ it isclear that the use of the words Oand rescinded' is$ as it is hereby declared$ a super,uity. Bt isapparent from the conte(t of the decision that the insurance policy in %uestion was found nulland #oid$ and did not ha#e to be Orescinded.' - True$ rescission presupposes the e(istence of a#alid contract. ! contract which is null and #oid is no contract at all and hence could not be thesubject of rescission.

5NARES-SANTIAGO, J.*ACTS! contract of insurance$ like all other contracts$ must be assented to by both partieseither in person or through their agents and so long as an application for insurance has not beeneither accepted or rejected$ it is merely a proposal or an o6er to make a contract.

Primiti#o 5. Pere8 had been insured with the 5M ;ifeman Bnsurance Corporation since 021A forP3A$AAA.AA. Eometime in /ctober 021@$ an agent of the insurance corporation$ odolfo ;alog$#isited Pere8 in Guinayangan$ Due8on and con#inced him to apply for additional insuranceco#erage of P>A$AAA.AA$ to a#ail of the ongoing promotional discount of P:AA.AA if the premiumwere paid annually.

/n /ctober 3A$ 021@$ Primiti#o 5. Pere8 accomplished an application form for the additionalinsurance co#erage of P>A$AAA.AA. /n the same day$ petitioner Nirginia !. Pere8$ Primiti#o's wife$paid P3$A@>.AA to ;alog. The receipt issued by ;alog indicated the amount recei#ed was a+deposit.-0 Snfortunately$ ;alog lost the application form accomplished by Pere8 and so on/ctober 31$ 021@$ he asked the latter to ll up another application form.3 /n )o#ember 0$ 021@$Pere8 was made to undergo the re%uired medical e(amination$ which he passed.Pursuant to the established procedure of the company$ ;alog forwarded the application for

additional insurance of Pere8$ together with all its supporting papers$ to the oce of 5M ;ifemanBnsurance Corporation at Gumaca$ Due8on which oce was supposed to forward the papers tothe *anila oce.

/n )o#ember 3>$ 021@$ Pere8 died in an accident. "e was riding in a banca which capsi8edduring a storm. !t the time of his death$ his application papers for the additional insurance ofP>A$AAA.AA were still with the Gumaca oce. ;alog testied that when he went to follow up thepapers$ he found them still in the Gumaca oce and so he personally brought the papers to the*anila oce of 5M ;ifeman Bnsurance Corporation. Bt was only on )o#ember 3@$ 021@ that saidpapers were recei#ed in *anila.


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ithout knowing that Pere8 died on )o#ember 3>$ 021@$ 5M ;ifeman Bnsurance Corporationappro#ed the application and issued the corresponding policy for the P>A$AAA.AA on 4ecember 3$021@.

Petitioner Nirginia Pere8 went to *anila to claim the benets under the insurance policies of thedeceased. Ehe was paid P:A$AAA.AA under the rst insurance policy for P3A$AAA.AA A$AAA.AA$ the proceeds of which amount to P0>A$AAA.AA in #iewof a triple indemnity rider on the insurance policy. Bn its letter of January 32$ 0211 to Nirginia !.Pere8$ the insurance company maintained that the insurance for P>A$AAA.AA had not beenperfected at the time of the death of Primiti#o Pere8. Conse%uently$ the insurance comptshiyrefunded the amount of P3$A@>.AA which Nirginia Pere8 had paid.

/n Eeptember 30$ 022A$ pri#ate respondent 5M ;ifeman Bnsurance Corporation led a complaintagainst Nirginia !. Pere8 seeking the rescission and declaration of nullity of the insurancecontract in %uestion.

Petitioner Nirginia !. Pere8$ on the other hand$ a#erred that the deceased had fullled all hisprestations under the contract and all the elements of a #alid contract are present. Ehe then leda counterclaim against pri#ate respondent for the collection of P0>A$AAA.AA as actual damages$P0AA$AAA.AA as e(emplary damages$ P9A$AAA.AA as attorney's fees and P0A$AAA.AA as e(pensesfor litigation.

G.R. No. 119176. M+& 19, 2332.. COMMISSIONER O* INTERNAL RE"ENE, #e$%$%one&, '. LINCOLN P!ILIPPINE LI*EINSRANCE COMPAN5, INC. (no JARDINE-CMA LI*E INSRANCE COMPAN5, INC.) +nT!E CORT O* APPEALS, &e#onen$.

