RHYS MURILLO Insurance Reviewer Ateneo Law School

INSURANCE REVIEWER Atty.
Quimson page 1
Most of the content of this reviewer was taken from the Reviewer of Johnbee Sioson (3-B,1994) edited to inc!de new "!ris#r!dence and
s!b"ect matter disc!ssed in cass$
THE INSURANCE CODE OF 1976
(Presidentia !e"ree No. 1#$%&
GENERAL PROVISIONS
Section 1. '(is de"ree s(a )e *no+n as t(e ,Insuran"e Code o- 1./01
What i the !"inci!#e $ehin% in&"ance'
Insuran"e is )ased upon t(e prin"ipe o- aiding anot(er -rom a oss "aused )y an un-ortunate e2ent.
Ho( o#% i the conce!t o) in&"ance'
Very od. 3ene2oent so"ieties organi4ed -or t(e purpose o- e5tending aid to t(eir un-ortunate mem)ers -rom a -und
"ontri)uted )y a6 (a2e )een in e5isten"e -rom t(e eariest times. '(ey e5isted among t(e Egyptians6 t(e C(inese6 t(e
7indus6 t(e Romans6 and are *no+n to (a2e )een esta)is(ed among t(e 8ree*s as eary as6 )eie2e it or not6 9 3.C.
Ho( %i% in&"ance %e*e#o! in the Phi#i!!ine'
P"e+S!anih E"a : t(ere +as no insuran"e; e2ery oss +as )orne )y t(e person or t(e -amiy +(o su--ered t(e
mis-ortune.
S!anih e"a Insuran"e6 in its present "on"ept6 +as introdu"ed in t(e P(iippines +(en <oyd=s o- <ondon appointed
Stra"(man6 >urray ? Co.6 In". as its representati2e (ere.
1,9, <i-e insuran"e +as introdu"ed in t(is "ountry +it( t(e entry o- Sun <i-e Assuran"e o- Canada in t(e o"a
insuran"e mar*et.
19-6 . @irst domesti" non:i-e insuran"e "ompany6 t(e Ae* 'ong <in Insuran"e Company6 +as organi4ed
191- . @irst domesti" i-e insuran"e "ompany6 t(e Insuar <i-e Assuran"e Co.6 <td.6 +as organi4ed
19/9 . Union Insuran"e So"iety o- Canton appointed Russe ? Surgis as its agent in >ania. '(e )usiness transa"ted
t(e P(iippines +as t(en imited to non-ife ins!rance$
19/6 . So"ia insuran"e +as esta)is(ed +it( t(e ena"tment o- Common+eat( A"t no. 10$ +(i"( "reated t(e
8o2ernment Ser2i"e Insuran"e System (8SIS& +(i"( started operations in 1.9/. '(e A"t "o2ers go2=t empoyees.
1909 8o2ernment agen"y +as -ormed to (ande insuran"e a--airs6 +(ere t(e Insuar 'reasurer +as appointed
"ommissioner e5:o--i"io.
191- Reinsuran"e +as introdu"ed )y t(e Reinsuran"e Company o- t(e Brient +(en it +rote treaties -or )ot( i-e and
non i-e.
1911 @irst +or*men=s "ompensation poo +as organi4ed as t(e Roya 8roup In"orporated.
1910 RA 11$1 +as ena"ted +(i"( pro2ided -or t(e organi4ation o- t(e So"ia Se"urity System (SSS& "o2ering
empoyees o- t(e pri2ate se"tor.
At present6 t(ere are 19% insuran"e "ompanies registered +it( t(e B--i"e o- t(e Insuran"e Commissioner. B- t(ese6 C
are "omposite insuran"e "ompanies (engaged in )ot( i-e and non:i-e insuran"e&6 C9 are i-e insuran"e "ompanies6 1%1 are
non:i-e insuran"e "ompanies and # are reinsuran"e "ompanies.
Ho( %i% in&"ance #a( %e*e#o! in the Phi#i!!ine'
!uring t(e S!anih Pe"io%6 t(e a+s on insuran"e +ere -ound in 'ite VII o- 3oo* II and Se"tion III o- 'ite III o- 3oo* III
o- t(e Spanis( Code o- Commer"e; and in C(apters II and IV o- 'ie DII o- 3oo* IV o- t(e Spanis( Ci2i Code o- 100.
(whew%)
!uring t(e A2e"ican Re3i2e6 on !e". 116 1.1#6 t(e P(i <egisature ena"ted t(e Insuran"e A"t (A"t C#C/&. '(is A"t
+(i"( too* e--e"t on Euy 16 1.1F repeaed t(e pro2isions o- t(e Spanis( Code o- Commer"e on Insuran"e.
W(en t(e Ci2i Code o- t(e P(iippines (RA 90$& too* e--e"t on August 9%6 1.F%6 t(e pro2isions o- t(e Spanis( Ci2i
Code o- 100. +ere i*e+ise repeaed. @or Guite a ong time6 t(e Insuran"e A"t +as t(e go2erning a+ on insuran"e in t(e
P(iippines.
Bn !e". 106 1./#6 P! $1C +as promugated6 ordaining and instituting t(e Insuran"e Code o- t(e P(iippines6 t(ere)y
repeaing A"t C#C/. P!=s $96 1C9 and 91/ +ere issued6 amending P! $1C. @inay P! 1#$% +(i"( too* e--e"t on Eune 116
1./$ "onsoidated a insuran"e a+s into a singe "ode and t(is is +(at +e *no+ no+ as t(e Insuran"e Code o- 1./0.
What a"e the !"eent #a( that 3o*e"n in&"ance (aso known as the aws we have to know for e&ams)H
'(e a+s +e (a2e to *no+ are6 o- "ourse6 P! 1#$%6 and Arti"es C%11:C%1C6 C%C1:C%C/ and C1$$ o- t(e Ne+ Ci2i
Code.
9! SA C%%#:C%%F r(ys ae5ei
INSURANCE REVIEWER Atty. Quimson page C
What %o thee Ci*i# Co%e P"o*iion a4'
A"t5 6-115 '(e "ontra"t o- insuran"e is go2erned )y spe"ia a+s. >atters not e5pressy pro2ided -or in su"( spe"ia
a+s s(a )e reguated )y t(is Code.
A"t5 6-165 Any person +(o is -or)idden -rom re"ei2ing any donation under Art. /9. "annot )e named )ene-i"iary o- a
i-e insuran"e poi"y )y a person +(o "annot ma*e any donation to (im6 a""ording to said arti"e.
A"t5 6-61. '(e aeatory "ontra"t o- i-e annuity )inds t(e de)tor to pay an annua pension or in"ome during t(e i-e o-
one or more determinate persons in "onsideration o- a "apita "onsisting o- money or ot(er property6 +(ose o+ners(ip is
trans-erred to (im at on"e +it( t(e )urden o- in"ome.
A"t5 6-66. '(e annuity may )e "onstituted upon t(e i-e o- t(e person +(o gi2es t(e "apita6 upon t(at o- a t(ird person6
or upon t(e i2es o- 2arious persons6 a o- +(om must )e i2ing at t(e time t(e annuity is esta)is(ed.
It may aso )e "onstituted in -a2or o- t(e person or persons upon +(ose i-e or i2es t(e "ontra"t is entered into6 or in
-a2or o- anot(er or ot(er persons.
A"t5 6-6/5 <i-e annuity s(a )e 2oid i- "onstituted upon t(e i-e o- a person +(o +as aready dead at t(e time t(e
"ontra"t +as entered into6 or +(o +as at t(e t(at time su--ering -rom an iness +(i"( "aused (is deat( +it(in t+enty days
-oo+ing said date.
A"t5 6-60. '(e a"* o- payment o- t(e in"ome due does not aut(ori4e t(e re"ipient o- t(e i-e annuity to demand t(e
reim)ursement o- t(e "apita or to reta*e possession o- t(e property aienated6 uness t(ere is a stipuation to t(e "ontrary;
(e s(a (a2e ony a rig(t Iudi"iay to "aim t(e payment o- t(e in"ome in arrears and to reGuire a se"urity -or t(e -uture
in"ome6 uness t(ere is a stipuation to t(e "ontrary.
A"t5 6-61. '(e in"ome "orresponding to t(e year in +(i"( t(e person enIoying it dies s(a )e pain in proportion to t(e
days during +(i"( (e i2ed; i- t(e in"ome s(oud )e paid )y instaments in ad2an"e6 t(e +(oe amount o- t(e instament
+(i"( )egan to run during (is i-e s(a )e paid.
A"t5 6-66. 7e +(o "onstitutes an annuity )y gratuitous tite upon (is property6 may pro2ide at t(e time t(e annuity is
esta)is(ed t(at t(e same s(a not )e su)Ie"t to e5e"ution or atta"(ment on a""ount o- t(e o)igations o- t(e re"ipient o- t(e
annuity. I- t(e annuity +as "onstituted in -raud o- "reditors6 t(e atter may as* -or e5e"ution or atta"(ment o- t(e property.
A"t5 6-67. No annuity s(a )e "aimed +it(out -irst pro2ing t(e e5isten"e o- t(e person upon +(ose i-e t(e annuity is
"onstituted.
What i o i2!o"tant a$o&t the Ci*i# Co%e P"o*iion'
Atty. Quimson ne2er -ais to as* a)out A"t5 6-16.
A"e the"e !ecia# #a( that 3o*e"n in&"ance'
Aes6 )ut Atty. Quimson did not te us to oo* t(em up. 7o+e2er6 -or re-eren"e t(ey areJ
1. Re2ised 8SIS A"t o- 1.// (P! 11#$6 as amended&
C. So"ia Se"urity A"t o- 1.F# ( RA 11$16 (as amended&
9. '(e Property Insuran"e <a+ ( RA $F$6 as amended )y P! C#F&
#. Repu)i" A"t No. #0.0
F. EB CF%; and
$. RA 9F.1
Ho( %o (e cont"&e the !"o*iion o) the In&"ance Co%e 7IC8'
Sin"e our present IC is )ased mainy on t(e Insuran"e A"t6 +(i"( in turn +as ta*en 2er)atim -rom t(e a+ o- Cai-ornia
(e5"ept -or C(ap V6 +(i"( +as ta*en -rom t(e a+ o- NA&6 t(e "ourts s(oud -oo+ in -undamenta points6 at east6 t(e
"onstru"tion pa"ed )y Cai-ornia Courts on Cai-ornia a+ (and t(e "onstru"tion pa"ed )y t(e NA Courts on NA a+&.
'(is is in a""ordan"e +it( t(e +e setted rue in statutory "onstru"tion t(at +(en a statute (as )een adopted -rom some
ot(er state or "ountry6 and said statute (as pre2iousy )een "onstrued )y t(e "ourts o- su"( state or "ountry6 t(e statute is
usuay deemed to (a2e )een adopted +it( t(e "onstru"tion so gi2en.
Cae9
718 Contantino *5 Aia Li)e
INSURANCE REVIEWER Atty. Quimson page 9
,7 PHIL 60,
Fact9
Appea "onsoidates t+o "ases.
Asia i-e insuran"e Company (A<IC& +as in"orporated in !ea+are.
@or t(e sum o- 1/F.%# as annua premium duy paid to A<IC6 it issued Poi"y No. .9.1C +(ere)y it insured t(e i-e o-
Ar"adio Constantino -or C% years -or P9' +it( Pa4 Constantino as )ene-i"iary.
o @irst premium "o2ered t(e period up to Sept. C$6 1.#C. No -urt(er premiums +ere paid a-ter t(e -irst premium
and Ar"adio died on Sept. CC6 1.##.
!ue to Eap o""upation6 A<IC "osed its )ran"( o--i"e in >ania -rom Ean. C 1.#C:1.#F.
Bn Aug. 16 1.906 A<IC issued Poi"y no. /01#F "o2ering t(e i2es o- Spouses 'omas Rui4 and Agustina Perata -or t(e
sum o- P9' -or C% years. '(e annua premium stipuated +as reguary paid -rom Aug. 16 1.90 up to and in"uding Sept.
9%6 1.#%.
o E--e"ti2e Aug. 16 1.#16 t(e mode o- payment +as "(anged -rom annuay to Guartery and su"( Guartery
premiums +ere paid unti No2. 106 1.#1.
o <ast payment "o2ered t(e period unti Ean. 916 1.#C.
o 'omas Rui4 died on @e). 1$6 1.#F +it( Agustina Perata as (is )ene-i"iary.
!ue to Eap o""upation6 it )e"ame impossi)e and iega -or t(e insured to dea +it( A<IC. Aside -rom t(is t(e insured
)orro+ed -rom t(e poi"y PC9#.%% su"( t(at t(e "as( surrender 2aue o- t(e poi"y +as su--i"ient to maintain t(e poi"y
in -or"e ony up to Sept. /6 1.#C.
3ot( poi"ies "ontained t(is pro2isionJ ' #remi!ms are d!e in advance and an( !n#!nct!ait( in makin) s!ch #a(ment
sha ca!se this #oic( to a#se !ness and e&ce#t as ke#t in force b( the )race #eriod condition$
Pa4 Constantino and Agustina Perata "aim as )ene-i"iaries6 t(at t(ey are entited to re"ei2e t(e pro"eeds o- t(e
poi"ies ess a sums due -or premiums in arrears. '(ey aso aege t(at non:payment o- t(e premiums +ere "aused )y
t(e "osing o- A<IC=s o--i"es during t(e +ar and t(e impossi)e "ir"umstan"es )y t(e +ar6 t(ere-ore6 t(ey s(oud )e
e5"used and t(e poi"ies s(oud not )e -or-eited.
<o+er "ourt rued in -a2or o- A<IC.
I&e9 >ay a )ene-i"iary in a i-e insuran"e poi"y re"o2er t(e amount t(ereo- at(oug( t(e insured died a-ter repeatedy
-aiing to pay t(e stipuated premiums6 su"( -aiure )eing "aused )y +arH
He#%9 NO5
!ue to t(e e5press terms o- t(e poi"y6 non:payment o- t(e premium produ"es its a2oidan"e. In 8araga 2. Sun <i-e6 it
+as (ed t(at a i-e poi"y +as a2oided )e"ause t(e premium (ad not )een paid +it(in t(e time -i5ed; sin"e )y its e5press
terms6 non:payment o- any premium +(en due or +it(in t(e 91

day gra"e period ipso -a"t "aused t(e poi"y to apse.
W(en t(e i-e insuran"e poi"y pro2ides t(at non:payment o- premiums +i "ause its -or-eiture6 +ar does NB' e5"use
non:payment and does not a2oid -or-eiture. Essentiay6 t(e reason +(y pun"tua payments are important is t(at t(e insurer
"a"uates on t(e )asis o- t(e prompt payments. Bt(er+ise6 mauugi sia.
It s(oud )e noted t(at t(e parties "ontra"ted not ony as to pea"e time "onditions )ut aso as to +ar:time "onditions
sin"e t(e poi"ies "ontained pro2isions appi"a)e e5pressy to +artime days. '(e ogi"a in-eren"e t(ere-ore is t(at t(e
parties "ontempated t(e uninterrupted operation o- t(e "ontra"t e2en i- armed "on-i"t s(oud ensue.
768 In&#a" Li)e *5 E$"a%o
,- SCRA 1,1
Fact9
3uena2entura E)rado +as issued )y Insuar <i-e Assuran"e Co. a +(oe i-e pan -or PF600C.%% +it( a rider -or
A""identa !eat( 3ene-its -or t(e same amount.
E)rado designated Carponia E)rado as t(e re2o"a)e )ene-i"iary in (is poi"y6 re-erring to (er as (is +i-e.
E)rado died +(en (e +as a""identay (it )y a -aing )ran"( o- tree.
Insurer )y 2irtue o- t(e "ontra"t +as ia)e -or 116/#F./96 and Carponia -ied (er "aim6 at(oug( s(e admitted t(at s(e
and t(e insured +ere merey i2ing as (us)and and +i-e +it(out t(e )ene-it o- marriage.
Pas"uaa E)rado aso -ied (er "aim as t(e +ido+ o- t(e de"eased insured.
Insuar i-e -ied an interpeader "ase and t(e o+er "ourt -ound in -a2or o- Pas"uaa.
I&e9 3et+een Carponia and Pas"uaa6 +(o is entited to t(e pro"eedsH
He#%9 Pac&a#a5
INSURANCE REVIEWER Atty. Quimson page #
It is Guite un-ortunate t(at t(e Insuran"e A"t or our o+n Insuran"e Code does not "ontain a spe"i-i" pro2ision grossy
resoutory o- t(e prime Guestion at (and. Rat(er6 t(e genera rues o- "i2i a+ s(oud )e appied to reso2e t(is 2oid in t(e
insuran"e a+. Art. C%11 o- t(e NCC statesJ *he contract of ins!rance is )overned b( s#ecia aws$ Matters not e&#ress(
#rovided for in s!ch s#ecia aws sha be re)!ated b( this +ode$ W(en not ot(er+ise spe"i-i"ay pro2ided -or in t(e
insuran"e a+6 t(e "ontra"t o- i-e insuran"e is go2erned )y t(e genera rues o- "i2i a+ reguating "ontra"ts.
Under Art. C%1C6 NCCJ 'n( #erson who is forbidden from receivin) an( donation !nder 'rt$ ,39 cannot be named
beneficiar( of a ife ins!rance #oic( b( a #erson who cannot make an( donation to him, accordin) to said artice. Under Art.
/9.6 donations )et+een persons +(o +ere guity o- adutery or "on"u)inage at t(e time o- t(e donation s(a )e 2oid.
In essen"e6 a i-e insuran"e poi"y is no di--erent -rom "i2i donations inso-ar as t(e )ene-i"iary is "on"erned. 3ot( are
-ounded on t(e same "onsideration o- i)eraity. A )ene-i"iary is i*e a donee )e"ause -rom t(e premiums o- t(e poi"y +(i"(
t(e insured pays6 t(e )ene-i"iary +i re"ei2e t(e pro"eeds or pro-its o- said insuran"e. As a "onseGuen"e6 t(e pros"ription in
Art. /9. s(oud eGuay operate in i-e insuran"e "ontra"ts.
'(ere-ore6 sin"e "ommon:a+ spouses are )arred -rom re"ei2ing donations6 t(ey are i*e+ise )arred -rom re"ei2ing
pro"eeds o- a i-e insuran"e "ontra"t.
7/8 :&a Chee Gan *5 La( Union Roc;
9, PHIL ,1
Fact9
Qua C(ee 8an6 a mer"(ant6 o+ned # +are(ouses in A)ay +(i"( +ere used -or t(e storage or "opra and (emp in +(i"(
t(e appee deas +it( e5"usi2ey.
'(e +are(ouses toget(er +it( t(e "ontents +ere insured +it( <a+ Union sin"e 1.9/ and t(e oss made paya)e to PN3
as mortgagee o- t(e (emp and "opra.
A -ire o- undetermined "ause )ro*e out in Euy C16 1.#% and asted -or amost 1 +(oe +ee*.
3odegas 16 96 and # in"uding t(e mer"(andise stored +ere destroyed "ompetey.
Insured t(en in-ormed insurer o- t(e un-ortunate e2ent and su)mitted t(e "orresponding -ire "aims6 +(i"( +ere ater
redu"ed to P9/%'.
Insurer re-used to pay "aiming 2ioations o- t(e +arranties and "onditions6 -iing o- -rauduent "aims and t(at t(e -ire
(ad )een dei)eratey "aused )y t(e insured.
Insured -ied an a"tion )e-ore C@I +(i"( rendered a de"ision in -a2or o- t(e insured.
I&e an% Reo#&tion9
(1) -./ the #oicies sho!d be avoided for the reason that there was a breach of warrant($
Under t(e >emorandum o- Warranty6 t(ere s(oud )e no ess t(an 1 (ydrant -or ea"( 1F% -eet o- e5terna +a
measurements o- t(e "ompound6 and sin"e )odegas insured (ad an e5terna +a per meter o- 1$#% -eet6 t(e insured s(oud
(a2e 11 (ydrants in t(e "ompound. 3ut (e ony (ad C.
E2en so6 t(e insurer is )arred )y estoppe to "aim 2ioation o- t(e -ire (ydrants +arranty6 )e"ause *no+ing t(at t(e
num)er o- (ydrants it demanded ne2er e5isted -rom t(e 2ery )eginning6 appeant ne2ert(eess issued t(e poi"ies su)Ie"t to
su"( +arranty and re"ei2ed t(e "orresponding premiums. '(e insuran"e "ompany +as a+are6 e2en )e-ore t(e poi"ies
+ere issued6 t(at in t(e premises t(ere +ere ony C (ydrants and C ot(ers +ere o+ned )y t(e >uni"ipaity6 "ontrary to t(e
reGuirements o- t(e +arranties in Guestion.
It s(oud )e "ose to "onni2ing at -raud upon t(e insured to ao+ t(e insurer to "aim no+ as 2oid t(e poi"ies it issued to
t(e insured6 +it(out +arning (im o- t(e -ata de-e"t6 o- +(i"( t(e insurer +as in-ormed6 and a-ter it (ad mised t(e insured
into )eie2ing t(at t(e poi"ies +ere e--e"ti2e.
A""dg to Ameri"an Eurispruden"eJ It is a +e:setted rue t(at t(e insurer at t(e time o- t(e issuan"e o- a poi"y (as t(e
*no+edge o- e5isting -a"ts6 +(i"( i- insisted on6 +oud in2aidate t(e "ontra"t -rom its 2ery in"eption6 su"( *no+edge
"onstitutes a +ai2er o- "onditions in t(e "ontra"t in"onsistent +it( *no+n -a"ts6 and t(e insurer is stopped t(erea-ter -rom
asserting t(e )rea"( o- su"( "onditions. '(e reason -or t(e rue isJ 'o ao+ a "ompany to a""ept one=s money -or a poi"y
o- insuran"e +(i"( it *no+s to )e 2oid and o- no e--e"t6 t(oug( it *no+s as it must t(at t(e insured )eie2es it to )e 2aid and
)inding is so "ontrary to t(e di"tates o- (onesty and -air deaing6 as so "osey reated to positi2e -raud6 as to )e a)(orrent to
-air:minded men. It +oud )e to ao+ t(e "ompany to treat t(e poi"y as 2aid ong enoug( to get t(e premium on it6 and
ea2e it at i)erty to repudiate it t(e ne5t moment.
INSURANCE REVIEWER Atty. Quimson page F
>oreo2er6 ta*ing into a""ount t(e +e:*no+n rue t(at am)iguities or o)s"urities must stri"ty )e interpreted against t(e
party t(at "ause t(em6 t(e memorandum o- +arranty in2o*ed )y t(e insurer )ars t(e atter -rom Guestioning t(e e5isten"e o-
t(e appian"es "aed -or6 sin"e its initia e5pression ,t(e undernoted appian"es -or t(e e5tin"tion o- -ire )eing *ept on t(e
premises insured (ere)y..1 admits o- t(e interpretation as an admission o- t(e e5isten"e o- su"( appian"es +(i"( insurer
"annot no+ "ontradi"t6 s(oud t(e paroe e2iden"e appy.
(0) -./ the ins!red vioated the hem# warrant( #rovision a)ainst the stora)e of )asoine since ins!red admitted there
were 31 cans of )asoine in Bode)a 0 which was a se#arate str!ct!re and not affected b( the fire$
It is +e to note t(at gasoine is not spe"i-i"ay mentioned among t(e pro(i)ited arti"es isted in t(e so:"aed (emp
+arranty. '(e "ause reied upon )y t(e insurer spea*s o- ,ois1. Brdinariy6 ois mean u)ri"ants and not gasoine or
*erosene. 7ere again6 )y reason o- t(e e5"usi2e "ontro o- t(e insuran"e "ompany o2er t(e terms o- t(e "ontra"t6 t(e
am)iguity must )e (ed stri"ty against t(e insurer and i)eray in -a2or o- t(e insured6 spe"iay to a2oid a -or-eiture.
@urt(ermore6 t(e gasoine *ept +as ony in"identa to t(e insured=s )usiness. It is a +e setted rue t(at *eeping o-
in-amma)e ois in t(e premises t(oug( pro(i)ited )y t(e poi"y does NB' 2oid it i- su"( *eeping is in"identa to t(e
)usiness. Aso6 t(e (emp +arranty -or)ade t(e storage ony in t(e )uiding to +(i"( t(e insuran"e appies6 andKor in any
)uiding "ommuni"ating t(ere+it(; and it is undisputed t(at no gasoine +as stored in t(e )urnt )odegas and t(at 3odega
No. C +(i"( +as +(ere t(e gasoine +as -ound stood isoated -rom t(e ot(er )odegas.

708 T4 *5 Fi#i!ina Co2!a<ia %e Se3&"o
17 SCRA /60
Fact9
'y +as empoyed as a me"(ani" operator )y 3raod+ay Cotton @a"tory at 8ra"e Par*6 Caoo"an.
In 1.F96 (e too* persona a""ident poi"ies -rom / insuran"e "ompanies ($ de-endants&6 on di--erent dates6 e--e"ti2e -or
1C mos.
Bn !e". C#. 1.F96 a -ire )ro*e out in t(e -a"tory +ere 'y +as +or*ing. A (e2y o)Ie"t -e on (is (and +(en (e +as
trying to put out t(e -ire.
@rom !e". 1.F9 to @e). $6 1.F# 'y re"ei2ed treatment at t(e Nat= Brt(opedi" 7ospita -or si5 isted inIuries. '(e
attending surgeon "erti-ied t(at t(ese inIuries +oud "ause t(e temporary tota disa)iity o- 'y=s e-t (and.
Insuran"e "ompanies re-used to pay 'y=s "aim -or "ompensation under t(e poi"ies )y reason o- said disa)iity o- (is
e-t (and. 'y -ied a "ompaint in t(e muni"ipa "ourt +(o de"ided in (is -a2or.
C@I re2ersed on t(e ground t(at under t(e uni-orm terms o- t(e poi"ies6 partia disa)iity due to oss o- eit(er (and o- t(e
insured6 to )e "ompensa)e must )e t(e resut o- amputation.
I&e9 WBN 'y s(oud )e indemni-ied under (is a""ident poi"ies.
He#%5 NO5
SC aready rued in t(e "ase o- 'y 2. @NSI t(at +ere t(e insuran"e poi"ies de-ine partia disa)iity as oss o- eit(er (and
)y amputation t(roug( t(e )ones o- t(e +rist6 t(e insured "annot re"o2er under said poi"ies -or temporary disa)iity o- (is
e-t (and "aused )y t(e -ra"tures o- some -ingers. '(e pro2ision is "ear enoug( to in-orm t(e party entering into t(at
"ontra"t t(at t(e oss to )e "onsidered a disa)iity entited to indemnity6 must )e se2eran"e or amputation o- t(e a--e"ted
mem)er o- t(e )ody o- t(e insured. In t(e +ords o- Atty. QuimsonJ A)a gago paa siya6 Sina)i ng oss )y amputation6
pinagpipiitan pa nyang -ra"ture ang ang *aiangan.
718 De# Roa"io *5 E=&ita$#e In&"ance
11, PHIL /09
Fact9
EGuita)e Insuran"e issued a i-e Insuran"e poi"y to de Rosario )inding itse- to pay P16%%% to P96%%% as indemnity.
!e Rosario died in a )oating a""ident. '(e (eirs -ied a "aim and EGuita)e paid t(em P16%%%.
'(e (eir -ied a "ompaint -or re"o2ery o- t(e )aan"e o- PC6%%%6 "aiming t(at t(e insurere s(oud pay (im P96%%% as
stated in t(e poi"y.
I&e9 WBN t(e (eir is entited to re"o2er P96%%%.
He#%9 >ES5
8eneray a""epted prin"ipes or ruing on insuran"e6 enun"iate t(at +(ere t(ere is an am)iguity +it( respe"t to t(e
terms and "onditions o- t(e poi"y6 t(e same s(a )e reso2ed against t(e one responsi)e t(ereo-. '(e insured (as itte6 i-
INSURANCE REVIEWER Atty. Quimson page $
any6 parti"ipation in t(e preparation o- t(e poi"y. '(e interpretation o- o)s"ure stipuations in a "ontra"t s(oud not -a2or t(e
party +(o "ause t(e o)s"urity.
768 ?ia2i L&2$e" *5 Ca!ita# In&"ance
16/ Phi# 1-77
Fact9
>isamis um)er insured it=s motor "ar -or P1#' +it( Capita Insuran"e. '(e poi"y stipuated t(at t(e insured may
aut(ori4e t(e repair o- t(e 2e(i"e ne"essitated )y damage and t(e ia)iity o- t(e insured is imited to 1F%.
Car met an a""ident and +as repaired )y >orosi >otors at a tota "ost o- P9%C.C/. >isamis made a report o- t(e
a""ident to Capita +(o re-used to pay t(e "ost o- t(e repairs.
I&e9 WBN t(e insurer is ia)e -or t(e tota amount o- t(e repair.
He#%9 NO5
'(e insuran"e poi"y stipuated t(at i- it is t(e insured +(o aut(ori4ed t(e repair6 t(e ia)iity o- t(e insurer is imited to
1F%. '(e itera meaning o- t(e stipuation must "ontro6 it )eing t(e a"tua "ontra"t6 e5pressy and painy pro2ided -or in t(e
poi"y.
778 Ve"en%ia *5 CA
617 SCRA 199/
Fact9
@ideity and Surety Insuran"e Company (@ideity& issued @ire Insuran"e Poi"y No. @:100/$ e--e"ti2e )et+een Eune C96
1.0% and Eune C96 1.01 "o2ering Ra-ae (Re5& VerendiaLs residentia in t(e amount o- P90F6%%%.%%. !esignated as
)ene-i"iary +as t(e >onte de Piedad ? Sa2ings 3an*.
Verendia aso insured t(e same )uiding +it( t+o ot(er "ompanies6 namey6 '(e Country 3an*ers Insuran"e -or
PF$6%%%.%% and '(e !e2eopment Insuran"e -or P#%%6%%%.%%.
W(ie t(e t(ree -ire insuran"e poi"ies +ere in -or"e6 t(e insured property +as "ompetey destroyed )y -ire.
@ideity appraised t(e damage amounting to 90F6%%% +(en it +as a""ordingy in-ormed o- t(e oss. !espite demands6
@ideity re-used payment under its poi"y6 t(us prompting Verendia to -ie a "ompaint -or t(e re"o2ery o- 90F6%%%
@ideity6 a2erred t(at t(e poi"y +as a2oided )y reason o- o2er:insuran"e6 t(at Verendia mai"iousy represented t(at t(e
)uiding at t(e time o- t(e -ire +as eased under a "ontra"t e5e"uted on Eune CF6 1.0% to a "ertain Ro)erto 8ar"ia6
+(en a"tuay it +as a >ar"eo 8ar"ia +(o +as t(e essee.
I&e9 WBN Verendia "an "aim on t(e insuran"e despite t(e misrepresentation as to t(e essee and t(e o2erinsuran"e.
He#%9 NOPE5
'(e "ontra"t o- ease upon +(i"( Verendia reies to support (is "aim -or insuran"e )ene-its6 +as entered into )et+een
(im and one Ro)ert 8ar"ia6 a "oupe o- days a-ter t(e e--e"ti2ity o- t(e insuran"e poi"y. W(en t(e rented residentia )uiding
+as ra4ed to t(e ground6 it appears t(at Ro)ert 8ar"ia +as sti +it(in t(e premises. 7o+e2er6 a""ording to t(e in2estigation
)y t(e poi"e6 t(e )uiding appeared to (a2e Mno o""upantsM and t(at >r. Ro)erto 8ar"ia +as Mrenting on t(e ot(erside o-
said "ompoundM '(ese pie"es o- e2iden"e )eie VerendiaLs un"orro)orated testimony t(at >ar"eo 8ar"ia +(om (e
"onsidered as t(e rea essee6 +as o""upying t(e )uiding +(en it +as )urned.
Ironi"ay6 during t(e tria6 Verendia admitted t(at it +as not Ro)ert 8ar"ia +(o signed t(e ease "ontra"t )ut it +as
>ar"eo 8ar"ia "ousin o- Ro)ert6 +(o (ad aso )een paying t(e rentas a t(e +(ie. Verendia6 (o+e2er6 -aied to e5pain
+(y >ar"eo (ad to sign (is "ousinLs name +(en (e in -a"t (e +as paying -or t(e rent and +(y (e (Verendia& (imse-6 t(e
essor6 ao+ed su"( a ruse. @ideityLs "on"usions on t(ese pro2en -a"ts appear6 t(ere-ore6 to (a2e su--i"ient )asesJ
Verendia "on"o"ted t(e ease "ontra"t to de-e"t responsi)iity -or t(e -ire to+ards an aeged MesseeM6 in-ated t(e 2aue o-
t(e property )y t(e aeged mont(y renta o- P$6F%%& +(en in -a"t6 t(e Pro2in"ia Assessor o- Ri4a (ad assessed t(e
propertyLs -air mar*et 2aue to )e ony P#%69%%.%%6 insured t(e same property +it( t+o ot(er insuran"e "ompanies -or a tota
"o2erage o- around P.%%6%%%6 and "reated a dead:end -or t(e adIuster )y t(e disappearan"e o- Ro)ert 8ar"ia.
3asi"ay a "ontra"t o- indemnity6 an insuran"e "ontra"t is t(e a+ )et+een t(e parties. Its terms and "onditions
"onstitute t(e measure o- t(e insurerLs ia)iity and "ompian"e t(ere+it( is a "ondition pre"edent to t(e insuredLs rig(t to
INSURANCE REVIEWER Atty. Quimson page /
re"o2ery -rom t(e. As it is aso a "ontra"t o- ad(esion6 an insuran"e "ontra"t s(oud )e i)eray "onstrued in -a2or o- t(e
insured and stri"ty against t(e insurer "ompany +(i"( usuay prepares it
.
