1 Gallardo vs. Morales G.R. No.

L-12189 April 29, 1960 Lessons Applicable: Definition and Coverage of Life Insurance (Insurance) Laws Applicable: Rule 39, section 12, subdivision (k) of the Rules of Court (old law) HELD: NO. order appealed from is reversed, and the garnishment in dispute hereby set aside and quashed FACTS:

Morales appealed maintaining that it was a life insurance for it insured her husband for injuries and/or death as a result of murder or assault or attempt thereat ISSUE: W/N the insurance is a life insurance and not an accident insurance

CFI: Hermenegilda S. Morales to pay P7,000 to a creditor Francisca Gallardo writ of execution was issued and delivered to the Sheriff who garnished and levied execution on the sum of P7,000 out of the P30,000 due from the CapitalInsurance & Surety Co. Inc., to Morales as beneficiary whose husband Luis Morales died by assassination. Morales asked the sheriff to quash and lift said garnishment or levy on execution invoking Rule 39, section 12, subdivision (k) of the Rules of Court but it was denied. All moneys, benefits, privileges, or annuities accruing or in any manner growing out of any life insurance, if the annual premiums paid do not exceedfive hundred pesos, and if they exceed that sum a like exemption shall exist which shall bear the same proportion to the moneys, benefits, privileges, and annuities so accruing or growing out of such insurance that said five hundredpesos bears to the whole annual premiums paid.

the annual premium was for P15 If it were an ordinary life insurance policy, taking into account that the insured, Luis G. Morales, was 38 years of age and the amount of the policy was for P50,000.00 the annual premium would have been around P1,206 the period for the policy was stipulated for one year, and considerations as to age, health, occupation and other personal circumstances were not taken into account in an accident insurance policy Annex "1" of the opposition, shows that the Capital Insurance and Surety Company Inc. is a non-life insurance company and that the only authority granted to it to transact business covers fire, marine, surety, fidelity, accident, motor car, and miscellaneous insurance, except life insurance Accident vs Life Insurance Policy accident policy - merely insures the person from injury and or death resulting from murder, assault, or an attempt thereat Accident insurance indemnity or casualty contract

life insurance policy - what is insured is the life of the subject for a definite number of years life insurance investment contract contract by which the insurer, for a stipulated sum, engages to pay a certain amount of money if another dies within the time limited by the policy contract for insurance for one year in consideration of an advanced premium, with the right of assured to continue it from year to year upon payment of a premium as stipulated includes accident insurance, since life is insured under either contract includes all policies of insurance in which payment of insurance money is contingent upon loss of life "any life insurance" applies to ordinary life insurance contracts, as well as to those which, although intended primarily to indemnify for risks arising from accident, likewise, insure against loss of life due, either to accidental causes, or to the willful and criminal act of another, which, as such, is not strictly accidental in nature statutes of this nature seek to enable the head of the family to secure his widow and children from becoming a burden upon the community and, accordingly, should merit a liberal interpretation

1. 1. throw or drop (something) from an aircraft or ship. "six aircraft jettisoned their loads in the sea"
o

noun Calanoc vs. CA (98 PHIL 79) Facts: Basilio was a watchman of the Manila Auto Supply located at the corner of Avenida Rizal and Zurbaran. He secured a life insurance policy from the Philippine American Life Insurance Company in the amount of P2,000 to which was attached a supplementary contract covering death by accident. On January 25, 1951, he died of a gunshot wound on the occasion of a robbery committed in the house of Atty. Ojeda at the corner of Oroquieta and Zurbaran streets. Calanoc, the widow, was paid the sum of P2,000, face value of the policy, but when she demanded the payment of the additional sum of P2,000 representing the value of the supplemental policy, the company refused alleging, as main defense, that the deceased died because he was murdered by a person who took part in the commission of the robbery and while making an arrest as an officer of the law which contingencies were expressly excluded in the contract and have the effect of exempting the company from liability. It is contended in behalf of the company that Basilio was killed which "making an arrest as an officer of the law" or as a result of an "assault or murder" committed in the place and therefore

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3 his death was caused by one of the risks excluded by the supplementary contract which exempts the company from liability. This contention was upheld by the Court of Appeals. Hence, this petition. Issue: Whether or not the death of the victim comes within the purview of the exception clause of the supplementary policy and, hence, exempts the company from liability. Held: NO. Basilio was a watchman of the Manila Auto Supply which was a block away from the house of Atty. Ojeda where something suspicious was happening which caused the latter to ask for help. While at first he declined the invitation of Atty. Ojeda to go with him to his residence to inquire into what was going on because he was not a regular policeman, he later agreed to come along when prompted by the traffic policeman, and upon approaching the gate of the residence he was shot and died. The circumstance that he was a mere watchman and had no duty to heed the call of Atty. Ojeda should not be taken as a capricious desire on his part to expose his life to danger considering the fact that the place he was in duty-bound to guard was only a block away. In volunteering to extend help under the situation, he might have thought, rightly or wrongly, that to know the truth was in the interest of his employer it being a matter that affects the security of the neighborhood. No doubt there was some risk coming to him in pursuing that errand, but that risk always existed it being inherent in the position he was holding. He cannot therefore be blamed solely for doing what he believed was in keeping with his duty as a watchman and as a citizen. And he cannot be considered as making an arrest as an officer of the law, as contended, simply because he went with the traffic policeman, for certainly he did not go there for that purpose nor was he asked to do so by the policeman. Much less can it be pretended that Basilio died in the course of an assault or murder considering the very nature of these crimes. In the first place, there is no proof that the death of Basilio is the result of either crime for the record is barren of any circumstance showing how the fatal shot was fired. Perhaps this may be clarified in the criminal case now pending in court as regards the incident but before that is done anything that might be said on the point would be a mere conjecture. Nor can it be said that the killing was intentional for there is the possibility that the malefactor had fired the shot merely to scare away the people around for his own protection and not necessarily to kill or hit the victim. In any event, while the act may not exempt the triggerman from liability for the damage done, the fact remains that the happening was a pure accident on the part of the victim. The victim could have been either the policeman or Atty. Ojeda for it cannot be pretended that the malefactor aimed at the deceased precisely because he wanted to take his life.

Biagtan vs. The Insular Life Assurance Company, LTD| Makalintal, J. March 29, 1972|

4 FACTS - Juan Biagtan was insured with Insular for P5k and a supplementary contract Accidental Death Benefit clause for another P5k if "the death of the Insured resulted directly from bodily injury effected solely through external and violent means sustained in an accident . . . and independently of all other causes." The clause, however, expressly provided that it would not apply where death resulted from an injury "intentionally inflicted by a third party." - One night, a band of robbers entered their house. Juan went out of his room and he was met with 9 knife stabs. He died. The robbers were convicted of robbery with homicide. - The family was claiming the additional P5k from Insular under the Accidental Death Benefit clause. Insular refused on the ground that the death resulted from injuries intentionally inflicted by 3rd parties and was therefore not covered. - Biagtans filed against Insular. CFI ruled in favor of Biagtans. be denied that the act itself of inflicting the injuries was intentional. - The exception in the accidental benefit clause invoked by the appellant does not speak of the purpose whether homicidal or not of a third party in causing the injuries, but only of the fact that such injuries have been "intentionally" inflicted this obviously to distinguish them from injuries which, although received at the hands of a third party, are purely accidental. - Examples of unintentional: >> A gun which discharges while being cleaned and kills a bystander; >> a hunter who shoots at his prey and hits a person instead; >> an athlete in a competitive game involving physical effort who collides with an opponent and fatally injures him as a result. - In Calanoc vs. CA: Where a shot was fired and it turned out afterwards that the watchman was hit in the abdomen, the wound causing his death, the Court held that it could not be said that the killing was intentional for there was the possibility that the malefactor had fired the shot to scare the people around for his own protection and not necessarily to kill or hit the victim. A similar possibility is clearly ruled out by the facts in this case. For while a single shot fired from a distance, and by a person who was not even seen aiming at the victim, could indeed have been fired without intent to kill or injure, nine wounds inflicted with bladed weapons at close range

ISSUES & ARGUMENTS WON the injuries were intentionally inflicted by a third party? Yes

RATIONALE - Whether the robbers had the intent to kill or merely to scare the victim or to ward off any defense he might offer, it cannot

5 cannot conceivably be considered as innocent insofar as such intent is concerned. - In Hucthcraft's Ex'r vs. Travelers' Ins. Co. (US case): where the insured was waylaid and assassinated for the purpose of robbery, the court rendered judgment for the insurance company and held that while the assassination of the insured was as to him an unforeseen event and therefore accidental, "the clause of the proviso that excludes the (insurer's) liability, in case death or injury is intentionally inflicted by any other person, applies to this case."