Inu&+ne/ An: &%e&, 0+ue, +&&+n$: o& eno&een$ #+$e o& +$$+e $o $e#o0%: % on%e&e #+&$ o= u #o0%: o& on$&+$ o= %nu&+ne.< Eection :2$ Title NB ofthe Bnsurance Code denes an insurance policy as the written instrument in which a contract ofinsurance is set forth. Eection >A of the same Code pro#ides that the policy$ which is re%uired tobe in printed form$ may contain any word$ phrase$ clause$ mark$ sign$ symbol$ signature$number$ or word necessary to complete the contract of insurance. Bt is thus clear that any rider$clause$ warranty or endorsement pasted or attached to the policy is considered part of suchpolicy or contract of insurance.

S+e/ S+e/ S+e/ Te +oun$ %nu&e : $e #o0%: +$ $e $%e o= %$ %u+nenee+&%0: %n0ue $e +%$%on+0 u o'e&e : $e +u$o+$% %n&e+e 0+uee+ue %$ % +0&e+: e$e&%n+$e +$ $e $%e $e $&+n+$%on % en$e&e %n$o +n=o& #+&$ o= $e #o0%:.


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Commission and engaged in life insurance business. Bn the years prior to 021:$ pri#aterespondent issued a special kind of life insurance policy known as the +Junior state 5uilderPolicy$- the distinguishing feature of which is a clause pro#iding for an automatic increase in theamount of life insurance co#erage upon attainment of a certain age by the insured without theneed of issuing a new policy. The clause was to take e6ect in the year 021:. 4ocumentary stampta(es due on the policy were paid by petitioner only on the initial sum assured.

Bn 021:$ pri#ate respondent also issued >A$AAA shares of stock di#idends with a par #alue ofP0AA.AA per share or a total par #alue of P>$AAA$AAA.AA. The actual #alue of said sharesrepresented by its book #alue$ was P02$9A@$>AA.AA. 4ocumentary stamp ta(es were paid basedonly on the par #alue of P>$AAA$AAA.AA and not on the book #alue.

Eubse%uently$ petitioner issued deciency documentary stamps ta( assessment for the year021: in the amounts of $ corresponding to the amount of automatic increase ofthe sum assured on the policy issued by respondent$ and corresponding to thebook #alue in e(cess of the par #alue of the stock di#idends.

Pri#ate respondent %uestioned the deciency assessments and sought their cancellation in apetition led in the Court of Ta( !ppeals$ docketed as CT! Case )o. :>19.

/n *arch 9A$ 0229$ the Court of Ta( !ppeals found no #alid basis for the deciency ta(assessment on the stock di#idends$ as well as on the insurance policy.

Petitioner appealed the CT!'s decision to the Court of !ppeals. /n )o#ember 01$ 022:$ the Courtof !ppeals promulgated a decision arming the CT!'s decision insofar as it nullied thedeciency assessment on the insurance policy$ but re#ersing the same with regard to thedeciency assessment on the stock di#idends. The CT! ruled that the correct basis of thedocumentary stamp ta( due on the stock di#idends is the actual #alue or book #alue representedby the shares.

No. 1774. No'ee& 29, 1923.4. PILAR C. DE LIM, #0+%n$%? +n +##e00+n$, '. SN LI*E ASSRANCE COMPAN5 O*CANADA, e=en+n$ +n +##e00ee.

1.INSRANCE CONTRACTS/ PRO"ISIONAL POLICIES.! so&called pro#isional policy wasissued to the applicant reading as follows7 ecei#ed $AAA for which an application$ dated the ?th day of July$ 020@$ has been made to the Eun ;ife!ssurance Company of Canada. The abo#e mentioned life is to be assured in accordance with theterms and conditions contained or inserted by the Company in the policy which may be grantedby it in this particular case for four months only from the date of the application$ pro#ided thatthe Company shall conrm this agreement by issuing a policy on said application &when the

same shall be submitted to the "ead /ce in *ontreal. Ehould the Company not issue such apolicy$ then this agreement shall be null and #oid ab initio$ and the Company shall be held not toha#e been on the risk at all$ but in such case the amount herein acknowledged shall be returned.