Considering6 (o+e2er6 t(e -oregoing dis"ussion pointing to t(e -a"t t(at Verendia used a -ase ease "ontra"t to support
(is "aim under @ire Insuran"e Poi"y6 t(e terms o- t(e poi"y s(oud )e stri"ty "onstrued against t(e insured. Verendia -aied
to i2e )y t(e terms o- t(e poi"y6 spe"i-i"ay Se"tion 19 t(ereo- +(i"( is e5pressed in terms t(at are "ear and unam)iguous6
t(at a )ene-its under t(e poi"y s(a )e -or-eited Mif the caim be in an( res#ect fra!d!ent, or if an( fase decaration be
made or !sed in s!##ort thereof, or if an( fra!d!ent means or devises are !sed b( the 2ns!red or an(one actin) in his
behaf to obtain an( benefit !nder the #oic(M. Verendia6 (a2ing presented a -ase de"aration to support (is "aim -or )ene-its
in t(e -orm o- a -rauduent ease "ontra"t6 (e -or-eited a )ene-its t(erein )y 2irtue o- Se"tion 19 o- t(e poi"y in t(e a)sen"e
o- proo- t(at @ideity +ai2ed su"( pro2ision
'(ere is aso no reason to "on"ude t(at )y su)mitting t(e su)rogation re"eipt as e2iden"e in "ourt6 @ideity )ound itse-
to a Mmutua agreementM to sette VerendiaLs "aims in "onsideration o- t(e amount o- P1#C6$0F.//. W(ie t(e said re"eipt
appears to (a2e )een a -ied:up -orm o- @ideity6 no representati2e o- @ideity (ad signed it. It is e2en in"ompete as t(e
)an* spa"es -or a +itness and (is address are not -ied up. >ore signi-i"anty6 t(e same re"eipt states t(at Verendia (ad
re"ei2ed t(e a-oresaid amount. 7o+e2er6 t(at Verendia (ad not re"ei2ed t(e amount stated t(erein6 is pro2en )y t(e -a"t
t(at Verendia (imse- -ied t(e "ompaint -or t(e -u amount o- P90F6%%%.%% stated in t(e poi"y. It mig(t )e t(at t(ere (ad
)een e--orts to sette VerendiaLs "aims6 )ut surey6 t(e su)rogation re"eipt )y itse- does not pro2e t(at a settement (ad
)een arri2ed at and en-or"ed. '(us6 to interpret @ideityLs presentation o- t(e su)rogation re"eipt in e2iden"e as indi"ati2e o-
its a""ession to its MtermsM is not ony +anting in rationa )asis )ut +oud )e su)stituting t(e +i o- t(e Court -or t(at o- t(e
parties
Section 65 W(ene2er used in t(is Code6 t(e -oo+ing terms s(a (a2e t(e respe"ti2e meanings (ereina-ter
set -ort( or indi"ated6 uness t(e "onte5t ot(er+ise reGuiresJ
(1& A ,Contra"t o- Insuran"e1 is an agreement +(ere)y one underta*es -or a "onsideration to indemni-y
anot(er against oss6 damage or ia)iity arising -rom an un*no+n or "ontingent e2ent.
A "ontra"t o- suretys(ip s(a )e deemed to )e an insuran"e "ontra"t6 +it(in t(e meaning o- t(is Code6 ony i-
made )y a surety +(o or +(i"(6 as su"(6 is doing an insuran"e )usiness as (ereina-ter pro2ided.
(C& '(e term ,doing an insuran"e )usiness1 or ,transa"ting an insuran"e )usiness1 +it(ing t(e meaning o- t(is
Code6 s(a in"udeJ
(a& >a*ing or proposing to ma*e6 as insurer6 any insuran"e "ontra"t;
()& >a*ing6 or proposing to ma*e6 as surety6 any "ontra"t o- suretys(ip as a 2o"ation and not as merey
in"identa to any ot(er egitimate )usiness or a"ti2ity o- t(e surety;
("& !oing any *ind o- )usiness in"uding a reinsuran"e )usiness6 spe"i-i"ay re"ogni4ed as "onstituting t(e
doing o- an insuran"e )usiness +it(in t(e meaning o- t(is Code;
(d& !oing or proposing to do any )usiness in su)stan"e eGui2aent to any o- t(e -oregoing in a manner
designed to e2ade t(e pro2isions o- t(is "ode.
In t(e appi"ation o- t(e pro2isions o- t(is Code6 t(e -a"t t(at no pro-it is deri2ed -rom t(e ma*ing o- insuran"e
"ontra"ts6 agreements or transa"tions or t(at no separate or distin"t "onsideration is re"ei2ed t(ere-or6 s(a not )e
deemed "on"usi2e to s(o+ t(at t(e ma*ing t(ereo- does not "onstitute t(e doing or transa"ting o- an insuran"e
)usiness.
(9& As used in t(is Code6 t(e term ,Commissioner1 means t(e ,Insuran"e Commissioner.1
I the %e)inition o) a cont"act o) in&"ance &n%e" Sec5 6 &))icient'
!e <eon )eie2es t(at it is not. 7e opines t(at t(e de-inition does Not in"ude <i-e insuran"e +(i"( is a "ontra"t upon a
"ondition rat(er t(an a "ontra"t to indemni-y -or nor re"o2ery "an -uy repay a )ene-i"iary -or t(e oss o- i-e +(i"( is )eyond
pe"uniary 2aue.
A )etter de-inition (e t(in*s6 is t(at o- Van"e +(o said t(at a ,contract of ins!rance is an a)reement b( which one #art(,
for a consideration, #romises to #a( mone( or its e3!ivaent, or to do some act va!abe to the ins!red or his nominee, !#on
the ha##enin) of a oss, dama)e, iabiit( or disabiit( arisin) from an !nknown or contin)ent event$4
What a"e the cha"acte"itic o) an in&"ance cont"act'
A "ontra"t o- insuran"e (as t(e -oo+ing "(ara"teristi"sJ
1. Conen&a# per-e"ted )y t(e meeting o- t(e minds o- t(e parties
C. Vo#&nta"4 it is not "ompusory and t(e parties may in"orporate su"( terms and "onditions as t(ey may deem
"on2enient +(i"( +i )e )inding pro2ided t(ey are not against t(e a+ or pu)i" poi"y
9. A#eato"4 depends upon some "ontingent e2ent
#. E@ec&te% as to t(e insured a-ter t(e payment o- t(e premium
F. E@ec&to"4 as to t(e insurer as it is not e5e"uted unti payment -or a oss
$. Con%itiona# su)Ie"t to "onditions t(e prin"ipa one o- +(i"( is t(e (appening o- t(e e2ent insured against
/. Pe"ona# ea"( party in t(e "ontra"t (a2e in 2ie+ t(e "(ara"ter6 "redit and "ondu"t o- t(e ot(er
What a"e the e#e2ent o) an in&"ance cont"act'
<i*e any ot(er "ontra"t6 an insuran"e "ontra"t must (a2e "onsent o- t(e parties6 o)Ie"t and "ause or "onsideration. '(e
parties +(o gi2e t(eir "onsent in t(is "ontra"t are t(e insurer and insured. '(e o)Ie"t o- t(e "ontra"t is t(e trans-erring or
distri)uting o- t(e ris* o- oss6 damage6 ia)iity or disa)iity -rom t(e insured to t(e insurer. '(e "ause or "onsideration o- t(e
"ontra"t is t(e premium +(i"( t(e insured pays t(e insurer.
What i an a%%itiona# e#e2ent o) an in&"ance cont"act'
Insura)e Interest. '(is means t(at t(e insured possesses an interest o- some *ind sus"epti)e o- pe"uniary estimation.
Ho( a"e in&"ance cont"act c#ai)ie%'
Insuran"e "ontra"ts are "assi-ied as -oo+sH
1& <i-e insuran"e "ontra"ts
a& Indi2idua (Se"tions 1/.:1096 CC/&
)& 8roup <i-e (Se"tions F% and CC0&
"& Industria <i-e (Se"tions CC.:C91&
C& Non:<i-e Insuran"e Contra"ts
a& >arine (Se"tions ..:1$$&
)& @ire (Se"tions 1$/:1/9&
"& Casuaty (Se"tion 1/#&
9& Contra"ts o- Suretys(ip and )onding (Se"tions 1/F:1/0&
Ho( a"e in&"ance cont"act cont"&e%'
Am)iguities or o)s"urities must )e stri"ty interpreted against t(e party t(at "aused t(em. As t(e insuran"e poi"y is
prepared soey )y t(e insurer6 t(e am)iguities s(a )e "onstrued against it and in -a2or o- t(e insured. (Qua C(ee 8an&
What %oe the te"2 A%oin3 in&"ance $&ineB inc#&%e'
'(e term ,doing an insuran"e )usiness or ,transa"ting an insuran"e )usiness1 in"udesJ
a& >a*ing or proposing to ma*e6 as insurer6 any insuran"e "ontra"t;
)& >a*ing6 or proposing to ma*e6 as surety6 any "ontra"t o- suretys(ip as a 2o"ation and not as merey in"identa to
any ot(er egitimate )usiness or a"ti2ity o- t(e surety;
"& !oing any *ind o- )usiness in"uding a reinsuran"e )usiness6 spe"i-i"ay re"ogni4ed as "onstituting t(e doing o- an
insuran"e )usiness +it(in t(e meaning o- t(is Code;
d& !oing or proposing to do any )usiness in su)stan"e eGui2aent to any o- t(e -oregoing in a manner designed to
e2ade t(e pro2isions o- t(is "ode.
Doe the )act that no !"o)it (a %e"i*e% )"o2 the t"anaction no" a e!a"ate coni%e"ation "ecei*e% the"e)o"e 2ean
that no in&"ance $&ine (a t"anacte%'
No. @a"t t(at no pro-it is deri2ed -rom t(e "ontra"t or transa"tion or t(at no separate or dire"t "onsideration is re"ei2ed
-or su"( "ontra"t or transa"tion is NB' deemed "on"usi2e to s(o+ t(at no insuran"e )usiness +as transa"ted.
Wi## an4 &"et4hi! a3"ee2ent a2o&nt to an in&"ance cont"act'
No. In order -or a suretys(ip agreement to "ome under t(e pur2ie+ o- t(e Insuran"e Code6 t(e Surety underta*ing to
ensure t(e per-orman"e o- t(e o)igations must )e registered +it( t(e Insuran"e Commissioner and must (a2e )een issued
)y t(e atter +it( a "erti-i"ate o- aut(ority. @urt(ermore6 t(e person a"ting as a surety is (a)ituay engaged as su"( -or a
i2ei(ood.
Cae9
7,8 Phi#a2#i)e *5 Ana#%o
6/0 SCRA 1-9
Fact9
INSURANCE REVIEWER Atty. Quimson page .
Ramon >. Paterno sent a etter:"ompaint to t(e Insuran"e Commissioner aeging "ertain pro)ems en"ountered )y
agents6 super2isors6 managers and pu)i" "onsumers o- t(e P(iami-e as a resut o- "ertain pra"ti"es )y said "ompany.
Commissioner reGuested petitioner Rodrigo de os Reyes6 in (is "apa"ity as P(iami-eLs president6 to "omment on
respondent PaternoLs etter.
'(e "ompaint prays t(at pro2isions on "(arges and -ees stated in t(e Contra"t o- Agen"y e5e"uted )et+een P(iami-e
and its agents6 as +e as t(e impementing pro2isions as pu)is(ed in t(e agentsL (and)oo*6 agen"y )uetins and
"ir"uars6 )e de"ared as nu and 2oid. 7e aso as*ed t(at t(e amounts o- su"( "(arges and -ees aready dedu"ted and
"oe"ted )y P(iami-e in "onne"tion t(ere+it( )e reim)ursed to t(e agents6 +it( interest at t(e pre2aiing rate re"*oned
-rom t(e date +(en t(ey +ere dedu"ted
>anue Brtega6 P(iami-eLs Senior Assistant Vi"e:President and E5e"uti2e Assistant to t(e President6 as*ed t(at t(e
Commissioner -irst rue on t(e Guestions o- t(e Iurisdi"tion o- t(e Insuran"e Commissioner o2er t(e su)Ie"t matter o- t(e
etters:"ompaint and t(e ega standing o- Paterno.
Insuran"e Commissioner set t(e "ase -or (earing and sent su)poena to t(e o--i"ers o- P(iami-e. Brtega -ied a motion
to Guas( t(e su)poena aeging t(at t(e Insuran"e "ompany (as no Iurisdi"tion o2er t(e su)Ie"t matter o- t(e "ase and
t(at t(ere is no "ompaint su--i"ient in -orm and "ontents (as )een -ied.
'(e motion to Guas( +as denied.
I&e9 WBN t(e insuran"e "ommissioner (ad Iurisdi"tion o2er t(e egaity o- t(e Contra"t o- Agen"y )et+een P(iami-e and
its agents.
He#%9 NoC it %oe not ha*e D&"i%iction5
'(e genera reguatory aut(ority o- t(e Insuran"e Commissioner is des"ri)ed in Se"tion #1# o- t(e Insuran"e Code6 to
+itJ
5*he 2ns!rance +ommissioner sha have the d!t( to see that a aws reatin) to ins!rance, ins!rance
com#anies and other ins!rance matters, m!t!a benefit associations and tr!sts for charitabe !ses are faithf!(
e&ec!ted and to #erform the d!ties im#osed !#on him b( this +ode, $ $ $ $5
Bn t(e ot(er (and6 Se"tion #1F pro2idesJ
52n addition to the administrative sanctions #rovided esewhere in this +ode, the 2ns!rance +ommissioner is
hereb( a!thori6ed, at his discretion, to im#ose !#on ins!rance com#anies, their directors and7or officers and7or
a)ents, for an( wif! fai!re or ref!sa to com#( with, or vioation of an( #rovision of this +ode, or an( order,
instr!ction, re)!ation or r!in) of the 2ns!rance +ommissioner, or an( commission of irre)!arities, and7or
cond!ctin) b!siness in an !nsafe or !nso!nd manner as ma( be determined b( the 2ns!rance +ommissioner,
the foowin)8
a) fines not in e&cess of five h!ndred #esos a da(9 and
b) s!s#ension, or after d!e hearin), remova of directors and7or officers and7or a)ents$5
A pain reading o- t(e a)o2e:Guoted pro2isions s(o+ t(at t(e Insuran"e Commissioner (as t(e aut(ority to reguate t(e
)usiness o- insuran"e6 +(i"( is de-ined as -oo+sJ
5(0) *he term :doin) an ins!rance b!siness: or :transactin) an ins!rance b!siness,: within the meanin) of
this +ode, sha inc!de (a) makin) or #ro#osin) to make, as ins!rer, an( ins!rance contract9 (b) makin), or
#ro#osin) to make, as s!ret(, an( contract of s!ret(shi# as a vocation and not as mere( incidenta of the s!ret(9
(c) doin) an( kind of b!siness, inc!din) a reins!rance b!siness, s#ecifica( reco)ni6ed as constit!tin) the doin)
of an ins!rance b!siness within the meanin) of this +ode9 (d) doin) or #ro#osin) to do an( b!siness in s!bstance
e3!ivaent to an( of the fore)oin) in a manner desi)ned to evade the #rovisions of this +ode$ (2ns!rance +ode,
Sec$ 0 ;0<)
Sin"e t(e "ontra"t o- agen"y entered into )et+een P(iami-e and its agents is not in"uded +it(in t(e meaning o- an
insuran"e )usiness6 Se"tion C o- t(e Insuran"e Code "annot )e in2o*ed to gi2e Iurisdi"tion o2er t(e same to t(e Insuran"e
Commissioner. E5pressio unius est e5"usio aterius.
798 Phi#a2ca"e *5 CA
/79 SCRA /16 76--68
Fact9
Ernani 'rinos6 appied -or a (eat( "are "o2erage +it( P(iam"are. In t(e standard appi"ation -orm6 (e ans+ered NB to
t(e -oo+ing GuestionJ ,=ave (o! or an( of (o!r fami( members ever cons!ted or been treated for hi)h bood
#ress!re, heart tro!be, diabetes, cancer, iver disease, asthma or #e#tic !cer> (2f ?es, )ive detais)4
'(e appi"ation +as appro2ed -or a period o- one year -rom >ar"( 16 1.00 to >ar"( 16 1.0.. 7e +as a issued 7eat(
Care Agreement6 and under su"(6 (e +as entited to a2ai o- (ospitai4ation )ene-its6 +(et(er ordinary or emergen"y6
INSURANCE REVIEWER Atty. Quimson page 1%
isted t(erein. 7e +as aso entited to a2ai o- Mout:patient )ene-itsM su"( as annua p(ysi"a e5aminations6 pre2enti2e
(eat( "are and ot(er out:patient ser2i"es.
Upon t(e termination o- t(e agreement6 t(e same +as e5tended -or anot(er year -rom >ar"( 16 1.0. to >ar"( 16 1..%6
t(en -rom >ar"( 16 1..% to Eune 16 1..%. '(e amount o- "o2erage +as in"reased to a ma5imum sum o- P/F6%%%.%% per
disa)iity.
!uring t(e period o- (is "o2erage6 Ernani su--ered a (eart atta"* and +as "on-ined at t(e >ania >edi"a Center (>>C&
-or one mont( )eginning >ar"( .6 1..%.
W(ie (er (us)and +as in t(e (ospita6 Euita tried to "aim t(e )ene-its under t(e (eat( "are agreement. 7o+e2er6
P(iam"are denied (er "aim saying t(at t(e 7eat( Care Agreement +as 2oid.
A""ording to P(iam"are6 t(ere +as "on"eament regarding ErnaniLs medi"a (istory.
o !o"tors at t(e >>C aegedy dis"o2ered at t(e time o- ErnaniLs "on-inement t(at (e +as (ypertensi2e6
dia)eti" and ast(mati"6 "ontrary to (is ans+er in t(e appi"ation -orm.
Euita (ad no "(oi"e )ut to pay t(e (ospitai4ation e5penses (erse-6 amounting to a)out P/$6%%%.%%
A-ter (er (us)and +as dis"(arged -rom t(e >>C6 (e +as attended )y a p(ysi"a t(erapist at (ome. <ater6 (e +as
admitted at t(e C(inese 8enera 7ospita (C87&. !ue to -inan"ia di--i"uties6 Euita )roug(t (er (us)and (ome again. In
t(e morning o- Apri 196 1..%6 Ernani (ad -e2er and +as -eeing 2ery +ea*. Euita +as "onstrained to )ring (im )a"* to
t(e C87 +(ere (e died on t(e same day.
Euita instituted6 an a"tion -or damages against P(iam"are. S(e as*ed -or reim)ursement o- (er e5penses pus mora
damages and attorneyLs -ees. R'C de"ided in -a2or o- Euita. CA a--irmed.
I&e an% Reo#&tion9
@hiamcare bro!)ht the instant #etition for review, raisin) the #rimar( ar)!ment that a heath care a)reement is not an
ins!rance contract9 hence the 5incontestabiit( ca!se5 !nder the 2ns!rance +ode *ite 1, Sec$ 4A does not a##($
SC (ed t(at in t(e "ase at )ar6 t(e insura)e interest o- respondentLs (us)and in o)taining t(e (eat( "are agreement
+as (is o+n (eat(. '(e (eat( "are agreement +as in t(e nature o- non:i-e insuran"e6 +(i"( is primariy a "ontra"t o-
indemnity. Bn"e t(e mem)er in"urs (ospita6 medi"a or any ot(er e5pense arising -rom si"*ness6 inIury or ot(er stipuated
"ontingent6 t(e (eat( "are pro2ider must pay -or t(e same to t(e e5tent agreed upon under t(e "ontra"t.
Under t(e tite Caim pro"edures o- e5penses6 P(iam"are. (ad 1C mos -rom t(e date o- issuan"e o- t(e Agreement
+it(in +(i"( to "ontest t(e mem)ers(ip o- t(e patient i- (e (ad pre2ious aiment o- ast(ma6 and si5 mont(s -rom t(e
issuan"e o- t(e agreement i- t(e patient +as si"* o- dia)etes or (ypertension. '(e periods (a2ing e5pired6 t(e de-ense o-
"on"eament or misrepresentation no onger ie.
@etitioner ar)!es that res#ondent:s h!sband conceaed a materia fact in his a##ication$ 2t a##ears that in the a##ication for
heath covera)e, #etitioners re3!ired res#ondent:s h!sband to si)n an e&#ress a!thori6ation for an( #erson, or)ani6ation or
entit( that has an( record or knowed)e of his heath to f!rnish an( and a information reative to an( hos#itai6ation,
cons!tation, treatment or an( other medica advice or e&amination$
P(iam"are "annot rey on t(e stipuation regarding MIn2aidation o- agreementM +(i"( readsJ
Bai!re to discose or misre#resentation of an( materia information b( the member in the a##ication or
medica e&amination, whether intentiona or !nintentiona, sha a!tomatica( invaidate the ')reement from the
ver( be)innin) and iabiit( of @hiamcare sha be imited to ret!rn of a Membershi# Bees #aid$ 'n !ndiscosed or
misre#resented information is deemed materia if its reveation wo!d have res!ted in the decination of the
a##icant b( @hiamcare or the assessment of a hi)her Membershi# Bee for the benefit or benefits a##ied for$
'(e ans+er assaied )y petitioner +as in response to t(e Guestion reating to t(e medi"a (istory o- t(e appi"ant. '(is
argey depends on opinion rat(er t(an -a"t6 espe"iay "oming -rom respondentLs (us)and +(o +as not a medi"a do"tor.
W(ere matters o- opinion or Iudgment are "aed -or6 ans+ers made in good -ait( and +it(out intent to de"ei2e +i not a2oid
a poi"y e2en t(oug( t(ey are untrue. '(us6
(')tho!)h fase, a re#resentation of the e&#ectation, intention, beief, o#inion, or "!d)ment of the ins!red wi
not avoid the #oic( if there is no act!a fra!d in ind!cin) the acce#tance of the risk, or its acce#tance at a ower
rate of #remi!m, and this is ikewise the r!e atho!)h the statement is materia to the risk, if the statement is
obvio!s( of the fore)oin) character, since in s!ch case the ins!rer is not "!stified in re(in) !#on s!ch statement,
b!t is obi)ated to make f!rther in3!ir($ *here is a cear distinction between s!ch a case and one in which the
ins!red is fra!d!ent( and intentiona( states to be tr!e, as a matter of e&#ectation or beief, that which he then
knows, to be act!a( !ntr!e, or the im#ossibiit( of which is shown b( the facts within his knowed)e, since in s!ch
case the intent to deceive the ins!rer is obvio!s and amo!nts to act!a fra!d$
'(e -rauduent intent on t(e part o- t(e insured must )e esta)is(ed to +arrant res"ission o- t(e insuran"e "ontra"t.
Con"eament as a de-ense -or t(e (eat( "are pro2ider or insurer to a2oid ia)iity is an a--irmati2e de-ense and t(e duty to
esta)is( su"( de-ense )y satis-a"tory and "on2in"ing e2iden"e rests upon t(e pro2ider or insurer. In any "ase6 +it( or
+it(out t(e aut(ority to in2estigate6 petitioner is ia)e -or "aims made under t(e "ontra"t. 7a2ing assumed a responsi)iity
under t(e agreement6 petitioner is )ound to ans+er t(e same to t(e e5tent agreed upon. In t(e end6 t(e ia)iity o- t(e (eat(
"are pro2ider atta"(es on"e t(e mem)er is (ospitai4ed -or t(e disease or inIury "o2ered )y t(e agreement or +(ene2er (e
a2ais o- t(e "o2ered )ene-its +(i"( (e (as prepaid.
Under Se"tion C/ o- t(e Insuran"e Code6 Ma "on"eament entites t(e inIured party to res"ind a "ontra"t o- insuran"e.M
'(e rig(t to res"ind s(oud )e e5er"ised pre2ious to t(e "ommen"ement o- an a"tion on t(e "ontra"t. In t(is "ase6 no
res"ission +as made. 3esides6 t(e "an"eation o- (eat( "are agreements as in insuran"e poi"ies reGuire t(e "on"urren"e
o- t(e -oo+ing "onditionsJ
1. Prior noti"e o- "an"eation to insured;
C. Noti"e must )e )ased on t(e o""urren"e a-ter e--e"ti2e date o- t(e poi"y o- one or more o- t(e grounds
mentioned;
9. >ust )e in +riting6 maied or dei2ered to t(e insured at t(e address s(o+n in t(e poi"y;
#. >ust state t(e grounds reied upon pro2ided in Se"tion $# o- t(e Insuran"e Code and upon reGuest o- insured6
to -urnis( -a"ts on +(i"( "an"eation is )ased.
None o- t(e a)o2e pre:"onditions +as -u-ied in t(is "ase. W(en t(e terms o- insuran"e "ontra"t "ontain imitations on
ia)iity6 "ourts s(oud "onstrue t(em in su"( a +ay as to pre"ude t(e insurer -rom non:"ompian"e +it( (is o)igation. 3eing
a "ontra"t o- ad(esion6 t(e terms o- an insuran"e "ontra"t are to )e "onstrued stri"ty against t(e party +(i"( prepared t(e
"ontra"t N t(e insurer. 3y reason o- t(e e5"usi2e "ontro o- t(e insuran"e "ompany o2er t(e terms and p(raseoogy o- t(e
insuran"e "ontra"t6 am)iguity must )e stri"ty interpreted against t(e insurer and i)eray in -a2or o- t(e insured6 espe"iay to
a2oid -or-eiture. '(is is eGuay appi"a)e to 7eat( Care Agreements. '(e p(raseoogy used in medi"a or (ospita ser2i"e
"ontra"ts6 su"( as t(e one at )ar6 must )e i)eray "onstrued in -a2or o- t(e su)s"ri)er6 and i- dou)t-u or reasona)y
sus"epti)e o- t+o interpretations t(e "onstru"tion "on-erring "o2erage is to )e adopted6 and e5"usionary "auses o- dou)t-u
import s(oud )e stri"ty "onstrued against t(e pro2ider.
CHAPTER 1
CONTRACT OF INSURANCE
TITLE I . WHAT ?A> EE INSURED
Section /5 Any "ontingent or un*no+n e2ent6 +(et(er past or -uture6 +(i"( may damni-y a person (a2ing an
insura)e interest6 or "reate a ia)iity against (im6 may )e insured against6 su)Ie"t to t(e pro2isions o- t(is "(apter.
'(e "onsent o- t(e (us)and is not ne"essary -or t(e 2aidity o- an insuran"e poi"y ta*en out )y t(e married
+oman on (er i-e or t(at o- (er "(idren.
Any minor o- t(e age o- eig(teen years or more6 may not+it(standing su"( minority6 "ontra"t -or i-e6 (eat( and
a""ident insuran"e6 +it( any insuran"e "ompany duy aut(ori4ed to do )usiness in t(e P(iippines6 pro2ided t(e
insuran"e is ta*en on (is o+n i-e and t(e )ene-i"iary appointed is t(e minor=s estate or t(e minor=s -at(er6 mot(er6
(us)and6 +i-e6 "(id6 )rot(er or sister.
'(e married +oman or t(e minor (erein ao+ed to ta*e out an insuran"e poi"y may e5er"ise a t(e rig(ts and
pri2ieges o- an o+ner under a poi"y.
A rig(ts6 tite and interest in t(e poi"y o- insuran"e ta*en out )y an origina o+ner on t(e i-e or (eat( o- a
minor s(a automati"ay 2est in t(e minor upon t(e deat( o- t(e origina o+ner6 uness ot(er+ise pro2ided in t(e
poi"y.
What !e"i# o" "i; 2a4 $e in&"e%'
'(e -oo+ing ris*s may )e insuredJ
1. Any "ontingent or un*no+n e2ent +(et(er past or -uture +(i"( may "ause damage to a person (a2ing an insura)e
interest; or
C. Any "ontingent or un*no+n e2ent6 +(et(er past or -uture6 +(i"( may "reate ia)iity against t(e person insured.
?a4 a 2a""ie% (o2an ta;e o&t an in&"ance' I) oC on (hat'
Aes. A married +oman may ta*e out an insuran"e on (er i-e or t(at o- (er "(idren e2en +it(out t(e "onsent o- (er
(us)and. S(e may i*e+ise ta*e out an insuran"e on t(e i-e o- (er (us)and6 (er parap(erna property6 or on property gi2en
to (er )y (er (us)and.
INSURANCE REVIEWER Atty. Quimson page 1C
?a4 a 2ino" ta;e o&t an in&"ance'
'(ird par o- Se". 9 is no onger appi"a)e6 sin"e t(e age o- maIority is no+ 10 years od (RA 00%.6 !e". 196 1.0.&.
Att4 :&i2on a;e% & to #oo; at a )e( !"o*iion o) #a( (ith "e!ect to thi ection5 What a"e the4'
Art. 11/# (NCC&. E5"ept in "ases e5pressy spe"i-ied )y t(e a+6 or +(en it is ot(er+ise de"ared )y stipuation6 or
+(en t(e nature o- t(e o)igation reGuires t(e assumption o- ris*6 no person s(a )e responsi)e -or t(ose e2ents +(i"(6
"oud not )e -oreseen6 or +(i"(6 t(oug( -oreseen6 +ere ine2ita)e.
Art. 11% (@C&. '(e spouses retain t(e o+ners(ip6 possession6 administration and enIoyment o- t(eir e5"usi2e
properties.
Eit(er spouse may during t(e marriage6 trans-er t(e administration o- (is or (er e5"usi2e property to t(e ot(er )y
means o- a pu)i" instrument6 +(i"( s(a )e re"orded in t(e registry o- property o- t(e pa"e +(ere t(e property is o"ated.
A"t5 1/67 7NCC&. '(e -oo+ing "annot gi2e "onsent to a "ontra"tJ
(1& Uneman"ipated minors;
(C& Insane or demented persons6 and dea-:mutes +(o do not *no+ (o+ to +rite.
A"t5 1/9- 7NCC85 '(e -oo+ing "ontra"ts are 2oida)e or annua)e6 e2en t(oug( t(ere may (a2e )een no damage to
t(e "ontra"ting partiesJ
(1& '(ose +(ere one o- t(e parties is in"apa)e o- gi2ing "onsent to a "ontra"t;
(C& '(ose +(ere t(e "onsent is 2itiated )y mista*e6 2ioen"e6 intimidation6 undue in-uen"e or -raud.
'(ese "ontra"ts are )inding6 uness t(ey are annued )y a proper a"tion in "ourt. '(ey are sus"epti)e o- rati-i"ation.
P"o$#e29
', wanted to o#en a medicina herb sho#$ =e #aced a on) distance #hone ca to *aiwan and taked to an e&#orter who
wiin)( a)reed to consi)n severa tons of )insen)s with him on the condition that he wi come and #ick the )oods !#$ '
then sent C of his car)o vesses to *aiwan$ *he shi#s eft on '!)!st 9$ .n '!)!st 14, ' ins!red the C vesses a)ainst #eris
of the So!th +hina Sea DEost or /ot Eost4 with B 2ns!rance +o$ -itho!t the knowed)e of both #arties, the shi#s had
aread( s!nk on '!)$ 14$ 2s B 2ns!rance +o$ iabe for the shi#s>
Aes. '(is is an e5ampe o- a past un*no+n e2ent )e"ause t(e sin*ing o- t(e s(ip is a past e2ent at t(e time t(at t(e
poi"y too* e--e"t. '(e "ontra"t is 2aid and 3 Insuran"e Co. is ia)e )e"ause (e agreed to pay e2en t(oug( t(e s(ip )e
aready ost. An insuran"e against an un*no+n past e2ent is pe"uiar ony to 2a"ine insuran"e. 7o+e2er6 Atty. Quimson
said in "ass t(at no+adays6 most i- not a insuran"e "ompanies no onger insure a past e2ent sin"e te"(noogy (as
progressed in su"( a manner t(at a s(ip=s "urrent status "an easiy )e *no+n +(ie t(e appi"ation is )eing pro"essed.
Cae5
71-8 Phi#a2ca"e *5 CA (repeat Case O%.&
/79 SCRA /16
Fact9
disa)iity.
I&e an% Reo#&tion9
mentioned;
INSURANCE REVIEWER Atty. Quimson page 1#
Section 05 '(e pre"eding se"tion does not aut(ori4e an insuran"e -or or against t(e dra+ing o- any ottery6 or
-or against any "(an"e or ti"*et in a ottery dra+ing a pri4e.
I a cont"act o) in&"ance a (a3e"in3 o" 3a2$#in3 cont"act'
NB. A "ontra"t o- insuran"e is a "ontra"t o- indemnity and not a +agering or gam)ing "ontra"t. At(oug( it is true t(at
an insuran"e "ontra"t is aso )ased on a "ontingen"y6 it is not a "ontra"t o- "(an"e.
What i the conce!t o) a #otte"4'
'(e term ,ottery1 e5tends to a s"(emes -or t(e distri)ution o- pri4es )y "(an"e6 su"( as poi"y paying6 gi-t e5(i)ition6
pri4e "on"erts6 ra--es at -airs6 et". and 2arious -orms o- gam)ing.
What a"e the th"ee eentia# e#e2ent o) #otte"4'
Consideration6 pri4es and "(an"e.
'(ere is "onsideration o- pri"e aid i- it appears t(at t(e pri4es o--ered )y +(ate2er name t(ey may )e "aed "ame out o-
t(e -und raised )y t(e sae o- "(an"es among t(e parti"ipants in order to +in t(e pri4es.
A"e a## !"iFe e=&i*a#ent to a #otte"4'
I- t(e pri4es do not "ome out o- t(e -und or "ontri)utions )y t(e parti"ipants6 no "onsideration (as )een paid and
"onseGuent6 t(ere is no ottery. E5J A "ompany6 to promote t(e sae o- "ertain produ"ts6 resorts to a s"(eme +(i"( en2isions
t(e gi2ing a+ay -or -ree o- "ertain pri4es -or t(e pur"(ase o- said produ"ts6 -or t(e parti"ipants are not reGuired to pay more
t(an t(e usua pri"e o t(e produ"ts.
Can a (ee!ta;e ho#%e" in&"e hi2e#) a3aint the )ai#&"e o) hi tic;et to (in'
NB. It "annot )e said t(at (e su--ered a ,oss1 o- pri4e +(en (e did not +in. '(e -aiure to +in a pri4e +oud not damni-y
or "reate a ia)iity against (im.
What a"e the %itinction $et(een an in&"ance cont"act an% a (a3e"in3 cont"act'
A "ontra"t o- insuran"e is a "ontra"t o- indemnity and not a +agering6 or gam)ing "ontra"t.(Se". CF& W(ite it is )ased
on a "ontingen"y6 it is not a "ontra"t o- "(an"e and is not used -or pro-it. '(e distin"tions are t(e -oo+ingJ
In&"ance Cont"act Ga2$#in3 cont"act
Parties see* to distri)ute oss )y reason o- mis"(an"e Parties "ontempate gain t(roug( mere "(an"e or t(e
o""urren"e o- a "ontingent e2ent.
Insured a2oids mis-ortune. 8am)er "ourts -ortune
'ends to eGuai4e -ortune. 'ends to in"rease t(e ineGuaity o- -ortune.
W(at one insured gains is not at t(e e5pense o-
anot(er insured. '(e entire group o- insureds pro2ides
t(roug( t(e premiums paid6 t(e -unds +(i"( ma*e
possi)e t(e payment o- a "aims;
Essen"e is +(ate2er one person +ins -rom a +ager is
ost )y t(e ot(er +agering party.