G.R. No. L-21574

June 30, 1966

In the course of his bout with another non-professional boxer of the same height, weight, and size, Eduardo slipped and was hit by his opponent on the left part of the back of the head, causing Eduardo to fall, with his head hitting the rope of the ring He was brought to the Baguio General Hospital the following day. He died due to hemorrhage, intracranial. Simon de la Cruz, the father of the insured and who was named beneficiary under the policy, thereupon filed a claim with the insurance company The Capital Insurance and Surety co., inc denied stating that the death caused by his participation in a boxing contest was not accidental RTC: favored Simon

Dela Cruz vs. Capital Lessons Applicable: Liability of Insurer for Suicide and Accidental Death (Insurance) Laws Applicable:

ISSUE: W/N the cause of death was accident HELD:YES.

FACTS:

Eduardo de la Cruz, employed as a mucker in the ItogonSuyoc Mines, Inc. in Baguio, was the holder of an accident insurance policy "against death or disability caused by accidental means" January 1, 1957: For the celebration of the New Year, the Itogon-Suyoc Mines, Inc. sponsored a boxing contest for general entertainment wherein Eduardo, a nonprofessional boxer participated

Eduardo slipped, which was unintentional The terms "accident" and "accidental" as used in insurance contracts, have not acquired any technical meaning and are construed by the courts in their ordinary and common acceptation happen by chance or fortuitously, without intention and design, and which is unexpected, unusual, and unforeseen event that takes place without one's foresight or expectation event that proceeds from an unknown cause, or is an unusual effect of a known cause and, therefore, not expected

where the death or injury is not the natural or probable result of the insured's voluntary act, or if something unforeseen occurs in the doing of the act which produces the injury, the resulting death is within the protection of policiesinsuring against death or injury from accident while the participation of the insured in the boxing contest is voluntary, the injury was sustained when he slid, giving occasion to the infliction by his opponent of the blow that threw him to the ropes of the ring is not The fact that boxing is attended with some risks of external injuries does not make any injuries received in the course of the game not accidental In boxing as in other equally physically rigorous sports, such as basketball or baseball, death is not ordinarily anticipated to result. If, therefore, it ever does, the injury or death can only be accidental or produced by some unforeseen happening or event as what occurred in this case Furthermore, the policy involved herein specifically excluded from its coverage (e) Death or disablement consequent upon the Insured engaging in football, hunting, pigsticking, steeplechasing, polo-playing, racing of any kind, mountaineering, or motorcycling. Death or disablement resulting from engagement in boxing contests was not declared outside of the protection of the insurance contract

Facts: Sun Insurance Office Ltd. issued Personal Accident Policy 05687 to Felix Lim, Jr. with a face value of P200,000.00. Two months later, he was dead with a bullet wound in his head. As beneficiary, his wife Nerissa Lim sought payment on the policy but her claim was rejected. Sun Insurance agreed that there was no suicide. It argued, however, that there was no accident either. Pilar Nalagon, Lim's secretary, was the only eyewitness Commercial Law Insurance Law, 2006 ( 47 )Narratives (Berne Guerrero) to his death. It happened on 6 October 1982, at about 10 p.m., after his mother's birthday party. According to Nalagon, Lim was in a happy mood (but not drunk) and was playing with his handgun, from which he had previously removed the magazine. As she watched the television, he stood in front of her and pointed the gun at her. She pushed it aside and said it might be loaded. He assured her it was not and then pointed it to his temple. The next moment there was an explosion and Lim slumped to the floor. He was dead before he fell. The widow sued Sun Insurance in the Regional Trial Court of Zamboanga City and was sustained. Sun Insurance was sentenced to pay her P200,000.00, representing the face value of the policy, with interest at the legal rate; P10,000.00 as moral damages; P5,000.00 as exemplary damages; P50,000.00 as actual and compensatory damages; and P5,000.00 as attorney's fees, plus the cost of the suit. This decision was affirmed on appeal, and the motion for reconsideration was denied. Sun Insurance then came to the Supreme Court.

Sun Insurance Office Ltd. vs. Court of Appeals [GR 92383, 17 July 1992]

7 Issue: Whether the insured willfully exposed himself to needless peril and thus removed himself from the coverage of the insurance policy. Held: NO. An accident is an event which happens without any human agency or, if happening through human agency, an event which, under the circumstances, is unusual to and not expected by the person to whom it happens. It has also been defined as an injury which happens by reason of some violence or casualty to the insured without his design, consent, or voluntary co-operation. Herein, the incident that resulted in Lim's death was indeed an accident. On the other hand, the parties agree that Lim did not commit suicide. Nevertheless, Sun Insurance contends that the insured willfully exposed himself to needless peril and thus removed himself from the coverage of the insurance policy. It should be noted at the outset that suicide and willful exposure to needless peril are in pari materia because they both signify a disregard for one's life. The only difference is in degree, as suicide imports a positive act of ending such life whereas the second act indicates a reckless risking of it that is almost suicidal in intent. The posture -- that by the mere act of pointing the gun to his temple, Lim had willfully exposed himself to needless peril and so came under the exception -- is arguable. But what is not is that Lim had removed the magazine from the gun and believed it was no longer dangerous. He expressed assured her that the gun was not loaded. It is submitted that Lim did not willfully expose himself to needless peril when he pointed the gun to his temple because the fact is that he thought it was not unsafe to do so. The act was precisely intended to assure Nalagon that the gun was indeed harmless. Lim was unquestionably negligent and that negligence cost him his own life. But it should not prevent his widow from recovering from the insurance policy he obtained precisely against accident. There is nothing in the policy that relieves the insurer of the responsibility to pay the indemnity agreed upon if the insured is shown to have contributed to his own accident. Indeed, most accidents are caused by negligence. There are only four exceptions expressly made in the contract to relieve the insurer from liability, and none of these exceptions is applicable in the present case. It bears noting that insurance contracts are as a rule supposed to be interpreted liberally in favor of the assured. There is no reason to deviate from this rule, especially in view of the circumstances of the case.

Jarque v Smith G.R. No. L-32986 November 11, 1930 J. Ostrand Facts: The plaintiff was the owner of the motorboat Pandan and held a marine insurance policy for the sum of P45,000 on the boat, the policy being issued by the National Union Fire Insurance

8 Company and according to the provisions of a "rider" attached to the policy, the insurance was against the "absolute total loss of the vessel only." The ship ran into very heavy sea off the Islands of Ticlin, and it became necessary to jettison a portion of the cargo. As a result of the jettison, the National Union Fire Insurance Company was assessed in the sum of P2,610.86 as its contribution to the general average. The insurance company, insisting that its obligation did not extend beyond the insurance of the "absolute total loss of the vessel only, and to pay proportionate salvage of the declared value," refused to contribute to the settlement of the general average. The present action was thereupon instituted,and after trial the court below rendered judgment in favor of the plaintiff and ordered the company to pay the plaintiff the sum of P2,610.86 as its part of the indemnity The insurance company appealed to this court. Issues: 1. WON the lower court erred in disregarding the typewritten clause endorsed upon the policy, Exhibit A, expressly limiting insurer's liability thereunder of the total loss of the wooden vessel Pandanand to proportionate salvage charges 2. WON the lower court erred in concluding that defendant and appellant, National Union Fire Insurance Company is liable to contribute to the general average resulting from the jettison of a part of said vessel's cargo. Held: No to both. Petition dismissed.

Ratio: 1. One of the clauses of the document originally read as follows: Touching the Adventures and Perils which the said National Union Fire Insurance Company is content to bear, and to take upon them in this Voyage; they are of the Seas, Men-of-War, Fire, Pirates, Rovers, Thieves, Jettison, Letters of Mart and Countermart, Surprisals, and Takings at Sea. Arrest, Restraint and Detainments, of all Kings Princes and People of what Nation, Condition or Quality so ever; Barratry of the Master and Marines, and of all other Perils, Losses and Misfortunes, that have or shall come to the Hurt, Detriment, or Damage of the said Vessel or any part thereof; and in case of any Loss or Misfortunes, it shall be lawful for the Assured, his or their Factors, Servants, or assigns, to sue, labor and travel for, in and about the Defense. Safeguard, and recovery of the said Vessel or any Charges whereof the said Company, will contribute, according to the rate and quantity of the sum herein assured shall be of as much force and Virtue as the surest Writing or Policy of Insurance made in LONDON. Attached to the policy over and above the said clause is a "rider" containing typewritten provisions, among which appears in capitalized type the following clause: AGAINST THE ABSOLUTE TOTAL LOSS OF THE VESSEL ONLY, AND TO PAY PROPORTIONATE SALVAGE CHARGES OF THE DECLARED VALUE. At the bottom of the same rider following the type written provisions therein set forth are the following words: "Attaching