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it shall take e6ect. There can be no contract of insurance unless the minds of the parties ha#emet in agreement.

.ID./ ID.$AAA. Bn hisapplication ;im designated his wife$ Pilar C. de ;im$ the plainti6 herein$ as the beneciary. Therst premium of P:99 was paid by ;im$ and upon such payment the company issued what wascalled a pro#isional policy. ;uis ;im y Garcia died on !ugust 39$ 020@$ after the issuance of thepro#isional policy but before appro#al of the application by the home oce of the insurancecompany. The instant action is brought by the beneciary$ Pilar C. de ;im$ to reco#er from theEun ;ife !ssurance Company of Canada the sum of P>$AAA$ the amount named in the pro#isionapolicy.

The pro#isional policy upon which this action rests reads as follows7ecei#ed $AAA$ for which an application dated the?th day of July$ 020@$ has been made to the Eun ;ife !ssurance Company of Canada.

The abo#e&mentioned life is to be assured in accordance with the terms and conditionscontained or inserted by the Company in the policy which may be granted by it in this particularcase for four months only from the date of the application$ pro#ided that the Company shallconrm this agreement by issuing a policy on said application when the. same shall be submittedto the "ead /ce in *ontreal. Ehould the Company not issue such a policy$ then this agreementshall be null and #oid ab initio$ and the Company shall be held not to ha#e been on the risk at all$but in such case the amount herein acknowledged shall be returned.

HE!;.I


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not been either accepted or rejected$ it is merely an o6er or proposal to make a contract. Thecontract$ to be binding from the date of the application$ must ha#e been a completed contract$one that lea#es nothing to be done$ nothing to be completed$ nothing to be passed upon$ ordetermined$ before it shall take e6ect. There can be no contract of insurance unless the minds ofthe parties ha#e met in agreement. /ur #iew is$ that a contract of insurance was not hereconsummated by the parties.

No. L-14. A#&%0 3, 1979.. GREAT PACI*IC LI*E ASSRANCE COMPAN5, #e$%$%one&, '. !ONORALE CORT O*APPEALS, &e#onen$.

Inu&+ne/ %n%n e#o%$ &ee%#$/ Cone#$ +n N+$u&e/ 8en %n%n e#o%$ &ee%#$no$ e?e$%'e.Clearly implied from the aforesaid conditions is that the binding deposit receiptin %uestion is merely an acknowledgment$ on behalf of the company$ that the latter's branchoce had recei#ed from the applicant the insurance premium and had accepted the applicationsubject for processing by the insurance company and that the latter will either appro#e or rejectthe same on the basis of whether or not the applicant is +insurable on standard rates.- Eincepetitioner Pacic ;ife disappro#ed the insurance application of respondent )go "ing$ the bindingdeposit receipt in %uestion had ne#er become in force at any time. Spon this premise$ thebinding deposit receipt @


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respondent$ in apparent bad faith$ withheld the fact material to the risk to be assumed by theinsurance company. !s an insurance agent of Pacic ;ife$ he ought to know$ as he surely mustha#e known$ his duty and responsibility to supply such a material fact. "ad he di#ulged saidsignicant fact in the insurance application form. Pacic ;ife would ha#e #eried the same andwould ha#e had no choice but to disappro#e the application outright.

S+e/ S+e/ N+$u&e +n e?e$ o= one+0en$ on %nu&+ne on$&+$ .The contract ofinsurance is one of perfect good faith EC! @A=. Concealment is a neglect tocommunicate that which a party known and ought to communicate $ !ct )o. 3:3@=.hether intentional or unintentional$ the concealment entitles the insurer to rescind the contractof insurance Phil. 29A Eaturnino#s. Philippine !merican ;ife Bnsurance Company$ @ EC! 90?=. Pri#ate respondent appears guiltythereof.

DE CASTRO, J.*ACTSBt appears that on *arch 0:$ 02>@$ pri#ate respondent )go "ing led an application witthe Great Pacic ;ife !ssurance Company A$AAA.AA on the life of his one&year old daughter"elen Go. Eaid respondent supplied the essential data which petitioner ;apulapu 4. *ondragon$5ranch *anager of the Pacic ;ife in Cebu City wrote on the corresponding form in his ownhandwriting @$*ondragon recei#ed a letter from Pacic ;ife disappro#ing the insurance application


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Inu&+ne L+/ A Co'e& No$eK %ue %n +'+ne o= $e %u+ne o= + +&%ne #o0%: %%n%n + +n %nu&+ne on$&+$ +0$ou no e#+&+$e #&e%u + #+% $e&e=o&.AA meters from the shoreline of the 4iapitan 5ay. The logs were taken fromthe log pond of the plainti6 and from which they were towed in rafts to the #essel.