Pur"(ase o- insuran"e does not "reate a ne+ and non:
e5isting ris* o- oss to t(e pur"(aser. In pur"(asing
insuran"e6 t(e insurer -a"es an aready e5isting ris* o-
e"onomi" oss.
As soon as a party ma*es a +ager6 (e "reates a ris* o-
oss to (imse- +(ere no su"( ris* e5isted pre2iousy.
INSURANCE REVIEWER Atty. Quimson page 1F
What a"e the i2i#a"itie $et(een an in&"ance cont"act an% a 3a2$#in3 cont"act'
'(ey are simiar in ony one respe"t. In )ot(6 one party promises to pay a gi2en sum to t(e ot(er upon t(e o""urren"e
o- a gi2en -uture e2ent6 t(e promise )eing "ondition upon t(e payment o-6 or agreement to pay6 a stipuated amount )y t(e
ot(er party to t(e "ontra"t.
In eit(er "ase6 one party may re"ei2e more6 mu"( more6 t(an (e paid or agreed to pay.
P"o$#e25
', B, + and F decided to "oin a b!n)ee "!m#in) com#etition$ *he( contrib!ted @1,GGG each to a f!nd avaiabe for the !se
of an( member who is in"!red in the contest$ 2s this ins!rance or )ambin)>
'(is is an insuran"e "ontra"t. Ea"( mem)er "ontri)utes to a "ommon -und6 out o- +(i"( one is reim)ursed -or t(e
osses t(at (e may su--er.
S!##ose ', B, +, and F a)ree that the whoe amo!nt of 4* wo!d be )iven to the one who swin)s nearest to the )ro!nd$ 2s
this ins!rance or )ambin)>
'(is is no+ a gam)ing "ontra"t. '(e parties are no+ "ontempating a gain )ased upon un"ertain e2ents.
Section 15 A *inds o- insuran"e are su)Ie"t to t(e pro2isions o- t(is "(apter so -ar as t(e pro2isions "an
appy.
What i the a!!#ica$i#it4 o) the !"o*iion o) Cha!te" 1'
Pro2isions o- C(ap 1 on ,'(e Contra"t o- Insuran"e1 (Se"s 1:.0& are aso appi"a)e to marine Insuran"e (Se"s. ..:
1$$&6 @ire insuran"e (Se"s. 1$/:1/9&6 Casuaty Insuran"e (Se". 1/#&6 Suretys(ip (Se"s. 1/F:1/0&6 <i-e Insuran"e (Se"s.
1/.:109&6 and to any ot(er *ind o- insuran"e (Se". C& so -ar as said pro2isions "an appy. >atters not e5pressy pro2ided -or
in t(e Insuran"e Code and spe"ia a+s are reguated )y t(e CC.
So6 an insuran"e "ontra"t under RA 1$11 (So"ia Se"urity A"t o- 1.F#& s(a )e go2erned primariy )y t(e said a+ and
su)sidiariy )y C(ap. 1 o- t(e Insuran"e Code6 and in t(e a)sen"e o- t(e appi"a)e pro2isions in )ot( a+s6 t(e pertinent
pro2isions o- t(e CC s(a )e appied.
TITLE II . PARTIES TO THE CONTRACT
Section 65 E2ery person6 partners(ip6 asso"iation or "orporation duy aut(ori4ed to transa"t insuran"e
)usiness as ese+(ere pro2ided in t(is Code6 may )e an insurer.
Who a"e the !a"tie to the cont"act o) in&"ance'
'(e In&"e" is t(e party +(o assumes or a""epts t(e ris* o- oss and underta*es -or a "onsideration to indemni-y t(e
insured or to pay (im a "ertain sum on t(e (appening o- a spe"i-ied "ontingen"y or e2ent. '(e )usiness o- insuran"e may
)e "arried on )y indi2iduas Iust as mu"( as )y "orporations and asso"iations. '(e state itse- may go into insuran"e
)usiness.
'(e in&"e%6 or t(e se"ond party to t(e "ontra"t6 is t(e person in +(ose -a2or6 t(e "ontra"t is operati2e and +(o is
indemni-ied against6 or is to re"ei2e a "ertain sum upon t(e (appening o- a spe"i-ied "ontingen"y or e2ent. 7e is t(e person
+(ose oss is t(e o""asion -or t(e payment o- t(e insuran"e pro"eeds )y t(e insurer.
I the in&"e% a#(a4 the !e"on to (ho2 the !"ocee% a"e !ai%'
No. '(e person paid may )e t(e $ene)icia"4 designated in t(e poi"y. A "ommon e5ampe o- t(is situation is a i-e
insuran"e poi"y +(ere t(e pro"eeds are not gi2en to t(e insured )ut to a t(ird party designated )y t(e insured.
What i the nat&"e o) the "e#ationhi! $et(een the in&"e" an% the in&"e%'
It is t(at o- a "ontingent de)tor and "reditor6 su)Ie"t to t(e "onditions o- t(e poi"y and NB' t(at o- trustee and "estui
Gue trust.
Ho( a"e the te"2 a&"e"C in&"e% an% a&"e% &e% in in&"ance'
A""dg to 3a"*=s <a+6 Insurer is synonymous +it( t(e term ,assurer1 or ,under+riter1.
INSURANCE REVIEWER Atty. Quimson page 1$
'(e terms ,insured1 and ,assured1 are generay used inter"(angea)y; )ut stri"ty spea*ing6 t(e term ,in&"e%1 re-ers to
t(e o+ner o- t(e property insured or t(e person +(ose i-e is t(e su)Ie"t o- t(e "ontra"t o- insuran"e6 +(ie ,a&"e%1 re-ers
to t(e person -or +(ose )ene-it t(e insuran"e is granted.
@or e5J A +i-e insures t(e i-e o- (er (us)and -or (er o+n )ene-it. '(e +i-e is t(e assured6 and t(e (us)and t(e
insured. '(e +i-e is t(e o+ner o- t(e poi"y )ut s(e is not t(e insured.
In property insuran"e6 i*e -ire insuran"e6 t(e insure is aso t(e assured +(ere t(e pro"eeds are paya)e to (im.
Assured is aso used sometimes as a synonym o- ,)ene-i"iary.1 '(e $ene)icia"4 is t(e person designated )y t(e terms
o- t(e poi"y as t(e one to re"ei2e t(e pro"eeds o- t(e insuran"e. 7e is t(e t(ird party in a "ontra"t o- i-e insuran"e6 +(ose
)ene-it t(e poi"y is issued and to +(om t(e oss is paya)e.
Who 2a4 $e an in&"e"'
A -oreign or domesti" insuran"e "ompany may transa"t )usiness in t(e P(iippines )ut must -irst o)tain a "erti-i"ate o-
aut(ority -or t(at purpose -rom t(e Insuran"e Commissioner +(o (as t(e dis"retion to re-use to issue su"( "erti-i"ate i- it +i
)est promote t(e interests o- t(e peope o- t(is "ountry. (Se". 10/&
An indi2idua may aso )e an insurer6 pro2ided (e (ods a "erti-i"ate o- aut(ority -rom t(e Insuran"e Commissioner6 and
pro2ided -urt(er t(at (e is possessed o- t(e "apita assets reGuired o- an insuran"e "orporation doing t(e same *ind o-
)usiness in t(e P(iippines and in2ested in t(e same manner. (Se"s. 10#:10$&
What i an in&"ance co"!o"ation'
IC de-ines it as one -ormed or organi4ed to sa2e any person or persons or ot(er "orporations (armess -rom oss6
damage6 or ia)iity arising -rom any un*no+n or -uture or "ontingent e2ent6 or to indemni-y or to "ompensate any person or
persons or ot(er "orporations -or any su"( oss6 damage6 or ia)iity6 or to guarantee t(e per-orman"e o- or "ompian"e +it(
"ontra"tua o)igations or t(e payment o- de)ts o- ot(ers. (Se". 10F& '(e ast part o- t(e statement re-ers to suretys(ip.
(Se". 1/F&
What %oe the te"2 Ain&"e"B an% Ain&"ance co2!an4B inc#&%e'
It in"udes indi2iduas6 partners(ips6 asso"iations or "orporations6 in"uding 8BCC=s or entities6 engaged as prin"ipas in
t(e insuran"e )usiness6 e@ce!t mutua )ene-it asso"iations. It s(a aso in"ude pro-essiona reinsurers as de-ined in Se".
C0% (Se". 10#&
I the E&ine o) In&"ance a))ecte% (ith !&$#ic inte"et'
Aes. It is t(ere-ore6 su)Ie"t to reguation and "ontro )y t(e state )y 2irtue o- t(e e5er"ise o- its poi"e po+er or in t(e
interest o- pu)i" "on2enien"e and t(e genera good o- t(e peope.
Att45 :&i2on a;e% & to #oo; at Sec5 1,0+1,1 )o" the 2eanin3 o) Ain&"e"BC Ain&"ance co2!an4BC an% AIn&"ance
co"!o"ationBG an% Sec5 1,7 )o" the ce"ti)icate o) a&tho"it4 "e=&i"e% to t"anact in&"ance $&ine5 What %o thee
ection !"o*i%e'
Sec5 1,0. @or t(e purposes o- t(is Code6 t(e term ,in&"e"1 or ,in&"ance co2!an41 s(a in"ude a indi2iduas6
partners(ips6 asso"iations6 or "orporations in"uding go2ernment:o+ned or "ontroed "orporations or entities6 engaged as
prin"ipas in t(e insuran"e )usiness6 e@ce!tin3 mutua )ene-it asso"iations. Uness t(e "onte5t ot(er+ise reGuires6 t(e
term s(a aso in"ude pro-essiona reinsurers de-ined in Se". C0%. ,Do2etic Co2!an41 s(a in"ude "ompanies -ormed6
organi4ed or e5isting under t(e a+s o- t(e P(iippines. ,Fo"ei3n Co2!an461 +(en used +it(out imitation6 s(a in"ude
"ompanies -ormed6 organi4ed6 or e5isting under any +s ot(er t(an t(ose o- t(e P(iippines.
Sec5 1,15 Corporations -ormed or organi4ed to sa2e any person or persons or ot(er "orporations (armess -rom oss6
damage6 or ia)iity arising -rom any un*no+n or -uture or "ontingent e2ent6 or to indemni-y or to "ompensate any person or
persons or ot(er "orporations -or any su"( oss6 damage6 or ia)iity6 or to guarantee t(e per-orman"e o- or "ompian"e +it(
"ontra"tua o)igations or t(e payment o- de)ts o- ot(ers s(a )e *no+n as ,in&"ance co"!o"ation51
'(e pro2isions o- t(e Corporation <a+ s(a appy to a insuran"e "orporations no+ or (erea-ter engaged in )usiness in
t(e P(iippines in so -ar as t(ey do not "on-i"t +it( t(e pro2isions o- t(is "(apter.
INSURANCE REVIEWER Atty. Quimson page 1/
Sec5 1,75 No insuran"e "ompany s(a transa"t any insuran"e )usiness in t(e P(iippines unti a-ter it s(a (a2e
o)tained a "erti-i"ate o- aut(ority -or t(at purpose -rom t(e Commissioner upon appi"ation t(ere-ore and payment )y t(e
"ompany "on"erned o- t(e -ees (ereina-ter pres"ri)ed.
'(e Commissioner may re-use to issue a "erti-i"ate o- aut(ority to any insuran"e "ompany i-6 in (is Iudgment6 su"(
re-usa +i )est promote t(e interests o- t(e peope o- t(is "ountry. No su"( "erti-i"ate o- aut(ority s(a )e granted to any
su"( "ompany unti t(e Commissioner s(a (a2e satis-ied (imse- )y su"( e5amination as (e may ma*e and su"( e2iden"e
as (e may reGuire t(at su"( "ompany is Guai-ied )y t(e a+s o- t(e P(iippines to transa"t )usiness t(erein6 t(at t(e grant o-
su"( aut(ority appears to )e Iusti-ied in t(e ig(t o- o"a e"onomi" reGuirements6 and t(at t(e dire"tion and administration6
as +e as t(e integrity and responsi)iity o- t(e organi4ers and administrators6 t(e -inan"ia organi4ation and t(e amount o-
"apita6 not+it(standing t(e pro2isions o- se"tion 1006 reasona)y assure t(e sa-ety o- t(e interests o- t(e poi"y(oders and
t(e pu)i".
In order to maintain t(e Guaity o- t(e management o- insuran"e "ompanies and a--ord )etter prote"tion o- poi"y(oders
and t(e pu)i" in genera6 any person o- good mora "(ara"ter6 unGuestioned integrity and re"ogni4ed "ompeten"e may )e
ee"ted or appointed dire"tor or o--i"er o- insuran"e "ompanies. '(e Commissioner s(a pres"ri)e t(e Guai-i"ations o- t(e
e5e"uti2e o--i"ers and ot(er *ey o--i"ias o- insuran"e "ompanies -or t(e purposes o- t(is se"tion.
No person s(a "on"urrenty )e a dire"tor andKor o--i"er o- an insuran"e "ompany and an adIustment "ompany.
In"um)ent dire"tors andKor o--i"ers a--e"ted )y t(e a)o2e pro2isions are (ere)y ao+ed to (od on to t(eir positions unti
t(e end o- t(eir terms or t+o years -rom t(e e--e"ti2ity o- t(e !e"ree6 +(i"(e2er is s(orter.
3e-ore issuing su"( "erti-i"ate o- aut(ority6 t(e Commissioner must )e satis-ied t(at t(e name o- t(e "ompany is not t(at
o- any ot(er *no+n "ompany transa"ting a simiar )usiness in t(e P(iippines6 or a name so simiar as to )e "a"uated to
misead t(e pu)i".
Su"( "erti-i"ate o- aut(ority s(a e5pire on t(e ast day o- Eune o- ea"( year and s(a )e rene+ed annuay i- t(e
"ompany is "ontinuing to "ompy +it( t(e pro2isions o- t(is Code or t(e "ir"uars6 instru"tions6 ruings or de"isions o- t(e
Commissioner. E2ery "ompany re"ei2ing any su"( "erti-i"ate o- aut(ority s(a )e su)Ie"t to t(e pro2isions o- t(is Code and
ot(er reated a+s and to t(e Iurisdi"tion and super2ision o- t(e Commissioner.
No insuran"e "ompany may )e aut(ori4ed to transa"t in t(e P(iippines t(e )usiness o- i-e and non:i-e insuran"e
"on"urrenty6 uness spe"i-i"ay aut(ori4ed to do so6 pro2ided (o+e2er6 t(at t(e terms ,i-e1 and ,non:i-e1 insuran"e s(a e
deemed to in"ude (eat(6 a""ident and disa)iity insuran"e.
No insurer "ompany s(a (a2e any eGuity in an adIustment "ompany and neit(er s(a an adIustment "ompany (a2e an
eGuity in an insuran"e "ompany.
Insuran"e "ompanies and adIustment "ompanies presenty a--e"ted )y t(e a)o2e pro2isions s(a (a2e t+o years -rom
t(e e--e"ti2ity o- t(e !e"ree +it(in +(i"( to di2est o- t(eir sto"*(odings.
Section 75 Anyone e5"ept a pu)i" enemy may )e insured.
What a"e the "e=&iite in o"%e" that a !e"on 2a4 $e in&"e% in a contact o) in&"ance'
'(ere are 9 reGuisites nameyJ
"& 7e must )e "ompetent to enter into a "ontra"t.
d& 7e must possess an insura)e interest in t(e su)Ie"t o- insuran"e.
e& 7e must NB' )e a pu)i" enemy.
What i a !&$#ic ene24'
It is a nation +it( +(om t(e P(iippines is at +ar6 and it in"udes e2ery "iti4en or su)Ie"t o- su"( nation.
What i the e))ect o) (a" on the e@itin3 in&"ance cont"act $et(een the Phi#i!!ine an% a citiFen o" &$Dect o) a
!&$#ic ene24C (ith "e!ect to !"o!e"t4 in&"ance'
Wit( respe"t to property insuran"e6 t(e rue adopted in t(e P(i is t(at an insuran"e poi"y "eases to )e 2aid and
en-or"ea)e as soon as t(e insured )e"omes a pu)i" enemy.
What i the e))ect o) (a" on the e@itin3 in&"ance cont"act $et(een the Phi#i!!ine an% a citiFen o" &$Dect o) a
!&$#ic ene24C (ith "e!ect to #i)e in&"ance'
'(ree do"trines (a2e arisen.
(1& Connectic&t R&#e t(ere are t+o eements in t(e "onsideration -or +(i"( t(e annua premium is paidJ
a. '(e mere prote"tion -or t(e year; and
). '(e pri2iege o- rene+ing t(e "ontra"t -or ea"( su""eeding year )y paying t(e premium -or t(at year at t(e time
agreed upon.
A""dg. to t(is 2ie+6 t(e payments o- t(e premiums are a "ondition pre"edent6 t(e non:per-orman"e o- +(i"( (as
+(en t(e per-orman"e +oud )e iega& ne"essary de-eats t(e rig(t to rene+ t(e "ontra"t.
(C& Ne( >o"; R&#e apparenty -oo+ed )y t(e num)er o- de"isions. War )et+een t(e states in +(i"( t(e parties
reside merey suspends t(e "ontra"ts o- i-e insuran"e and t(at upon t(e tender o- premiums due )y t(e insured or (is
representati2es a-ter t(e +ar (as terminated re2i2es t(e "ontra"t +(i"( )e"omes -uy operati2e.
(9& US R&#e de"ared t(e "ontra"t not merey suspended )ut is a)rogated )y reason o- non:payment o-
premiums6 sin"e t(e time o- t(e payment is pe"uiary o- t(e essen"e o- t(e "ontra"t. 7o+e2er6 t(e insured is entited
to t(e "as( or reser2e 2aue o- t(e poi"y (i- any& +(i"( is t(e e5"ess o- t(e premiums paid o2er t(e a"tua ris* "arried
during t(e years +(en t(e poi"y (ad )een in -or"e.
We -oo+ t(e US R&#e.
P"o$#e25
B is sideswi#ed b( a ba!t vendor$ Beca!se he was #revio!s( indicted for man( other crimes inc!din) ie)a #ossession of
baison)s, he was decared Metro ManiaHs @!bic Inem( /o$1$ 2f ' wants to sec!re ins!rance on the ife of B, ma( the
ins!rer ref!se on the )ro!nds that B is a #!bic enem( and therefore ma( not be ins!red !nder Sec$ , of the 2+H
NB. Se". / spea*s o- a pu)i" enemy ony in re-eren"e to a nation +it( +(om t(e P(i is at +ar and e2ery "iti4en and or
su)Ie"t t(ereo-.
Cae5
7118 Fi#i!ina Cia %e Se3&"o *5 Ch"ite"n H&en)e#% H Co5
,- PHIL 10
Fact9
B"t. 16 1.#16 !omesti" Corp C(ristern6 a-ter payment o- t(e premium6 o)tained -rom @iipinas6 -ire poi"y no. C.999 -or
P1%%' "o2ering mer"(andise "ontained in a )uiding o"ated in 3inondo.
Bn @e). C/6 1.#C6 during t(e Eap o""upation6 t(e )uiding and t(e insured mer"(andise +ere )urned. C(ristern
su)mitted to @iipinas its "aim.
Sa2aged goods +ere sod and t(e tota oss o- C(ristern +as P.C'.
@iipinas denied ia)iity on t(e ground t(at C(ristern +as an enemy "orp and "annot )e insured.
I&e9 WBN @iipinas is ia)e to C(ristern6 7uen-ed ? Co.
He#%9 NO5
>aIority o- t(e sto"*(oders o- C(ristern +ere 8erman su)Ie"ts. '(is )eing so6 SC rued t(at said "orporation )e"ame
an enemy "orporation upon t(e +ar )et+een t(e US and 8ermany. '(e P(i Insuran"e <a+ in Se". 0 pro2ides t(at anyone
e5"ept a pu)i" enemy may )e insured. It stands to reason t(at an insuran"e poi"y "eases to )e ao+a)e as soon as an
insured )e"omes a pu)i" enemy.
'(e purpose o- t(e +ar is to "rippe t(e po+er ad e5(aust t(e resour"es o- t(e enemy6 and it is in"onsistent t(at one
"ountry s(oud destroy its enemy property and repay in insuran"e t(e 2aue o- +(at (as )een so destroyed6 or t(at it s(oud
in su"( manner in"rease t(e resour"es o- t(e enemy or render it aid.
A indi2iduas +(o "ompose t(e )eigerent po+ers6 e5ist as to ea"( ot(er6 in a state o- utter e5"usion and are pu)i"
enemies. C(ristern (a2ing )e"ome an enemy "orporation on !e". 1%. 1.#16 t(e insuran"e poi"y issued in (is -a2or on B"t.
16 1.#1 )y @iipinas (ad "eased to )e 2aid and en-or"ea)e6 and sin"e t(e insured goods +ere )urned a-ter !e". 1%6 1.#16
and during t(e +ar6 C(ristern +as NB' entited to any indemnity under said poi"y -rom @iipinas.
Eementary rues o- Iusti"e reGuire t(at t(e premium paid )y C(ristern -or t(e period "o2ered )y t(e poi"y -rom !e". 1%6
1.#1 s(oud )e returned )y @iipinas.
INSURANCE REVIEWER Atty. Quimson page 1.
Section ,5 Uness t(e poi"y ot(er+ise pro2ides6 +(ere a mortgagor o- t(e property e--e"ts insuran"e in (is
o+n name pro2iding t(at a oss s(a )e paya)e to t(e mortgagee6 or assigns a poi"y o- insuran"e to a mortgagee6
t(e insuran"e is deemed to )e upon t(e interest o- t(e mortgagor6 +(o does not "ease to )e a party to t(e origina
"ontra"t6 and any a"t o- (is6 prior to t(e oss6 +(i"( +oud ot(er+ise a2oid t(e insuran"e6 +i (a2e t(e same e--e"t6
at(oug( t(e property is in t(e (ands o- t(e mortgagee6 )ut any a"t +(i"(6 under t(e "ontra"t o- insuran"e6 is to )e
per-ormed )y t(e mortgagor6 may )e per-ormed )y t(e mortgagee t(erein named6 +it( t(e same e--e"t as i- it (ad
)een per-ormed )y t(e mortgagor.
I it a#"i3ht i) $oth the 2o"t3a3o" an% the 2o"t3a3e in&"e the a2e !"o!e"t4'
AES. '(e mortgagor and t(e mortgagee (a2e ea"( an insura)e interest in t(e property mortgaged6 and t(is interest is
separate and distin"t -rom t(e ot(er. ConseGuenty6 insuran"e ta*en )y one in (is o+n name ony and in (is -a2or aone
does not inure to t(e )ene-it o- t(e ot(er. And in "ase )ot( o- t(em ta*e out separate insuran"e poi"ies on t(e same
property6 or one poi"y "o2ering t(eir respe"ti2e interests6 t(e same is not open to t(e o)Ie"tion t(at t(ere is dou)e
insuran"e.
What i the e@tent o) the in&"a$#e inte"et o) the 2o"t3a3o"'
'(e mortgagor o- t(e property6 as o+ner (as an insura)e interest to t(e e5tent o- t(e 2aue o- t(e property6 e2en i- t(e
mortgage de)t is eGua to su"( 2aue. '(e reason is t(at t(e oss or destru"tion o- t(e property insured +i NB' e5tinguis(
t(e mortgage de)t.
What i the e@tent o) the in&"a$#e inte"et o) the 2o"t3a3ee'
'(e mortgagee or (is assignee (as an insura)e interest in t(e mortgaged property to t(e e5tent o- t(e de)t se"ured6
su"( interest "ontinues unti t(e mortgage de)t is e5tinguis(ed.
U! to (hat e@tent can each "eco*e"'
'(e mortgagor "annot re"o2er upon t(e insuran"e )eyond t(e -u amount o- t(e oss6 and t(e mortgagee "annot
re"o2er in e5"ess o- t(e "redit at t(e time o- t(e oss.
Un%e" Sec5 ,C (hat a"e the e))ect o) in&"ance (hen the 2o"t3a3o" e))ect in&"ance in hi o(n na2e an% !"o*i%e
that the #o $e !a4a$#e to the 2o"t3a3ee'
'(e ega e--e"ts o- t(is areJ
(1& '(e "ontra"t is deemed to )e upon t(e interest o- t(e mortgagor6 (en"e (e does NB' "ease to )e a party to
t(e "ontra"t;
(C& Any a"tion o- t(e mortgage prior to t(e oss +(i"( +oud ot(er+ise a2oid t(e insuran"e a--e"ts t(e mortgagee
e2en i- t(e property is in t(e (ands o- t(e mortgagee;
(9& Any a"t +(i"( under t(e "ontra"t o- insuran"e is to )e per-ormed )y t(e mortgagor6 may )e per-ormed )y t(e
mortgagee;
(#& In "ase o- oss6 t(e mortgagee is entited to t(e pro"eeds to t(e e5tent o- (is "redit; and
(F& Upon re"o2ery )y t(e mortgagee to t(e e5tent o- (is "redit6 t(e de)t is e5tinguis(ed.
What i the e))ect i) the 2o"t3a3ee e))ect in&"ance on $eha#) o) the 2o"t3a3o"'
Pra"ti"ay t(e same rues appy. Upon t(e destru"tion o- t(e property6 t(en t(e mortgagee is entited to re"ei2e t(e
pro"eeds eGua to t(e amount o- t(e mortgage "redit. Su"( payment operates to dis"(arge t(e de)t.
Att45 :&i2on (ant & to #oo; at A"t5 6167 CC5 What %oe it a4'
Art. C1C/. '(e mortgage e5tends to t(e natura a""ession6 to t(e impro2ements6 gro+ing -ruits6 and t(e rents or in"ome
not yet re"ei2ed +(en t(e o)igation )e"omes due6 and to t(e amount o- t(e indemnity granted or o+ing to t(e proprietor
-rom t(e insurers o- t(e property mortgaged6 or in 2irtue o- e5propriation -or pu)i" use6 +it( t(e de"arations6 ampi-i"ations
and imitations esta)is(ed )y a+6 +(et(er t(e estate remains in t(e possession o- t(e mortgagor6 or it passes into t(e
(ands o- a t(ird person.
P"o$#e25
' is the owner of a ho!se worth 1G* which he mort)a)ed to B to sec!re a oan of C*$ -hat is the ins!rabe interests of
each>
Insura)e interest o- A6 mortgagor is P1%'6 +(ie t(e insura)e interest o- 36 mortgagee is PF'.
' ins!red for 1M her ho!se with the #oic( #rovidin) that the oss sha be #a(abe to B$ *he ho!se was mort)a)ed to B as
sec!rit( for a oan of @,CG*$ 2t was tota( destro(ed b( accidenta fire$ -ho ma( recover on the #oic(>
INSURANCE REVIEWER Atty. Quimson page C%
36 t(e mortgagee may re"ei2e t(e 1> )ut is entited ony to t(e e5tent o- (is "redit o- P/F%'6 and (e s(a (od as
trustee -or A6 mortgagor6 t(e e5"ess o- PCF%'.
S!##osin) before the fire occ!rred B had aread( been #aid, who, if at a, wi receive the #roceeds>
A +i re"ei2e t(e pro"eeds. '(e reason is t(at A e--e"ted t(e insuran"e in (is o+n name and (e did NB' "ease to )e a
party to t(e "ontra"t at(oug( it +as pro2ided t(at t(e indemnity )e paid to 3.
S!##ose it was B, mort)a)ee who ins!red the ho!se for 1M$ 2f the oss occ!rred before B was #aid who is entited to
receive the #roceeds>
3. 3ut 3 "an ony re"o2er P/F%'6 t(e amount o- (er "redit.
-hat if the oss occ!rred after B was #aid, can he sti receive the #roceeds>
No. Upon payment o- t(e de)t6 3 ost (is insura)e interest in t(e property.
-i ' )et the #roceeds>
No. 3e"ause A +as ne2er a party to t(e "ontra"t. It is important to note t(at it +as 36 mortgagee +(o e--e"ted t(e
insuran"e.
Cae9
7168 San ?i3&e# E"e(e"4 *5 La( Union Roc; In&"ance Co2!an4
0- PHIL 670
Fact9
Bn Ean. 1C6 1.106 !unn mortgaged a par"e o- and to S>3 to se"ure a de)t o- 1%'.
>ortgage "ontra"t stated t(at !unn +as to (a2e t(e property insured at (is o+n e5pense6 aut(ori4ing S>3 to "(oose
t(e insurers and to re"ei2e t(e pro"eeds t(ereo- and retain so mu"( o- t(e pro"eeds as +oud "o2er t(e mortgage de)t.
!unn i*e+ise aut(ori4ed S>3 to ta*e out t(e insuran"e poi"y -or (im.
3rias6 S>3=s genera manager6 approa"(ed <a+ Union -or insuran"e to t(e e5tent o- 1F' upon t(e property. In t(e
appi"ation6 3rias stated t(at S>3=s interest in t(e property +as merey t(at o- a mortgagee.
<a+ Union6 not +anting to issue a poi"y -or t(e entire amount6 issued one -or P/6F%% and pro"ured anot(er poi"y o-
eGua amount -rom @iipinas Cia de Seguros. 3ot( poi"ies +ere issued in t(e name o- S>3 ony and "ontained no
re-eren"e to any ot(er interests in t(e propty. 3ot( poi"ies reGuired assignments to )e appro2ed and noted on t(e
poi"y.
Premiums +ere paid )y S>3 and "(arged to !unn. A year ater6 t(e poi"ies +ere rene+ed.
In 1.1/6 !unn sod t(e property to 7arding6 )ut no assignment o- t(e poi"ies +as made to t(e atter.
Property +as destroyed )y -ire. S>3 -ied an a"tion in "ourt to re"o2er on t(e poi"ies. 7arding +as made a de-endant
)e"ause )y 2irtue o- t(e sae6 (e )e"ame t(e o+ner o- t(e property6 at(oug( t(e poi"ies +ere issued in S>3=s name.
S>3 soug(t to re"o2er t(e pro"eeds to t(e e5tent o- its mortgage "redit +it( t(e )aan"e to go to 7arding.
Insuran"e Companies "ontended t(at t(ey +ere not ia)e to 7arding )e"ause t(eir ia)iity under t(e poi"ies +as
imited to t(e insura)e interests o- S>3 ony.
S>3 e2entuay rea"(ed a settement +it( t(e insuran"e "ompanies and +as paid t(e )aan"e o- it=s mortgage "redit.
7arding +as e-t to -end -or (imse-. 'ria "ourt rued against 7arding. 7en"e t(e appea.
I&e9 WBN t(e insuran"e "ompanies are ia)e to 7arding -or t(e )aan"e o- t(e pro"eeds o- t(e C poi"ies.
He#%9 NOPE5
Under t(e Insuran"e A"t6 t(e measure o- insura)e interest in t(e property is t(e e5tent to +(i"( t(e insured mig(t )e
damini-ied )y t(e oss or inIury t(ereo-. Aso it is pro2ided in t(e IA t(at t(e insuran"e s(a )e appied e5"usi2ey to t(e
proper interest o- t(e person in +(ose name it is made. Undou)tedy6 S>3 as t(e mortgagee o- t(e property6 (ad an
insura)e interest t(erein; )ut it "oud NB'6 an any e2ent6 re"o2er upon t(e t+o poi"ies an amount in e5"ess o- its mortgage
"redit.
3y 2irtue o- t(e Insuran"e A"t6 neit(er !unn nor 7arding "oud (a2e re"o2ered -rom t(e t+o poi"ies. Wit( respe"t to
7arding6 +(en (e a"Guired t(e property6 no "(ange or assignment o- t(e poi"ies (ad )een underta*en. '(e poi"ies mig(t
(a2e )een +orded di--erenty so as to prote"t t(e o+ner6 )ut t(is +as not done.
I- t(e +ording (ad )eenJ ,@a(abe to SMB, mort)a)ee, as its interests ma( a##ear, remainder to whomsoever, d!rin)
the contin!ance of the risk, ma( become owner of the interest ins!red46 it +oud (a2e pro2ed an intention to insure t(e entire
interest in t(e property6 NB' merey S>3=s and +oud (a2e s(o+n to +(om t(e money6 in "ase o- oss6 s(oud )e paid.
Un-ortunatey6 t(is +as not +(at +as stated in t(e poi"ies.
INSURANCE REVIEWER Atty. Quimson page C1
I- during t(e negotiation -or t(e poi"ies6 t(e parties (ad agreed t(at e2en t(e o+ner=s interest +oud )e "o2ered )y t(e
poi"ies6 and t(e poi"ies (ad inad2ertenty )een +ritten in t(e -orm in +(i"( t(ey +ere e2entuay issued6 t(e o+er "ourt
+oud (a2e )een a)e to order t(at t(e "ontra"t )e re-ormed to gi2e e--e"t to t(em in t(e sense t(at t(e parties intended to
)e )ound. 7o+e2er6 t(ere is no "ear and satis-a"tory proo- t(at t(e poi"ies -aied to re-e"t t(e rea agreement )et+een t(e
parties t(at +oud Iusti-y t(e re-ormation o- t(ese t+o "ontra"ts.
71/8 Sa&"a I2!o"t E@!o"t Co5 *5 Phi#i!!ine Inte"nationa# S&"et4
11, PHIL 11-
Fact9
Bn !e". C$6 1.FC6 Saura mortgaged to PN3 its registered par"e o- and in !a2ao to se"ure t(e payment o- a
promissory note o- PC/'.
A )uiding o- strong materias +(i"( +as aso o+ned )y Saura6 +as ere"ted on t(e par"e o- and and t(e )uiding (ad
a+ays )een "o2ered )y insuran"e e2en )e-ore t(e e5e"ution o- t(e mortgage "ontra"t.
Pursuant to t(e mortgage agreement +(i"( reGuired Saura to insure t(e )uiding and its "ontents6 it o)tained a -ire
insuran"e -or PC.' -rom PISC -or a period o- 1 year starting B"t. C6 1.F#.
'(e mortgage aso reGuired Saura to endorse t(e insuran"e poi"y to PN3. '(e memo statedJ Eoss if an(, #a(abe to
@/J as their interest ma( a##ear, s!b"ect to the terms, conditions and warranties of this #oic($
'(e poi"y +as dei2ered to PN3 )y Saura.
Bn B"t. 1F6 1.F#6 )arey 19 days a-ter t(e issuan"e o- t(e -ire insuran"e6 PISC "an"eed t(e same6 e--e"ti2e as o- t(e
date o- issue. Noti"e o- t(e "an"eation +as sent to PN3 in +riting and +as re"ei2ed )y t(e )an* on No2. 06 1.F#.
Bn Apr. $6 1.FF6 t(e )uiding and its "ontents +ort( P#6$0F +ere )urned. Bn Apri 116 1.0F6 Saura -ied a "aim +it(
PISC and mortgagee )an*.