9 to and forming part of the National Union Fire Insurance Co., Hull Policy No. 1055." It is a well settled rule that in case repugnance exists between written and printed portions of a policy, the written portion prevails, and there can be no question that as far as any inconsistency exists, the above-mentioned typed "rider" prevails over the printed clause it covers. Section 291 of the Code of Civil Procedure provides that "when an instrument consists partly of written words and partly of a printed form and the two are inconsistent, the former controls the latter. 2. In the absence of positive legislation to the contrary, the liability of the defendant insurance company on its policy would, perhaps, be limited to "absolute loss of the vessel only, and to pay proportionate salvage of the declared value." But the policy was executed in this jurisdiction and "warranted to trade within the waters of the Philippine Archipelago only." Here the liability for contribution in general average is not based on the express terms of the policy, but rest upon the theory that from the relation of the parties and for their benefit, a quasi contract is implied by law. Article 859 of the Code of Commerce is still in force and reads as follows: ART. 859. The underwriters of the vessel, of the freight, and of the cargo shall be obliged to pay for the indemnity of the gross average in so far as is required of each one of these objects respectively. The article is mandatory in its terms, and the insurers, whether for the vessel or for the freight or for the cargo, is bound to contribute to the indemnity of the general average. It simply places the insurer on the same footing as other persons who have an interest in the vessel, or the cargo therein at the time of the occurrence of the general average and who are compelled to contribute. In the present case it is not disputed that the ship was in grave peril and that the jettison of part of the cargo was necessary. If the cargo was in peril to the extent of call for general average, the ship must also have been in great danger, possibly sufficient to cause its absolute loss. The jettison was therefore as much to the benefit of the underwriter as to the owner of the cargo. If no jettison had take place and if the ship by reason thereof had foundered, the underwriter's loss would have been many times as large as the contribution now demanded.

Fortune Insurance and Surety Co., Inc., vs. CA [G.R. No. 115278, May 23, 1995] Facts: On June 29, 1987, Producers Bank of the Philippinesarmored vehicle was robbed, in transit, of seven hundred twenty-five thousand pesos (Php 725,000.00) that it was transferring from its branch in Pasay to its main branch in Makati. To mitigate their loss, they claim the amount from their insurer, namely Fortune Insurance and Surety Co.. Fortune Insurance, however, assails that the general exemptionclause in the Casualty Insurance coverage had a general exemptionclause, to wit:

10 GENERAL EXCEPTIONS The company shall not be liable under this policy in respect of xxx xxx xxx (b) any loss caused by any dishonest, fraudulent or criminal act of the insured or any officer, employee, partner, director, trustee or authorized representative of the Insured whether acting alone or in conjunction with others. . . . And, since the driver (Magalong) and security guard (Atiga) of the armored vehicle were charged with three others as liable for the robbery, Fortune denies Producers Bank of its insurance claim. The trial court and the court appeals ruled in favor of recovery, hence, the case at bar. in a special capacity, as an agent, and is interchangeable with "agent." 23 In view of the foregoing, Fortune is exempt from liability under the general exceptions clause of the insurance policy.

Issue: Whether recovery general exemption clause.

is

precluded

under

the

Held: Yes, recovery is precluded under the general exemption clause. Howsoever viewed, Producers entrusted the three with the specific duty to safely transfer the money to its head office, with Alampay to be responsible for its custody in transit; Magalong to drive the armored vehicle which would carry the money; and Atiga to provide the needed security for the money, the vehicle, and his two other companions. In short, for these particular tasks, the three acted as agents of Producers. A "representative" is defined as one who represents or stands in the place of another; one who represents others or another

LIM V. SUN LIFE 41 PHIL 263 Facts: > On July 6, 1917, Luis Lim Y Garcia of Zamboanga applied for a policy of life insurance with Sunlife in the amount of 5T. > He designated his wife Pilar Lim as the beneficiary. The first premium of P433 was paid by Lim and company issued a provisional policy > Such policy contained the following provisions xx the abovementioned life is to be assured in accordance with the terms and conditions contained or inserted by the Company in the policy which may be granted by it in this particular case for 4 months only from the date of the application, PROVIDED that the company shall confirm this agreement by issuing a policy on said application xxx. Should the company NOT issue such a policy, then this agreement shall be null and void ab initio and the Company shall be held not to have been on the risk at all, but in such case, the amount herein shall be returned. > Lim died on Aug. 23, 1917 after the issuance of the provisional policy but before the approval of the application by the home office of the insurance company. > The instant action is brought by the beneficiary to recover from Sun Life the sum of 5T.

11 Issue: Whether or not the beneficiary can collect the 5T. Held: NO. The contract of insurance was not consummated by the parties. The above quoted agreement clearly stated that the agreement should NOT go into effect until the home office of the Company shall confirm it by issuing a policy. It was nothing but an acknowledgment by the Company that it has received a sum of money agreed upon as the first years premium upon a policy to be issued upon the application if it is accepted by the Company. When an agreement is made between the applicant and the agent whether by signing an application containing such condition or otherwise, that no liability shall attach until the principal approves the risk and a receipt is given by the agent, such acceptance is merely conditional and is subordinated to the companys act in approving or rejecting; so in life insurance a binding slip or receipt does not insure itself. WILLARD, J.: On July 5, 1902, William H. Badger made out a written application for a policy of insurance upon his life for $5,000 in favor of his wife, Harriet Viola Badger. The first premium on this policy amounted to $312.50. Badger sent the application and $297.60 to R. E. Herdman, who received the application and the money on the 9th of July, 1902. Herdman sent the papers on July 24 to the office of the defendant company in Shanghai, where they were received on August 11. Badger executed a promissory note for $14.90, the balance of the first premium, which was sent to Herdman on July 17, 1902. On the 31st of July, Mrs. Badger, acting for her husband, sent to Herdman $14.90, cash, in payment of said note. Badger died on the 1st day of August, 1902, of cholera. No policy was ever issued upon his application. The plaintiff brought this action to recover the sum of $5,000, alleging that a contract of insurance had been made by the company with Badger. Judgment was rendered in the court below in favor of the defendant to the effect that no such contract was ever made, from which judgment the plaintiff appealed. The only person who acted in any way for the company in this transaction was Herdman. The only evidence in the case to show what his powers were is found in an admission in the answer which states that he was "a special agent and cashier of the defendant company in Manila," and in his evidence, testifying as a witness, he said that at the time of the trial on

January 23, 1907 G.R. No. 3069 VIOLA BADGER, plaintiff-appellant, vs. THE NEW YORK LIFE INSURANCE COMPANY, defendantappellee. Condert Brothers for appellant. Hartigan, Rohde & Gutierrez for appellee.

12 September 6, 1905, he was the agency director of the defendant company in the city of Manila. The action can not be maintained unless the plaintiff proves a contract between the company and Badger, made by a person authorized to act for the company. The authority of this person must, of course, be proven. There is no evidence in the case to show that Herdman had any authority to make any contract, either parol or in writing, that would bind the company. There is no evidence to show that he had any policies in his possession. Nor is there any evidence that Herdman ever undertook to make any parol contract with Badger for this insurance. There had been some correspondence between the parties prior to the making of the application on July 5. On that day Herdman, writing to Badger in regard to the medical examination, said: I will send you an official receipt when your remittance reaches the office, and then a new examination will not be necessary when the policies are delivered; otherwise this would be necessary. After Badger had received the receipt of Herdman for the money sent to him and on July 11, he wrote to Herdman, saying: Yours of the 9th instant received. Is the receipt you sent official or not? I do not wish to take another examination, and so desire an official receipt. xxx xxx xxx

Shall I be obliged to wait until you receive an answer from the office in New York, or do you have authority to issue policies at the Manila office? xxx xxx xxx

If my application is accepted does insurance begin July 5, 1902? In reply to this letter, Herdman, on July 15, wrote, saying: The receipt I sent you is official, being signed by me as cashier and not personally, and of course there will not be another examination required. xxx xxx xxx

We issue an interim policy from our Shanghai office, which stands until the definite policy comes from New York. We hope soon to have an advisory board here in Manila, so that we will be entirely free from Shanghai, all our other business being transacted directly with the home officer at New York. If your examination is acceptable, your policy will date from July 5, the date of your application. This evidence shows conclusively that there was no parol agreement between the parties that the insurance had

13 commenced on July 5, 1902. In fact, the claim of the appellant reduced to its lowest terms is that the mere signing of an application for life insurance and the payment of a first premium, without any parol agreement as to when the insurance shall commence, constitutes a contract between the parties binding from that date. Such a contention as this can not be sustained. Moreover, there is evidence in the case in addition to that already referred to, showing that the company expressly refused to be bound until the application had been accepted either by its office in Shanghai or its office in New York. In the application which Badger signed on the 5th day of July it is said: I agree, on behalf of myself and of any person who shall have or claim any interest in any policy issued under this application, as follows: That inasmuch as only the officers at the home office of the company in the city of New York have authority to determine whether or nor a policy shall issue on any application, no statements, etc., shall be binding on the company. In the report of the medical examiner there is found this printed statement: The examiner is requested to send direct to the company in New York City any information which, for any reason, he prefers not to embody in this report. He can also mail this report direct to the company if he prefers. Herdman testifies that when he sent to Badger a receipt for the money paid, it was on one of two printed blanks, which one he could not say. The court below found that the receipt was sent upon the blank which contained a reference to the Shanghai office. Whether it was upon this form of receipt or upon the other one is of no consequence. In one of them it is stated "that the company shall incur no liability under the application until it has been received, approved by the resident board of the company at Shanghai, and a policy issued thereon by the resident board, and the full premium has actually been paid to and accepted by the company or its authorized agent during the lifetime and good health of the person upon whose life the insurance is applied for. The company reserves the absolute right of disapproval of such application." The other form contains the statement that "the company shall incur no liability under the application until it has been received, approved at the house office of the company, and a policy issued thereon." This is then followed by the words of the first form. Upon both of these forms are printed the words "conditional receipt." It seems very clear that no liability was incurred by the company in this case. The judgment of the court below is accordingly affirmed, with the costs of this instance against the appellant. After expiration of twenty days let judgment be entered in accordance herewith and ten days thereafter the record remanded to the court below for proper action. So ordered.