!t about 0A7AA o'clock a. m. on *arch 32$ 02?9$ while the logs were alongside the #essel$ badweather de#eloped resulting in @> pieces of logs which were rafted together to break loose fromeach other. :> pieces of logs were sal#aged$ but 9A pieces were #eried to ha#e been lost orwashed away as a result of the accident.

+Bn a letter dated !pril :$ 02?9$ the plainti6 informed the defendant about the loss ofOappro(imately 93 pieces of logs' during loading of the OEE oodlock'.

!lthough dated !pril :$ 02?9$ the letter was recei#ed in the oce of the defendant only on !pril0>$ 02?9$ as shown by the stamp impression appearing on the left bottom corner of said letter.

The plainti6 subse%uently submitted a OClaim Etatement demanding payment of the loss underPolicies )os. >9 "/ 0A93 and >9 "/ 0A99$ in the total amount of P02$31?.@2. +/n July 0@$ 02?9$the defendant re%uested the Mirst Philippine !djustment Corporation to inspect the loss andassess the damage. The adjustment company submitted its Oeport' on !ugust 39$ 02?9 9 "/ 0A93 and >9 "/ 0A99 were recei#ed in good order at their point ofdestination. Bt was further stated that the said loss may not be considered as co#ered underCo#er )ote )o. 0A0A because the said )ote had become Onull and #oid by #irtue of the issuanceof *arine Policy )os. >9 "/ 0A93 and 0A99'


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C%'%0 L+/ Con$&+$/ Inu&+ne/ 8e&e $e&e + no #e&=e$e on$&+$ o= %nu&+ne,DP MRI Poo0 +nno$ e e0 0%+0e on $e on$&+$ $+$ oe no$ eF%$.Sndisputably$the power to appro#e *B applications is lodged with the 45P *B Pool. The pool$ howe#er$ didnot appro#e the application of 4ans. There is also no showing that it accepted the sum ofP0$:@?.AA$ which 45P credited to its account with full knowledge that it was payment for 4ans'spremium. There was$ as a result$ no perfected contract of insurance hence$ the 45P *B Poolcannot be held liable on a contract that does not e(ist.

S+e/ Aen:/ O0%+$%on o= $e Aen$/ Aen$ +$%n + u % no$ #e&on+00: 0%+0eun0e e eF#&e0: %n %e0= o& eFee % +u$o&%$:.


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/n Eeptember 9$ 021@$ 4ans died of cardiac arrest. The 45P$ upon notice$ relayed thisinformation to the 45P *B Pool. /n Eeptember 39$ 021@$ the 45P *B Pool notied 45P that4ans was not eligible for *B co#erage$ being o#er the acceptance age limit of ?A years at thetime of application.

/n /ctober 30$ 021@$ 45P apprised Candida 4ans of the disappro#al of her late husband's *Bapplication. The 45P o6ered to refund the premium of P0$:@?.AA which the deceased had paid$but Candida 4ans refused to accept the same$ demanding payment of the face #alue of the *Bor an amount e%ui#alent to the loan. Ehe$ likewise$ refused to accept an e( gratia settlement ofP9A$AAA.AA$ which the 45P later o6ered.

/n Mebruary 0A$ 0212$ respondent state$ through Candida 4ans as administratri($ led acomplaint with the egional Trial Court$ 5ranch B$ 5asilan$ against 45P and the insurance pool for+Collection of Eum of *oney with 4amages.- espondent state alleged that 4ans becameinsured by the 45P *B Pool when 45P$ with full knowledge of 4ans' age at the time ofapplication$ re%uired him to apply for *B$ and later collected the insurance premium thereon.espondent state therefore prayed7 AA.AA$ which it paid under protestfor the loan$ be reimbursed