Upon presentation o- noti"e o- oss +it( PN36 Saura earned -or t(e -irst time t(at t(e poi"y (ad )een pre2iousy
"an"eed )y PISC6 +(en Saura=s -oder in t(e )an*=s -ie +as opened and t(e noti"e o- t(e "an"eation )y PISC +as
-ound.
I&e9 WBN t(ere +as proper "an"eation o- t(e poi"yH
He#%5 NO5
'(e poi"y in Guestion does NB' pro2ide -or t(e noti"e o- "an"eation6 its -orm or period. '(e Insuran"e <a+ does not
i*e+ise pro2ide -or su"( noti"e. '(is )eing t(e "ase6 it de2o2es upon t(e Court to appy t(e generay a""epted prin"ipes
o- insuran"e6 regarding "an"eation o- t(e insuran"e poi"y )y t(e insurer.
A"tua noti"e o- "an"eation in a "ear and uneGui2o"a manner6 pre-era)y in +riting s(oud )e gi2en )y t(e insurer to
t(e insured so t(at t(e atter mig(t )e gi2en an opportunity to o)tain ot(er insuran"e -or (is o+n prote"tion. '(e noti"e
s(oud )e persona to t(e insurer and not to andKor t(roug( any unaut(ori4ed person )y t(e poi"y. 3ot( t(e PSIC and t(e
PN3 -aied6 +ittingy or un+ittingy to noti-y Saura o- t(e "an"eation made.
'(e insurer "ontends t(at it ga2e noti"e to PN3 as mortgagee o- t(e property and t(at +as aready su)stantia
"ompian"e +it( its duty to noti-y t(e insured o- t(e "an"eation o- t(e poi"y. 3ut noti"e to t(e )an*6 as -ar as Saura (erein
is "on"erned6 is not e--e"ti2e noti"e. PISC is t(en ordered to pay Saura PC.'6 t(e amount in2o2ed in t(e poi"y su)Ie"t
matter o- t(is "ase.
7108 Pa#i#ieo *5 Coio
97 PHIL 919
Fact9
Bn !e". 106 1.F16 Paieo o)tained -rom Cosio a oan o- P1C'.
'o se"ure payment6 Cosio reGuired Paieo to sign a do"ument *no+n as ,"onditiona sae o- residentia )uiding16
purporting to "on2ey to Cosio6 +it( a rig(t to repur"(ase (on t(e part o- Paieo&6 a t+o:story )uiding o- strong materias
)eonging to Paieo.
A-ter e5e"ution o- t(e do"ument6 Cosio insured t(e )uiding against -ire +it( Asso"iated Insuran"e ? Surety Co.
(Asso"iated& -or 1F'.
'(e insuran"e poi"y +as issued in t(e name o- Cosio.
'(e )uiding +as party destroyed )y -ire and a-ter proper demand6 Cosio +as a)e to "oe"t -rom t(e insuran"e
"ompany an indemnity o- P1961%/.
Paieo demanded -rom Cosio t(at s(e )e "redited +it( t(e ne"essary amount to pay (er o)igation out o- t(e insuran"e
pro"eeds6 )ut Cosio re-used to do so.
INSURANCE REVIEWER Atty. Quimson page CC
'ria Court -ound t(at t(e de)t (ad an unpaid )aan"e o- P1C'. It de"ared t(e o)igation o- Paieo to Cosio -uy
"ompensated )y 2irtue o- t(e pro"eeds "oe"ted )y Cosio and -urt(er (ed t(at t(e e5"ess o- P161%/ (1961%/ 1C6%%%&
)e re-unded to Paieo
I&e9 WBN t(e tria "ourt +as Iusti-ied in "onsidering t(e o)igation o- Paieo -uy "ompensated )y t(e insuran"e amount
t(at Cosio +as a)e to "oe"t -rom Asso"iated6 and WBN t(e tria "ourt +as "orre"t in reGuiring Cosio to re-und t(e e5"ess
o- P161%/ to Paieo.
He#%5 NO an% NO5
'(e rue is t(at ,+(ere a mortgagee6 independenty o- t(e mortgagor6 insures t(e mortgaged property in (is o+n name
and -or (is o+n interest6 (e is entited to t(e insuran"e pro"eeds in "ase o- oss6 )ut in su"( "ase6 (e is not ao+ed to retain
(is "aim against t(e mortgagor6 )ut is passed )y su)rogation to t(e insurer to t(e e5tent o- t(e money paid.1
'(e o+er "ourt erred in de"aring t(at t(e pro"eeds o- t(e insuran"e ta*en out )y Cosio on t(e property insured to t(e
)ene-it o- Paieo and in ordering t(e -ormer to dei2er to t(e atter6 t(e di--eren"e )et+een t(e inde)tedness and t(e amount
o- insuran"e re"ei2ed )y Cosio. In t(e ig(t o- t(is ruing6 t(e "orre"t soution +oud )e t(at t(e pro"eeds o- t(e Insuran"e )e
dei2ered to Cosio6 )ut (er "aim against Paieo s(oud )e "onsidered assigned to t(e insuran"e "ompany +(o is deemed
su)rogated to t(e rig(ts o- Cosio to t(e e5tent o- t(e money paid as indemnity.
7118 G"e!a#i)e *5 CA
/16 SCRA 677
Fact9
A "ontra"t o- group i-e insuran"e +as e5e"uted )et+een 8repai-e and !3P. 8repai-e agreed to insure t(e i2es o-
eigi)e (ousing oan mortgagors o- !3P.
!r. Wi-redo <euterio6 a p(ysi"ian and a (ousing de)tor o- !3P appied -or mem)ers(ip in t(e group i-e insuran"e pan.
In an appi"ation -orm6 !r. <euterio ans+ered Guestions "on"erning (is (eat( stating t(at (e is in good (eat( and (as
ne2er "onsuted a p(ysi"ian -or or a (eart "ondition6 (ig( )ood pressure6 "an"er6 dia)etes6 ung6 *idney or stoma"(
disorder or any ot(er p(ysi"a impairment.
8repai-e issued t(e insuran"e "o2erage o- !r. <euterio6 to t(e e5tent o- (is !3P mortgage inde)tedness amounting to
eig(ty:si5 t(ousand6 t+o (undred (P0$6C%%.%%& pesos.
!r. <euterio died due to Mmassi2e "ere)ra (emorr(age.M ConseGuenty6 !3P su)mitted a deat( "aim to 8repai-e.
8repai-e denied t(e "aim aeging t(at !r. <euterio +as not p(ysi"ay (eat(y +(en (e appied -or an insuran"e
"o2erage and insisted t(at !r. <euterio did not dis"ose t(at (e (ad )een su--ering -rom (ypertension6 +(i"( "aused (is
deat(. Aegedy6 su"( non:dis"osure "onstituted "on"eament t(at Iusti-ied t(e denia o- t(e "aim.
'(e +ido+ o- t(e ate !r. <euterio6 -ied a "ompaint against 8repai-e -or MSpe"i-i" Per-orman"e +it( !amages.M !uring
t(e tria6 !r. 7ernando >eIia6 +(o issued t(e deat( "erti-i"ate6 +as "aed to testi-y. !r. >eIia=s -indings6 )ased party
-rom t(e in-ormation gi2en )y t(e +ido+6 stated t(at !r. <euterio "ompained o- (eada"(es presuma)y due to (ig(
)ood pressure. '(e in-eren"e +as not "on"usi2e )e"ause !r. <euterio +as not autopsied6 (en"e6 ot(er "auses +ere
not rued out.
R'C rued in -a2or o- +ido+ and against 8repai-e. 8repai-e appeaed "ontending t(at t(e +i-e +as not t(e proper
party in interest to -ie t(e suit6 sin"e it is !3P +(o insured t(e i-e o- !r. <euterio.
I&e9 WBN t(e +ido+ is t(e rea party in interest6 (not !3P& and (as ega standing to -ie t(e suit.
He#%9 >ES5
8repai-e aeges t(at t(e "ompaint +as instituted )y t(e +ido+ o- !r. <euterio6 not t(e rea party in interest6 (en"e t(e
tria "ourt a"Guired no Iurisdi"tion o2er t(e "ase. It argues t(at +(en t(e Court o- Appeas a--irmed t(e tria "ourt=s Iudgment6
8repai-e +as (ed ia)e to pay t(e pro"eeds o- insuran"e "ontra"t in -a2or o- !3P6 t(e indispensa)e party +(o +as not
Ioined in t(e suit.
'o reso2e t(e issue6 +e must "onsider t(e insura)e interest in mortgaged properties and t(e parties to t(is type o-
"ontra"t. '(e rationae o- a group insuran"e poi"y o- mortgagors6 ot(er+ise *no+n as t(e Mmortgage redemption insuran"e6M
is a de2i"e -or t(e prote"tion o- )ot( t(e mortgagee and t(e mortgagor. Bn t(e part o- t(e mortgagee6 it (as to enter into
su"( -orm o- "ontra"t so t(at in t(e e2ent o- t(e une5pe"ted demise o- t(e mortgagor during t(e su)sisten"e o- t(e mortgage
"ontra"t6 t(e pro"eeds -rom su"( insuran"e +i )e appied to t(e payment o- t(e mortgage de)t6 t(ere)y reie2ing t(e (eirs
o- t(e mortgagor -rom paying t(e o)igation.
In a simiar 2ein6 ampe prote"tion is gi2en to t(e mortgagor under su"( a "on"ept so t(at in t(e e2ent o- deat(; t(e
mortgage o)igation +i )e e5tinguis(ed )y t(e appi"ation o- t(e insuran"e pro"eeds to t(e mortgage inde)tedness.
ConseGuenty6 +(ere t(e mortgagor pays t(e insuran"e premium under t(e group insuran"e poi"y6 ma*ing t(e oss paya)e
to t(e mortgagee6 t(e insuran"e is on t(e mortgagor=s interest6 and t(e mortgagor "ontinues to )e a party to t(e "ontra"t. In
t(is type o- poi"y insuran"e6 t(e mortgagee is simpy an appointee o- t(e insuran"e -und6 su"( oss:paya)e "ause does not
ma*e t(e mortgagee a party to t(e "ontra"t.
'(e insured pri2ate respondent did not "ede to t(e mortgagee a (is rig(ts or interests in t(e insuran"e6 t(e poi"y
stating t(atJ 52n the event of the debtorHs death before his indebtedness with the +reditor ;FB@< sha have been f!( #aid, an
amo!nt to #a( the o!tstandin) indebtedness sha first be #aid to the creditor and the baance of s!m ass!red, if there is
an(, sha then be #aid to the beneficiar(7ies desi)nated b( the debtor$5 W(en !3P su)mitted t(e insuran"e "aim against
petitioner6 t(e atter denied payment t(ereo-6 interposing t(e de-ense o- "on"eament "ommitted )y t(e insured. '(erea-ter6
!3P "oe"ted t(e de)t -rom t(e mortgagor and too* t(e ne"essary a"tion o- -ore"osure on t(e residentia ot o- pri2ate
respondent
And sin"e a poi"y o- insuran"e upon i-e or (eat( may pass )y trans-er6 +i or su""ession to any person6 +(et(er (e
(as an insura)e interest or not6 and su"( person may re"o2er it +(ate2er t(e insured mig(t (a2e re"o2ered6 1# t(e +ido+
o- t(e de"edent !r. <euterio may -ie t(e suit against t(e insurer6 8repai-e.
As to t(e Guestion o- +(et(er t(ere +as "on"eament6 CA (ed as a--irmed )y t(e SC t(at "ontrary to 8repai-e=s
aegations6 t(ere +as no su--i"ient proo- t(at t(e insured (ad su--ered -rom (ypertension. Aside -rom t(e statement o- t(e
insured=s +ido+ +(o +as not e2en sure i- t(e medi"ines ta*en )y !r. <euterio +ere -or (ypertension6 t(e appeant (ad not
pro2en nor produ"ed any +itness +(o "oud attest to !r. <euterio=s medi"a (istory.
'(e -rauduent intent on t(e part o- t(e insured must )e esta)is(ed to entite t(e insurer to res"ind t(e "ontra"t.
>isrepresentation as a de-ense o- t(e insurer to a2oid ia)iity is an a--irmati2e de-ense and t(e duty to esta)is( su"(
de-ense )y satis-a"tory and "on2in"ing e2iden"e rests upon t(e insurer. In t(e "ase at )ar6 t(e petitioner -aied to "eary and
satis-a"toriy esta)is( its de-ense6 and is t(ere-ore ia)e to pay t(e pro"eeds o- t(e insuran"e
Section 95 I- an insurer assents to t(e trans-er o- an insuran"e -rom a mortgagor to a mortgagee6 and6 at t(e
time o- (is assent6 imposes -urt(er o)igations on t(e assignee6 ma*ing a ne+ "ontra"t +it( (im6 t(e a"ts o- t(e
mortgagor "annot a--e"t t(e rig(ts o- said assignee.
What %oe thi !"o*iion a4'
Under t(is se"tion6 +(ere an insurer assents to t(e trans-er o- an insuran"e -rom a >ortgagor (>or& to a >ortgage
(>ee&6 and at t(e time o- (is assent t(e insurer imposes -urt(er o)igation on t(e >ee6 a ne+ and distin"t "onsideration
passed -rom t(e >ee to t(e insurer6 and a ne+ "ontra"t is "reated )et+een t(em. '(e a"ts o- t(e >or "annot anymore
a--e"t t(e rig(ts o- t(e >ee.
What i the i3ni)icance o) thi !"o*iion'
Remem)er +e said in Se". 0 t(at a a"ts o- t(e mortgagor a--e"ts t(e mortgageeH We6 t(is pro2ision pro2ides t(e
e5"eption to t(e rue.
TITLE III . INSURAELE INTEREST
Section 1-5 E2ery person (as an insura)e interest in t(e i-e and (eat(J
(a& B- (imse-6 o- (is spouse and o- (is "(idren;
()& B- any person on +(om (e depends +(oy in part -or edu"ation or support6 or in +(om (e (as a pe"uniary
interest;
("& B- any person under a ega o)igation to (im -or t(e payment o- money6 or respe"ting property or ser2i"es6
B- +(i"( deat( or iness mig(t deay or pre2ent t(e per-orman"e; and
(d& B- any person upon +(ose i-e any estate or interest 2ested in (im depends.
Wh4 i thi ection i2!o"tant'
Bt(er t(an it dis"usses t(e "on"ept o- keyman insurance6 Atty. Quimsons as*ed t(is in a past mid:term e5am6 as*ing
t(e students to Quote t(e pro2ision.
What i in&"a$#e inte"et'
Insura)e interest is one t(e most )asi" o- a reGuirements in insuran"e. In genera6 a person is deemed to (a2e
insura)e interest in t(e su)Ie"t matter insured +(ere (e (a a reation or "onne"tion +it( or "on"ern in it t(at (e +i deri2e
pe"uniary )ene-it or ad2antage -rom its preser2ation and +i su--er pe"uniary oss or damage -rom its destru"tion6
termination or inIury )y t(e (appening o- t(e e2ent insured against.
INSURANCE REVIEWER Atty. Quimson page C#
Wh4 2&t the"e $e an in&"a$#e inte"et'
It is essentia -or 2aidity and en-or"ea)iity o- t(e "ontra"t or poi"y. A poi"y issued to a person +it(out interest in t(e
su)Ie"t matter is a mere +ager poi"y or "ontra"t.
When i the"e in&"a$#e inte"et in #i)e in&"ance'
In i-e insuran"e6 Insura)e interest e5ists +(ere t(ere is reasona)e ground -ounded on t(e reations o- t(e parties
+(et(er pe"uniary6 "ontra"tua or )y )ood or a--inity6 and to e5pe"t some )ene-it or ad2antage -rom t(e "ontinuan"e o- t(e
i-e o- t(e insured.
P"o$#e25
' takes an ins!rance #oic( on his ife and names his friend K as beneficiar(, and another ins!rance on the ife of ? in
consideration of Dove and affection4 with ' as a beneficiar($ -hich of the two ins!rances, if an(, is vaid and which, if an(,
is void>
'(e Insuran"e ta*en on A on (is i-e is VA<I!6 )e"ause t(e )ene-i"iary need not (a2e an insura)e interest in t(e i-e o-
t(e insured. It must )e t(e one insuring +(o (as an insura)e interest in t(e i-e o- t(e person (e is insuring6 and o- "ourse6 it
goes +it(out saying t(at one (as an insura)e interest in (is o+n i-e and (eat(.
BN t(e ot(er (and6 t(e insuran"e ta*en )y A on t(e i-e o- A is VBI! )e"ause ,o2e and a--e"tion -or t(e insured1 n t(e
part o- t(e person insuring is NB' su--i"ient ground to Guai-y as insura)e interest.
Cae9
7168 Co#5 C5 Cat"o *5 In&"ance Co22iione"
GR5 11,/6C Fe$5 16C 19,1
Fact9
Castro appied -or insuran"e on t(e i-e o- (is dri2er. Bn t(e )asis o- su"( appi"ation6 Insuar <i-e issued poi"y No.
.9#.#9 e--e"ti2e Euy 106 1./..
'(e poi"y appied -or and issued +as on a C%:yr endo+ment pan -or t(e sum o- PCF' +it( dou)e indemnity in "ase o-
a""identa deat(.
Castro paid t(e -irst Guartery premium o- P9%...F. A)out 9 mont(s ater6 on B"t. 1$6 1.F.6 t(e insured dri2er +as
aegedy s(ot to deat( )y un*no+n persons. ((mmmP sounds -is(yP&
Castro t(en -ied a "aim -or t(e tota )ene-its o- F%' under t(e poi"y.
Insuar i-e denied t(e "aim on t(e ground t(at t(e poi"y +as VBI!. Insuar instead re-unded to Castro t(e premiums
(e (ad paid.
I&e9 WBN Castro (as an insura)e interest in (is dri2er.
He#%9 NO5
'(e reGuirement o- insura)e interest to support a "ontra"t o- insuran"e is )ased upon "onsideration o- pu)i" poi"y
+(i"( renders +ager poi"ies INVA<I!. 'o sustain a "ontra"t o- t(is "(ara"ter it must appear t(at t(ere is a rea "on"ern in
t(e i-e o- t(e party +(ose deat( +oud )e t(e "ause o- su)stantia oss to t(ose +(o are named as a )ene-i"iary.
>ere reations(ip o- un"e and nep(e+6 e2!#o4e" an% e2!#o4ee is NB' su--i"ient to pro2ide an insura)e interest on
t(e i-e o- t(e insured. It must )e s(o+n t(at t(e destru"tion o- t(e i-e o- t(e insured +oud "ause pe"uniary oss to t(e
"ompainant. '(is6 Castro -aied to pro2e.
7178 Linco#n Nationa# Li)e *5 San I&an
CA GR /01,,+,,C No*5 67C 1971
Fact9
An empoyer insured t(e i-e o- t(e empoyee +it( t+o insuran"e "ompanies.
'(e insuran"e totaed C%%' and t(e ony )ene-i"iaries +ere t(e empoyer and (is +i-e.
A se2ered (ead +as ater -ound6 purportedy t(at o- t(e insured empoyee.
'(e insuran"e "ompanies re-used to pay on t(e ground t(at t(e empoyer (ad no insura)e interest in t(e i-e o- t(e
empoyee.
INSURANCE REVIEWER Atty. Quimson page CF
I&e9 WBN t(e empoyer "an re"o2er t(e pro"eeds o- a i-e insuran"e poi"y o- (is empoyee.
He#%5 NOPE5
'(e insured +as a tenant in a "o"onut and o+ned )y t(e empoyer and (is earning +ere )arey t(at o- a -arm a)orer.
It +as esta)is(ed t(at t(e insured "oud not (a2e a--orded t(e insuran"e poi"ies dra+n on (is i-e. >any more poi"ies +ere
-ound to (a2e )een issued +it( t(e empoyeeKtenant as insured and t(e empoyer and (is +i-e as )ene-i"iaries.
'(e poi"ies +ere aso -ound to (a2e )een a"Guired in Gui"* su""ession. It +as -ound t(at t(e 2arious posta money
orders issued in payment o- t(e premiums +ere made )y t(e empoyer. It appears t(at6 )ased on t(e "ir"umstan"es and
e2iden"e6 t(e insuran"e +as reay ta*en out )y t(e empoyer.
71,8 Ge"cio *5 S&n Li)e
0, PHIL 1/
Fact9
Suni-e issued a i-e insuran"e poi"y to 8er"io6 t(e -ormer agreeing to insure t(e i-e o- 8er"io -or C' to )e paid to (im
on @e). 16 1.9% or i- (e s(oud die )e-ore said date6 t(en to (is +i-e Andrea6 s(oud s(e sur2i2e (im; ot(er+ise to t(e
e5e"utor6 administrator o- 8er"io.
'(e poi"y did not in"ude any pro2ision reser2ing to 8er"io t(e rig(t to "(ange t(e )ene-i"iary.
'(e +i-e +as "on2i"ted o- adutery and a de"ree o- di2or"e +as issued.
8er"io noti-ied Suni-e t(at (e (ad re2o*ed (is donation in -a2or o- Andrea and t(at (e (ad designated (is present +i-e
Adea as (is )ene-i"iary.
Suni-e re-used to "(ange t(e )ene-i"iary.
I&e9 WBN 8er"io may "(ange t(e )ene-i"iary in t(e poi"y.
He#%5 NO5
I- t(e poi"y "ontains no pro2ision aut(ori4ing a "(ange o- )ene-i"iary +it(out t(e )ene-i"iary=s "onsent6 t(e insured
"annot ma*e su"( "(ange. It is (ed t(at a i-e insuran"e poi"y o- a (us)and made paya)e to (is +i-e as a )ene-i"iary is
t(e separate property o- t(e )ene-i"iary and )eyond t(e "ontro o- t(e (us)and. (NB'EJ t(is "ase is )ased on t(e od rue
under t(e Insuran"e A"t&
Court aso (ed t(at t(e designation o- a )ene-i"iary t(at is originay 2aid does NB' render it in2aid dut to a
su)seGuent "essation o- t(e interests )et+een t(e )ene-i"iary and insured.
7198 E# O"iente *5 Poa%a
16 PHIL 107 719/18
Fact9
E Briente in order to prote"t itse- against t(e oss t(at it mig(t su--er )y reason o- t(e deat( o- its manager6 A.
Ve(agen6 +(o (ad (ad more t(an t(irty:-i2e (9F& years o- e5perien"e in t(e manu-a"ture o- "igars in t(e P(iippines6
pro"ured -rom t(e >anu-a"turers <i-e Insuran"e Co.6 o- 'oronto6 Canada6 t(ru its o"a agent E. E. Eser6 an insuran"e
poi"y on t(e i-e o- t(e said A. Ve(agen -or t(e sum o- QF%6%%%6 United States "urren"y designating itse- as t(e
)ene-i"iary.
E Briente paid -or t(e premiums due t(ereon and "(arged as e5penses o- its )usiness a t(e said premiums and
dedu"ted t(e same -rom its gross in"omes as reported in its annua in"ome ta5 returns6 +(i"( dedu"tions +ere ao+ed
upon a s(o+ing t(at su"( premiums +ere egitimate e5penses o- its )usiness.
Upon t(e deat( o- A. Ve(agen in 1.C.6 t(e E Briente re"ei2ed a t(e pro"eeds o- t(e said i-e insuran"e poi"y6
toget(er +it( t(e interests and t(e di2idends a""ruing t(ereon6 aggregating P1%#6.F/.00
CIR assessed E Briente -or de-i"ien"y ta5es )e"ause E Briente did not in"ude as in"ome t(e pro"eeds re"ei2ed -rom
t(e insuran"e.
I&e9 WBN t(e pro"eeds o- insuran"e ta*en )y a "orporation on t(e i-e o- an important o--i"ia to indemni-y it against oss
in "ase o- (is deat(6 are ta5a)e as in"ome under t(e P(iippine In"ome 'a5 <a+
He#%9 NOT TAJAELE5
In C(apter I o- t(e 'a5 Code6 is to )e -ound se"tion # +(i"( pro2ides t(at6 M*he foowin) incomes sha be e&em#t from
the #rovisions of this aw8 (a) *he #roceeds of ife ins!rance #oicies #aid to beneficiaries !#on the death of the ins!red $ $ $ M
Se"tion 1%6 as amended6 in C(apter II Bn Corporations6 pro2ides t(at6 M*here sha be evied, assessed, coected, and #aid
ann!a( !#on the tota net income received in the #recedin) caendar (ear from a so!rces b( ever( cor#oration $ $ $a ta& of
INSURANCE REVIEWER Atty. Quimson page C$
three #er cent!m !#on s!ch income $ $ .M Se"tion 11 in t(e same "(apter6 pro2ides t(e e5emptions under t(e a+6 )ut neit(er
(ere nor in any ot(er se"tion is re-eren"e made to t(e pro2isions o- se"tion # in C(apter I.
Under t(e 2ie+ +e ta*e o- t(e "ase6 it is su--i"ient -or our purposes to dire"t attention to t(e anomaous and 2ague
"ondition o- t(e a+. It is "ertain t(at t(e pro"eeds o- i-e insuran"e poi"ies paid to indi2idua )ene-i"iaries upon t(e deat( o-
t(e insured are e5empt. It is not so "ertain t(at t(e pro"eeds o- i-e insuran"e poi"ies paid to "orporate )ene-i"iaries upon
t(e deat( o- t(e insured are i*e+ise e5empt. 3ut at east6 it may )e said t(at t(e a+ is inde-inite in p(raseoogy and does
not permit us uneGui2o"ay to (od t(at t(e pro"eeds o- i-e insuran"e poi"ies re"ei2ed )y "orporations "onstitute in"ome
+(i"( is ta5a)e
It +i )e re"aed t(at E Briente6 too* out t(e insuran"e on t(e i-e o- its manager6 +(o (ad (ad more t(an t(irty:-i2e
yearsL e5perien"e in t(e manu-a"ture o- "igars in t(e P(iippines6 to prote"t itse- against t(e oss it mig(t su--er )y reason o-
t(e deat( o- its manager. We do not )eie2e t(at t(is -a"t signi-ies t(at +(en t(e painti-- re"ei2ed P1%#6.F/.00 -rom t(e
insuran"e on t(e i-e o- its manager6 it t(ere)y reai4ed a net pro-it in t(is amount. It is true t(at t(e In"ome 'a5 <a+6 in
e5empting indi2idua )ene-i"iaries6 spea*s o- t(e pro"eeds o- i-e insuran"e poi"ies as in"ome6 )ut t(is is a 2ery sig(t
indi"ation o- egisati2e intention. In reaity6 +(at t(e painti-- re"ei2ed +as in t(e nature o- an indemnity -or t(e oss +(i"( it
a"tuay su--ered )e"ause o- t(e deat( o- its manager.
76-8 Phi#a2ca"e *5 CA (repeat Case O %.&
/79 SCRA /16
Fact9
disa)iity.
I&e an% Reo#&tion9
INSURANCE REVIEWER Atty. Quimson page C/
mentioned;
Section 115 '(e insured s(a (a2e t(e rig(t to "(ange t(e )ene-i"iary (e designated in t(e poi"y6 uness (e
(as e5pressy +ai2ed (is rig(t in t(e said poi"y.
What i a $ene)icia"4'
A )ene-i"iary is a person +(et(er natura or Iuridi"a -or +(ose )ene-it t(e poi"y is issued and is t(e re"ipient o- t(e
pro"eeds in t(e insuran"e.
Who can $e a $ene)icia"4'
Any person in genera "an )e a )ene-i"iary.
A"e the"e an4 e@ce!tion'
Aes. '(e ony persons disGuai-ied -rom )eing a )ene-i"iary are t(ose not Guai-ied to re"ei2e donations under Art. /9..
'(ey "annot )e named )ene-i"iaries o- a i-e insuran"e poi"y )y t(e person +(o "annot ma*e any donation to (im.
In cae o) a%&#te"4C conc&$ina3e %oe the %i=&a#i)ication e@ten% to the i##e3iti2ate chi#%"en'
NB. '(e disGuai-i"ation does not e5tend to t(e "(idren6 and as su"(6 t(ey may )e made )ene-i"iaries.
What i the o#% "&#e "e3a"%in3 "e*oca$i#it4 o) %ei3nation o) $ene)icia"4 a en&nciate% in the cae o) Ge"cio *5
S&n#i)e'
'(e B<! rue isJ W(en t(e insured did NB' e5pressy reser2e (is rig(t to re2o*e t(e designation o- (is )ene-i"iary6
su"( designation is irre2o"a)e and (e "annot "(ange (is )ene-i"iary +it(out t(e "onsent o- t(e atter.
What i the c&""ent "&#e'
'(e rue no+ isJ '(e insured (as t(e po+er to re2o*e t(e designation o- t(e )ene-i"iary e2en +it(out t(e "onsent o- t(e
atter6 +(et(er or not su"( po+er is reser2ed in t(e poi"y. Su"( rig(t must )e e5er"ised spe"i-i"ay in t(e manner set -ort(
in t(e poi"y or "ontra"t. It is o- "ourse6 e5tinguis(ed at (is deat( and CANNB' )e e5er"ised )y (is persona
representati2es or assignees.
Un%e" the c&""ent "&#eC (hen %oe the in&"e% #oe the "i3ht to chan3e the $ene)icia"4'
W(en t(e rig(t to "(ange t(e )ene-i"iary is e5pressy +ai2ed in t(e poi"y6 t(e insured (as no po+er to ma*e su"(
"(ange +it(out t(e "onsent o- t(e )ene-i"iary.
What i) the $ene)icia"4 %ie $e)o"e the in&"e% an% the in&"e% %i% not chan3e the %ei3nationC (ho 3et the
!"ocee%'
'(ere is a di2ergen"e o- opinion6 )ut t(e genera trend is to gi2e it to t(e estate of the beneficiary.
What a"e the othe" !"o*iion o) #a( that Att45 :&i2on "e=&i"e% & to "ea%'
A"t5 6-16C CC. Any person +(o is -or)idden -rom re"ei2ing any donation under Art. /9. "annot )e named a )ene-i"iary
o- a i-e insuran"e poi"y )y t(e person +(o "annot ma*e any donation to (im6 a""ording to said arti"e.
A"t5 7/9. '(e -oo+ing donations s(a )e 2oidJ
(1& '(ose made )et+een persons +(o +ere guity o- adutery or "on"u)inage at t(e time o- t(e donation;
(C& '(ose made )et+een persons -ound guity o- t(e same "rimina o--ense6 in "onsideration t(ereo-;
(9& '(ose made to a pu)i" o--i"er6 or (is +i-e6 des"endants and as"endants )y reason o- (is o--i"e.R
L'tt($ M!imson said that the desi)nation of the #!bic officer MNS* be b( reason of his office and /.* a #!bic officers are
dis3!aified from bein) beneficiaries of a ife ins!rance #oic(, as on) as the desi)nation was not made in consideration of
an act done b( the #!bic officer b( reason of his office in favor of the ins!red$
A"t5 0/C FC. '(e termination o- su)seGuent marriage produ"es t(e -oo+ing e--e"tsJ
555.
(#& '(e inno"ent spouse may re2o*e t(e designation o- t(e ot(er spouse +(o a"ted in )ad -ait( as a )ene-i"iary in any
insuran"e poi"y e2en i- su"( designation )e stipuated as irre2o"a)e.
A"t5 60C FC. A-ter t(e -inaity o- t(e de"ree o- ega separation6 t(e inno"ent spouse may re2o*e t(e designation o- t(e
o--ending spouse as )ene-i"iary in any insuran"e poi"y. '(e re2o"ation o- or "(ange in t(e designation o- t(e insuran"e
)ene-i"iary s(a ta*e e--e"t upon +ritten noti-i"ation to t(e insured.
A"t5 1-C FC. '(e e--e"ts pro2ided -or )y paragrap( (#& o- Art. #9 555 s(a aso appy in t(e proper "ases to marriages
+(i"( are de"ared 2oid a) initio or annued )y -ina Iudgment under Art. #% ? #F.
P"o$#e25
@ao and Jane are h!sband and wife$ Jef and Jo"o are aso h!sband and wife ((iheeO)$ Jef and Jane en)a)ed in
ad!tero!s reations$ Jef sec!red a ife ins!rance #oic( and named Jane as beneficiar($ -hen Jef dies, who wi )et the
ins!rance #roceeds>
INSURANCE REVIEWER Atty. Quimson page C.
EoIo. Eane "annot )e named as a )ene-i"iary in a i-e insuran"e poi"y )e"ause s(e is -or)idden )y a+ to re"ei2e a
donation -rom Ee- sin"e t(ey +ere )ot( guity o- adutery.
@ao and Jane are h!sband and wife$ Jef and Jo"o are aso h!sband and wife$ Jane en)a)ed in ad!tero!s reaions with
Pan$ Jef sec!red a ife ins!rance and named Jane as beneficiar($ -hen Jef dies, who wi )et the ins!rance #roceeds>
Eane. '(e a+ pro(i)its t(e situation +(erein a person +(o is -or)idden -rom re"ei2ing a donation under Art. /9. is
named a )ene-i"iary o- a i-e insuran"e poi"y )y t(e person +(o "annot ma*e any donation to (im6 a""ording to said arti"e.
In ot(er +ords6 not+it(standing t(e -a"t t(at Eane is guity o- adutery6 Eane "an sti )e a )ene-i"iary o- Ee- sin"e t(e a+
pro2ides t(at Eane "annot )e a )ene-i"iary o- a i-e insuran"e poi"y i- t(e person +(o names (er as )ene-i"iary is -or)idden
to gi2e (er a donation under Art. /9.. Art. /9. is t(ere-ore not appi"a)e in t(e situation at )ar.
@ao and Jane are h!sband and wife$ Jef and Jo"o are aso h!sband and wife$ Jef has a conc!bine named Ma!i *a(or$ Jef
thereafter sec!red a ife ins!rance #oic( and named Jane as beneficiar($ -hen Jef dies, who wi )et the ins!rance
#roceeds>
Eane. '(e a+ ony pro(i)its t(e situation +(erein a person +(o is -or)idden -rom re"ei2ing a donation under Art. /9. is
Not+it(standing t(at Ee- is guity o- "on"u)inage6 Eane "an sti )e a )ene-i"iary. Sin"e Eane is not t(e "on"u)ine6 Art. /9.
+i not appy and Ee- is not -or)idden -rom gi2ing a donation to Eane.