14 Arellano, C.J., Torres, Mapa, Carson and Tracey, JJ., concur. when an acceptance has passed beyond the control of the party. NOTE: Life annuity is the opposite of a life insurance. In life annuity, a big amount is given to the insurance company, and if after a certain period of time the insured is stil living, he is entitled to regular smaller amounts for the rest of his life. Examples of Life annuity are pensions. Life Insurance on the other hand, the insured during the period of the coverage makes small regular payments and upon his death, the insurer pays a big amount to his beneficiaries. Vda de Sindayen v Insular September 4, 1935 G.R. No. 41702 J. Butte

ENRIQUEZ V. SUNLIFE- INSURANCE POLICY 41 PHIL 269 Facts: > On Sept. 24 1917, Herrer made an application to SunLife through its office in Manila for life annuity. > 2 days later, he paid the sum of 6T to the companys anager in its Manila office and was given a receipt. > On Nov. 26, 1917, the head office gave notice of acceptance by cable to Manila. On the same date, the Manila office prepared a letter notifying Herrer that his application has been accepted and this was placed in the ordinary channels of transmission, but as far as known was never actually mailed and never received by Herrer. > Herrer died on Dec. 20, 1917. The plaintiff as administrator of Herrers estate brought this action to recover the 6T paid by the deceased. Issue: Whether or not the insurance contract was perfected. Held: NO. The contract for life annuity was NOT perfected because it had NOT been proved satisfactorily that the acceptance of the application ever came to the knowledge of the applicant. An acceptance of an offer of insurance NOT actually or constructively communicated to the proposer does NOT make a contract of insurane, as the locus poenitentiae is ended

Facts: Sindayen, employed in the Bureau of Printing at Manila went to Tarlac, to spend the Christmas vacation with his aunt. There he applied for for life insurance in the sum of P1,000 and paid to the agent P15 cash as part of the first premium. It was agreed with the agent that the policy, when and if issued, should be delivered to his aunt with whom he left sum of P26.06 to complete the payment of the first annual premium of P40.06. Sindayen returned to Manila and resumed his work a linotype operator. The company accepted the risk after examining Sindayen and issued a policy and to the same agent for delivery to the insured. Sindayen abruptly passed away.

15 The policy which the company issued was received by its agent in Tarlac. The agent delivered the policy to Felicidad Estrada upon her payment of the balance of the first years annual premium. The agent asked Felicidad Estrada if her nephew was in good health and she replied that she believed so. He gave her the policy. The agent learned of the death of Arturo Sindayen and the aunt to return the policy. He did not return or offer to return the premium paid. The aunt gave him the policy. The company obtained from the beneficiary, the widow of Arturo Sindayen, her signature to alegal document entitled ACCORD, SATISFACTION AND RELEASE In consideration of the sum of P40.06 paid to her by a check of the company, she discharged the company for all claims . The said check for P40.06 was never cashed but returned to the company. The widow brought action to enforce payment of the policy. The first premium was already paid by the insured covering the period from December 1, 1932. It is to December 1, 1933. Hence, this appeal. The application which the insured signed in Tarlac, contained among others the following provisions: 3. That the said policy shall not take effect until the first premium has been paid and the policy has been delivered to and accepted by me, while I am in good health. There is one line of cases which holds that the stipulation contained in paragraph 3 is in the nature of a condition precedent, that is to say, that there can be no valid delivery to the insured unless he is in good health at the time. A number of these cases, on the other hand, go to the of holding that the delivery of the policy by the agent to the insured consummates the contract even though the agent knew that the insured was not in good health at the time, the theory being that his knowledge is the companys knowledge and his delivery of the policy is the companys delivery. We are inclined to the view that it is more consonant with the well known practice of life insurancecompanies and the evidence in the present case to rest our decision on the proposition that Mendoza was authorized by the company to make the delivery of the policy when he received the payment of the first premium and he was satisfied that the insured was in good health. In the case of MeLaurin vs. Mutual Life Insurance Co. -It is plain, therefore, that upon the facts it is not necessarily a case of waiver or of estoppel, but a case where the local agents, in the exercise of the powers lodged in them, accepted the premium and delivered the policy. That act binds their principal, the defendant.

Issue: WON the said policy never took effect because of paragraph 3 of the application for at the time of its delivery by the agent the insured was not in good health. Held: No. Petition granted.

Ratio:

16 The evidence in the record shows that Mendoza had the authority, given him by the company, to withhold the delivery of the policy to the insured until the first premium has been paid and the policy has been delivered to and accepted by me (the insured) while I am in good health. Mendozas decision that the condition had been met by the insured and that it was proper to make a delivery of the policy to him is just as binding on the company as if the decision had been made by its board of directors. It is the interest not only the applicant but of all insurance companies as well that there should be some act which gives the applicant the definite assurance that the contract has been consummated. A cloud will be thrown over the entire insurance business if the condition of health of the insured at the time of delivery of the policy may be required into years afterwards with the view to avoiding the policy on the ground that it never took effect because of an alleged lack of good health, at the time of delivery. When the policy is issued and delivered it is plainly not within the intention of the parties that there should be any questions held in abeyance or reserved for future determination. It would be a most serious handicap to business if the very existence of the contract remains in doubt even though the policy has been issued and delivered with all the formalities required by the law. The delivery of the policy to the insured by an agent is the final act which binds the company and insured in the absence of fraud or other legal ground for rescission. The fact that the agent to whom it has entrusted this duty is derelict or negligent or even dishonest in the performance of the duty which has been entrusted to him would create a liability of the agent to the company but does not resolve the companys obligation based upon the authorized acts of the agent toward a third party who was not in collusion with the agent. 4. That the agent taking this application has no authority to make, modify or discharge contracts, or to waive any of the Companys right or requirements. Paragraph 4 of the application to the effect is not in point. Mendoza neither waived nor pretended to waive any right or requirement of the company. In fact, his inquiry as to the state of health of the insured discloses that he was endeavoring to assure himself that this requirement of the company had been satisfied. In doing so, he acted within the authority conferred on him by his agency and his acts within that authority bind the company. The company therefore having decided that all the conditions precedent to the taking effect of the policy had been complied with, it is now estopped to assert that it never intended that the policy should take effect. G.R. No. 105562 September 27, 1993

Lessons Applicable: Who Exercises Rights of Minor Insured or Beneficiaries (Insurance) Laws Applicable: Art. 225 Family Code

FACTS:

Prime Marine Services, Inc. (PMSI), a crewing/manning outfit, procured Group PoIicy

17 from Insular Life Assurance Co., Ltd. to provide life insurance coverage to its sea-based employees enrolled under the plan.

February 17 1986: 6 employees of the PMSI perished at sea when M/V Nemos, a Greek cargo vessel, sunk somewhere in El Jadida, Morocco The beneficiaries asked President and General Manager of PMSI, Capt. Roberto Nuval and issued him special powers of attorney authorizing him to "follow up, ask, demand, collect and receive" for their benefit indemnities. It only verbally pertained to the sinking of the fatal vessel Unknown to them, however, the PMSI, in its capacity as employer and policyholder of the life insurance of its deceased workers, filed with formal claims with their special power of attorney Capt. Nuval, upon receipt of these checks from the treasurer, who happened to be his son-in-law, endorsed and deposited them in his account with the Commercial Bank of Manila, now Boston Bank Upon learning that they are entitled to the claim, they sought to recover from Insular Life but it denied on the ground that they already delivered to PMSI The fact that there was a verbal agreement between complainants-appellees and Capt. Nuval limiting the authority of the latter to claiming specified death benefits cannot prejudice the insurance company which relied on the terms of the powers of attorney which on their face do not disclose such limitation Section 180 of the Insurance Code has been amended by the Family Code 17 which grants the father and mother

joint legal guardianship over the property of their unemancipated common child without the necessity of a court appointment; however, when the market value of the property or the annual income of the child exceeds P50,000.00, the parent concerned shall be required to put up a bond in such amount as the court may determine. Insurance Commission: favored petitioners The Insular Life Assurance Company appealed stating that (a) had no jurisdiction over the case considering that the claims exceeded P100,000 (b) erred in holding that the powers of attorney relied upon by Insular Life were insufficient to convey absolute authority to Capt. Nuval to demand, receive and take delivery of the insurance proceeds pertaining to the petitioners (c) erred in not giving credit to the version of Insular Life that the power of attorney supposed to have been executed in favor of the Alarcons was missing, and (d) erred in holding that Insular Life was liable for violating Section 180 of the Insurance Code for having released to the surviving mothers the insuranceproceeds pertaining to the beneficiaries who were still minors despite the failure of the former to obtain a court authorization or to post a bond. CA: eliminated the award to minor beneficiaries Dina Ayo and Lucia Lontok ISSUE: W/N the minor beneficiaries award should be eliminated