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S+e/ 8en o&$+ee o= ++e +&, + ene>%+&:, % #&e=e&&e $o $e &e#+%&+n%$ &e#e$ $o %nu&+ne #&oee.?$ bearing plate )o. DC&1A1mortgaged the same to the ".E. eyes$ Bnc.$ with the condition that the former would insure theautomobile with the latter as beneciary. The automobile was thereafter insured on June 3902>2 with the Etate 5onding X Bnsurance Co$$ Bnc.$ and motor car insurance policy !&A?0> wasissued to nri%ue *ora$ the pertinent pro#isions of which read7

0. The Company


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P0e+%n +n #&+$%e/ P+&$%e/ C+ue o= +$%on/ On0: #+&$%e $o + on$&+$ +: &%n+n +$%on $e&eon/ EFe#$%on/ Con$&+$ #ou& +u$&u%.

This is but the restatement of a well&known principle concerning contracts pour autrui$ theenforcement of which may be demanded by a third party for whose benet it was made$although not a party to the contract$ before the stipulation in his fa#or has been re#oked by thecontracting parties.

Inu&+ne 0+/ 8e&e +n %nu&+ne #o0%: % $:#%+0 o= + on$&+$ #ou& +u$&u%/ C+e +$+&.


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CONCEPCION, C.J.*ACTSThis is an appeal from a decision of the Court of Mirst Bnstance of *anila$ certied to uby the Court of !ppeals$ only %uestions of law being in#ol#ed therein. Bndeed$ the pertinent factsha#e been stipulated andWor$ admitted by the parties at the hearing of the case in the trial court$to dispense with the presentation of e#idence therein.Bt appears that on 4ecember 0$ 02?0$ appellant MieldmenUs Bnsurance Company$ Bnc.hereinafterreferred to as the Companyissued$ in fa#or of the *anila Qellow Ta(icab Co.$ Bnc.hereinafterreferred to as the Bnsureda common carrier accident insurance policy$ co#ering the period from4ecember 0$ 02?0 to 4ecember 0$ 02?3. Bt was stipulated in said policy that7

The Company will$ subject to the ;imits of ;iability and under the Terms. of this Policy$ indemnifythe Bnsured in the e#ent of accident caused by or arising out of the use of *otor Nehicle againstall sums which the Bnsured will become legally liable to pay in respect of7 4eath or bodily injuryto any farepaying passenger including the 4ri#er. Conductor andWor Bnspector who is riding in the*otor Nehicle insured at the time of accident or injury.

hile the policy was in force$ or on Mebruary 0A$ 02?3$ a ta(icab of the Bnsured$ dri#en by CarlitoCo%uia$ met a #ehicular accident at *agaldan$ Pangasinan$ in conse%uence of which Carlitodied. The Bnsured led therefor a claim for P>$AAA.AA to which the Company replied with an o6erto pay P3$AAA.AA$ by way of compromise. The Bnsured rejected the same and made a counter&o6er for P:$AAA.AA$ but the Company did not accept it. "ence$ on Eeptember 01$ 02?3$ theBnsured and CarlitoUs parents$ namely$ *elecio Co%uia and *aria spanue#ahereinafter referredto as the Co%uiasled a complaint against the Company to collect the proceeds of theaforementioned policy. Bn its answer$ the Company admitted the e(istence thereof$ but pleadedlack of cause of action on the part of the plainti6s.

No. L-22342. Auu$ 17, 1967.13. DIONISIA, ELOGIO, MARINA, GILLERMO +n NORERTO +00 u&n+e GINGON,#0+%n$%?-+##e00ee, '. ILMINADO DEL MONTE, JLIO AGILAR +n CAPITALINSRANCE U SRET5 Co., INC., e=en+n$. CAPITAL INSRANCE U SRET5 Co., INC.,e=en+n$-+##e00+n$.

Inu&+ne/ R%$ o= %nu&e #e&on $o ue %nu&e& o= #+&$: +$ =+u0$/ Con%$%on.The rightof the person injured to sue the insurer of the party at fault


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Bnsurance X Eurety Co.$ Bnc.$ the pertinent pro#isions of which in so far as this case is concernedcontains the following7

Eection BB;B!5B;BTQ T/ T" PS5;BC0. The Company$ will$ subject to the limits of liability$ indemnify the Bnsured in the e#ent ofaccident caused by or arising out of the use of the *otor NehicleWs or in connection with theloading or unloading of the *otor NehicleWs$ against all sums including claimantUs costs ande(penses which the Bnsured shall become legally liable to pay in respect of7a. death of or bodily injury to any personb. damage to property

4uring the e6ecti#ity of such insurance policy on Mebruary 3A$ 02?0 Bluminado del *onte$ one ofthe dri#ers of the jeepneys operated by !guilar$ while dri#ing along the intersection of Juan ;unaand *oro streets$ City of *anila$ bumped with the jeepney abo#ementioned one Ger#acioGuingon who had just alighted from another jeepney and as a conse%uence the latter died somedays thereafter.