@ao and Jane are h!sband and wife$ Jef and Jo"o are aso h!sband and wife$ Jane en)a)es in ad!tero!s reations with
Pan$ Jef has a conc!bine named Ma!i *a(or$ Jef thereafter sec!res a ife ins!rance #oic( and names Jane as a
beneficiar($ -henJef dies, who wi )et the ins!rance #roceeds>
Eane. '(e a+ ony pro(i)its t(e situation +(erein a person +(o is -or)idden -rom re"ei2ing a donation under Art. /9. is
Not+it(standing t(at )ot( parties are guity o- adutery and "on"u)inage respe"ti2ey6 t(ey are not -or)idden )e"ause Ee- is
not t(e one engaged in an aduterous reations(ip +it( Eane6 and s(e is not t(e "on"u)ine o- Ee-. Art. /9. does not appy.
@ao and Jane are h!sband and wife$ Jef and Jo"o are aso h!sband and wife$ Jef and @ao become overs$ Jef thereafter
sec!res a ife ins!rance #oic( and names @ao as his beneficiar($ -hen Jef dies who wi )et the ins!rance #roceeds>
Pao. Sin"e t(ere is no a+ pro(i)iting Ee- -rom donating to Pao6 )e"ause )ot( o- t(em are neit(er guity o- adutery nor
"on"u)inage6 t(en t(e ony soution to t(is pro)em is to "onsider t(e designation o- t(e )ene-i"iary as a "ontra"t +(i"( is
2aid and )inding )et+een t(e insurer and t(e insured.
Fiscaimer8 'n( resembance to rea and ivin) #ersons are #!re( coincidenta$ =ahahaha$$ ri)ht$
Cae5
7618 In&#a" Li)e *5 E$"a%o (re#eated case Q case R0)
,- SCRA 1,1
Fact9
3uena2entura E)rado +as issued )y Insuar <i-e Assuran"e Co. a +(oe i-e pan -or PF600C.%% +it( a rider -or
A""identa !eat( 3ene-its -or t(e same amount.
E)rado designated Carponia E)rado as t(e re2o"a)e )ene-i"iary in (is poi"y6 re-erring to (er as (is +i-e.
E)rado died +(en (e +as a""identay (it )y a -aing )ran"( o- tree.
Insurer )y 2irtue o- t(e "ontra"t +as ia)e -or 116/#F./96 and Carponia -ied (er "aim6 at(oug( s(e admitted t(at s(e
and t(e insured +ere merey i2ing as (us)and and +i-e +it(out t(e )ene-it o- marriage.
Pas"uaa E)rado aso -ied (er "aim as t(e +ido+ o- t(e de"eased insured.
Insuar i-e -ied an interpeader "ase and t(e o+er "ourt -ound in -a2or o- Pas"uaa.
I&e9 3et+een Carponia and Pas"uaa6 +(o is entited to t(e pro"eedsH
He#%9 Pac&a#a5
It is Guite un-ortunate t(at t(e Insuran"e A"t or our o+n Insuran"e Code does not "ontain a spe"i-i" pro2ision grossy
resoutory o- t(e prime Guestion at (and. Rat(er6 t(e genera rues o- "i2i a+ s(oud )e appied to reso2e t(is 2oid in t(e
insuran"e a+. Art. C%11 o- t(e NCC statesJ *he contract of ins!rance is )overned b( s#ecia aws$ Matters not e&#ress(
#rovided for in s!ch s#ecia aws sha be re)!ated b( this +ode$ W(en not ot(er+ise spe"i-i"ay pro2ided -or in t(e
insuran"e a+6 t(e "ontra"t o- i-e insuran"e is go2erned )y t(e genera rues o- "i2i a+ reguating "ontra"ts.
Under Art. C%1C6 NCCJ 'n( #erson who is forbidden from receivin) an( donation !nder 'rt$ ,39 cannot be named
beneficiar( of a ife ins!rance #oic( b( a #erson who cannot make an( donation to him, accordin) to said artice. Under Art.
/9.6 donations )et+een persons +(o +ere guity o- adutery or "on"u)inage at t(e time o- t(e donation s(a )e 2oid.
In essen"e6 a i-e insuran"e poi"y is no di--erent -rom "i2i donations inso-ar as t(e )ene-i"iary is "on"erned. 3ot( are
-ounded on t(e same "onsideration o- i)eraity. A )ene-i"iary is i*e a donee )e"ause -rom t(e premiums o- t(e poi"y +(i"(
t(e insured pays6 t(e )ene-i"iary +i re"ei2e t(e pro"eeds or pro-its o- said insuran"e. As a "onseGuen"e6 t(e pros"ription in
Art. /9. s(oud eGuay operate in i-e insuran"e "ontra"ts.
'(ere-ore6 sin"e "ommon:a+ spouses are )arred -rom re"ei2ing donations6 t(ey are i*e+ise )arred -rom re"ei2ing
pro"eeds o- a i-e insuran"e "ontra"t.
7668 So&the" L&Fon E2!#o4eeK Aociation *5 Go#!eo
96 PHIL ,/
Fact9
S<EA is "omposed o- a)orers and empoyees o- t(e <'3C and 3'C (no+ 3<'3 Co.&6 and one o- its purposes is mutua
aid o- its mem)ers and t(eir dependents in "ase o- deat(.
Roman Con"ep"ion +as a mem)er unti (is deat( in 1.F%.
In 1.#.6 S<EA adopted a resoution pro2iding t(atJ ' member ma(, if he chooses, #!t down his common aw wife
and7or chidren he had with her as his beneficiaries9 and s!ch #erson so named b( the member wi be the soe #ersons
to be reco)ni6ed b( SEI' re)ardin) caims for condoence contrib!tions$
Roman isted as (is )ene-i"iaries AGuiina >aoes and t(eir # "(idren. A-ter (is deat(6 S<EA +as a)e to "oe"t
2ountary "ontri)ution -rom its mem)ers amounting to PC6C%F.
'(ree sets o- "aimants to t(e amount presented t(emse2es to t(e asso"iation nameyJ
o Euanita 8opeo6 ega +i-e6 and (er "(idren
o AGuiina >aoes6 t(e "ommon a+ +i-e6 and (er "(idren
o Esie 7i")an6 anot(er "ommon a+ +i-e o- Roman6 and (er "(id.
S<EA t(en -ied an a"tion -or interpeader against t(e 9 "on-i"ting "aimants.
'ria "ourt rendered a de"ision de"aring >aoes and (er "(idren t(e soe )ene-i"iaries o- t(e amount "iting !e Va 2.
!e Va.
Bny 8opeo appeaed. S(e argues t(atJ
o '(e insuran"e "ode does not appy sin"e t(e asso"iation is not an insuran"e "ompany )ut a mutua )ene-it
asso"iation.
o '(e stipuation )et+een S<EA and Roman +as 2oid -or )eing "ontrary to a+6 pu)i" moras and pu)i" poi"y6
pursuant to Art. /9. o- t(e CC ( donations )et+een persons guity o- "on"u)inage at t(e time o- donation are
2oid&
I&e9 WBN 8opeo6 t(e ega +i-e is entited to t(e amount.
He#%9 NO5
@irst o- a6 t(e o+er "ourt did not "onsider t(e asso"iation as a reguar insuran"e "ompany6 )ut merey rued t(at t(e
deat( )ene-it in Guestion is anaogous to insuran"e. 3esides6 e2en t(e Administrati2e Code des"ri)es a mutua )ene-it
"ompany as one +(i"( pro2ides any met(od o- i-e insuran"e among its mem)ers out o- dues or assessments "oe"ted -rom
its mem)ers(ip.
Se"ondy6 +it(out "onsidering t(e intimation in t(e )rie- -or >aoes t(at 8opeo6 )y (er sien"e and a"tions (ad
a"Guies"ed in t(e ii"it reations )et+een (er (us)and and >aoes6 8opeo=s argument +oud "ertainy NB' appy to t(e
"(idren o- >aoes i*e+ise named )ene-i"iaries )y t(e de"eased. As a matter o- -a"t6 t(e NCC re"ogni4es "ertain
su""essiona rig(ts o- iegitimate "(idren.
76/8 Na"io *5 Phi#a2#i)e In&"ance Co2!an4
6- SCRA 0/0
Fact9
>rs. Nario appied -or and +as issued a i-e Insuran"e poi"y (no. F%9$1/& )y P7I<A><I@E under a C%:yr endo+ment
pant6 +it( a -a"e 2aue o- F'. 7er (us)and !e-in and t(eir uneman"ipated son Ernesto +ere (er re2o"a)e
)ene-i"iaries.
>rs. Nario t(en appied -or a oan on t(e a)o2e poi"y +it( P7I<A><I@E +K" s(e is entited to as poi"y (oder6 a-ter t(e
poi"y (as )een in -or"e -or 9 years. '(e purpose o- su"( oan +as -or t(e s"(oo e5penses o- Ernesto.
'(e appi"ation )ore t(e +ritten signature and "onsent o- !e-in in C "apa"ities
o As one o- t(e irre2o"a)e )ene-i"iaries o- t(e poi"y
o As -at(er:guardian o- Ernesto and aso t(e ega administrator o- t(e minor=s properties pursuant to Art. 9C% o-
t(e CC.
P7I<A><I@E denied t(e oan appi"ation "ontending t(at +ritten "onsent o- t(e minor son must not ony )e gi2en )y (is
-at(er as ega guardian )ut it must aso )e aut(ori4ed )y t(e "ourt in a "ompetent guardians(ip pro"eeding.
>rs. Nario t(en signi-ied (er de"ision to surrender (er poi"y and demand its "as( 2aue +(i"( t(en amounted to P FC%.
P7I<A><I@E aso denied t(e surrender o- t(e poi"y on t(e same ground as t(at gi2en in disappro2ing t(e oan
appi"ation.
>rs. Nario sued P7I<A><I@E praying t(at t(e atter grant t(eir oan appi"ation andKor a""ept t(e surrender o- said
poi"y in e5"(ange -or its "as( 2aue.
P7I<A><I@E "ontends t(at t(e oan appi"ation and t(e surrender o- t(e poi"y in2o2ed a"ts o- disposition and
aienation o- t(e property rig(ts o- t(e minor6 said a"ts are not +it(in t(e po+er o- administrator granted under Art. 9C%
in reation to art. 9C$ CC6 (en"e "ourt aut(ority is reGuired.
I&e9 WBN P7I<A><I@E +as Iusti-ied in re-using to grant t(e oan appi"ation and t(e surrender o- t(e poi"y.
He#%9 >ES5
SC agreed +it( t(e tria "ourt t(at t(e 2ested interest or rig(t o- t(e )ene-i"iaries in t(e poi"y s(oud )e measured on its
-u -a"e 2aue and not on its "as( surrender 2aue6 -or in "ase o- deat( o- t(e insured6 said )ene-i"iaries are paid on t(e
)asis o- its -a"e 2aue and in "ase t(e insured s(oud dis"ontinue paying premiums6 t(e )ene-i"iaries may "ontinue paying it
and are entited to automati" e5tended term or paid:up insuran"e options and t(at said 2ested rig(t under t(e poi"y "annot
)e di2isi)e at any gi2en time.
SC aso agreed +it( 'C t(at t(e said a"ts (oan app and surrender& "onstitute a"ts o- disposition or aienation o-
property rig(ts and not merey management or administration )e"ause t(ey in2o2e t(e in"urring or termination o- "ontra"tua
o)igations.
Under t(e a+s (CC and rues o- Court& '(e -at(er is "onstituted as t(e minor=s ega administrator o- t(e propty6 and
+(en t(e propty o- t(e "(id is +ort( more t(an PC' (as in t(e "ase at )ar6 t(e minor=s propty +as +ort( C6F%% (is S s(are
as )ene-i"iary&6 t(e -at(er a must -ie a petition -or guardians(ip and post a guardians(ip )ond. In t(e "ase at )ar6 t(e -at(er
did not -ie any petition -or guardians(ip nor post a guardians(ip )ond6 and as su"( "annot possi)y e5er"ise t(e po+ers
2ested on (im as ega administrator o- t(e minor=s property. '(e "onsent gi2e -or and in )e(a- o- t(e son +it(out prior "ourt
aut(ori4ation to t(e oan appi"ation and t(e surrender +as insufficient and ineffective and P7I<A><I@E +as Iusti-ied in
disappro2ing t(e said appi"ations.
Assuming t(at t(e propty o- t(e +ard +as ess t(an C'6 t(e e--e"t +oud )e t(e same6 sin"e t(e parents +oud ony )e
e5empted -rom -iing a )ond and Iudi"ia aut(ori4ation6 )ut t(eir a"ts as ega administrators are ony imited to a"ts o-
management or administration and not to a"ts o- en"um)ran"e or disposition.
7608 Vi##an&e*a *5 O"o
,1 PHIL 060
Fact9
West Coast <i-e Insuran"e Company issued t+o poi"ies o- insuran"e on t(e i-e o- Esperan4a Vianue2a6 one -or C'6
maturing Apri 16 1.#9; and ot(er -or 9' maturing >ar. 916 1.#9.
In )ot( poi"ies6 West agreed to pay C' eit(er to Esperan4a i- sti i2ing on Apr 16 1.#9; or to )ene-i"iary 3artoome
Vianue2a6 or t(e -at(er o- t(e insured immediatey upon re"eipt o- t(e proo- o- deat( o- Esperan4a.
'(e poi"y aso ga2e (er t(e rig(t to "(ange t(e )ene-i"iary.
In 1.#%6 3artoome died6 and (e +as su)stituted as )ene-i"iary under t(e poi"ies )y >ariano6 Esparan4a=s )rot(er.
Esperan4a died in 1.## +it(out (a2ing "oe"ted t(e insuran"e pro"eeds. Ad2erse "aims -or t(e pro"eeds +ere
presented )y t(e estate o- Esperan4a on one (and and )y >ariano on t(e ot(er.
C@I (ed t(at t(e estate o- Esperan4a +as entited to t(e pro"eeds to t(e e5"usion o- t(e )ene-i"iary.
I&e9 WBN t(e )ene-i"iary is entited to t(e pro"eeds.
He#%9 NO5
Under t(e poi"ies6 t(e insurer o)igated itse- to pay t(e insuran"e pro"eeds toJ (1& t(e insured i- t(e atter i2ed on t(e
dates o- maturity; or (C& t(e )ene-i"iary i- t(e insured died during t(e "ontinuan"e o- t(e poi"ies. '(e -irst "ontingen"y
e5"udes t(e se"ond6 and 2i"e 2ersa. In ot(er +ords6 as t(e insured Esperan4a +as i2ing on Apri 1 and >ar"( 916 1.#96
t(e pro"eeds are paya)e e5"usi2ey to (er or to (er estate uness s(e (ad )e-ore (er deat( ot(er+ise assigned t(e
matured poi"ies.
'(e )ene-i"iary "oud )e entited to said pro"eeds ony in de-aut o- t(e -irst "ontingen"y. 'o sustain t(e )ene-i"iary=s
"aim +oud )e to atoget(er eiminate -rom t(e poi"ies t(e "ondition t(at t(e insurer ,agrees to pay to t(e insured i- i2ing.1
'(is "on"usion taies +it( Ameri"an Aut(orities +(o say t(atJ '(e interest o- t(e insured in t(e pro"eeds o- t(e
insuran"e depends upon (is sur2i2a o- t(e e5piration o- t(e endo+ment period. Upon t(e insured=s deat(6 +it(in t(e period6
t(e )ene-i"iary +i ta*e6 as against t(e persona representati2es t(e endo+ment period6 t(e )ene-its are paya)e to (im or to
(is assignee6 not+it(standing a )ene-i"iary is designated in t(e poi"y. (AmEur and Cou"( Cy"opedia o- Insuran"e <a+&
7618 Phi#a2#i)e *5 Pine%a
171 SCRA 016
Fact9
Bn Ean. 1F 1.$96 !imayuga pro"essed an ordinary i-e insuran"e poi"y -rom P(iami-e and designated (is +i-e and
"(idren as irre2o"a)e )ene-i"iaries.
Bn @e). CC6 1.0%6 !imayuga -ied a petition in "ourt to amend t(e designation o- t(e )ene-i"iaries in (is poi"y -rom
irre2o"a)e to re2o"a)e.
<o+er Court granted t(e petition.
I&e9 WBN t(e "ourt erred in granting !imayuga=s petition.
He#%9 >ES5
Under t(e Insuran"e A"t6 t(e )ene-i"iary designated in a i-e insuran"e "ontra"t "annot )e "(anged +it(out t(e "onsent
o- t(e )ene-i"iary )e"ause (e (as a 2ested interest in t(e poi"y. '(e poi"y "ontra"t states t(at t(e designation o- t(e
)ene-i"iaries is irre2o"a)e. '(ere-ore6 )ased on t(e said pro2ision o- t(e "ontra"t6 not to mention t(e a+ t(en appi"a)e6 it
is ony +it( t(e "onsent o- a t(e )ene-i"iaries t(at any "(ange or amendment in t(e poi"y may )e egay and 2aidy
e--e"ted. '(e "ontra"t )et+een t(e parties is t(e a+ )inding on t(em. (*his case r!e is no on)er controin) !nder the
2ns!rance +ode$)
7668 SSS *5 Da*ao
17 SCRA ,6/
Fact9
!a2a" +as an SSS mem)er6 and designated Candearia !a2a"6 (is aeged +i-e6 as (is )ene-i"iary.
W(en (e died6 )ot( (is -irst +i-e6 <ourdes and (is se"ond +i-e6 Candearia -ied "aims -or t(e deat( )ene-its.
!ue to t(e "on-i"ting "aims6 t(e SSS -ied a petition praying t(at )ot( o- t(em )e reGuired to interpead and itigate t(e
"on-i"ting "aims.
'(e deat( )ene-its +ere a+arded to Candearia !a2a".
I&e9 W(o is entited to t(e SSS )ene-itsH
He#%9 Can%e#a"ia5
Under t(e SSS A"t6 t(e )ene-i"iary as re"orded )y t(e empoyee=s empoyer is t(e one entited to t(e deat( )ene-its6
(en"e t(ey s(oud go to Candearia. <ourdes "ontends t(at t(e designation made in t(e person o- Candearia +(o is party
in a )igamous marriage is nu and 2oid -or )eing against Art. /9. o- t(e CC. SC (ed t(at t(e disGuai-i"ation mentioned in
Art. /9. is NB' appi"a)e to Candearia6 )e"ause s(e +as not guity o- "on"u)inage 6 t(ere )ieing NB proo- t(at s(e (ad
a"tua *no+edge o- t(e pre2ious marriage o- (er (us)and.
7678 In Re9 ?a"io Chan#ion3co
79 SCRA /60
Fact9
Atty. C(angiong"o6 an atty o- t(e SC and a 8SIS mem)er6 died a) intestate.
7e -aied or o2eroo*ed to state in (is appi"ation -or mem)ers(ip +it( t(e 8SIS t(e )ene-i"iary or )ene-i"iaries o- (is
retirement )ene-its s(oud (e die )e-ore t(e retirement.
I&e9 W(o +i )ene-it -rom t(e pro"eedsH
He#%9
'(e retirement )ene-its s(a a""rue to (is estate and )e distri)uted among (is ega (eirs in a""ordan"e +it( t(e a+ on
intestate su""ession6 as in t(e "ase o- a i-e insuran"e poi"y i- NB )ene-i"iary is named in t(e insuran"e poi"y.
76,8 V%a5 De Con&e3"a *5 GSIS
/7 SCRA /11
Fact9
Eose Consuegra +as empoyed as a s(op -oreman o- t(e B--i"e o- t(e !istri"t Engineer in Surigao !e Norte.
W(en (e +as sti ai2e6 (e "ontra"ted t+o marriagesJ
o @irst Rosario !ia4; C "(idren T Eose Consuegra Er. and Pedro )ut )ot( prede"eased (im
o C
nd
3asiia 3erdin; / "(idren. (this was contracted in JB whie the first marria)e s!bsisted)
3eing a 8SIS mem)er +(en (e died6 t(e pro"eeds o- (is i-e insuran"e +ere paid )y t(e 8SIS to 3erdin and (er
"(idren +(o +ere t(e )ene-i"iaries named in t(e poi"y.
Sin"e (e +as in t(e go2=t ser2i"e -or CC.F%C0 years6 (e +as entited to retirement insuran"e )ene-its6 -or +(i"( no
)ene-i"iary +as designated.
3ot( -amiies -ied t(eir "aims +it( t(e 8SIS6 +(i"( rued t(at t(e ega (eirs +ere !ia4 +(o is entited to one:(a- or
0K1$ o- t(e retirement )ene-its and 3erdin and (er "(idren +ere entited to t(e remaining (a-6 ea"( to re"ei2e an eGua
s(are o- 1K1$.
3erdin +ent to C@I on appea. C@I a--irmed 8SIS de"ision.
I&e9 'o +(om s(oud t(e retirement insuran"e )ene-its )e paidH
He#%9 Eoth )a2i#ie a"e entit#e% to ha#) o) the "eti"e2ent $ene)it5
'(e )ene-i"iary named in t(e i-e insuran"e does NB' automati"ay )e"ome t(e )ene-i"iary in t(e retirement insuran"e.
W(en Consuegra6 during t(e eary part o- 1.#96 or )e-ore 1.#96 designated (is )ene-i"iaries in (is i-e insuran"e6 (e "oud
NB' (a2e intended t(ose )ene-i"iaries o- (is i-e insuran"e as aso t(e )ene-i"iaries o- (is retirement insuran"e )e"ause t(e
pro2isions on retirement insuran"e under t(e 8SIS "ame a)out ony +(en CA 10$ +as amended )y RA $$% on Eune 106
1.F1.
Se". 11()& "eary indi"ates t(at t(ere is need -or t(e empoyee to -ie an appi"ation -or retirement insuran"e )ene-its
+(en (e )e"omes a 8SIS mem)er and to state (is )ene-i"iary. '(e i-e insuran"e and t(e retirement insuran"e are t+o
separate and distin"t systems o- )ene-its paid out -rom C separate and distin"t -unds.
In "ase o- -aiure to name a )ene-i"iary in an insuran"e poi"y6 t(e pro"eeds +i a""rue to t(e estate o- t(e insured. And
+(en t(ere e5ists t+o marriages6 ea"( -amiy +i )e entited to one:(a- o- t(e estate.
7698 Ge"cio *5 S&n Li)e (re#eat, case R1A)
0, PHIL 1/
Fact9
Suni-e issued a i-e insuran"e poi"y to 8er"io6 t(e -ormer agreeing to insure t(e i-e o- 8er"io -or C' to )e paid to (im
on @e). 16 1.9% or i- (e s(oud die )e-ore said date6 t(en to (is +i-e Andrea6 s(oud s(e sur2i2e (im; ot(er+ise to t(e
e5e"utor6 administrator o- 8er"io.
'(e poi"y did not in"ude any pro2ision reser2ing to 8er"io t(e rig(t to "(ange t(e )ene-i"iary.
'(e +i-e +as "on2i"ted o- adutery and a de"ree o- di2or"e +as issued.
8er"io noti-ied Suni-e t(at (e (ad re2o*ed (is donation in -a2or o- Andrea and t(at (e (ad designated (is present +i-e
Adea as (is )ene-i"iary.
Suni-e re-used to "(ange t(e )ene-i"iary.
I&e9 WBN 8er"io may "(ange t(e )ene-i"iary in t(e poi"y.
He#%5 NO5
I- t(e poi"y "ontains no pro2ision aut(ori4ing a "(ange o- )ene-i"iary +it(out t(e )ene-i"iary=s "onsent6 t(e insured
"annot ma*e su"( "(ange. It is (ed t(at a i-e insuran"e poi"y o- a (us)and made paya)e to (is +i-e as a )ene-i"iary is
t(e separate property o- t(e )ene-i"iary and )eyond t(e "ontro o- t(e (us)and. (NB'EJ t(is "ase is )ased on t(e od rue
under t(e Insuran"e A"t&
Court aso (ed t(at t(e designation o- a )ene-i"iary t(at is originay 2aid does NB' render it in2aid dut to a
su)seGuent "essation o- t(e interests )et+een t(e )ene-i"iary and insured.
Section 165 '(e interest o- a )ene-i"iary in a i-e insuran"e poi"y s(a )e -or-eited +(en t(e )ene-i"iary is t(e
prin"ipa6 a""ompi"e or a""essory in +i-uy )ringing a)out t(e deat( o- t(e insured; in +(i"( e2ent6 t(e nearest
reati2e o- t(e insured s(a re"ei2e t(e pro"eeds o- said insuran"e i- not ot(er+ise Guai-ied.
Who a"e the Anea"et "e#ati*eB 2entione% he"e'
'(ose reated to t(e de"edent in t(e order mentioned under t(e rues o- intestate su""ession su"( asJ (t(e order o- t(e
-oo+ing reati2es are as -oo+s&
1. '(e egitimate "(idren;
C. '(e -at(er and mot(er6 i- i2ing;
9. '(e grand-at(er and grandmot(er; or as"endants nearest in degree6 i- i2ing;
#. '(e iegitimate "(idren;
F. '(e sur2i2ing spouse; and
$. '(e "oatera reati2es6 to +itJ
a. 3rot(ers and sisters o- t(e -u )ood;
). 3rot(ers and sisters o- t(e (a-:)ood; and
". Nep(e+s and nie"es
/. In de-aut o- t(e a)o2e6 t(e S'A'E s(a )e entited to re"ei2e t(e insuran"e pro"eeds.
P"o$#e29
+ark is ins!red$ =is nearest reatives are8
1) 'nakin, the e)itimate chid
0) Jor-e and S(a, the e)itimate father and mother
3) Eoo and Eoa, )randfather and )randmother (or ascendants in the nearest de)ree)
4) Bastardo, the ie)itimate chid
C) Eois Eane, the s!rvivin) s#o!se
1) +oatera reatives to wit8
a) S!(a, brother of f! bood
b) 'f, brother of haf bood
c) /e#, ne#hew
-hat if a of the above are nowhere to be fo!nd>
'(en t(e State o- Urypton is entited to t(e pro"eeds.
S!##ose that Eois Eane masterminded a #an to ki +ark and 'nakin carried it o!t$ 'nakin and Eois were convicted of
m!rder$ =owever, the( are aso instit!ted as beneficiaries in the ins!rance #oic( of +ark, and the #roceeds are the on(
#ro#erties avaiabe for distrib!tion to the heirs$ 2n case a three are convicted who )ets the #roceeds>
Sin"e Ana*in6 t(e egitimate "(id and <ois6 t(e sur2i2ing spouse are no onger entited to t(e pro"eeds6 t(en -oo+ing
t(e rues on intestate su""ession6 t(e pro"eeds must )e di2ided )et+een t(e egitimate parents (Eor:e and Uya& +(o get S
o- t(e pro"eeds and t(e Iegitimate "(id (3astardo& +(o gets t(e ot(er (a-.
Same facts above, b!t it was on( Eois Eane who was instit!ted as beneficiar($ 2s 'nakin sti entited to the ins!rance
#roceeds>
At -irst gan"e t(e ans+er mig(t )e AES6 )e"ause a""ording to Se"tion 1C6 it is ony t(e interest o- t(e )ene-i"iary +(i"(
is -or-eited6 and sin"e Ana*in +as not instituted as )ene-i"iaries6 t(en (is interest is sti inta"t. 7BWEVER6 t(ere is a
pro2iso in Se". 1C6 +(i"( statesJ 1 the nearest reative of the ins!red sha received the #roceeds of said ins!rance if not
otherwise 3!aified4. >eaning6 in order to -ind out i- Ana*in is Guai-ied6 re-eren"e must )e made to a+s o- su""ession.
A""ording to Art. 1%C# o- t(e CC6 t(e pro2isions reating to in"apa"ity )y +i are eGuay appi"a)e to intestate
su""ession; and a""ording to Art. 1%9C (C&6 any person +(o (as )een "on2i"ted o- an attempt against t(e i-e o- t(e testator
is in"apa)e o- su""eeding )y reason o- unworthiness. 7en"e6 t(e "orre"t ans+er to t(is pro)em is NB. Ana*in is not
entited to t(e pro"eeds and su)seGuenty t(e insuran"e pro"eeds +i )e di2ided as pro2ided -or in t(e -irst ans+er.
2n case 'nakin and Eois are not convicted, b!t both are instit!ted as beneficiaries of +ark, can the( sti coect the
#roceeds>
'(ere is no a+ or Iurispruden"e t(at treats o- t(is situation. 7o+e2er6 Atty. Quimson said in "ass t(at t(ere must )e a
conviction )e-ore Se". 1C "an operate to disGuai-y or -or-eit t(e interests o- Ana*in and <ois. Se". 1C spea*s o- ,prin"ipas6
a""ompi"e or a""essory16 and t(ere must t(ere-ore )e a "on2i"tion o- t(e )ene-i"iaries as eit(er o- t(e t(ree to t(e "rime
against t(e insured.
S!##ose 'nakin and Eois are not convicted and the( are not instit!ted as beneficiaries of +ark, can the( now coect the
#roceeds>
In t(is "ase6 Se". 1C is no onger t(e ree2ant pro2ision6 )ut Art. 1%9C (C& o- t(e CC. 7o+e2er6 it is su)mitted ()y
Eo(n3ee Sioson& t(at t(ere must )e a -ina "on2i"tion in order -or Art. 1%9C to appy6 i.e.6 to )ar Ana*in and <ois -rom
"oe"ting on t(e ground o- un+ort(iness. @urt(ermore6 Art. 1%9# saysJ In order to Iudge t(e "apa"ity o- t(e (eir6 de2isee or
egatee6 (is Guai-i"ations at t(e time o- t(e deat( o- t(e de"edent s(a )e t(e "riterion. In "ases -aing under Nos. C6 9 ? F
o- Art. 1%9C6 it s(a )e ne"essary to +ait unti -ina Iudgment is rendered.
Ie Friver, Beatri& Siddo T .-Ren 2shi are a creditors of Bi$ ' three are instit!ted as beneficiaries of Bi$ Ie fais to
3!aif( since she is BiHs conc!bine$ Beatri& on the other hand, ea)er to caim the ins!rance #roceeds, !sed the DC #oint
e&#odin) heart techni3!e4 she earned from @ai Mei, kiin) Bi$ .-Ren now caims the #roceeds of the ins!rance$
=owever, her caim is o##osed b( BB, BiHs e)itimate da!)hter who contends that accordin) to Sec$ 10, it is the nearest
reative who sho!d )et the #roceeds, meanin) her$ Between BB and .-Ren, who is entited to )et the #roceeds>
B:Ren Is(i gets t(e pro"eeds )e"ause it +as stipuated in t(e "ontra"t o- insuran"e (2 think sheH !se it to s!r)ica( )raft
her sca# back since it was siced b( Beatri& !sin) a =atori =an6o Sword). Remem)er t(at t(e insuran"e "ontra"t is t(e a+
)et+een t(e parties and (en"e it must )e -oo+ed )y t(e insuran"e "ompany. Se". 1C BN<A appies i- t(ere is NB
stipuation in t(e "ontra"t o- insuran"e as to +(o are t(e ot(er )ene-i"iaries o- t(e pro"eeds.(+!e Si Bi so!ndtrackO)
Section 1/5 E2ery interest in property6 +(et(er rea or persona6 or any reation t(ereto6 or ia)iity in respe"t
t(ereo-6 o- su"( nature t(at a "ontempated peri mig(t dire"ty damni-y t(e insured6 is an insura)e interest.
What i the i2!o"tance o) thi !"o*iion'
It de-ines insura)e interest in PRBPER'A.
Cae9
7/-8 Ha"*a"%ian Co##e3e *5 Co&nt"4 Ean;e" In&"ance Co"!5
1 CARA 6
Fact9
7ar2ardian is a -amiy "orporation6 t(e sto"*(oders o- +(i"( are Ide-onso Aap6 Virginia Uing Aap and t(eir "(idren.
Prior to Aug. .6 1./.6 an agent o- Country 3an*ers proposed to 7ar2ardian to insure its s"(oo )uiding. At(oug( at
-irst reu"tant6 7ar2ardian agreed.
Country 3an*s sent an inspe"tor to inspe"t t(e s"(oo )uiding and agreed to insure t(e same -or PF%%6%%% -or +(i"(
7ar2ardian paid an annua premium o- PC6F%%.
Bn Aug. .6 1./.6 Country 3an*ers issued to 7ar2ardian a -ire insuran"e poi"y. Bn >ar"( 1C6 1.0%6 (39 da(s before 2
was bornO hehehehe )during t(e e--e"ti2ity o- said insuran"e poi"y6 t(e insured property +as totay )urned rendering it
a tota oss.
A "aim +as made )y painti-- upon de-endant )ut de-endant denied it "ontending t(at painti-- (ad no insura)e interest
o2er t(e )uiding "onstru"ted on t(e pie"e o- and in t(e name o- t(e ate Ide-onso Aap as o+ner.
It +as "ontended t(at )ot( t(e ot and t(e )uiding +ere o+ned )y Ide-onso Aap and NB' )y t(e 7ar2ardian Coeges.
I&e9 WBN 7ar2ardian "oeges (as a rig(t to t(e pro"eeds.
He#%9 Ha"*a"%ian ha a "i3ht to the !"ocee%5
Regardess o- t(e nature o- t(e tite o- t(e insured or e2en i- (e did not (a2e tite to t(e property insured6 t(e "ontra"t o-
-ire insuran"e s(oud sti )e up(ed i- (is interest in or (is reation to t(e property is su"( t(at (e +i )e )ene-ited in its
"ontinued e5isten"e or su--er a dire"t pe"uniary oss -rom its destru"tion or inIury. '(e test in determining insura)e interest
in property is +(et(er one +i deri2e pe"uniary )ene-it or ad2antage -rom its preser2ation6 or +i su--er pe"uniary oss or
damage -rom its destru"tion6 termination or inIury )y t(e (appening o- t(e e2ent insured against.
7ere 7ar2ardian +as not ony in possession o- t(e )uiding )ut +as in -a"t using t(e same -or se2era years +it( t(e
*no+edge and "onsent o- Ide-onso Aap. It is reasona)y -air to assume t(at (ad t(e )uiding not )een )urned6 7ar2ardian
+oud (a2e )een ao+ed t(e "ontinued use o- t(e same as t(e site o- its operation as an edu"ationa institution. 7ar2ardian
t(ere-ore +oud (a2e )een dire"ty )ene-ited )y t(e preser2ation o- t(e property6 and "ertainy su--ered a pe"uniary oss )y
its )eing )urned.
Section 105 An insura)e ineters in property may "onsist inJ
(a& An e5isting interest;
()& An in"(oate interest -ounded on an e5isting interest; or
("& An e5pe"tan"y6 "ouped +it( an e5isting interest in t(at out o- +(i"( t(e e5pe"tan"y arises.
What i e@itin3 inte"et'
E5isting interest in property is t(e ega or eGuita)e tite on t(e property.