18 HELD: YES. petition is GRANTED. CA Reversed. Insurance Commission Reinstated.

Being special powers of attorney, they must be strictly construed. Insular Life knew that apower of attorney in favor of Capt. Nuval for the collection and receipt of such proceeds was a deviation from its practice with respect to group policies. Group Insurance coverage terms for group insurance are usually stated in a master agreement or policy that is issued by the insurer to a representative of the group or to an administrator of the insurance program employer acts as a functionary in the collection and payment of premiums and in performing related duties falling within the ambit of administration of a group policy is the disbursement of insurance payments by the employer to the employees employee is in the position of a real party to the master policy employees is the true source of the benefits, which are a form of additional compensation to them enables the employees to carry a larger amount of insurance than they could otherwise, and helps to attract and hold a permanent class of employees Even granting for the sake of argument that the special powers of attorneywere in due form, Insular Life was grossly negligent in delivering the checks, drawn in favor of the petitioners, to a party who is not the agent mentioned in the special power of attorney Nor can we agree with the opinion of the public respondent that since the shares of the minors in the

insurance proceeds are less than P50,000.00, then under Article 225 of the Family Code their mothers could receive such shares without need of either court appointments as guardian or the posting of a bond Art. 225. The father and the mother shall jointly exercise legal guardianship over the property of their unemancipated common child without the necessity of a court appointment. In case of disagreement, the father's decision shall prevail, unless there is judicial order to the contrary.

Where the market value of the property or the annual income of the child exceeds P50,000, the parent concerned shall be required to furnish a bond in such amount as the court may determine, but not less than ten per centum (10%) of the value of the property or annual income, to guarantee the performance of the obligations prescribed for general guardians.

It is clear from the said Article that regardless of the value of the unemancipated common child's property, the father and mother ipso jure become the legal guardian of the child's property. However, if the market value of the property or the annual income of the child exceeds P50,000.00, a bond has to be posted by the parents concerned to guarantee the performance of the obligations of a general guardian.

19

It must, however, be noted that the second paragraph of Article 225 of the Family Code speaks of the "market value of the property or the annual income of the child," which means, therefore, the aggregate of the child's property or annual income; if this exceeds P50,000.00, a bond is required. There is no evidence that the share of each of the minors in the proceeds of the group policy in question is the minor's only property. Without such evidence, it would not be safe to conclude that, indeed, that is his only property.

GREPALIFE V. CA 89 SCRA 543 Facts: > On March 14, 1957, respondent Ngo Hing filed an application with Grepalife for a 20-yr endowment policy for 50T on the life of his one year old daughter Helen Go. > All the essential data regarding Helen was supplied by Ngo to Lapu-Lapu Mondragon, the branch manager of GrepalifeCebu. Mondragon then typed the data on the application form which was later signed by Ngo. > Ngo then paid the insurance premium and a binding deposit receipt was issued to him. The binding receipt contained the following provision: If the applicant shall not have been insurable xxx and the Company declines to approve the application, the insurance applied for shall not have been in

force at any time and the sum paid shall be returned to the applicant upon the surrender of this receipt. > Mondragon wrote on the bottom of the application form his strong recommendation for the approval of the insurance application. > On Apr 30, 1957, Mondragon received a letter from Grepalife Main office disapproving the insurance application of Ngo for the simple reason that the 20yr endowment plan is not available for minors below 7 yrs old. > Mondragon wrote back the main office again strongly recommending the approval of the endowment plan on the life of Helen, adding that Grepalife was the only insurance company NOT selling endowment plans to children. > On may 1957, Helen died of influenza with complication of broncho pneumonia. Ngo filed a claim with Gepalife, but the latter denied liability on the ground that there was no contract between the insurer and the insured and a binding receipt is NOT evidence of such contract. Issue: Whether or not the binding deposit receipt, constituted a temporary contract of life insurance. Held: NO. The binding receipt in question was merely an acknowledgement on behalf of the company, that the latters branch office had received from the applicant, the insurance premium and had accepted the application subject for processing by the insurance company, and that the latter will

20 either approve or reject the same on the basis of whether or not the applicant is insurable on standard rates. Since Grepalife disapproved the insurance application of Ngo, the binding deposit receipt had never became on force at any time, pursuant to par. E of the said receipt. A binding receipt is manifestly merely conditional and does NOT insure outright. 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. time she first applied, no further medical exam was made but she accomplished Part 1 (which certified the truthfulness of statements made in Part. 2) > The policy was again approved. On Apri 20 1966, Lee Su Guat died of Lung cancer. > Tang claimed the amount o 100T but Philamlife refused to pay on the ground that the insured was guilty of concealment and misrepresentation. > Both trial court and CA ruled that Lee was guilty of concealment. > Tangs position, however, is that because Lee was illiterate and spoke only Chinese, she could not be held guilty of concealment of her health history because the application for insurance was English, and the insurer has not proven that the terms thereof had been fully explained to her as provided by Art. 1332 of CC. Issue: TANG V. CA- INSURANCE FRAUD OR MISTAKE 90 SCRA 236 Facts: > On Sept. 25, 2965, Lee Su Guat, widow, 61 years old and illiterate who spoke only Chinese, applied for life insurance for 60T with Philamlife. The application was in two parts, both in English. > The second part dealt with her state of health. Her answers having shown that she was health, Philamlife issued her a policy effective Oct. 23, 1965 with her nephew Vicente Tang as beneficiary. > On Nov. 15, 1965, Lee again applied for additional insurance of her life for 40T. Since it was only recent from the Whether or not Art. 1332 applies. Held: NO. Art. 1332 is NOT applicable. Under said article, the obligation to show that the terms of the contract had been fully explained to the party who is unable to read or understand the language of the contract, when fraud or mistake is alleged, devolves on the party seeking to enforce it. Here, the insurance company is NOT seeking to enforce the contract; on the contrary, it is seeking to avoid its performance.

21 It is petitioner who is seeking to enforce it, even as fraud or mistake is NOT alleged. Accordingly, Philamlife was under no obligation to prove that the terms of the insurance contract were fully explained to the other party. Even if we were to say that the insurer is the one seeking the performance of the cont contracts by avoiding paying the claim, it has to be noted as above stated that there has been NO imputation of mistake of fraud by the illiterate insured whose personality is represented by her beneficiary. In sum, Art. 1332 is inapplicable, and considering the findings of both the trial court and the CA as to the Concealment of Lee, the SC affirms their decisions. Concurring: J., Antonio In a contract of insurance, each party must communicate to the other, in good faith, all facts within his knowledge which are material to the contract, and which the other has no means of ascertaining. As a general rule, the failure by the insured to disclose conditions affecting the risk of which he is aware makes the contract voidable at the option of the insurer. The reason for this rule is that insurance policies are traditionally contracts uberrimae fidei, which means most abundant good faith, absolute and perfect candor or openness and honesty, absence of any concealment or deception however slight. Here the CA found that the insured deliberately concealed material facts about her physical condition and history and/or concealed with whoever assisted her in relaying false information to the medical examiner. Certainly, the petitioner cannot assume inconsistent positions by attempting to enforce the contract of insurance for the purpose of collecting the proceeds of the policy and at the same time nullify the contract by claiming that it was executed through fraud or mistake. NOTE: Art. 1332: When one of the parties is unable to read or if the contract is in a language not understood by him, and mistake or fraud is alleged, the person enforcing the contract must show that the terms thereof have been fully explained to him.