! corresponding information for homicide thru reckless imprudence was led against Bluminadodel *onte$ who pleaded guilty. ! penalty of four months imprisonment was imposed on him.

!s a corollary to such action$ the heirs of Ger#acio Guingon led an action for damages prayingthat the sum of P13$@@0.1A be paid to them jointly and se#erally by the defendants$ dri#erBluminado del *onte$ owner and operator Julio !guilar$ and the Capital Bnsurance X Eurety Co.$Bnc. Mor failure to answer the complaint$ 4el *onte and !guilar were declared in default. CapitaBnsurance X Eurety Co.$ Bnc. answered$ alleging that the plainti6 has no cause of action against it.

No. 974. *e&u+&: 16, 191.11. *RANCISCO DEL "AL ET AL., #0+%n$%? +n +##e00+n$, '. ANDRES DEL, "AL,e=en+n$ +n +##e00ee

7.LI*E INSRANCE/ PROCEEDS/ !EIR AS ENE*ICIAR5.here a life&insurance policy ismade payable to one of the heirs of the person whose life is insured$ the proceeds of the policyon the death of the insured belong e(clusi#ely to the beneciary and not to the estate of theperson whose life was insured and such proceeds are his indi#idual property and not theproperty of the heirs of the person whose life was insured.

.ID./ ID./ ID./ ARTICLE 13, CI"IL CODE. of the Ci#il Code$ pro#iding that anheir by force of law sur#i#ing with others of the same character to a succession must bring intothe hereditary estate the property or securities he may ha#e recei#ed from the deceased duringthe life of the same$ by way of dowry$ gift$ or for any good consideration$ in order to compute itin (ing the legal portions and in the account of the di#ision$ is not applicable to the proceeds ofan insurance policy made payable to one of the heirs of the insured by name$ nor can theproceeds of such a policy be considered a gift under article 102 of the Ci#il Code.

9.ID./ ID./ ID./ CODE O* COMMERCE.The contract of life insurance is a special contract andthe destination of the proceeds thereof is determined by special laws which deal e(clusi#ely withthat subject. The Ci#il Code has no pro#isions which relate directly and specically to life&insurance contracts or to the destination of life&insurance proceeds. That subject is regulatede(clusi#ely by the Code of Commerce$ which pro#ides for the terms of the contract$ the relationsof the parties and the destination of the proceeds of the policy.

MORELAND, J.*ACTSThe pleadings set forth that the plainti6s and defendant are brothers and sisters thathey are the only heirs at law and ne(t of kin of Gregorio )acianceno del Nal$ who died in *anilaon !ugust :$ 020A$ intestate that an administrator was appointed for the estate of the deceased


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and$ after a partial administration$ it was closed and the administrator discharged by order of theCourt of Mirst Bnstance dated 4ecember 2$ 0200 that during the lifetime of the deceased he tookout insurance on his life for the sum of P:A$AAA and made it payable to the defendant as solebeneciary that after his death the defendant collected the face of the policy that of said policyhe paid the sum of P01$9?.>.3A to redeem certain real estate which the decedent had sold tothird persons with a right to repurchase that the redemption of said premises was made by theattorney of the defendant in the name of the plainti6s and the defendant as heirs of thedeceased #endor that the redemption in the name of the plainti6s was$ so defendant declares$without his knowledge or consent that since the redemption of said premises they ha#e been inthe possession of the plainti6s$ who ha#e had the use and benet thereof that during that timethe plainti6s paid no ta(es and made no repairs.

Bt further appears from the pleadings that the defendant$ on the death of the deceased$ tookpossession of most of his personal property$ which he still has in his possession$ and that he hasalso the balance on said insurance policy amounting to P30$?9:.1A.