What i an inchoate inte"et'
It is an interest +(i"( (as not yet ripened6 su"( as t(e interest o- a sto"*(oder in t(e property o- t(e "orporation +(i"(
(e o+ns sto"*s.
In (hat ;in% o) e@!ectanc4 2a4 in&"a$#e inte"et conit'
'(e e5pe"tan"y >US' )e "ouped +it( an e5isting interest in t(at6 out o- +(i"( su"( e5pe"tan"y arises. E5ampes
+oud )eJ a -armer insuring -uture "rops t(at (e +i gro+ on (is and6 or a +or*man insuring t(e )uiding +(i"( (e +as
"ontra"ted to repair.
Cae9
7/18 S&te" *5 Union S&"et4
11 OG 19-1
Fact9
Suter6 t(e managing partner o- >or"oin Co.6 insured t+o Iu*e )o5es +it( Union Surety -or P#6%%%. (btw, si(a din (!n)
sa *a& 0 diba> ?!n) #inakasaan (!n) #artner ni(an) si S#iri)>)
Su)seGuenty6 t(e t+o Iu*e )o5es +ere destroyed )y -ire.
Suter no+ "aims -rom Union Surety6 t(e atter denying t(e "aims on t(e grounds t(atJ
o '(e properties +ere aegedy o2er2auedC it (a2ing )een pro2en t(at t(e Iu*e )o5es "ost ony P//#.%%
o Suter (ad no insura)e interest sin"e t(e properties insured )eong to >or"oin Co.
I&e an% Reo#&tion9
(1) -hether or not the "!ke bo&es were overva!ed$
No. W(ie a"Guisition "ost is ony P//#.%%6 t(is does not in"ude ta5es6 -reig(t insuran"e6 s(ipping "ost6 and ot(er
impro2ements made t(ereon. '(e 2aue o- t(e property is determine at t(e time it +as insured and not t(e time it +as
a"Guired.
(0) -./ S!ter had ins!rabe interest$
AES6 Suter (ad insura)e interest. '(e test -or insura)e interest in property is +(et(er or not t(e insured +i )ene-it in
t(e property=s reser2ation or "ontinued e5isten"e6 or su--er a dire"t pe"uniary oss in its destru"tion. Suter6 )eing t(e
managing partner +i "eary )ene-it in t(e Iu*e )o5es= preser2ation and +oud aso )e a--e"ted )y its destru"tion.
7/68 T"a%e" In&"ance an% S&"et4 Co5 *5 Go#an3co
91 PHIL ,66
Fact9
A de"ision +as rendred in Ci2i Case No. $9%$ granting 8oang"o t(e rig(t to "oe"t rentas -rom a )uiding in Sta. Cru46
>ania.
8oang"o t(en soug(t -ire insuran"e -rom 'raders. 3e-ore t(e poi"y +as issued6 8oang"o made a -u and "ear
e5posa o- (is interests in t(e premises6 i.e. t(at (e +as not t(e o+ner.
'(e -ire poi"y t(at de-endant issued "o2ered ony a o- 8oang"o=s interest in t(e premises and (is rig(t to "oe"t t(e
rentas.
'(e )uiding )urned do+n in a -ire and 8oang"o soug(t to "oe"t -rom 'raders. 'raders denied any ia)iity on t(e
ground t(at sin"e 8oang"o +as not t(e o+ner o- t(e premises t(en (e (ad no insura)e interest in t(e same and
"onseGuenty6 (e "oud not "oe"t t(e insuran"e pro"eeds.
I&e9 WBN painti-- "an "aim t(e insuran"e pro"eeds.
He#%5 >ES5
3ot( at t(e time o- t(e issuan"e o- t(e poi"y and at t(e time o- t(e -ire6 painti-- 8oang"o +as in ega possession o-
t(e premises6 "oe"ting rentas -rom its o""upant. It seems pain t(at i- t(e premises +ere destroyed as t(ey +ere6 )y -ire6
8oang"o +oud )e6 as (e +as6 dire"ty damni-ied t(ere)y; and (en"e (e (ad an insura)e interest t(erein.
7//8 Lenith In&"ance Co"!o"ation *5 The In&"ance Co22iion
,7 OG 6609
Fact9
Venit( entered into an insuran"e "ontra"t6 denominated as EGuipment @oater Poi"y "o2ering a Uato 3a"(oe in"uding
its a""essories and appurtenan"es t(ereo-6 -rom oss o- damage. Compainant paid t(e stipuated premiums t(ere-ore.
Wit(in t(e period o- e--e"ti2ity o- t(e poi"y6 t(e t+o pie"es o- (ydraui" +(ee gear pumps6 +(i"( are "onsidered
appurtenan"es andKor parts atta"(ed to andKor instaed in t(e Uato 3A"(oe +ere ost6 stoen andKor iegay deta"(ed
)y un*no+n t(ie2es or mae-a"tors
!espite repeated assuran"es )y Venit(=s soi"iting agent6 it re-used and -aied to sette and pay "ompainant=s insuran"e
"aim.
Compainant see*s not ony t(e payment o- said insuran"e "aim o- /%' pus ega interest6 atty=s -ees6 and itigation
e5penses6 )ut aso t(e re2o"ation or "an"eation o- t(e i"ense o- Venit( to do insuran"e )usiness.
Venit( on t(e ot(er (and "ontends t(atJ
o Compainant is not t(e rea party in interest sin"e t(e poi"y "arries +it( it a designated oss payee6 t(e 3A
@inan"e Corp
o '(e poi"y insures against oss or damage "aused )y -ire and ig(tning6 et"6 +(ie t(e-t or ro))ery is NB'
insured against in t(e poi"y6 it not (a2ing )een e5pressy mentioned
o <oss ne2ert(eess is e5"uded under t(e e5"eption o- ,in-ideity e5"usion1 )y t(e operator +(o e-t it
unguarded6 unattended and deserted +(ie entrusted to (im6 and -or -aiure to gi2e timey noti"e o- oss
o Compainant andKor 3A @inan"e is guity o- "on"eament and misrepresentation at t(e time t(ey se"ured t(e
poi"y6 )e"ause at t(e time it )e"ame operati2e6 t(e "ompainant +as NB' yet t(e o+ner o- t(e property
insured6 t(e property sti (ot (a2ing )een dei2ered to (im6 and 3A -inan"e (ad no insura)e interest yet6
(en"e-ort(6 t(e "ontra"t o- insuran"e +as VBI! A3 INI'IB -or a"* o- insura)e interest at t(e time t(e
insuran"e too* e--e"t.
I&e an% Reo#&tion9
(1) -./ the oss thro!)h theft or robber( caimed is within the covera)e of the #oic($
'(e Insuran"e Commissioner6 as reiterated )y t(e SC6 -ound -or t(e "ompainant in t(is +iseJ W(ie t(e poi"y
enumerated t(e ris*s "o2ered6 it does NB'6 (o+e2er6 in its e5press terms6 imit "ompensa)iity to t(at stated in t(e
enumeration. '(e enumerated ris*s e5"uded did not in"ude t(e-t or ro))ery "ommitted or perpetrated )y an unidenti-ied
"uprit6 (en"e t(e "ompainant=s "aim -or damages is "ompensa)e.
'(e -oregoing poi"y is supported )y t(e ong time (onored do"trine o- ,"ontra pro-erentemJ +(i"( pro2ides t(atJ ,any
am)iguity in t(e poi"y s(a )e reso2ed in -a2or o- t(e insured and against t(e insurer1. '(is is true )e"ause insuran"e
"ontra"ts are essentiay "ontra"ts o- ad(esion and appi"ants -or insuran"e (a2e no "(oi"e )ut to a""ept t(e terms and
"onditions in t(e poi"y e2en i- t(ey are not in -u a""ord t(ere+it(.
(0) -./ the com#ainant was with ins!rabe interest therein when the said #oic( contract was #roc!red$
'(e "ompainant (as insura)e interest in t(e insured property at t(e time o- t(e pro"urement o- t(e insuran"e poi"y.
As t(e CC pro2ides6 ,t(e "ontra"t o- sae is per-e"ted at t(e moment t(ere is a meeting o- minds upon t(e t(ing +(i"( is t(e
o)Ie"t o- t(e "ontra"t and upon t(e pri"e61 and Se". 1F o- t(e IC ao+s t(e insuran"e o- a mere "ontingent or e5pe"tant
interest in anyt(ing i- t(e same is -ounded on an a"tua rig(t to t(e t(ing6 or upon any 2aid "ontra"t.
As t(is is t(e "ase6 mere possession o- an eGuita)e tite6 i*e t(at pertaining to t(e )uyer6 gi2es rise to insura)e interest
in t(e property in +(i"( su"( tite in(eres. @urt(ermore6 "onsidering t(at Venit(=s agent (ad )een -uy apprised o- t(e
"ir"umstan"es prior to t(e a"tua issuan"e o- t(e poi"y and t(e endorsement6 it "annot no+ aege t(at "ompainant (as no
insura)e interest on t(e property insured. Venit( is no+ pre"uded )y t(e eGuita)e prin"ipe o- estoppe -rom impugning
and dis(onoring t(e 2ery insuran"e poi"y "ontra"t it issued and t(e endorsement and in"rease in t(e "o2erage made
t(roug( its duy aut(ori4ed agent.
7/08 Fi#i!ino ?e"chant *5 CA
179 SCRA 6/,
Fact9
'(e C(ao 'ie* Seng a "onsignee o- t(e s(ipment o- -is(mea oaded on )oard t(e 2esse SS 3ougain2ie and unoaded
at t(e Port o- >ania on or a)out !e"em)er 116 1./$ and see*s to re"o2er -rom @iipino t(e amount o- PF16F$0.$C
representing damages to said s(ipment +(i"( (as )een insured )y @iipino.
@iipino )roug(t a t(ird party "ompaint against Compagnie >aritime !es C(argeurs Reunis andKor E. Ra4on6 In".
see*ing Iudgment against t(e t(ird party de-endants in "ase Iudgment is rendered against it.
It appears -rom t(e e2iden"e presented t(at C(ao insured said s(ipment +it( @iipino -or t(e sum o- PC$/6$F9.F. -or t(e
goods des"ri)ed as $%% metri" tons o- -is(mea in gunny )ags o- .% *ios ea"( -rom 3ang*o*6 '(aiand to >ania
against a ris*s under +are(ouse to +are(ouse terms.
A"tuay6 +(at +as imported +as F...#% metri" tons not $%% tons at Q9.F.#C a ton.
'(e -is(mea in $$$ gunny )ags +ere unoaded -rom t(e s(ip on !e"em)er 116 1./$ at >ania unto t(e arrastre
"ontra"tor E. Ra4on6 In". and @iipino=s sur2eyor as"ertained and "erti-ied t(at in su"( dis"(arge 1%F )ags +ere in )ad
order "ondition as Iointy sur2eyed )y t(e s(ipLs agent and t(e arrastre "ontra"tor.
3ased on said "omputation t(e C(ao made a -orma "aim against t(e @iipino -or PF16F$0.$C. A -orma "aim
statement +as aso presented )y t(e painti-- against t(e 2esse6 )ut t(e @iipino re-used to pay t(e "aim.
I&e H Reo#&tion9
Bii#ino contends that an 5a risks5 marine #oic( has a technica meanin) in ins!rance in that before a caim can be
com#ensabe it is essentia that there m!st be 5some fort!it(,5 5cas!at(5 or 5accidenta ca!se5 to which the ae)ed oss is
attrib!tabe and the fai!re of herein #rivate res#ondent, !#on whom a( the b!rden, to add!ce evidence showin) that the
ae)ed oss to the car)o in 3!estion was d!e to a fort!ito!s event #rec!des his ri)ht to recover from the ins!rance #oic($
SC did not up(od t(is "ontention. An Ma ris*s poi"yM s(oud )e read iteray as meaning a ris*s +(atsoe2er and
"o2ering a osses )y an a""identa "ause o- any *ind. '(e terms Ma""identM and Ma""identaM6 as used in insuran"e
"ontra"ts6 (a2e not a"Guired any te"(ni"a meaning. '(ey are "onstrued )y t(e "ourts in t(eir ordinary and "ommon
a""eptan"e. '(us6 t(e terms (a2e )een ta*en to mean t(at +(i"( (appens )y "(an"e or -ortuitousy6 +it(out intention and
design6 and +(i"( is une5pe"ted6 unusua and un-oreseen. An a""ident is an e2ent t(at ta*es pa"e +it(out oneLs -oresig(t
or e5pe"tation; an e2ent t(at pro"eeds -rom an un*no+n "ause6 or is an unusua e--e"t o- a *no+n "ause and6 t(ere-ore6 not
e5pe"ted.
Co2erage under an Ma ris*sM pro2ision o- a marine insuran"e poi"y "reates a spe"ia type o- insuran"e +(i"( e5tends
"o2erage to ris*s not usuay "ontempated and a2oids putting upon t(e insured t(e )urden o- esta)is(ing t(at t(e oss +as
due to t(e peri -aing +it(in t(e poi"yLs "o2erage; t(e insurer "an a2oid "o2erage upon demonstrating t(at a spe"i-i"
pro2ision e5pressy e5"udes t(e oss -rom "o2erage. A marine insuran"e poi"y pro2iding t(at t(e insuran"e +as to )e
Magainst a ris*sM must )e "onstrued as "reating a spe"ia insuran"e and e5tending to ot(er ris*s t(an are usuay
"ontempated6 and "o2ers a osses e5"ept su"( as arise -rom t(e -raud o- t(e insured. '(e )urden o- t(e insured6
t(ere-ore6 is to pro2e merey t(at t(e goods (e transported (a2e )een ost6 destroyed or deteriorated. '(erea-ter6 t(e )urden
is s(i-ted to t(e insurer to pro2e t(at t(e oss +as due to e5"epted peris. 'o impose on t(e insured t(e )urden o- pro2ing t(e
pre"ise "ause o- t(e oss or damage +oud )e in"onsistent +it( t(e )road prote"ti2e purpose o- Ma ris*sM insuran"e.
In t(e present "ase6 t(ere )eing no s(o+ing t(at t(e oss +as "aused )y any o- t(e e5"epted peris6 t(e insurer is ia)e
under t(e poi"y
Bii#ino contends that +hao does not have ins!rabe interest, bein) on( a consi)nee of the )oods$
Anent t(e issue o- insura)e interest6 SC up(ed t(e ruing o- t(e CA t(at C(ao6 as "onsignee o- t(e goods in transit
under an in2oi"e "ontaining t(e terms under MC ? @ >ania6M (as insura)e interest in said goods.
Se"tion 19 o- t(e Insuran"e Code de-ines insura)e interest in property as e2ery interest in property6 +(et(er rea or
persona6 or any reation t(ereto6 or ia)iity in respe"t t(ereo-6 o- su"( nature t(at a "ontempated peri mig(t dire"ty damni-y
t(e insured. In prin"ipe6 anyone (as an insura)e interest in property +(o deri2es a )ene-it -rom its e5isten"e or +oud su--er
oss -rom its destru"tion +(et(er (e (as or (as not any tite in6 or ien upon or possession o- t(e property. Insura)e interest
in property may "onsist in (a& an e5isting interest; ()& an in"(oate interest -ounded on an e5isting interest; or ("& an
e5pe"tan"y6 "ouped +it( an e5isting interest in t(at out o- +(i"( t(e e5pe"tan"y arises.
C(ao6 as 2endeeK"onsignee o- t(e goods in transit (as su"( e5isting interest t(erein as may )e t(e su)Ie"t o- a 2aid
"ontra"t o- insuran"e. 7is interest o2er t(e goods is )ased on t(e per-e"ted "ontra"t o- sae. '(e per-e"ted "ontra"t o- sae
)et+een (im and t(e s(ipper o- t(e goods operates to 2est in (im an eGuita)e tite e2en )e-ore dei2ery or )e-ore (e
per-ormed t(e "onditions o- t(e sae. '(e "ontra"t o- s(ipment6 +(et(er under @.B.3.6 C.I.@.6 or C. ? @. as in t(is "ase6 is
immateria in t(e determination o- +(et(er t(e 2endee (as an insura)e interest or not in t(e goods in transit. '(e per-e"ted
"ontra"t o- sae e2en +it(out dei2ery 2ests in t(e 2endee an eGuita)e tite6 an e5isting interest o2er t(e goods su--i"ient to
)e t(e su)Ie"t o- insuran"e
Section 115 A "arrier or depository o- any *ind (as an insura)e interest in a t(ing (ed )y (im as su"(6 to t(e
e5tent o- (is ia)iity )ut not to e5"eed t(e 2aue t(ereo-.
What i the "eaon )o" thi !"o*iion'
'(e oss o- t(e t(ing may ma*e t(e "arrier or depositary ia)e to t(e o+ner o- t(e goods6 to t(e e5tent o- t(e 2aue o-
t(e goods6 and t(e a+ t(ere-ore ao+s su"( a "arrier or depositary to insure (is possi)e ia)iity t(ere-or.
P"o$#e25
M7P Mar( Jane, a common carrier, ins!red @eter @arkerHs )oods, va!ed at 1M with '$M'? 2ns!rance +om#an( for 0M$
*he vesse was hit b( i)htnin), ca!)ht fire, and sank$ Mar( Jane is now caimin) 0M from '$M'? beca!se the #oic( stated
that the oss d!e to i)htnin) is com#ensabe$ '$M'? denies iabiit( on the )ro!nd that8 (1) Mar( Jane is not the owner of
the )oods and therefore has no ins!rabe interest9 and (0) Mar( Jane cannot caim more than the va!e of the )oods ost$
Fecide$
A""ording to Se". 1F6 a "arrier (as insura)e interest in a t(ing (ed )y (im as su"(. 7en"e6 >ary Eane (as insura)e
interest o2er t(e goods o- Peter Par*er. 7o+e2er6 t(e same pro2ision aso states t(at su"( insura)e interest is ony up to
t(e e5tent o- (is ia)iity and not to e5"eed t(e 2aue o- t(e t(ing. Sin"e t(e 2aue o- t(e goods is ony 1>6 t(en >ary Eane
"an ony "oe"t 1>.
Cae9
7/18 Lo!eF *5 De# Roa"io
00 PHIL 9,
Fact9
3enita !e Rosario is t(e o+ner o- a )onded +are(ouse in >ania +(ere "opra and ot(er mer"(andise are deposited.
Among t(ose +(o (ad "opra deposited in t(e +are(ouse +as @roian <ope46 t(e o+ner o- 1# +are(ouse re"eipts +it( a
de"ared 2aue o- P1%/6..%.#% in (is name.
!e Rosario se"ured insuran"e on t(e +are(ouse and its "ontents +it( F di--erent insuran"e "ompanies in t(e amount o-
P#%#60%%.
A poi"ies +ere in t(e name o- !e Rosario6 e5"ept -or one (+it( Nat= Insuran"e Co.& -or #%'6 in -a2or o- Compania
Copra de 'aya)as.
'(e +are(ouse and its "ontents +ere destroyed )y -ire. W(en 3ayne6 a -ire oss adIuster6 -aied to e--e"t a settement
)et+een t(e Insuran"e "ompanies and !e Rosario6 t(e atter aut(ori4ed Atty. @is(er to negotiate +it( t(e Companies.
An agreement +as rea"(ed to su)mit t(e matter to ar)itration. '(e "aims )y di--erent peope +(o (ad stored "opra in
t(e +are(ouse +ere setted +it( t(e e5"eption o- @rioan <ope4.
A "ase +as -ied in C@I )y <ope4. '(e "ourt a+arded (im t(e sum o- P006#.C.C1 +it( ega interest.
I&e9 WBN !e Rosario a"ted as t(e agent o- <ope4 in ta*ing out t(e insuran"e on t(e "ontents o- t(e +are(ouse or
+(et(er s(e a"ted as t(e reinsurer o- t(e "opra.
He#%9 She acte% a the a3ent o) Lo!eF5
'(e agen"y "an )e dedu"ed -rom t(e +are(ouse re"eipts6 t(e insuran"e poi"ies and t(e "ir"umstan"es surrounding
t(e transa"tion. Under any aspe"t6 !e Rosario is ia)e. '(e a+ is t(at a poi"y e--e"ted )y a )aiee and "o2ering )y its
terms in (is o+n property and property (ed in trust6 inures6 in t(e e2ent o- oss6 eGuay and proportionatey to t(e )ene-it o-
a o+ners o- t(e property insured. E2en i- one se"ured insuran"e "o2ering (is o+n goods and goods stored +it( (im6 and
e2en i- t(e o+ner o- t(e stored goods did not reGuest or *no+ t(e insuran"e6 and did not rati-y it )e-ore t(e payment o- t(e
oss6 it (as )een (ed )y a reputa)e "ourt t(at t(e +are(ouseman is ia)e to t(e o+ner o- su"( stored goods -or (is s(are.
In a "ase o- "ontri)uting poi"ies6 adIustments o- oss made )y an e5pert or )y a )oard o- ar)itrators may )e su)mitted
to t(e "ourt NB' as e2iden"e o- t(e -a"ts stated t(erein6 or as o)igatory6 )ut -or t(e purpose o- assisting t(e "ourt in
"a"uating t(e amount o- ia)iity.
Section 165 A mere "ontingent or e5pe"tant interest in anyt(ing6 not -ounded on an a"tua rig(t to t(e t(ing6
nor upon any 2aid "ontra"t -or it6 is not insura)e.
INSURANCE REVIEWER Atty. Quimson page #%
What %oe thi ection 2ean'
>ere (ope or e5pe"tation o- )ene-it +(i"( may )e -rustrated )y t(e (appening o- some e2ent un"ouped +it( any
present ega rig(t +i not support a "ontra"t o- insuran"e.
E@a2!#e9
A son "annot insure t(e property o- (is -at(er +(i"( (e e5pe"ts to in(erit -rom t(e atter6 or a (us)and insuring t(e
parap(erna property o- (is +i-e; t(e reason )eing6 t(eir interest is merey an e5pe"tan"y o- in(eriting6 and t(e rig(ts to
su""ession are transmitted ony -rom t(e moment o- t(e deat( o- t(e de"edent.
Section 175 '(e measure o- an insura)e interest in t(e property is t(e e5tent to +(i"( t(e insured mig(t )e
damni-ied )y oss or inIury t(ereo-.
P"o$#e25
' ins!red his #ro#ert( va!ed at @1GG,GGG for @10G,GGG$ ' s!ffered a tota oss$ =ow m!ch is he entited to recover>
A is entited to re"o2er ony t(e 2aue o- (is oss +(i"( is 1%%' and not 1C%' )e"ause it is against pu)i" poi"y to pro-it
-rom a oss.
-hat if the one who ca!sed the dama)e, B #aid ' @AG,GGG> -hat is the iabiit( of the 2ns!rance +om#an(>
'(e insuran"e "aim is redu"ed in t(e same amount o- 0%'. Anyt(ing t(at redu"es or diminis(es t(e oss6 redu"es and
diminis(ed t(e amount +(i"( t(e insurer is )ound to pay. 7en"e t(e insurer is ia)ie -or C%'.
Nnder a b!idin) contract, ' constr!cted a ho!se in '(aa 'aban) for 4M for U who made an advance #a(ment of 1M, the
baance to be #aid !#on deiver of the ho!se on '!)$ 13, 1993$ ' finished the ho!se on J!( 13, 1993 so he ins!red the
ho!se a)ainst fire for 4M$ Before deiver( of the ho!se in '!)!st, the ho!se b!rned down$ -hat is the e&tent of the
ins!rabe interest of '>
It is sti #>6 not+it(standing t(e -a"t t(at (e (as re"ei2ed -rom V 1> as ad2an"e payment. '(e reason +(y (e is
entited to t(e +(oe #> is6 (e (as to repa"e t(e (ouse destroyed +it( anot(er (ouse +ort( #> as per t(e "ontra"t6 not one
2aued at ony 9>. In ot(er +ords6 #> +as t(e e5tent to +(i"( A +as damni-ied )y t(e oss o- t(e (ouse.
Cae9
7/68 San ?i3&e# E"e(e"4 *5 La( Union Roc; In&"ance Co2!an4 (repeat "ase O1C&
0- PHIL 670
Fact9
poi"y.
INSURANCE REVIEWER Atty. Quimson page #1
He#%9 NOPE5
"redit.
7/78 An3 Ma >& *5 Phoeni@ A&"ance
1 CARA 7-0
Fact9
Ang Ua Au (ad a pie"e o- property in (is possession. 7e insured it +it( P(oeni5.
'(e property +as ost6 so Ang Ua Au soug(t to "aim t(e pro"eeds.
P(oeni5 denied ia)iity on t(e ground t(at Ang +as not t(e o+ner )ut a mere possessor and as su"(6 (ad no insura)e
interest o2er t(e property.
I&e9 WBN a mere possessor (as insura)e interest o2er t(e property.
He#%9 >e5
A person (a2ing a mere rig(t or possession o- property may insure it to its -u 2aue and in (is o+n name6 e2en +(en (e
is not responsi)e -or its sa-e*eeping. '(e reason is t(at e2en i- a person is NB' interested in t(e sa-ety and preser2ation o-
materia in (is possession )e"ause t(ey )eong to 9
rd
parties6 said person sti (as insura)e interest6 )e"ause (e stands
eit(er to )ene-it -rom t(eir "ontinued e5isten"e or to )e preIudi"ed )y t(eir destru"tion.
7/,8 Cha *5 Cha
677 SCRA 69- 719978
Fact9
Spouses Nio C(a and Stea Uy:C(a6 as essees6 entered into a ease "ontra"t +it( CUS !e2eopment Corporation
(CUS&6 as essor.
Bne o- t(e stipuations o- t(e one (1& year ease "ontra"t statesJ 51A$ $ $ $ *he EISSII sha not ins!re a)ainst
fire the chattes, merchandise, te&ties, )oods and effects #aced at an( sta or store or s#ace in the eased #remises
witho!t first obtainin) the written consent and a##rova of the EISS.R$ 2f the EISSII obtain(s) the ins!rance thereof
witho!t the consent of the EISS.R then the #oic( is deemed assi)ned and transferred to the EISS.R for its own
benefit9 $ $ $5
Not+it(standing t(e a)o2e stipuation6 t(e C(a spouses insured against oss )y -ire t(eir mer"(andise inside t(e eased
premises -or @i2e 7undred '(ousand (PF%%6%%%.%%& +it( t(e United Insuran"e +it(out t(e +ritten "onsent CUS.
Bn t(e day t(at t(e ease "ontra"t +as to e5pire6 -ire )ro*e out inside t(e eased premises. W(en CUS earned o- t(e
insuran"e earier pro"ured )y t(e C(a spouses (+it(out its "onsent&6 it +rote t(e United a demand etter as*ing t(at t(e
pro"eeds o- t(e insuran"e "ontra"t ()et+een t(e C(a spouses and United& )e paid dire"ty to CUS6 )ased on its ease
"ontra"t +it( t(e C(a spouses.
United re-used to pay CUS6 aeging t(at t(e atter (ad no insura)e interest. 7en"e6 t(e atter -ied a "ompaint against
t(e C(a spouses and United.
INSURANCE REVIEWER Atty. Quimson page #C
I&e9 WBN CUS "an "aim t(e pro"eeds o- t(e -ire insuran"e.
He#%9 NO5 CMS ha no in&"a$#e inte"et5
Se". 10 o- t(e Insuran"e Code pro2idesJ
5Sec$ 1A$ /o contract or #oic( of ins!rance on #ro#ert( sha be enforceabe e&ce#t for the benefit of some
#erson havin) an ins!rabe interest in the #ro#ert( ins!red$5
A non:i-e insuran"e poi"y su"( as t(e -ire insuran"e poi"y ta*en )y petitioner:spouses o2er t(eir mer"(andise is
primariy a "ontra"t o- indemnity. Insura)e interest in t(e property insured must e5ist at t(e time t(e insuran"e ta*es e--e"t
and at t(e time t(e oss o""urs. '(e )asis o- su"( reGuirement o- insura)e interest in property insured is )ased on sound
pu)i" poi"yJ to pre2ent a person -rom ta*ing out an insuran"e poi"y on property upon +(i"( (e (as no insura)e interest
and "oe"ting t(e pro"eeds o- said poi"y in "ase o- oss o- t(e property.
In t(e present "ase6 it "annot )e denied t(at CUS (as no insura)e interest in t(e goods and mer"(andise inside t(e
eased premises under t(e pro2isions o- Se"tion 1/ o- t(e Insuran"e Code +(i"( pro2ideJ
5Section 1,$ *he meas!re of an ins!rabe interest in #ro#ert( is the e&tent to which the ins!red mi)ht be
damnified b( oss of in"!r( thereof$5
'(ere-ore6 CUS "annot6 under t(e Insuran"e Code N a spe"ia a+ N )e 2aidy a )ene-i"iary o- t(e -ire insuran"e
poi"y ta*en )y t(e petitioner:spouses o2er t(eir mer"(andise. '(is insura)e interest o2er said mer"(andise remains +it(
t(e insured6 t(e C(a spouses. '(e automati" assignment o- t(e poi"y to CUS under t(e pro2ision o- t(e ease "ontra"t
pre2iousy Guoted is 2oid -or )eing "ontrary to a+ andKor pu)i" poi"y. '(e pro"eeds o- t(e -ire insuran"e poi"y t(us
rig(t-uy )eong to t(e spouses Nio C(a and Stea Uy:C(a ((erein "o:petitioners&. '(e insurer (United& "annot )e
"ompeed to pay t(e pro"eeds o- t(e -ire insuran"e poi"y to a person (CUS& +(o (as no insura)e interest in t(e property
insured.
Section 1,5 No "ontra"t or poi"y o- insuran"e on property s(a )e en-or"ea)e e5"ept -or t(e )ene-it o- some
person (a2ing an insura)e interest in t(e property insured.
Si2!#i)ie%C the !"o*iion tate that'
NB insura)e interest T NB "ontra"t o- Insuran"e.
Cae9
7/98 Sha"&)) an% Co5 *5 Ea#oie Fi"e In&"ance Co5
60 SCRA 61,
Fact9
S(aru-- and Es*ena4i +ere doing )usiness under t(e -irm name S(aru-- and Co.
'(ey insured t(eir mer"(andise +it( 3aoise. <ater on6 S(aru-- and Es*ena4i entered into a "ontra"t o- partners(ip and
t(ere)y "(anged t(e -irm name to S(aru-- and Es*ena4i.
'(e mer"(andise insured +as su)seGuenty destroyed )y -ire. S(aru-- and Es*ena4i -ied t(eir "aim against t(e
insuran"e "ompany.
3aoise re-used to pay on t(e ground t(at t(e poi"y +as issued in t(e name o- S(aru-- and Co. and not S(aru-- and
Es*ena4i.
I&e9 WBN t(e partners(ip "an "aim t(e pro"eeds o- t(e poi"y.
He#%9 >UP5
'(e su)seGuent partners(ip did not ater t(e "omposition o- t(e -irm. '(e peope in2o2ed are a"tuay t(e same.
@urt(ermore6 su"( "(ange o- -irm name +as not made to de-raud t(e insuran"e "ompany or some ot(er person.
70-8 Ga"cia *5 Hon3Mon3 Fi"e an% ?a"ine In&"ance Co5
01 PHIL 166
Fact9
8ar"ia (ad (is mer"(andise insured )y 7ong*ong @ire and >arine Insuran"e Co.
'(e insuran"e "ompany (o+e2er made a mista*e and issued a poi"y "o2ering t(e )uiding +(ere t(e mer"(andise +as
stored. ('(e )uiding +as not o+ned )y 8ar"ia&
'(e poi"y +as +ritten in Engis(6 o- +(i"( 8ar"ia +as ignorant6 so (e "oud not (a2e noti"ed t(e error o- t(e insuran"e
"ompany.
Said poi"y +as ater on assigned )y 8ar"ia to PN3 to se"ure a oan. PN3 a"*no+edged re"eipt o- said poi"y6
re-erring to it as a poi"y "o2ering t(e mer"(andise.
'(e insuran"e "ompany made t(e ne"essary endorsements to PN3.
'(e )uiding +(i"( (oused t(e mer"(andise +as ater ra4ed )y -ire. '(e insuran"e "ompany re-used to pay due to t(e
-a"t t(at t(e poi"y indi"ates insuran"e on t(e )uiding and not on t(e mer"(andise.
I&e9 WBN 8ar"ia "an "oe"t.
He#%9 >ES5
'(e de-ense o- t(e insurer is purey te"(ni"a. '(e mista*e +as o)2iousy on t(e part o- t(e insurer +(en it issued a
+rong poi"y. It "annot deny su"( aegation due to t(e -a"t t(at it e2en "on-irmed +it( PN3 t(e nature o- said poi"y +(en it
+as endorsed. 8ar"ia "oud not (a2e noti"ed t(e mista*e due to (is ignoran"e o- t(e Engis( anguage.
Section 195 An interest in property insured must e5ist +(en t(e insuran"e ta*es e--e"t6 and +(en t(e oss
o""urs6 )ut need not e5ist in t(e meantime; and interest in t(e i-e or (eat( o- a person insured must e5ist +(en t(e
insuran"e ta*es e--e"t6 )ut need not e5ist t(erea-ter or +(en t(e oss o""urs.
When 2&t in&"a$#e inte"et e@it'
In "ase o- #i)e in&"ance at t(e time t(e insuran"e ta*es e--e"t.
In "ase o- !"o!e"t4 in&"ance6 at t(e time t(e insuran"e ta*es e--e"t AN! at t(e time o- t(e oss6 )ut it need not e5ist in
t(e meantime.
P"o$#e25
Beatri& ins!red her ho!se for 1*$ 't that time, she was the owner of the ho!se$ F!rin) the effectivit( of the #oic(, she sod
the ho!se to Bi for 0*, b!t did not transfer the #oic($ Beca!se of the effects of Sec$ 0G, the ins!rance was s!s#ended$ '
week ater, Beatri& reai6ed how m!ch she missed the ho!se and bo!)ht it from Bi for 3*$ *he ne&t da(, the ho!se b!rned
down$ 2s the 2ns!rer iabe notwithstandin) the transfer of interest from Beatri& to Bi d!rin) the effectivit( of the #oic(>
Aes. 3eatri5 (ad insura)e interest on t(e (ouse as s(e +as t(e o+ner at t(e time t(e insuran"e too* e--e"t. S(e aso
(ad insura)e interest on t(e (ouse at t(e time o- t(e oss sin"e s(e (ad aready rea"Guired it -rom 3i. '(e a+ says 3eatri5
need not (a2e insura)e interest in t(e meantime6 or during t(e inter2ening period )et+een t(e time o- e--e"ti2ity o- t(e
insuran"e6 and t(e time o- t(e oss. '(ere-ore6 not+it(standing t(e o+ners(ip o- 3i during t(e inter2ening period6 as 3eatri5
(ad insura)e interest at t(e t+o points in time reGuired )y a+6 t(en t(e insurer is ia)e.