G.R. No. L-18529 FRANCISCO G. ALEJA, FELICITACION GAMBOA-ALEJA and DOMINADOR ALEJA, plaintiffs-appellants, vs. GOVERNMENT SERVICE INSURANCE SYSTEM, defendantappellee. Restituto L. Joson for plaintiffs-appellants. Bartolome S. Palma for defendant-appellee. Barrera, J.: This is an appeal by Francisco G. Aleja, et al., from the decision of the Court of First Instance of Nueva Ecija (in Civil Case No. 3335) dismissing their complaint against the Government Service Insurance System (GSIS) and denying their claim to the proceeds of the insurance policy No. 310973 issued to the late Rosauro G. Aleja, on the ground that the deceased was not yet covered by insurance at the time of his death. As found by the lower court, the deceased Rosauro G. Aleja was appointed as temporary classroom teacher in the Bureau of Public Schools, Division of Nueva Ecija, on July 8, 1958. Thereafter, a compulsory term insurance policy, No. 310973,

22 was issued in his name, said policy to take effect on February 1, 1959. The corresponding premium therefor was deducted for the first time from his salary on January 31, 1959. However, two days before that or on January 29, 1959, while guarding the rice stack in front of their house, Rosauro Aleja died of a gunshot wound inflicted by his own gun. Plaintiffs, as beneficiaries named in the policy, filed a claim with the GSIS to collect the proceeds of the said policy, but the same was denied allegedly because at the time of Aleja's death, the policy was not yet effective and the latter was, therefore, not covered by insurance. Hence, the institution of this case and the consequent promulgation of the decision by the lower court which is the subject of the present appeal. In denying plaintiffs-appellants' claim, the GSIS contends that although Aleja became a permanent employee and entitled to membership in the System 6 months after his original appointment, or on January 8, 1959, yet as specified in the policy issued to him, the same shall become effective only on February 1, 1959. And this latter date was fixed in accordance with the provisions of Commonwealth Act 186, as amended byRepublic Act 660, which read: SEC. 4. Scope of application of System.- (a) Membership to the System shall be compulsory upon all regularly and permanently appointed employees, including those whose tenure of office is fixed or limited by law; upon all teachers except only those who are substitutes; ... . SEC. 8. (a) Compulsory membership insurance.- An employee whose membership in the System is compulsory shall be automatically insured on the first day of the seventh calendar month following the month he was appointed or on the first day of the sixth calendar month if the date of his appointment is the first day of the month: Provided, That his medical examination, if required, has been approved by the System. It is not controverted that the deceased had rendered services to the government for 6 months and 21 days before his death; that he was insured and in fact a policy was already issued in his favor at the time of his death; that the death fixed for the effectivity of said policy was made pursuant to the aforequoted provisions of the GSIS Charter. Appellants, however, maintain that section 8 of Commonwealth Act 186, insofar as it fixes the date of compulsory membership therein, is absurd and discriminatory, in that, whereas those whose appointments are dated on the first day of the month become covered by insurance on the first day of the sixth month following their appointment, those who were appointed on other dates become insured only on the first day of the seventh calendar month from their original appointment. In other words, if an employee is appointed on January 1, he will be covered by insurance on June 1, whereas one who gets appointed in January 2 becomes insured only on July 1. This arrangement, appellants claim, was made only to facilitate office transactions or for office procedure, and should not be construed to defeat the purpose for which the System was established, i.e., to promote the welfare of the employees. It is, therefore, urged that the coverage of compulsory insurance should commence on the date when the employee becomes entitled to membership in the System, or upon completion of six months' service. It may be admitted that as thus worded, the disputed provision makes a distinction, in the matter of effectivity of their

23 insurance coverage, between those appointed to the service on the first day of the month and those who receive their appointments on any other date. But classification or class legislation, assuming this to be one, does not ipso facto make a statutory provision invalid. Classification will not constitute an infringement of the individual's right to constitutional guarantees of equality if it is not unreasonable, arbitrary or capricious. To be reasonable, the classification must be based on substantial distinctions which make real differences; must be germane to the purposes of the law; must not be limited to existing conditions only, and must apply equally to each member of the class, under similar conditions. 1 In the instant case, it may be true that the disputed provision must have been incorporated in the law to promote efficiency and convenience in office procedure of the System. Taking into account the volume of business that the System handles, the providing of this measure which ultimately may redound to the benefit of the members in the form of efficient and prompt service, cannot be considered capricious or arbitrary. Furthermore, it appears that the policy issued and accepted by Aleja during his lifetime specifically provides that the effective date of the insurance contract is February 1, 1959. Additionally, it is not denied that the first premium on said insurance contract was deducted from Aleja's salary only on January 31, 1959 or after his death. Clearly, at the time of his said death, there was no existing contract between him and the appellee GSIS, there being no consideration for the risk sought to be enforced against the insurance system. The offer of the latter to refund the amount collected after Aleja's death, is proper. WHEREFORE, the decision of the lower court appealed from is hereby modified in the sense that the defendant-appellee shall return to the plaintiffs the amount deducted from the deceased's salary in the form of premium. No costs. So ordered.

Areola vs. CA G.R. No. 95641 September 22, 1994

Lessons Applicable: Binding Effect of Payment (Insurance) Laws Applicable: Art. 1910,Article 1191

FACTS:

December 17, 1984: Prudential Guarantee And Assurance, Inc. issued collector's provisional receipt amounting to P1,609.65 June 29, 1985: 7 months after the issuance of petitioner Santos Areola's Personal Accident Insurance Policy, Prudential Guarantee And Assurance, Inc. unilaterally cancelled it for failing to pay his premiums through its manager Teofilo M. Malapit Shocked by the cancellation of the policy, Santos approached Carlito Ang, agent of Prudential and demanded the issuance of an official receipt. Ang told Santos that it was a mistake and assured its rectification. July 15, 1985: Santos demanded the same terms and same rate increase as when he paid the provincial receipt

24 but Malapit insisted that the partialpayment he made was exhausted and that he should pay the balance or his policy will cease to operate July 25, 1985 : Assistant Vice-President Mariano M. Ampil III apologized August 6, 1985 had filed a complaint for breach of contract with damages before the lower court August 13, 1985: Santos received through Carlito Ang the leeter of Assistant Vice-President Mariano M. Ampil III finding error on their part since premiums were not remitted Malapit, proposed to extend its lifetime to December 17, 1985 RTC: favored Santos - Prudential in Bad Faith CA: Reversed - not motivated by negligence, malice or bad faith in cancelling subject policy ISSUE: W/N the Areolas can file against damages despite the effort to rectify the cancellation

a contract of insurance creates reciprocal obligations for both insurer and insured Article 1191 choice between fulfillment or rescission of the obligation in case one of the obligors fails to comply with what is incumbent upon him entitles the injured party to payment of damages, regardless of whether he demands fulfillment or rescission of the obligation Nominal damages are "recoverable where a legal right is technically violated and must be vindicated against an invasion that has produced no actual present loss of any kind, or where there has been a breach of contract and no substantial injury or actual damages whatsoever have been or can be shown.

CONSTANTINO V. ASIA LIFE- NON-PAYMENT OF INSURANCE PREMIUMS 87 PHIL 248 Facts: > Appeal consolidates two cases. > Asia life insurance Company (ALIC) was incorporated in Delaware. > For the sum of 175.04 as annual premium duly paid to ALIC, it issued Policy No. 93912 whereby it insured the life of Arcadio Constantino for 20 years for P3T with Paz Constantino as beneficiary. First premium covered the period up to Sept. 26, 1942. No further premiums were paid after the first premium and Arcadio died on Sept. 22, 1944.

HELD: YES. RTC reinstated Malapit's fraudulent act of misappropriating the premiums paid is beyond doubt directly imputable to Prudential Art. 1910. The principal must comply with all the obligations which the agent may have contracted within the scope of his authority. As for any obligation wherein the agent has exceeded his power, the principal is not bound except when he ratifies it expressly or tacitly.

Subsequent reinstatement could not possibly absolve Prudential there being an obvious breach of contract

25 > Due to Jap occupation, ALIC closed its branch office in Manila from Jan. 2 1942-1945. > On Aug. 1, 1938, ALIC issued Policy no. 78145 covering the lives of Spouses Tomas Ruiz and Agustina Peralta for the sum of P3T for 20 years. The annual premium stipulated was regularly paid from Aug. 1, 1938 up to and including Sept. 30, 1940. Effective Aug. 1, 1941, the mode of payment was changed from annually to quarterly and such quarterly premiums were paid until Nov. 18, 1941. Last payment covered the period until Jan. 31, 1942. Tomas Ruiz died on Feb. 16, 1945 with Agustina Peralta as his beneficiary. > Due to Jap occupation, it became impossible and illegal for the insured to deal with ALIC. Aside from this the insured borrowed from the policy P234.00 such that the cash surrender value of the policy was sufficient to maintain the policy in force only up to Sept. 7, 1942. > Both policies contained this provision: All premiums are due in advance and any unpunctuality in making such payment shall cause this policy to lapse unless and except as kept in force by the grace period condition. > Paz Constantino and Agustina Peralta claim as beneficiaries, that they are entitled to receive the proceeds of the policies less all sums due for premiums in arrears. They also allege that non-payment of the premiums were caused by the closing of ALICs offices during the war and the impossible circumstances by the war, therefore, they should be excused and the policies should not be forfeited. > Lower court ruled in favor of ALIC. Issue:

May a beneficiary in a life insurance policy recover the amount thereof although the insured died after repeatedly failing to pay the stipulated premiums, such failure being caused by war? Held: NO. Due to the express terms of the policy, non-payment of the premium produces its avoidance. In Glaraga v. Sun Life, it was held that a life policy was avoided because the premium had not been paid within the time fixed; since by its express terms, non-payment of any premium when due or within the 31 day grace period ipso fact caused the policy to lapse. When the life insurance policy provides that non-payment of premiums will cause its forfeiture, war does NOT excuse nonpayment and does not avoid forfeiture. Essentially, the reason why punctual payments are important is that the insurer calculates on the basis of the prompt payments. Otherwise, malulugi sila. It should be noted that the parties contracted not only as to peace time conditions but also as to war-time conditions since the policies contained provisions applicable expressly to wartime days. The logical inference therefore is that the parties contemplated the uninterrupted operation of the contract even if armed conflict should ensue.