Plainti6s contend that the amount of the insurance policy belonged to the estate of the deceasedand not to the defendant personally that$ therefore$ they are entitled to a partition not only ofthe real and personal property$ but also of the P:A$AAA life insurance. The complaint prays apartition of all the property$ both real and personal$ left by the deceased that the defendantaccount for P30$?9:.1A$ and that that sum be di#ided e%ually among the plainti6s and defendantalong with the other property of deceased.

The defendant denies the material allegations of the complaint and sets up as special defenseand counterclaim that the redemption of the real estate sold by his father was made in the nameof the plainti6s and himself instead of in his name alone without his knowledge or consent andthat it was not his intention to use the proceeds of the insurance policy for the benet of anyperson but himself$ he alleging that he was and is the sole owner thereof and that it is hisindi#idual property. "e$ therefore$ asks that he be declared the owner of the real estateredeemed by the payment of the P01$9?>.3A$ the owner .of the remaining P30$?9:.1A$ thebalance of the insurance policy$ and that the plainti6s account for the use and occupation of thepremises so redeemed since the date of the redemption.

No. L-4439. O$oe& 2, 197712. T!E INSLAR LI*E ASSRANCE COMPAN5, LTD., #0+%n$%?-+##e00ee, '. CARPONIA T.ERADO +n PASCALA "DA. DE ERADO, e=en+n$-+##e00+n$.

Coe&%+0 L+/ Inu&+ne/ Inu&+ne Coe/ 8o& In$e&e$K %n Se. 3 o= Inu&+neA$ % #&o'%e $+$ %nu&+ne +00 e +##0%e eF0u%'e0: $o $e #&o#e& %n$e&e$o= $e #e&on %n oe n+e %$ % +e &e=e& on0: $o $e %nu&e +n no$ $o $eene>%+&:/ on$&+$ o= %nu&+ne #e&on+0 %n +&+$e&.Eection >A of the Bnsurance !ctwhich pro#ides that ++00: #&o'%e =o& : $e Inu&+ne L+,$e on$&+$ o= 0%=e %nu&+ne % o'e&ne : ene&+0 &u0e o= %'%0 0+ .ather thegeneral rules of ci#il law should be applied to resol#e this #oid in the Bnsurance ;aw. !rticle 3A00of the )ew Ci#il Code states7 +The contract of insurance is go#erned by special laws. *atters note(pressly pro#ided for in such special laws shall be regulated by this Code.- hen not otherwisespecically pro#ided for by the Bnsurance ;aw$ the contract of life insurance is go#erned by thegeneral rules of the ci#il law regulating contracts. !nd under !rticle 3A03 of the same Code$ +any


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person who is forbidden from recei#ing any donation under !rticle @92 cannot be namedbeneciary of a life insurance policy by the person who cannot make a donation to him.-Common&law spouses are$ denitely$ barred from recei#ing donations from each other.

S+e/ S+e/ L%=e Inu&+ne #o0%: no %?e&en$ =&o %'%0 on+$%on + =+& +ene>%+&: % one&ne/ o$ +&e =oune on 0%e&+0%$:/ Coon-0+ #ouee%n+$e + ene>%+&: +&&e =&o &ee%'%n 0%=e %nu&+ne #&oee =&o + 0e+00:+&&%e #e&on/ Re+on $e&e=o&.Bn essence$ a life insurance policy is no di6erent from aci#il donation insofar as the beneciary is concerned. 5oth are founded upon the sameconsideration7 liberality. ! beneciary is like a donee$ because from the premiums of the policywhich the insured pays out of liberality$ the beneciary will recei#e the proceeds or prots of saidinsurance. !s a conse%uence$ the proscription in !rticle @92 of the new Ci#il Code should e%uallyoperate in life insurance contracts. The mandate of !rticle 3A03 cannot be laid aside7 any personwho cannot recei#e a donation cannot be named as beneciary in the life insurance policy of theperson who cannot make the donation. Snder !merican law$ a policy of life insurance isconsidered as a testament and in construing it$ the courts will$ so far as possible treat it as a willand determine the e6ect of a clause designating the beneciary by rules under which wills areinterpreted.

S+e/ S+e/ Con'%$%on =o& +u0$e&: o& onu%n+e =o& $oe +&&e =&o &ee%'%non+$%on o& 0%=e %nu&+ne no$ &

concealment to loss cases

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