Cae9
7018 Tai Ton3 Ch&a Che H Co5 *5 In&"ance Co22iion
11, SCRA /66
Fact9
Paomo o)tained a oan -rom 'aitong -or 1%%'. 'o se"ure t(is6 (e mortgaged a par"e o- and +it( a )uiding. 'aitong
insured t(e mortgaged property +it( 'ra2eers >uti:Indemnity Corp -or 1%%'.
'(e insured property +as ra4ed )y -ire. 'aitong "aimed t(e pro"eeds -rom t(e insuran"e "ompany.
'ra2eers re-used to pay6 "aiming t(at 'aitong (ad no more insura)e interest in t(e property sin"e Paomo (ad
aegedy paid t(e mortgaged de)t aready.
I&e9 WBN 'aitong "an "oe"t t(e pro"eeds.
He#%9 >e5
'(e aegation o- t(e insuran"e "ompany t(at t(e de)t (ad aready )een paid +as NB' pro2ed. 'aitong on t(e ot(er
(and presented e2iden"e6 namey t(e "ontra"t o- mortgage +(i"( does not appear to (a2e )een "an"eed or reeased.
Section 6-5 E5"ept in t(e "ases spe"i-ied in t(e ne5t -our se"tions6 and in t(e "ases o- i-e6 a""ident and
(eat( insuran"e6 a "(ange o- interest in any part o- a t(ing insured6 una""ompanied )y a "orresponding "(ange o-
interest in t(e insuran"e6 suspends t(e insuran"e to an eGui2aent e5tent6 unti t(e interests in t(e t(ing and t(e
interest in t(e insuran"e are 2ested in t(e same person.
INSURANCE REVIEWER Atty. Quimson page ##
What i the 3ene"a# "&#e e2$o%ie% in thi ection'
'(e 8enera Rue is t(at t(e mere trans-er o- t(e t(ing insured does not trans-er t(e poi"y )ut suspends it unti t(e
same person )e"omes t(e o+ner o- )ot( t(e poi"y and t(e t(ing insured. '(e term ,chan3e o) inte"etB in t(is se"tion
means a)soute trans-er o- t(e property insured su"( as t(e "on2eyan"e o- t(e property insured )y means o- an a)soute
deed o- sae.
What a"e the e@ce!tion to the 3ene"a# "&#e'
'(e e5"eptions6 +(ere a "(ange o- interest does NB' suspend t(e insuran"e areJ
1. <i-e6 (eat( and a""ident insuran"e (Se". C%&
C. C(ange o- interest in t(e t(ing insured o""urs a)te" t(e inIury +(i"( resuts in a oss (Se". C1&
9. C(ange o- interest in one or more o- se2era t(ings separatey insured )y one poi"y (Se". CC&
#. C(ange o- interest )y +i or su""ession on t(e deat( o- t(e insured (Se". C9&
F. 'rans-er o- interest )y one o- se2era partners6 Ioint o+ners or o+ners in "ommon +(o are Iointy insured6 to
t(e ot(er (Se". C#&
What i the "eaon )o" thi !"o*iion &!en%in3 the in&"ance in cae o) chan3e o) inte"et'
'(e o)Ie"t o- t(e pro2ision is to pro2ide against "(anges +(i"( mig(t suppy a moti2e to destroy t(e property6 or mig(t
essen t(e interest o- t(e insurer in prote"ting and guarding it.
Cae9
7068 Each"ach *5 E"itih A2e"ican In&"ance Co5
17 PHIL 111
Fact9
3a"(ra"( insured properties o- its genera -urniture s(op +it( 3ritis(. '(e properties +ere su)seGuenty destroyed )y
-ire.
3a"(ra"( "aims -rom t(e insuran"e "ompany. '(e "aim +as denied on t(e -- groundsJ
o '(e poi"y +as aegedy -or-eited )e"ause t(e insured stored 2arnis(es and paints +it(in t(e premises;
o Insured stored gasoine in t(e )uiding; and
o 3a"(ra"( e5e"uted a "(atte mortgage on t(e properties insured +it(out t(e "onsent o- t(e insured.
I&e9 WBN 3a"(ra"( "an "aim t(e pro"eeds o- t(e poi"y.
He#%9 >e5
'(e poi"y +as NB' -or-eited due to t(e strong paints and 2arnis(es. '(ere +as no e5press pro2ision pertaining to it
and t(ese paints and 2arnis(es are in"identa to t(e )usiness o- t(e insured to *eep t(e -urniture in a saea)e "ondition.
'(e gasoine stored +it(in t(e premises +as in t(e reser2oir o- t(e "ar and t(us does not 2ioate any pro2ision in t(e poi"y.
'(ere is no e5press pro(i)ition against t(e e5e"ution o- a "(atte mortgage on t(e property insured.
70/8 San ?i3&e# E"e(e"4 *5 La( Union Roc; In&"ance Co2!an4 (repeat "ase O1C&
0- PHIL 670
Fact9
poi"y.
INSURANCE REVIEWER Atty. Quimson page #F
He#%9 NOPE5
"redit.
Section 615 A "(ange o- interest in a t(ing insured6 a-ter t(e o""urren"e o- an inIury +(i"( resuts in a oss6
does not a--e"t t(e rig(t o- t(e insured to indemnity -or t(e oss.
P"o$#e29
' ins!red his ho!se for 1G*$ .n '!)$ 1G, 0GG4, the ho!se was #artia( dama)ed b( fire$ .n '!)$ 1C, 0GG4, he sod the
same ho!se so #artia( dama)ed to +$ +an ' coect on the ins!rance after sein) the ho!se>
Aes. '(e "(ange o- interest +as made a)te" t(e o""urren"e o- t(e inIury +(i"( resuted in a partia oss. Upon t(e
o""urren"e o- t(e ris* insured against6 t(e ia)iity o- t(e insurer )e"ame -i5ed and -rom t(at day on+ard6 (e )e"ame duty
)ound to indemni-y A -or (is oss.
Section 665 A "(ange in interest in one or more o- se2era distin"t t(ings6 separatey insured )y one poi"y6
does not a2oid t(e insuran"e as to t(e ot(ers.

P"o$#e25
' is the owner of a Bero6a and a +ivic$ =e ins!res the Bero6a for 0GG* and the +ivic for 1CG* !nder a sin)e #oic( for
which he #aid a tota #remi!m of 0G*$ 2f he ses the Bero6a witho!t the ins!rerHs consent, is the ins!rer iabe in case the
+ivic is ost>
Aes. Sin"e t(e 2e(i"es are separatey insured. Under Se". CC6 t(e sae o- one distin"t t(ing does NB' a2oid t(e
insuran"e as to t(e ot(ers.
' is the owner of a Bero6a and a +ivic$ =e ins!red the Bero6a and the +ivic for 3CG* !nder a sin)e #oic( for which he #aid
a #remi!m of 0G*$ 2n case he ses the Bero6a witho!t the ins!rerHs consent, is the ins!rer iabe in case the +ivic is ost>
NB. Sin"e t(e t+o "ars are not separatey 2aued in t(e poi"y and t(e premium +as meant to "o2er )ot( 2e(i"es. In
t(is "ase6 t(e sae o- one t(ing a--e"ts t(e insuran"e o- t(e ot(ers.
INSURANCE REVIEWER Atty. Quimson page #$
Section 6/5 A "(ange o- interest6 )y +i or su""ession on t(e deat( o- t(e insured6 does not a2oid t(e
insuran"e; and (is interest in t(e insuran"e passes to t(e person ta*ing (is interest in t(e t(ing insured.
P"o$#e25
' ins!res his ni#a h!t, his on( #ro#ert($ =e has no com#!sor( heirs$ =e instit!tes B as his !niversa heir$ *hereafter, '
dies and B inherits the h!t$ 2f the h!t b!rns down can B coect>
Aes. Se". C9 says so.
Section 605 A trans-er o- interest )y one o- se2era partners6 Ioint o+ners6 or o+ners in "ommon6 +(o are
Iointy insured6 to t(e ot(ers6 does not a2oid t(e insuran"e6 e2en t(oug( it (as )een agreed t(at t(e insuran"e s(a
"ease upon t(e aienation o- t(e t(ing insured.
What %oe thi ection !"o*i%e'
It pro2ides t(at a trans-er o- interest in t(e insured property )y a partner6 Ioint o+ner6 or o+ner in "ommon to t(e ot(ers
+(o are Iointy insured6 +i NB' a2oid t(e insuran"e. '(e rue is t(e same e2en i- t(ere is a stipuation t(at t(e insuran"e
+i "ease upon t(e aienation o- t( t(ing insured.
What i the "eaon )o" the "&#e'
'(e underying prin"ipe is t(at ea"( partner6 or o+ner or o+ner in "ommon is interested in t(e +(oe property and
(a4ard is NB' in"reased )e"ause t(e pur"(asing partner (as a"Guired a greater interest in t(e property )y a trans-er o- (is
"o:partner=s "(are. In ot(er +ords6 t(e trans-er does not a--e"t t(e ris* )e"ause NB NEW PAR'A is )roug(t into t(e
"ontra"tua reations(ip +it( t(e insurer.
I the"e an e@ce!tion to the "&#e'
Aes. I- t(e poi"y "ontains t(e stipuation t(at ,in case of ANY sae or transfer or chan)e of tite of an( #ro#ert( ins!red
b( this com#an(, or of an( !ndivided interest therein, s!ch ins!rance wi be void and cease$4
What i the e))ect i) the a#e (a 2a%e to a t"an3e"'
A t(e more6 t(e "ontra"t +i )e a2oided )e"ause t(e ris* is aready a--e"ted sin"e a ne+ party is )roug(t into t(e
"ontra"t o- insuran"e. 7o+e2er6 su"( sae to a stranger ends t(e "ontra"t o- insuran"e ony a to the inte"et o) the
t"an)e"o" and does NB' a--e"t t(e insuran"e o- t(e ot(er partners6 Ioint o+ners or o+ners in "ommon.
P"o$#e25
' fire ins!rance #oic( was iss!ed b( S#iderman 2ns!rance +o$ to @eter, MJ, and =arr(, who are #artners$ =arr( sod his
interest to Foc .ck$ 2n case of fire is the ins!rer iabe to Foc .ck>
NB6 sin"e !o" B"* is a stranger.(B!rthermore arch-enem( si(a ni s#idermanOhehehe) 7o+e2er6 t(e insurer is ia)e
to Peter and >E +(ose insuran"e +as not a--e"ted )y t(e sae o- 7arry.
2f !sin) the same facts, =arr( ses to @eter$ 2s the ins!rer iabe to @eter>
Aes. Peter is a partner.
-hat m!st the ins!rer do to avoid the #oic(>
Spiderman Insuran"e Co. must stipuate in t(e poi"y t(at ,any sae o- t(e property or any interest t(erein a2oids t(e
poi"y.1 '(is is t(e ony +ay t(e insurer "annot )e (ed ia)e.
Section 615 E2ery stipuation in a poi"y o- insuran"e -or t(e payment o- oss +(et(er t(e person insured (as
or t(e payment o- oss +(et(er t(e person insured (as or (as not any interest in t(e property insured6 or t(at t(e
poi"y s(a )e re"ei2ed as proo- o- su"( interest6 and e2ery poi"y e5e"uted )y +ay o- gaming or +agering6 is 2oid.
Thi ection a*oi% t(o t4!e o) ti!&#ation in an in&"ance !o#ic45 What a"e the4'
1. Stipuation -or t(e payment o- oss WBN t(e person insured (as any interest in t(e su)Ie"t matter o- t(e insuran"e
(e5"eptionJ i-e insuran"e&
C. Stipuation t(at t(e poi"y +i )e re"ei2ed as proo- o- insura)e interest
INSURANCE REVIEWER Atty. Quimson page #/
What i the "eaon )o" *oi%in3 &ch ti!&#ation'
As to t(e 1
st
stipuation6 +e must remem)er t(at insura)e interest is a reGuisite o- a 2aid "ontra"t o- insuran"e. <a"* o-
t(is reGuisite a2oids t(e "ontra"t.
As to t(e C
nd
stipuation6 t(e a+ permits t(e insurer to s(o+ a"* o- insura)e interest on t(e part o- t(e insured6 e2en
a-ter t(e issuan"e o- a poi"y o- insuran"e to a2oid ia)iity. (Se". 09&
TITLE IV . CONCEAL?ENT
Section 665 A nege"t to "ommuni"ate t(at +(i"( a party *no+s and oug(t to "ommuni"ate is "aed a
"on"eament.
What a"e the )o&" !"i2a"4 conce"n o) !a"tie to an in&"ance cont"act'
In ma*ing a "ontra"t so (ig(y aeatory su"( as t(at o- insuran"e6 t(e parties (a2e -our primary "on"erns to +itJ
1. '(e "orre"t estimation o- t(e ris* +(i"( ena)es t(e insurer to de"ide +(et(er (e is +iing to assume it6 and i- so6 at
+(at rate or premium;
C. '(e pre"ise deimitation o- t(e ris* +(i"( determines t(e e5tent o- t(e "ontingent duty to pay underta*en )y t(e
insurer;
9. Su"( "ontro o- t(e ris* a-ter it is assumed as +i ena)e t(e insurer to guard against t(e in"rease o- t(e ris*
)e"ause o- "(ange in "onditions; and
#. !etermining +(et(er a oss o""urred6 and i- so6 t(e amount o- su"( oss.
What i concea#2ent'
Con"eament is a nege"t to "ommuni"ate t(at +(i"( a party *no+s and oug(t to "ommuni"ate.
What a"e the "e=&iite o) concea#2ent'
'(ere "an )e no "on"eament unessJ
1& A party *no+s t(e -a"t +(i"( (e nege"ts to "ommuni"ate or dis"ose to t(e ot(er;
C& Su"( party "on"eaing duty )ound to dis"ose su"( -a"t to t(e ot(er
9& Su"( party "on"eaing ma*es no +arranty o- t(e -a"t "on"eaed; and
#& '(e ot(er party (as no means o- as"ertaining t(e -a"t "on"eaed
Section 675 A "on"eament +(et(er intentiona or unintentiona entites t(e inIured party to res"ind a "ontra"t
o- insuran"e.
What i the e))ect o) concea#2ent'
As a rue6 -aiure on t(e part o- t(e insured to dis"ose "onditions a--e"ting t(e ris* o- +(i"( (e is a+are6 ma*es t(e
"ontra"t 2oida)e at t(e insured=s option. '(e reason is t(at insuran"e poi"ies are traditionay "ontra"ts !berrime fidae6 t(at
is6 "ontra"ts o- t(e outmost good -ait(. '(is do"trine is essentia on a""ount o- t(e -a"t t(at t(e -u "ir"umstan"es o- t(e
su)Ie"t:matter o- insuran"e are6 as a rue6 *no+n to t(e insured ony6 and t(e insurer6 in de"iding +(et(er or not to a""ept a
ris*6 must rey primariy upon t(e in-ormation suppied to (im )y t(e appeant.
In o"%e" to "ecin% a cont"act on the 3"o&n% o) concea#2entC 2&t the in&"e" !"o*e )"a&%'
NB. Under Se". C/6 t(e insurer need not pro2e -raud in order to res"ind a "ontra"t on t(e ground o- "on"eament. '(e
duty o- "ommuni"ation is independent o- t(e intention and is 2ioated )y t(e -a"t o- "on"eament6 e2en +(en t(ere is no
intention to de"ei2e. Se". C/ pro2ides t(at t(e e--e"t o- "on"eament is t(e same regardess o- +(et(er t(e "on"eament is
intentiona or unintentiona.
Wh4 %oe the #a( 2a;e no %itinction $et(een inte"nationa# an% &nintentiona# concea#2ent'
3e"ause you (a2e to pro2e -raud. And i- you (a2e to pro2e -raud6 you (a2e to pro2e intention to de"ei2e. And it is so
(ard to pro2e intention to de"ei2e )e"ause +e are not mind:readers.
What i the "eaon $ehin% Sec5 67'
'(e reason )e(ind t(e Se". is t(at in "ases o- "on"eament6 t(e insurer is mised or de"ei2ed into a""epting t(e ris* 6 or
a""epting it at t(e rate o- premium agreed upon. '(e insurer6 reying upon t(e )eie- t(at t(e insured +i dis"ose e2ery
materia -a"t +it(in (is a"tua or presumed *no+edge6 is mised into a )eie- t(at t(e "ir"umstan"e +it((ed does NB' e5ist6
and (e is t(ere)y indu"ed to estimate t(e ris* upon a -ase )asis.
What i the c"ite"ion then i) (e (e"e to a!!#4 Sec5 67'
We must as* ourse2es t(e GuestionJ Was t(e insurer mised or de"ei2ing into entering a "ontra"t o)igation or in -i5ing
t(e premium o- insuran"e )y t(e +it((oding o- materia in-ormation or -a"ts +it(in t(e insured=s *no+edge or presumed
*no+edgeH '(e appi"ation o- Se" C/6 ne"essariy depends on t(e ans+er to t(is Guestion.
P"o$#e25
2n his a##ication for ife ins!rance, ' did not revea the fact that he was s!fferin) from a certain aiment$ 2s there
conceament if the aiment was not materia to the contract>
W(et(er or not A +as a+are o- t(e aiment6 t(ere is no "on"eament i- t(e aiment is not materia to t(e "ontra"t.
Same facts as above b!t the aiment is materia to the contract$ 2s there conceament>
AES. '(ere is "on"eament. 7o+e2er6 +e "an distinguis(. I- A6 +as a+are o- t(e aiment6 )ut (onesty )eie2ed t(at it
+as not materia6 t(e "on"eament is not -rauduent or intentiona. 3ut i- A +as a+are o- t(e materiaity o- t(e aiment6 t(ere
is -rauduent "on"eament. Ne2ert(eess6 t(e e--e"t is t(e same. It entites t(e insurer to res"ind t(e "ontra"t.
Cae9
7008 A"3ente *5 Wet Coat Li)e In&"ance Co5
11 PHIL 761
Fact9
A Ioint i-e insuran"e poi"y +as issued to 3ernardo Argente and (is +i-e Vi"enta upon payment o- premium6 )y West
Coast.
Bn No2. 106 1.CF6 during t(e e--e"ti2ity o- t(e poi"y6 Vi"enta died o- "ere)ra apope5y. '(erea-ter6 3ernardo "aimed
payment )ut +as re-used.
It is admitted t(at in t(e >edi"a E5aminer=s report6 Vi"enta6 in response to t(e Guestion as*ed )y t(e medi"a e5aminer6
(er repies +ere as -oo+sJ
o ,7o+ -reGuenty do you use )eer6 +ine6 spirits and ot(er into5i"antsH1 s(e ans+ered ,)eer ony in sma
Guantities1.
o ,W(at p(ysi"ian (a2e you "onsuted or )een treated )y +it(in t(e ast F years and -or +(at iness or aimentH1
s(e ans+ered ,none1
It is (o+e2er6 not disputed t(at in 1.C#6 Vi"enta +as ta*en to a (ospita -or +(at +as -irst diagnosed as a"o(oism and
ater "(anged to mani":depressi2e psy"(osis and t(en again "(anged to ps"y(onuerosis.
I&e9 WBN on t(e )ais o- t(e misrepresentations o- Vi"enta6 3ernardo is )arred -rom re"o2ery.
He#%9 >ES5
'(e "ourt -ound t(at t(e representations made )y Vi"enta in (is appi"ation -or i-e insuran"e +ere -ase +it( respe"t to
(er state o- (eat( and t(at s(e *ne+ and +as a+are t(at t(e representations so made )y (er +ere -ase. In an a"tion on a
i-e insuran"e poi"y +(ere t(e e2iden"e "on"usi2ey s(o+s t(at t(e ans+ers to Guestions "on"erning diseases +ere untrue6
t(e trut( or -asity o- t(e ans+er )e"omes t(e determining -a"tor.
I- t(e poi"y +as pro"ured )y -rauduent misrepresentations6 t(e "ontra"t o- insuran"e apparenty set -ort( t(erein +as
ne2er egay e5istent. It "an )e -airy assumed t(at (ad t(e true -a"ts )een dis"osed )y t(e insured6 t(e insuran"e +oud
ne2er (a2e )een granted.
7018 >& Pan3 Chen3 *5 CA
1-1 PHIL 19/-
Fact9
Au Pang Eng o)tained a i-e insuran"e poi"y naming (is )rot(er Au Pang C(eng as )ene-i"iary.
Eng su)seGuenty died o- meduary "ar"inoma6 8rade #6 ad2an"ed and esser "ur2ature.
C(eng "aims t(e pro"eeds o- t(e poi"y.
Insuran"e "o. re-used payment on t(e ground t(at t(e poi"y +as 2oid due to t(e "on"eament.
I&e9 WBN t(e poi"y is 2oid.
He#%9 >ES5
INSURANCE REVIEWER Atty. Quimson page #.
In t(e appi"ation -or t(e poi"y6 Eng +as as*ed +(et(er (e (ad )een i or (ad "onsuted a do"tor due to symptoms or
inesses enumerated in t(e Guestionnaire. 7e ans+ered , No16 +(en in -a"t (e +as (ospitai4ed se2en mont(s prior to (is
appi"ation -or t(e said poi"y.
7068 Sat&"nino *5 Phi#a2#i)e
7 SCRA /16
Fact9
C mont(s prior to t(e insuran"e o- t(e poi"y6 Saturnino +as operated on -or "an"er6 in2o2ing "ompete remo2a o- t(e
rig(t )reast6 in"uding t(e pe"tora mus"es and t(e gands6 -ound in t(e rig(t armpit.
Not+it(standing t(e -a"t o- (er operation6 Saturnino did not ma*e a dis"osure t(ereo- in (er appi"ation -or insuran"e.
S(e stated t(erein t(at s(e did not (a2e6 nor (ad s(e e2er (ad6 among ot(ers isted in t(e appi"ation6 "an"er or ot(er
tumors; t(at s(e (ad not "onsuted any p(ysi"ian6 undergone any operation or su--ered any inIury +it(in t(e pre"eding F
years.
S(e aso stated t(at s(e (ad ne2er )een treated -or6 nor did s(e e2er (a2e any iness or disease pe"uiar to (er se56
parti"uary o- t(e )reast6 o2aries6 uterus and menstrua disorders.
'(e appi"ation aso re"ited t(at t(e de"arations o- Saturnino "onstituted a -urt(er )asis -or t(e issuan"e o- t(e poi"y.
I&e9 WBN t(e insured made su"( -ase representation o- materia -a"ts as to a2oid t(e poi"y.
He#%9 >ES5
'(ere "an )e no dispute t(at t(e in-ormation gi2en )y (er in t(e appi"ation -or insuran"e +as -ase6 namey6 t(at s(e
ne2er (ad "an"er or tumors or "onsuted any p(ysi"ian or undergone any operation +it(in t(e pre"eding period o- F years.
'(e Guestion to determine isJ Are t(e -a"ts t(en -asey represented materiaH '(e Insuran"e <a+ pro2ides t(at
,materiaity is to )e determined not )y t(e e2ent6 )ut soey )y t(e pro)a)e and reasona)e in-uen"e o- t(e -a"ts upon t(e
party to +(om t(e "ommuni"ation is due6 in -orming (is estimate o- t(e proposed "ontra"t6 or ma*ing (is inGuiries.
'(e "ontention o- appeants is t(at t(e -a"ts su)Ie"t o- t(e representation +ere not materia in 2ie+ o- t(e non:medi"a
nature o- t(e insuran"e appied -or6 +(i"( does a+ay +it( t(e usua reGuirement o- medi"a e5amination )e-ore t(e poi"y is
issued. '(e "ontention is +it(out merit. I- anyt(ing6 t(e +ai2er o- medi"a e5amination renders e2en more materia t(e
in-ormation reGuired o- t(e appi"ant "on"erning pre2ious "ondition o- (eat( and diseases su--ered6 -or su"( in-ormation
ne"essariy "onstitutes an important -a"tor +(i"( t(e insurer ta*es into "onsideration in de"iding +(et(er to issue t(e poi"y
or not.
Appeants aso "ontend t(at t(ere +as no -rauduent "on"eament o- t(e trut( inasmu"( as t(e insured (erse- did not
*no+6 sin"e (er do"tor ne2er tod (er6 t(at t(e disease -or +(i"( s(e (ad )een operated on +as "an"er. In t(e -irst pa"e6
"on"eament o- t(e -a"t o- t(e operation itse- +as -rauduent6 as t(ere "oud not (a2e )een any mista*e a)out it6 no matter
+(at t(e aiment.
Se"ondy6 in order to a2oid a poi"y6 it is not ne"essary to s(o+ a"tua -raud on t(e part o- t(e insured. In t(is
Iurisdi"tion6 "on"eament6 +(et(er intentiona or unintentiona entited t(e insurer to res"ind t(e "ontra"t o- insuran"e6
"on"eament )eing de-ined as ,ne)i)ence to comm!nicate that which a #art( knows and o!)ht to comm!nicate$1 '(e )asis
o- t(e rue 2itiating t(e "ontra"t in "ases o- "on"eament is t(at it miseads or de"ei2es t(e insurer into a""epting t(e ris*6 or
a""epting it at a rate o- premium agreed upon. '(e insurer6 reying upon t(e )eie- t(at t(e insured +i dis"ose e2ery
materia -a"t +it(in (is a"tua or presumed *no+edge6 is mised into a )eie- t(at t(e "ir"umstan"es +it((ed does not e5ist6
and (e is t(ere)y indu"ed to estimate t(e ris* upon a -ase )asis t(at it does not e5ist.
7078 G"e!a#i)e *5 CA (repeat "ase O1F&
Fact9
Bn >ar #6 1.F/6 Ngo 7ing -ied an appi"ation +it( 8repai-e -or a C%:yr endo+ment poi"y -or PF%' on t(e i-e o- (is 1:yr
od daug(ter 7een 8o.
Upon payment o- t(e insuran"e premium6 a )inding deposit re"eipt +as issued to 7Ing )y t(e )ran"( manager o- t(e
insurer in Ce)u.
Bn >ay C06 1.F/6 7een died o- in-uen4a +it( "ompi"ation o- )ron"(o pneumonia.
7ing -ied a "aim +it( 8repai-e6 )ut t(e atter denied ia)iity on t(e ground o- "on"eament.
I&e9 WBN 8repai-e is ia)e to 7Ing.
He#%9 NO5 The"e (a concea#2ent5
INSURANCE REVIEWER Atty. Quimson page F%
'(e SC +as o- t(e -irm )eie- t(at Ngo 7ing (ad dei)eratey "on"eaed t(e state o- (eat( and p(ysi"a "ondition o- (is
daug(ter 7een. W(en (e suppied t(e reGuired essentia data -or t(e insuran"e -orm6 (e +as -uy a+are t(at 7een +as a
mongooid.
Su"( a "ongenita de-e"t "oud not )e ens"on"ed or disguised. Nonet(eess6 Ngo 7ing6 in apparent gad -ait(6 +it((ed
su"( -a"t +(i"( is materia to t(e ris* to )e assumed )y t(e insuran"e "ompany. 7ad (e di2uged said signi-i"ant -a"t in t(e
insuran"e -orm6 8repai-e +oud (a2e 2eri-ied t(e same and +oud (a2e (ad no o)2ious "(oi"e )ut to disappro2e t(e
appi"ation outrig(t. Con"eament entites t(e insurer to reso2e t(e "ontra"t o- insuran"e.
70,8 Henon *5 Phi#a2#i)e
16 OG 7/6,
Fact9
Ceestino 7enson +as insured )y P(iami-e in 1.F# upon (is appi"ation or a C%:yr endo+ment i-e poi"y.
In 1.FF6 t(e poi"y apsed due to non:payment o- t(e premiums.
Upon payment o- t(e premiums due6 t(e poi"y +as reinstated6 )ut in t(e appi"ation -or reinstatement6 7enson did not
dis"ose t(e -a"t t(at (e (ad )een pre2iousy diagnosed -or pyeonep(ritis6 enarged i2er and (ernia. 7e aso did not
dis"ose t(at (e (ad )een e5amined )y a p(ysi"ian.
In 1.F$6 7enson died6 and (is )ene-i"iaries= "aim +as reIe"ted )y P(iami-e on t(e ground o- "on"eament.
'(e "ompany t(en -ied -or res"ission. 3ene-i"iaries= "ontend t(at t(e intent to "on"ea must )e pro2en to +arrant
res"ission.
I&e9 WBN t(ere is need to pro2e intent to "on"ea to +arrant res"ission.
He#%9 NO5
Se". C$ pro2ides t(at ,a conceament whether intentiona or !nintentiona entites the in"!red #art( to rescind the
contract of ins!rance1. And aside -rom t(is6 intent6 )eing a state o- t(e mind is (ard to pro2e.
A""ording to Se". 9% o- t(e Insuran"e CodeJ Materiait( is to be determined not b( the event, b!t soe( b( the #robabe
and reasonabe inf!ence of the facts !#on the #art( to whom the comm!nication is d!e, in formin) his estimate of the
disadvanta)es of the #ro#osed contract, or in makin) his in3!iries$ In essen"e t(ere-ore6 t(e insured need not (a2e died o-
t(e 2ery diseases (e (ad -aied to re2ea to t(e insuran"e "ompany. It is su--i"ient t(at (is non:re2eation (ad mised t(e
insurer in -orming its estimate o- t(e disad2antages o- t(e proposed poi"y reinstatement or in ma*ing its inGuiries6 in order to
entite t(e atter to res"ind t(e "ontra"t.
7098 So#i2an *5 US Li)e
1-0 PHIL 1-06
Fact9
US <i-e issued a C%yr endo+ment i-e poi"y on t(e Ioint i2es o- Patri"io Soiman and (is +i-e Rosario6 ea"( o- t(em
)eing t(e )ene-i"iary o- t(e ot(er.
In >ar"( 1.#.6 t(e spouses +ere in-ormed t(at t(e premium -or Ean 1.#. +as sti unpaid not+it(standing t(at t(e 91:
day gra"e period (ad aready e5pired6 and t(ey +ere -urnis(ed at t(e same time ong:-orm (eat( "erti-i"ates -or t(e
reinstatement o- t(e poi"ies.
In Apr 1.#.6 t(ey su)mitted t(e (eat( "erti-i"ates and paid t(e premium due up to said mont(.
In Ean. 1.F%6 Rosario died o- a"ute diatation o- t(e (eart6 and t(erea-ter Patri"io -ied a "aim -or t(e pro"eeds o- t(e
insuran"e.
US <i-e denied t(e "aim and it -ied a "ase -or res"ission on t(e ground t(at t(e (eat( "erti-i"ates -aied to dis"ose t(at
Rosario (ad )een su--ering -rom )ron"(ia ast(ma -or t(ree years prior to t(e su)mission.
Patri"io "aims t(at t(e ans+ers to t(e Guestions in t(e (eat( "erti-i"ates +ere made )y US <i-e=s agent.
I&e9 WBN t(e poi"y "an )e res"inded.
He#%9 >ES5
'(e spouses in ao+ing t(e agent to ans+er some o- t(e )an*s in t(e "erti-i"ates and a-ter+ards stamping t(eir
signature t(ereon are presumed to (a2e at east a"Guies"ed in and appro2ed a t(at (ad )ee stated t(erein in t(eir )e(a-.
71-8 Ea&tita *5 Ca!ita# In&"ance
1 CA Re!5 66,
Fact9
INSURANCE REVIEWER Atty. Quimson page F1
In 1.FC6 a "ontra"t o- insuran"e +as entered )y t(e parties6 upon PIar 3autista=s (ouse.
'(e poi"y des"ri)ed t(e )uiding as ,occ!#ied as dwein) on(4.
'(ere +as a stipuation to t(e e--e"t t(at any misrepresentation o- materia -a"t or misdes"ription o- t(e property s(a
render t(e insurer not ia)e -or its oss.
3e-ore t(e poi"y +as issued (o+e2er6 >anue <eyson6 3autista=s essee6 su)eased t(e ground -oor to BNg6 +(o used
it as a -a"tory -or t(e manu-a"ture o- s(oes. A mont( ater6 ru))er (ees6 soes and "an2ass +ere stored t(erein.
Su)seGuenty6 t(e (ouse +as destroyed )y -ire. 3autista -ied (er "aims +it( Capita Insuran"e6 )ut t(e atter denied
(er "aim on t(e ground o- )rea"( o- +arranty.
3autista said t(at t(e statement ,o""upied as d+eing ony1 +as not (ers6 )ut o- t(e insuran"e agent6 and t(at t(e
poi"y +as in Engis( (+(i"( s(e did not understand& and +as ne2er read to (er.
I&e9 WBN Capita may res"ind t(e "ontra"t.
He#%9 It can5
3autista +as )ound to *no+ t(e "ontents o- t(e poi"y in a""epting it. In t(e a)sen"e o- -raud6 s(e is presumed to *no+
t(e "ontents o- t(e "ontra"t and to (a2e assented to t(em. @aiure to read t(e poi"y is negigen"e6 and t(e insured is
regarded as (a2ing assumed t(e ris* o- t(e -asity or misstatements o- its "ontents.
7118 Gen5 In&"ance H S&"et4 Co"! *5 NG H&a
1-6 PHIL 1117
Fact9
In 1.FC6 8enera issued a -ire poi"y to Ng 7ua to "o2er t(e "ontents o- t(e Centra Pomade @a"tory o+ned )y (im.
'(ere +as a pro2ision in t(e poi"y t(at s(oud t(ere )e any insuran"e aready e--e"ted or to )e su)seGuenty pro"ured6
t(e insured s(a gi2e noti"e to t(e insurer.
Ng 7ua de"ared t(at t(ere +as non. '(e 2ery ne5t day6 t(e )uiding and t(e goods stored t(erein )urned.
Su)seGuenty6 t(e "aim o- Ng 7ua -or t(e pro"eeds +as denied )y 8enera sin"e it dis"o2ered t(at Ng 7ua (ad
o)tained an insuran"e -rom 8enera Indemnity -or t(e same goods and -or t(e same period o- time.
I&e9 WBN 8enera Insuran"e "an re-use to pay t(e pro"eeds.
He#%9 >e5
Vioation o- t(e statement +(i"( is to )e "onsidered a +arranty entites t(e insurer to res"ind t(e "ontra"t o- insuran"e.
Su"( misrepresentation is -ata.