26
provincial de la Pampanga habia llenado un formulario del referido Sistema de Seguro llamado "Information for membership insurance," en el que nombraba a suesposa Adelaida Ocampo como beneficiaria, enviando luego el formulario asi llenado al "Government Service Insurance System" que lo recibio y guardo en su archivo; (d) que el 28 de Febrero, 1938, el tesorero provincia lde la Pampanga, como pagador oficial, dedujo del sueldode Gomez correspondiente a la segunda mitad de dichomes la cantidad de P2.70 como su parte en la primera prima, aportando la provincia una suma igual como su contribucion; (e) que la prima fue enviada a la oficina del "Government Service Insurance System" en Manila, y dicha oficina la recibio el 10 de marzo, 1938, librando el correspondiente recibo al gobierno provincial de la Pampanga; (f) que el 7 de Marzo, 1938, el tesorero provincial de la Pampanga envio a la oficina del "Government Service Insurance System," en nombre de la viuda de Andres Gomez, Adelaida Ocampo, una reclamacion por el importe dela poliza de seguro en la suma de P1,052, pero la juntadirectiva del Sistema la rechazo por el fundamento de queAndres Gomez era solo un empleado temporero temporary bajo las reglas del Servicio Civil, y, por tanto, no era asegurable cuando murio el 28 de Febrero, 1938; (g) finalmente, que la oficina del "Government Service Insurance System" devolvio al gobierno provincial de la Pampanga el importe de la prima pagada, o sea la cantidad de P5.40, por medio de la libranza de la Tesoreria No. 58162. La viuda interpuso la presente accion ante el Juzgado de Primera Instancia de la Pampanga contra la Junta Directiva del "Government Service Insurance System," pidiendoel cobro del importe de la poliza. El Juzgado, estimandola defensa de que Andres Gomez era solo un temporero, sinhaberse cualificado en el servicio civil mediante el correspondiente examen para merecer un nombramiento como empleado regular y permanente, y, por tanto, sin derechoa ser asegurado automaticamente bajo la ley que rige el Sistema, dicto sentencia contra la demandante, sobrese y endola demanda. De ahi la presente apelacion.

ADELAIDA OCAMPO VDA. DE GOMEZ, demandante-apelante, vs. THE GOVERNMENT INSURANCE BOARD, demandado-apelado. Sres. Artemio C. Macalino y Rodrigo G. Pagan en representacion de la apelante. Abogado Auxiliar de Corporaciones D. Federico C. Alikpala en representacion del apelado. BRIONES, J.: Andres A. Gomez estuvo sirviendo en el gobierno provincial de la Pampanga como tasador provincial delegado por un periodo continuo de 25 aos, desde el 8 de Agosto de 1914 en que fue nombrado por primera vez, hasta el 28 de Febrero de 1938 en que fallecio. Segun el convenio dehechos, no cabe duda de que su nombramiento era de empleado temporero temporary al tenor de la fraseologia legal. No era elegible en el servicio civil: esto explica porque durante tan largo tiempo de servicio no se le habia podido expedir un nombramiento regular y permanente. El sueldo que percibia al morir era de P90 al mes. Tampoco hay controversia entre las partes, bajo el convenio, acerca de los siguientes hechos: (a) que el gobierno provincial de la Pampanga, para aprovecharse delos beneficios de la ley del Commonwealth No. 186, aprobo el 8 de Agosto, 1937, por medio de su junta provincial, una resolucion en que significaba su intencion de afiliarse al Sistema de Seguro de Vida del Gobierno nacional llamado "Government Service Insurance System"; (b) que despues de recibir dicha resolucion, la junta que regenta y administra dicho Sistema de Seguro la aprobo debidamente, haciendo efectiva la afiliacion desde el 28 de Febrero, 1938; (c) que Andres A. Gomez, antes de sumuerte, juntamente con otros empleados del gobierno

27
Establecido y convenido que el nombramiento de Gomez era de temporero, la cuestion que tenemos que resolver essi al tiempo de su muerte tenia tales cualificaciones quepodia ser considerado como empleado regular y permanente para los efectos del cobro del importe de su poliza de seguro por la beneficiaria. Decidimos que si, tenia tales cualificaciones. Resulta establecido en autos, sin discusion, que Gomez, acogiendose a las disposiciones del articulo 672 del Codigo Administrativo tal como fue enmendado por la ley del Commonwealth No. 177, se sometio a examen de 2.ogrado enel servicio civil el 16 de Octubre, 1937, y fue aprobado enaquel examen, si bien este favorable resultado no se anunciosino despues ya de su muerte. Es obvio que los efectos de la aprobacion deben retrotraerse a la fecha del examen. La prueba de la competencia, de la idoneidad del examinando, se realizo antes de su muerte; por tanto, hay que darle efectividad desde la fecha en que tuvo lugar laprueba. Hasta parece superfluo que esto se discuta. Sin embargo, se arguye que no cabe dar efecto retroactivo a la aprobacion de Gomez en su examen, puesto que el articulo 663 (d) del Codigo Administrativo Revisado, tal como ha sido enmendado, dispone que "a period of trial service shall be required before appointment or employmentis made permanent;" y es claro que Gomez, habien domuerto despues del examen y antes de que su resultado seanunciara, mal pudo ser sometido a dicho periodo de pruebapor 6 meses. Esta manera de interpretar la ley tiene el defecto deser demasiado literal, y "la letra mata (a veces), mientrasque el espiritu vivifica." Tengase en cuenta que Gomez habia servido como tasador provincial delegado por 25 aos consecutivos hasta el dia de su muerte. Cuando portan largo tiempo pudo superar la prueba de su competencia, en el ejercicio cotidiano de sus deberes, hay que presumir que sus superiores estaban satisfechos de su idoneidad. Por tanto, el periodo de prueba de 6 meses no rezabacon el. Para los efectos, por lo menos, de la validez de su poliza de seguro, se debe concluir que el exito desu examen le capacitaba y cualificaba automaticamente para un nombramiento regular y permanente desde la fechade dicho examen. Por tanto, el era asegurable y, dehecho, estaba asegurado en el dia de su muerte, bajo losterminos de la Ley No. 186. Esta conclusion es tanto masjusta cuanto que el "Government Service Insurance System" acepto practicamente la prima pagada, librando porella el correspondiente recibo. Nos sentimos perfectamente autorizados para interpretarla ley lo mas liberalmente posible, toda vez que, prescindiendo ya de que en el presente caso se trata de la viuday familia de un pequeo empleado, es evidente que el Sistema Nacional de Seguro de Vida del Gobierno se hacreado para fines sociales y humanitarios, siendo parte deese generoso movimiento universal que tiende a mejorarcada dia la suerte de los hijos del trabajo mediante la promulgacion en todos los paises cultos y civilizados de leyes progresivas y liberales sobre seguridad social y economica. El articulo 3 de la ley del Commonwealth No. 186 que crea y reglamenta dicho Sistema, dice positivamente que el mismose establece "en orden a promover la eficiencia y bien estarde los empleados del Gobierno de Filipinas y reemplazar los sistemas de pensiones actualmente establecidos . . .". Como se sabe, aquellos sistemas de pensioneseran fundamentalmente de beneficencia, tanto que si noha sido posible continuarlos era porque el gobierno no disponia de tanto dinero para capitalizarlos y sostener lospor si solo. Asi que se ha ideado el Sistema Nacional de Seguro sobre bases mas cientificas y con adecuadas aportaciones de los empleados mismos. Con todo, es innegableque el sucesor ha heredado parte de los rasgos beneficos y humanitarios de sus antecesores. En meritos de lo expuesto, se revoca la sentencia del Juzgado y se condena a la demandada y apelada a pagara la demandante y

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apelante la suma de P1,052, importe de la poliza de seguro del difunto Andres A. Gomez, maslos intereses legales desde la interposicion de la demanda, y las costas del juicio. Asi se ordena. Moran, Pres., Paras, Feria, Pablo, Hilado, Bengzon, Padilla, and Tuason , MM., estan conformes.

personal signature, renounced the right to change the beneficiary, should prevail over the printed phrase "WITH RIGHT OF REVOCATION" which occurs in the policy. It is to be noted that the application itself is made a part of the contract.

DECISION [G.R. No. 42874. October 22, 1935.] THE INSULAR LIFE ASSURANCE CO., LTD., PlaintiffAppellant, v. MARIA NARCISA SUVA, as administratrix of the intestate estate of Benito Patrocinio Suva, defendant and appellee. FELICIDAD CRUZ, intervenor and appellant, MARIA NARCISA SUVA, Intervenor-Appellee. Araneta, Zaragoza & Araneta for plaintiff. Jose Gutierrez David for intervenors. SYLLABUS LIFE INSURANCE POLICY; ATTEMPTED CHANGE OF BENEFICIARY. The conclusion of the trial court is sustained by the decision in the case of Gercio v. Sun Life Assurance Co. of Canada (48 Phil., 53), and the American authorities therein cited. The attempted change of beneficiary made by the insured on August 16, 1933, no right to change having been reserved, and endorsed by the company on the back of the policy on August 24, 1933, was due to a mutual mistake. The application in which the insured, over his

BUTTE, J.:

This is an appeal from a judgment of the Court of First Instance of Manila in an action brought by the Insular Life Assurance Co., Ltd., for the cancellation of two policies of P5,000 each issued and delivered by it upon the life of Benito Patrocinio Suva, now deceased. The action was originally brought only against the administratrix of the estate of the insured, but by leave of court, Maria Narcisa Suva, in her own right, and Felicidad Cruz filed their interventions claiming to be the beneficiaries of the two policies involved in this action. The first of the policies, numbered 47726, bears date of December 1, 1932, and names as beneficiary Isabel Simbulan, the wife of the insured. The second of the said policies, numbered 48819, bears date of February 1, 1933, and names as beneficiary the appellee, Maria Narcisa Suva, sister of the insured. The company acknowledges having received the premium due on said policies for the first year and tenders the return of the same in its petition. The intervenors, besides praying for judgment for the amount due

29 on said policies, also pray for P1,000 each as damages. The ground alleged by the plaintiff for the cancellation of said policies is that the insured made false statements as to the past and present state of his health in his applications which, by the terms of the policies themselves, are made a part of the contract. The applicant was examined on October 17, 1932, by Dr. G. Ocampo, one of the physicians of the company. He was again examined on December 28, 1932, by Dr. M. Llora, a physician of the company sent out from the home office for that purpose. In connection with his first application for policy No. 47726, among the numerous questions with relation to specific diseases, the following questions and answers appear in the report of Dr. Ocampo (Exhibit B):jgc:chanrobles.com.ph " Ha padecido V.2 alguna vez de las siguientes enfermedades . . . del pulmon, pleuriesia, pulomia, asma? No. " Ha escupido V. sangre? Por quecausa? No." No doubt is raised as to the correctness of any other statements of the applicant. The report of Dr. Ocampo is a detailed account of the complete examination made by him. Item No. 30 of his report is as follows:" Encuentra V., despues de una cuidadosa interrogacion y reconocimiento, algn sintoma de padecimiento actual o anterior . . . de los pulmones? to which the doctor answered "No." Item 33 of his report is as follows:" Ha revisado V. cuidadosamente todas las contestaciones de este reconocimiento y esta V. seguro de que son claras y completas?" to which the doctor answered "Si." Item 34 is as follows:" Cree V. que los informes dados por le solicitante son verdaderos y completos en todos los conceptos?" to which the doctor answered "Si." Item 35 is as follows:" Recomienda V., como representante fiel de la compaia, que se acepte este riesgo como excelente, bueno, o que no se acepte?" to which the doctor answered "Si, que se acepte como excelente."cralaw virtua1aw library On December 28, 1932, when the applicant was examined by Dr. M. Llora, he was asked the same questions as were put to him by Dr. Ocampo. In the questions relating to his clinical history he was asked: "Have you ever suffered from any ailment or disease of (c) the lungs, pleurisy, pneumonia or asthma? The applicant answered "Yes, trancazo 1918" and (h) "Have you ever spat blood? What was it due to?" to which the applicant answered "No." No other answers made by him are called in question in this litigation. In Dr. Lloras detailed report which appears on the back of said application, Exhibit C, appear the following:jgc:chanrobles.com.ph "Item 30: Do you find after careful inquiry and physical examination any evidence of past or present disease . . . (d) of the lungs? "Answer: No."cralaw virtua1aw library "Item 34: Do you believe the party has given full and true information in all respects? "Answer: Si.

30 disturb his findings of fact. It seems to us the companys physicians were entirely warranted in their conclusion that the insured was an acceptable risk. The preponderance of the evidence discloses that the applicant, a young man 27 years of age and recently married, was devoted to vigorous athletic sports and regularly carried on his business as a farmer and contractor up to May, 1933. In reply to the question in the printed application, "Are you in good health? he replied "Yes." If two qualified physicians, not selected by him, independently examine a man with critical attention and in the interest of their employer, the insurance company, and they pronounce him to be in good health, we should find it difficult to declare that he knowingly made a false statement when he said he believed the same thing himself. "Good health" is a relative term. A person with sound body may honestly believe himself to be in "good health" although at the moment he may have a terrific headache, or a running cold, or an attack of diarrhea, or indigestion, or any other of a host of minor common ailments which may possibly develop later into a serious illness. A hemorrhage may be due to any one of a variety of causes, grave or slight, having no necessary relation with pulmonary tuberculosis. Even if we gave credence to the testimony that Benito Patrocinio Suva spat blood on one occasion in May, 1932, and another in August, 1932, there is no evidence whatever in the record as to the cause of the alleged hemorrhage. We have no right to jump at the conclusion that it was grave and could only be due to pulmonary tuberculosis, especially as it left no trace, for Drs. Ocampo and Llora found nothing wrong with the applicant in October or December, 1932. No serious illness prior to May, 1933, is established by the evidence. We agree with the trial

"Item 35: Would you classify applicant as first class, good, average or poor risk? "Answer: Creo que es aceptable." His report concludes with the following certificate:jgc:chanrobles.com.ph "I CERTIFY that I have carefully examined Benito Patrocinio Suva of Arayat, Pampanga, in private, and not in the presence of any third person, at Arayat, Pampanga, this 28th day of December, 1932, at 5.15 oclock P. M. for an insurance of P5,000 for 20 C. P. years on the applicants life; that I have asked each question exactly as set forth on the other side of this sheet and that the applicants answers thereto are in my handwriting, and are exactly as made by the applicant to me and that the applicant signed them in my presence. (Sgd.) "M. LLORA, Med. Ex."cralaw virtua1aw library The insured died of pulmonary tuberculosis in the Chinese General Hospital in Manila on September 23, 1933. The substance of the plaintiffs cause of action is that the statements made by the insured in his applications as above quoted, were false and that the applicant was not in good health either at the time he presented his applications or on the date when said policies were delivered. Upon this issue of fact the learned trial judge made a complete and careful analysis of the evidence. We accept his conclusions as to the credibility of the witnesses. We have carefully re-examined the entire record and see no reason to

31 court that the applicant was in good health when the policies were delivered and that it is not proved that he made any material false statement in his said applications for insurance. The appellant company complains that the trial court failed to consider the death certificate signed by Dr. Tablante. This certificate (Exhibit J) states that Suva died in the Chinese General Hospital of Manila on September 23, 1933; that the cause of the death was pulmonary tuberculosis; that the duration of the disease was one year and five months. The source information of the latter statement is not mentioned. Suva entered the hospital in August 1933, and the certificate itself recites that Dr. Tablante treated him only from August 18, 1933, to September 23, 1933. The plaintiff did not offer Dr. Tablante as a witness and none of the hospital records were put in evidence. The statement of Dr. Tablante as to the duration of the disease is apparently hearsay and, under the circumstances, we cannot give that recital in the certificate of death the conclusiveness which the plaintiff claims for it. (U.S. v. Que Ping, 40 Phil., 17.) Felicidad Cruz appeals from that part of the judgment which holds that the insured, Benito Patrocinio Suva, having renounced in his application the right to change the beneficiary in policy No. 47726, his wife, Isabel Simbulan, acquired a vested interest in the policy which neither the insured nor the company could take from her without her consent. The conclusion of the trial court is sustained by our decision in the case of Gercio v. Sun Life Assurance Co. of Canada (48 Phil., 53), and the American authorities therein cited. (We think that the attempted change of beneficiary made by the insured on August 16, 1933, and endorsed by the company on the back of the policy on August 24, 1933, was due to a mutual mistake. The application in which the insured, over his personal signature, renounced the right to change the beneficiary, should prevail over the printed phrase "WITH RIGHT OF REVOCATION" which occurs in the policy. It is to be noted that the application itself is made a part of the contract. In view of the premises, the judgment is affirmed with costs against the appellant insurance company as to the appellee Maria Narcisa Suva and without special pronouncement as to costs in the appeal of Felicidad Cruz.