7168 V%a5 De Cani#an3 *5 CA
66/ SCRA 00/ 7199/8
Fact9
Caniang "onsuted !r. Caudio and +as diagnosed as su--ering -rom Msinus ta"(y"ardia.M >r. Caniang "onsuted t(e
same do"tor again on 9 August 1.0C and t(is time +as -ound to (a2e Ma"ute )ron"(itis.M
Bn t(e ne5t day6 # August 1.0C6 Caniang appied -or a Mnon:medi"aM insuran"e poi"y +it( 8repai-e naming (is +i-e6
as (is )ene-i"iary. Caniang +as issued ordinary i-e insuran"e +it( t(e -a"e 2aue o- P1.6/%%.
Bn F August 1.096 Caniang died o- M"ongesti2e (eart -aiure6M Manemia6M and M"(roni" anemia.M '(e +i-e as )ene-i"iary6
-ied a "aim +it( 8repai-e +(i"( t(e insurer denied on t(e ground t(at t(e insured (ad "on"eaed materia in-ormation
-rom it.
Vda Caniang -ied a "ompaint +it( t(e Insuran"e Commissioner against 8repai-e "ontending t(at as -ar as s(e *no+s
(er (us)and +as not su--ering -rom any disorder and t(at (e died o- *idney disorder.
8repai-e +as ordered to pay t(e +ido+ )y t(e Insuran"e Commissioner (oding t(at t(ere +as no intentiona
"on"eament on t(e Part o- Caniang and t(at 8repai-e (ad +ai2ed its rig(t to inGuire into t(e (eat( "ondition o- t(e
appi"ant )y t(e issuan"e o- t(e poi"y despite t(e a"* o- ans+ers to Msome o- t(e pertinent GuestionsM in t(e insuran"e
appi"ation. CA re2ersed.
I&e9 WBN 8repai-e is ia)e.
He#%9
SC too* note o- t(e -a"t t(at Caniang -aied to dis"ose t(at (at (e (ad t+i"e "onsuted !r. Wi-redo 3. Caudio +(o (ad
-ound (im to )e su--ering -rom Msinus ta"(y"ardiaM and Ma"ute )ron"(itis. Under t(e ree2ant pro2isions o- t(e Insuran"e
Code6 t(e in-ormation "on"eaed must )e in-ormation +(i"( t(e "on"eaing party *ne+ and Moug(t to W(a2eX
"ommuni"ateWdX6M t(at is to say6 in-ormation +(i"( +as Mmateria to t(e "ontra"t.
INSURANCE REVIEWER Atty. Quimson page FC
'(e in-ormation +(i"( Caniang -aied to dis"ose +as materia to t(e a)iity o- 8repai-e to estimate t(e pro)a)e ris* (e
presented as a su)Ie"t o- i-e insuran"e. 7ad Caniang dis"osed (is 2isits to (is do"tor6 t(e diagnosis made and t(e
medi"ines pres"ri)ed )y su"( do"tor6 in t(e insuran"e appi"ation6 it may )e reasona)y assumed t(at 8repai-e +oud (a2e
made -urt(er inGuiries and +oud (a2e pro)a)y re-used to issue a non:medi"a insuran"e poi"y or6 at t(e 2ery east6
reGuired a (ig(er premium -or t(e same "o2erage.
'(e materiaity o- t(e in-ormation +it((ed )y Caniang -rom 8repai-e did not depend upon t(e state o- mind o- Eaime
Caniang. A manLs state o- mind or su)Ie"ti2e )eie- is not "apa)e o- proo- in our Iudi"ia pro"ess6 e5"ept t(roug( proo- o-
e5terna a"ts or -aiure to a"t -rom +(i"( in-eren"es as to (is su)Ie"ti2e )eie- may )e reasona)y dra+n. Neit(er does
materiaity depend upon t(e a"tua or p(ysi"a e2ents +(i"( ensue. >ateriaity reates rat(er to t(e Mpro)a)e and reasona)e
in-uen"e o- t(e -a"tsM upon t(e party to +(om t(e "ommuni"ation s(oud (a2e )een made6 in assessing t(e ris* in2o2ed in
ma*ing or omitting to ma*e -urt(er inGuiries and in a""epting t(e appi"ation -or insuran"e; t(at Mpro)a)e and reasona)e
in-uen"e o- t(e -a"tsM "on"eaed must6 o- "ourse6 )e determined o)Ie"ti2ey6 )y t(e Iudge utimatey.
SC -ound it di--i"ut to ta*e seriousy t(e argument t(at 8repai-e (ad +ai2ed inGuiry into t(e "on"eament )y issuing t(e
insuran"e poi"y not+it(standing CaniangLs -aiure to set out ans+ers to some o- t(e Guestions in t(e insuran"e appi"ation.
Su"( -aiure pre"isey "onstituted "on"eament on t(e part o- Caniang. PetitionerLs argument6 i- a""epted6 +oud o)2iousy
erase Se"tion C/ -rom t(e Insuran"e Code o- 1./0.
71/8 S&n Li)e *5 CA
601 SCRA 66, 719918
Fact9
Bn Apri 1F6 1.0$6 3a"ani pro"ured a i-e insuran"e "ontra"t -or (imse- -rom Sun <i-e. 7e +as issued a i-e insuran"e
poi"y +it( dou)e indemnity in "ase o- a""identa deat(. '(e designated )ene-i"iary +as (is mot(er6 3ernarda.
Bn Eune C$6 1.0/6 t(e insured died in a pane "ras(. 3ernarda 3a"ani -ied a "aim +it( Sun <i-e6 see*ing t(e )ene-its o-
t(e insuran"e. Sun <i-e "ondu"ted an in2estigation and its -indings prompted it to reIe"t t(e "aim.
Sun <i-e dis"o2ered t(at C +ee*s prior to (is appi"ation6 3a"ani +as e5amined and "on-ined at t(e <ung Center o- t(e
P(iippines6 +(ere (e +as diagnosed -or rena -aiure. !uring (is "on-inement6 t(e de"eased +as su)Ie"ted to
urinaysis6 utra:sonograp(y and (ematoogy tests. 7e did not re2ea su"( -a"t in (is appi"ation.
In its etter6 Sun <i-e in-ormed 3erarda6 t(at t(e insured did not dis"osed materia -a"ts ree2ant to t(e issuan"e o- t(e
poi"y6 t(us rendering t(e "ontra"t o- insuran"e 2oida)e. A "(e"* representing t(e tota premiums paid in t(e amount o-
P1%61/C.%% +as atta"(ed to said etter.
3ernarda and (er (us)and6 -ied an a"tion -or spe"i-i" per-orman"e against Sun <i-e. R'C rued -or 3ernarda (oding
t(at t(e -a"ts "on"eaed )y t(e insured +ere made in good -ait( and under t(e )eie- t(at t(ey need not )e dis"osed.
>oreo2er6 it (ed t(at t(e (eat( (istory o- t(e insured +as immateria sin"e t(e insuran"e poi"y +as Mnon:medi"a.M
CA a--irmed.
I&e9 WBN t(e )ene-i"iary "an "aim despite t(e "on"eament.
He#%9 NOPE5
Se"tion C$ o- t(e Insuran"e Code is e5pi"it in reGuiring a party to a "ontra"t o- insuran"e to "ommuni"ate to t(e ot(er6
in good -ait(6 a -a"ts +it(in (is *no+edge +(i"( are materia to t(e "ontra"t and as to +(i"( (e ma*es no +arranty6 and
+(i"( t(e ot(er (as no means o- as"ertaining.
>ateriaity is to )e determined not )y t(e e2ent6 )ut soey )y t(e pro)a)e and reasona)e in-uen"e o- t(e -a"ts upon
t(e party to +(om "ommuni"ation is due6 in -orming (is estimate o- t(e disad2antages o- t(e proposed "ontra"t or in ma*ing
(is inGuiries ('(e Insuran"e Code6 Se" 91&
'(e terms o- t(e "ontra"t are "ear. '(e insured is spe"i-i"ay reGuired to dis"ose to t(e insurer matters reating to (is
(eat(. '(e in-ormation +(i"( t(e insured -aied to dis"ose +ere materia and ree2ant to t(e appro2a and t(e issuan"e o-
t(e insuran"e poi"y. '(e matters "on"eaed +oud (a2e de-initey a--e"ted petitionerLs a"tion on (is appi"ation6 eit(er )y
appro2ing it +it( t(e "orresponding adIustment -or a (ig(er premium or reIe"ting t(e same. >oreo2er6 a dis"osure may (a2e
+arranted a medi"a e5amination o- t(e insured )y petitioner in order -or it to reasona)y assess t(e ris* in2o2ed in
a""epting t(e appi"ation.
'(us6 Mgood -ait(M is no de-ense in "on"eament. '(e insuredLs -aiure to dis"ose t(e -a"t t(at (e +as (ospitai4ed -or
t+o +ee*s prior to -iing (is appi"ation -or insuran"e6 raises gra2e dou)ts a)out (is )ona-ides. It appears t(at su"(
"on"eament +as dei)erate on (is part.
Section 6,. Ea"( party to a "ontra"t o- insuran"e must "ommuni"ate to t(e ot(er6 in good -ait(6 a -a"ts
+it(in (is *no+edge +(i"( are materia to t(e "ontra"t and as to +(i"( (e ma*es no +arranty6 and +(i"( t(e ot(er
(as not t(e means o- as"ertaining.
Acco"%in3 to Sec5 6,C (hat a"e the 2atte" that 2&t $e co22&nicate% $4 the !a"t4 to the othe"'
'(is se"tion ma*es it t(e duty o- ea"( party to a "ontra"t o- insuran"e to "ommuni"ate in good -ait( a -a"ts t(at are
materia to t(e "ontra"t +it(in (is *no+edge +(enJ
1. t(e party +it( t(e duty to "ommuni"ate ma*es no +arranty; and
C. t(e ot(er party (as no means o- as"ertaining t(e -a"ts
An4 e@ce!tion to the %&t4 to co22&nicate'
'(ose -aing under Se". 9%.
What i the tet to %ete"2ine (hethe" o" not one 2&t co22&nicate the )act to the othe" !a"t4'
'(e test isJ I- t(e appi"ant is a+are o- t(e e5isten"e o- some "ir"umstan"e +(i"( (e *no+s +oud in-uen"e t(e insurer
in a"ting upon (is appi"ation6 8BB! @AI'7 reGuires (im to dis"ose t(at "ir"umstan"e6 t(oug( unas*ed.
P"o$#e25
2f ' cons!ted Fr$ B for treatment of s(#hiis and )onorrhea when m!st ' discose the fact>
7e must dis"ose su"( -a"t e2en i- not inGuired into6 i- su"( -a"t is materia to t(e ris* assumed )y t(e insurer.
In the !"o$#e2 a$o*eC ho( (i## A ;no( i) the )act i 2ate"ia# o" not'
'(e -a"t must )e reated to t(e insuran"e appied -or. In t(e a)o2e e5ampe6 su"( -a"t is materia in "ases o- i-e or
(eat( insuran"e and may e2en )e materia up to a "ertain e5tent -or a""ident insuran"e. It is -ar:-et"(ed to reGuire
dis"osing su"( in-ormation i- (e is appying -or -ire or marine insuran"e.
What i) the in&"e" (ith "eaona$#e %i#i3ence co&#% ha*e ;no(n o" %ico*e"e% &ch )act )o" hi2e#)C can the
In&"e% $e e@c&e% )o" hi concea#2ent an% %en4 the "e2e%4 o) "eciion to the in&"e"'
NB. '(e e--e"t o- t(e materia "on"eament "annot )e a2oided )y t(e aegation t(at t(e insurer "oud (a2e *no+n and
dis"o2ered a -a"t +(i"( t(e insured (ad "on"eaed. An aegation i*e t(is impies t(at t(ere is an o)igation on t(e part o-
t(e insuran"e "ompany to 2eri-y a t(e statements made )y t(e insured in (is appi"ation. No su"( o)igation e5ists on t(e
part o- t(e insurer. '(e insurer (as t(e rig(t to rey upon t(e statements o- t(e insured -or (e *no+s t(e -a"ts and t(e insurer
does not.
What i %ee2e% 2ate"ia#'
See se". 91.
Att4 :&i2on a;e% & to #oo; at Sec5 1-75 What %oe thi !"o*iion a4'
Se". 1%/ pro2ides t(at ,in marine insuran"e ea"( party is )ound to "ommuni"ate6 in addition to +(at is reGuired )y
se"tion t+enty:eig(t6 a t(e in-ormation +(i"( (e possesses6 materia to t(e ris*6 e5"ept su"( as is mentioned in Se"tion
t(irty6 and to state t(e e5a"t and +(oe trut( in reation to a matters t(at (e represents6 or upon inGuiry dis"oses or
assumes to dis"ose.
Cae9
7108 Fie#%2anK In&"anc *5 Son3co
61 SCRA 7-
Fact9
In 1.$%6 Sam)at6 an agent o- @iedman=s Insuran"e6 indu"ed Song"o6 a man o- s"ant edu"ation to enter into a "ommon
"arrier insuran"e "ontra"t +it( @iedman.
!uring t(e indu"ement6 a son o- Song"o )utted in and said t(at t(ey "oud not a""ept t(e type o- insuran"e o--ered
)e"ause t(eirs +as an o+ner:type Ieepney and not a "ommon "arrier.
Sam)at ans+ered t(at it did not matter )e"ause t(e insuran"e "ompany +as not o+ned )y t(e go2ernment and
t(ere-ore (ad not(ing to do +it( rues and reguations o- t(e atter (@iedman&.
'(e insuran"e +as e5e"uted and appro2ed -or a year -rom Sept. 1.$%:1.$1. It +as rene+ed in 1.$1 -or anot(er year.
INSURANCE REVIEWER Atty. Quimson page F#
In B"t. 1.$16 t(e Ieepney "oided +it( a "ar in 3ua"an and as a resut6 Son"o died. '(e remaining mem)ers o- t(e
-amiy "aimed t(e pro"eeds o- t(e insuran"e +it( t(e "ompany )ut it re-used to pay on t(e ground t(at t(e 2e(i"e +as
not a "ommon "arrier.
I&e9 WBN t(e Song"os= "an "aim t(e insuran"e pro"eeds despite t(e -a"t t(at t(e 2e(i"e "on"erned +as an o+ner and
not a "ommon "arrier.
He#%9 >e5
'(e "ompany is estopped -rom asserting t(at t(e 2e(i"e +as not "o2ered. A-ter it (ad ed @ederi"o Song"o to )eie2e
t(at (e "oud Guai-y under t(e "ommon "arrier ia)iity insuran"e poi"y6 and to enter into a "ontra"t o- insuran"e paying t(e
premiums due6 it "oud not t(erea-ter )e permitted to "(ange its stand to t(e detriment o- t(e (eirs o- t(e insured. It *ne+ a
aong t(at @rederi"o o+ned a pri2ate 2e(i"e. Its agent Sam)at t+i"e e5erted t(e utmost pressure on t(e insured6 a man o-
s"ant edu"ation6 and t(e "ompany did not o)Ie"t to t(is.
Section 69. An intentiona and -rauduent omission6 on t(e part o- one insured6 to "ommuni"ate in-ormation o-
matters pro2ing or tending to pro2e t(e -asity o- a +arranty6 entites t(e insurer to res"ind.
What t4!e o) concea#2ent i "e)e""e% to he"e'
'(e type o- "on"eament re-erred to (ere reates to t(e Dfasit( of a warrant(4. Uni*e t(e ordinary "on"eament pro2ided
-or in Se". C/6 t(e non:dis"osure under t(is se"tion must )e intentional and fraudulent in order t(at t(e "ontra"t may )e
res"inded.
What i an e@a2!#e o) thi ;in% o) concea#2ent'
In e2ery "ontra"t o- marine insuran"e6 t(ere is an impied +arranty o- sea+ort(iness o- t(e 2esse. '(e intentiona and
-rauduent omission on t(e part o- t(e insured to "ommuni"ate t(e -a"t t(at (is s(ip is in distress or in spe"ia peri entites
t(e insurer to res"ind )e"ause t(e "on"eament re-ers to matters pro2ing or tending to pro2e t(e -asity o- t(e +arranty t(at
t(e s(ip is sea+ort(y.
Section /-. Neit(er party to a "ontra"t o- insuran"e is )ound to "ommuni"ate in-ormation o- t(e matters
-oo+ing6 e5"ept in ans+er to t(e inGuiries o- t(e ot(erJ
(a& '(ose +(i"( t(e ot(er *no+s;
()& '(ose +(i"(6 in t(e e5er"ise o- ordinary "are6 t(e ot(er oug(t to *no+6 and o- +(i"( t(e -ormer (as no
reason to suppose (im ignorant;
("& '(ose o- +(i"( t(e ot(er +ai2es "ommuni"ation;
(d& '(ose +(i"( pro2e or tend to pro2e t(e e5isten"e o- a ris* e5"uded )y a +arranty6 and +(i"( are not
ot(er+ise materia; and
(e& '(ose +(i"( reate to a ris* e5"epted -rom t(e poi"y and +(i"( are not ot(er+ise materia.
What i the 3ene"a# "&#e'
Communi"ate t(e ne"essary materia -a"ts.
What i the e@ce!tion'
'(ose pro2ided -or under Se"tion 9%.
When (i## the in&"e% $e "e=&i"e% to co22&nicate in)o"2ation co*e"e% $4 Sec5 /-(e&ce#tion to the e&ce#tion)'
I- t(e insurer as*s a)out t(em6 t(e insured )e"omes duty )ound to "ommuni"ate su"( in-ormation.
Cae9
7118 In&#a" Li)e *5 Fe#iciano
7/ PHIL 6-1
Fact9
E2aristo @ei"iano -ied an appi"ation +it( Insuar <i-e upon t(e soi"itation o- one o- its agents.
It appears t(at during t(at time6 E2aristo +as aready su--ering -rom tu)er"uosis. Su"( -a"t appeared during t(e
medi"a e5am6 )ut t(e e5aminer and t(e "ompany=s agent ignored it.
A-ter t(at6 E2aristo +as made to sign an appi"ation -orm and t(erea-ter t(e )an* spa"es +ere -ied )y t(e medi"a
e5aminer and t(e agent ma*ing it appear t(at E2aristo +as a -it su)Ie"t o- insuran"e. (E2aristo "oud not read and
understand Engis(&
INSURANCE REVIEWER Atty. Quimson page FF
W(en E2aristo died6 Insuar i-e re-used to pay t(e pro"eeds )e"ause o- "on"eament.
I&e9 WBN Insuar <i-e +as )ound )y t(eir agent=s a"ts.
He#%9 >e5
'(e insuran"e )usiness (as gro+n so 2ast and u"rati2e +it(in t(e past "entury. No+adays6 e2en peope o- modest
means enter into insuran"e "ontra"ts. Agents +(o soi"it "ontra"ts are paid arge "ommissions on t(e poi"ies se"ured )y
t(em. '(ey a"t as genera representati2es o- insuran"e "ompanies.
IN t(e "ase at )ar6 t(e true state o- (eat( o- t(e insured +as "on"eaed )y t(e agents o- t(e insurer. '(e insurer=s
medi"a e5aminer appro2ed t(e appi"ation *no+ing -uy +e t(at t(e appi"ant +as si"*. '(e situation is one in +(i"( o-
t+o inno"ent parties must )ear a oss -or (is reian"e upon a t(ird person. In t(is "ase6 it is t(e one +(o dra-ted and
a""epted t(e poi"y and "onsummated t(e "ontra"t. It seems reasona)e t(at as )et+een t(e t+o o- t(em6 t(e one +(o
empoyed and ga2e "(ara"ter to t(e t(ird person as its agent s(oud )e t(e one to )ear t(e oss. 7en"e6 Insuar is ia)e to
t(e )ene-i"iaries.
7168 In&#a" #i)e *5 Fe#iciano
70 PHIL 06,1
Fact9
Insuar i-e -ied a motion -or re"onsideration o- t(e de"ision in t(e pre"eding "ase.
He#%9 NO (what the fO>)
'(ere +as "ousion )et+een E2aristo and t(e agent and t(e medi"a e5aminer in ma*ing it appear t(at E2aristo +as a
-it su)Ie"t -or insuran"e. W(en E2aristo aut(ori4ed t(em to +rite t(e ans+ers -or (im6 (e made t(em (is o+n agents -or t(at
purpose and (e +as responsi)e -or t(eir a"ts in t(at "onne"tion.
I- t(ey -asi-ied t(e ans+ers -or (im6 (e "oud not e2ade ia)iity -or t(e -asi-i"ation. 7e +as not supposed to sign t(e
appi"ation in )an*. 7e *ne+ t(at (is ans+ers +oud )e t(e )asis -or t(e poi"y6 and +as reGuired +it( (is signature to
2ou"( -or t(eir trut(. '(e Iudgment rendered t(ere-ore in t(e pre"eding "ase is t(us re2ersed6 and Insuar <i-e is a)so2ed
-rom ia)iity. (bakit ka(a na)reverse>$$$ the #ot thickensO =mmO$)
7178 A"ani##a *5 In&#a" LI)e
69 OG No5 0 6/7
Fact9
In 1.F.6 Eose Arania appied -or i-e insuran"e +it( Insuar. In (is appi"ation6 t(ese C Guestions appearedJ
o WBN (e (as su--ered -rom any disease o- t(e *idney and urinary tra"t6 to +(i"( (e ans+ered NB.
o WBN (e (as )een "on-ined in a (ospita -or "onsutation and treatment6 to +(i"( (e ans+ered t(at in 1.#/6 (e
+as "on-ined due to in-uen4a.
'(e trut( (o+e2er6 +as t(at a -e+ mont(s prior to (is appi"ation6 (e +as "on-ined and treated -or nep(ritis6 a disease o-
t(e *idney and urinary tra"t6 and (e +as a""ordingy in-ormed o- t(e "ause.
W(en Arania died o- "irr(osis o- t(e i2er6 Insuar re-used to pay t(e pro"eeds due to "on"eament.
I&e9 WBN t(e "ontra"t "an )e res"inded.
He#%9 >e5
I- an ans+er gi2en )y t(e insured to a spe"i-i" Guestion as*ed )y t(e insurer in an appi"ation -or i-e insuran"e turns out
to )e -ase6 it is a "on"eament o- a materia -a"t +(i"( entites t(e insurer to res"ind6 e2en i- t(e insured died o- an aiment
+(i"( (as NB "onne"tion +it( t(e spe"i-i" Guestions -asey ans+ered )y (im. '(is is )e"ause materiaity is to )e
determined NB' )y t(e e2ent )ut BN<A )y t(e pro)a)e and reasona)e in-uen"e o- t(e -a"ts upon t(e party to +(om t(e
"ommuni"ation is due6 in -orming (is estimate o- t(e disad2antages o- t(e proposed "ontra"t or in ma*ing (is inGuiries.
Section /1. >ateriaity is to )e determined not )y t(e e2ent6 )ut soey )y t(e pro)a)e and reasona)e
in-uen"e o- t(e -a"ts upon t(e party to +(om t(e "ommuni"ation is due6 in -orming (is estimate o- t(e
disad2antages o- t(e proposed "ontra"t6 or in ma*ing (is inGuiries.
INSURANCE REVIEWER Atty. Quimson page F$
What i the tet o) 2ate"ia#it4'
'(e test is simpyJ I@ t(e *no+edge o- a -a"t +oud "ause t(e insurer to reIe"t t(e ris* 6 or to a""ept it ony at a (ig(er
premium rate6 t(at -a"t is materia6 t(oug( it may not e2en remotey "ontri)ute to t(e "ontingen"y upon +(i"( t(e insurer
+oud )e"ome ia)e6 or in any +ise a--e"t t(e ris*.
What i the !"inci!a# =&etion that 2&t $e a;e%'
'(e prin"ipa Guestion in determining +(et(er t(e "on"eament is materia isJ -as the ins!rer mised or deceived into
enterin) a contract, obi)ation or in fi&in) the #remi!m of ins!rance b( a withhodin) of materia information or facts within
the ins!redHs act!a or #res!med knowed)e> I- so6 t(en t(e "ontra"t is a2oided6 e2en i- t(e "ause o- t(e oss +(i"(
su)seGuenty o""urred )e un"onne"ted +it( t(e -a"t "on"eaed.
Cae9
71,8 Sat&"nino *5 Phi#a2#i)e (repeat "ase O#$&
7 SCRA /16
Fact9
years.
He#%9 >ES5
or not.
+(at t(e aiment.
7198 Henon *5 Phi#a2#i)e (repeat "ase O#0&
16 OG 7/6,
Fact9
Ceestino 7enson +as insured )y P(iami-e in 1.F# upon (is appi"ation or a C%:yr endo+ment i-e poi"y.
INSURANCE REVIEWER Atty. Quimson page F/
In 1.FF6 t(e poi"y apsed due to non:payment o- t(e premiums.
Upon payment o- t(e premiums due6 t(e poi"y +as reinstated6 )ut in t(e appi"ation -or reinstatement6 7enson did not
dis"ose t(e -a"t t(at (e (ad )een pre2iousy diagnosed -or pyeonep(ritis6 enarged i2er and (ernia. 7e aso did not
dis"ose t(at (e (ad )een e5amined )y a p(ysi"ian.
In 1.F$6 7enson died6 and (is )ene-i"iaries= "aim +as reIe"ted )y P(iami-e on t(e ground o- "on"eament.
'(e "ompany t(en -ied -or res"ission. 3ene-i"iaries= "ontend t(at t(e intent to "on"ea must )e pro2en to +arrant
res"ission.
I&e9 WBN t(ere is need to pro2e intent to "on"ea to +arrant res"ission.
He#%9 NO5
Se". C$ pro2ides t(at ,a conceament whether intentiona or !nintentiona entites the in"!red #art( to rescind the
contract of ins!rance1. And aside -rom t(is6 intent6 )eing a state o- t(e mind is (ard to pro2e.
A""ording to Se". 9% o- t(e Insuran"e CodeJ Materiait( is to be determined not b( the event, b!t soe( b( the #robabe
and reasonabe inf!ence of the facts !#on the #art( to whom the comm!nication is d!e, in formin) his estimate of the
disadvanta)es of the #ro#osed contract, or in makin) his in3!iries$ In essen"e t(ere-ore6 t(e insured need not (a2e died o-
t(e 2ery diseases (e (ad -aied to re2ea to t(e insuran"e "ompany. It is su--i"ient t(at (is non:re2eation (ad mised t(e
insurer in -orming its estimate o- t(e disad2antages o- t(e proposed poi"y reinstatement or in ma*ing its inGuiries6 in order to
entite t(e atter to res"ind t(e "ontra"t.
76-8 S&n Li)e *5 CA (repeat Case O F9&
601 SCRA 66, 719918
Fact9
Bn Apri 1F6 1.0$6 3a"ani pro"ured a i-e insuran"e "ontra"t -or (imse- -rom Sun <i-e. 7e +as issued a i-e insuran"e
poi"y +it( dou)e indemnity in "ase o- a""identa deat(. '(e designated )ene-i"iary +as (is mot(er6 3ernarda.
Bn Eune C$6 1.0/6 t(e insured died in a pane "ras(. 3ernarda 3a"ani -ied a "aim +it( Sun <i-e6 see*ing t(e )ene-its o-
t(e insuran"e. Sun <i-e "ondu"ted an in2estigation and its -indings prompted it to reIe"t t(e "aim.
Sun <i-e dis"o2ered t(at C +ee*s prior to (is appi"ation6 3a"ani +as e5amined and "on-ined at t(e <ung Center o- t(e
P(iippines6 +(ere (e +as diagnosed -or rena -aiure. !uring (is "on-inement6 t(e de"eased +as su)Ie"ted to
urinaysis6 utra:sonograp(y and (ematoogy tests. 7e did not re2ea su"( -a"t in (is appi"ation.
In its etter6 Sun <i-e in-ormed 3erarda6 t(at t(e insured did not dis"osed materia -a"ts ree2ant to t(e issuan"e o- t(e
poi"y6 t(us rendering t(e "ontra"t o- insuran"e 2oida)e. A "(e"* representing t(e tota premiums paid in t(e amount o-
P1%61/C.%% +as atta"(ed to said etter.
3ernarda and (er (us)and6 -ied an a"tion -or spe"i-i" per-orman"e against Sun <i-e. R'C rued -or 3ernarda (oding
t(at t(e -a"ts "on"eaed )y t(e insured +ere made in good -ait( and under t(e )eie- t(at t(ey need not )e dis"osed.
>oreo2er6 it (ed t(at t(e (eat( (istory o- t(e insured +as immateria sin"e t(e insuran"e poi"y +as Mnon:medi"a.M
CA a--irmed.
I&e9 WBN t(e )ene-i"iary "an "aim despite t(e "on"eament.
He#%9 NOPE5
Se"tion C$ o- t(e Insuran"e Code is e5pi"it in reGuiring a party to a "ontra"t o- insuran"e to "ommuni"ate to t(e ot(er6
in good -ait(6 a -a"ts +it(in (is *no+edge +(i"( are materia to t(e "ontra"t and as to +(i"( (e ma*es no +arranty6 and
+(i"( t(e ot(er (as no means o- as"ertaining.
>ateriaity is to )e determined not )y t(e e2ent6 )ut soey )y t(e pro)a)e and reasona)e in-uen"e o- t(e -a"ts upon
t(e party to +(om "ommuni"ation is due6 in -orming (is estimate o- t(e disad2antages o- t(e proposed "ontra"t or in ma*ing
(is inGuiries ('(e Insuran"e Code6 Se" 91&
'(e terms o- t(e "ontra"t are "ear. '(e insured is spe"i-i"ay reGuired to dis"ose to t(e insurer matters reating to (is
(eat(. '(e in-ormation +(i"( t(e insured -aied to dis"ose +ere materia and ree2ant to t(e appro2a and t(e issuan"e o-
t(e insuran"e poi"y. '(e matters "on"eaed +oud (a2e de-initey a--e"ted petitionerLs a"tion on (is appi"ation6 eit(er )y
appro2ing it +it( t(e "orresponding adIustment -or a (ig(er premium or reIe"ting t(e same. >oreo2er6 a dis"osure may (a2e
+arranted a medi"a e5amination o- t(e insured )y petitioner in order -or it to reasona)y assess t(e ris* in2o2ed in
a""epting t(e appi"ation.
'(us6 Mgood -ait(M is no de-ense in "on"eament. '(e insuredLs -aiure to dis"ose t(e -a"t t(at (e +as (ospitai4ed -or
t+o +ee*s prior to -iing (is appi"ation -or insuran"e6 raises gra2e dou)ts a)out (is )ona-ides. It appears t(at su"(
"on"eament +as dei)erate on (is part.
Section /6. Ea"( party to a "ontra"t o- insuran"e is )ound to *no+ a t(e genera "auses +(i"( are open to
(is inGuiry6 eGuay +it( t(at o- t(e ot(er6 and +(i"( may a--e"t t(e poiti"a or materia peris "ontempated; and a
genera usages o- trade.
Un%e" thi ectionC (hat i each !a"t4 to a cont"act o) in&"ance $o&n% to ;no('
'(ere are t+o matters t(at ea"( party to a "ontra"t o- insuran"e is )ound to *no+6 nameyJ
1. 8enera "auses
C. 8enera usages o- trade.
A party (o+e2er6 is not )ound to *no+ a t(e "asses o- genera "auses )ut ony su"( 3ene"a# ca&eJ
a& W(i"( are open to (is inGuiry6 eGuay +it( t(at o- t(e ot(er;
)& W(i"( may a--e"t eit(er t(e poiti"a or materia peris "ontempated.
What i the i2!o"t o) the a)o"e2entione% "&#e'
'(e insured need not "ommuni"ate pu)i" e2ents su"( as t(at t(e nation is at +ar6 or +(at t(e a+ is6 or poiti"a
"onditions in ot(er "ountries6 t(e sour"es o- t(is in-ormation )eing eGuay open to t(e insurer +(o is aso presumed to *no+
su"( e2ents. <i*e+ise6 t(e insurer is "(arged +it( t(e *no+edge or genera trade usages and rues o- na2igation6 *inds o-
seasons and a t(e ris*s "onne"ted +it( na2igation.
Section //. '(e rig(t to in-ormation o- materia -a"ts may )e +ai2ed6 eit(er )y t(e terms o- t(e insuran"e or )y
nege"t to ma*e inGuiry as to su"( -a"ts6 +(ere t(ey are distin"ty impied in ot(er -a"ts o- +(i"( in-ormation is
"ommuni"ated.
?a4 the "i3ht to in)o"2ation $e (ai*e%'
Aes. '(e rig(t to in-ormation o- materia -a"ts may )e +ai2ed eit(erJ
1& E5pressy6 )y t(e terms o- t(e insuran"e; or
C& Impiedy6 )y nege"t to ma*e inGuiry as to t(e -a"ts aready "ommuni"ated.
I- t(e appi"ant (as ans+ered t(e Guestioned as*ed in t(e appi"ation6 (e is Iusti-ied in assuming t(at no -urt(er
in-ormation is desired.
What i an e@a2!#e o) the o!e"ation o) thi !"o*iion'
'(e insurer as*s t(e insured i- (e +as e2er "on-ined in a (ospita -or more t(an a mont( and t(e insured says ,AES1. I-
t(e insurer does not inGuire -or t(e "ause o- t(e ong "on-inement6 t(en (e is deemed to (a2e +ai2ed t(e in-ormation.
Cae9
7618 N3 Gan Lee *5 Aian C"&a%e" LI)e
166 SCRA 61
Fact9
In 1.$C6 U+on Nam appied -or a C%yr endo+ment insuran"e on (is i-e +it( (is +i-e6 Ng 8an Vee as t(e )ene-i"iary.
7e stated in (is appi"ation t(at (e +as operated on -or tumor o- t(e stoma"( asso"iated +it( u"er.
In 1.$96 U+ong died o- "an"er o- t(e i2er +it( metastasis. Asian re-used to pay on t(e ground o- ase in-ormation.
It +as -ound t(at prior to (is appi"ation6 U+ong +as diagnosed to (a2e pepti" u"ers6 and t(at during t(e operation +(at
+as remo2ed -rom U+ong=s )ody +as a"tuay a portion o- t(e stoma"( and not tumor.
I&e9 WBN t(e "ontra"t may )e res"inded on t(e ground o- t(e imper-e"tion in t(e appi"ation -orm.
He#%9 NO5
U+ong did not (a2e su--i"ient *no+edge as to distinguis( )et+een a tumor and a pepti" u"er. 7is statement t(ere-ore
+as made in good -ait(. Asian s(oud (a2e made an inGuiry as to t(e iness and operation o- U+ong +(en it appeared on
t(e -a"e o- t(e appi"ation t(at a Guestion appeared to )e imper-e"ty ans+ered. Asian=s -aiure to inGuire "onstituted a
+ai2er o- t(e imper-e"tion in t(e ans+er.
INSURANCE REVIEWER Atty. Quimson page F.
Section /0. In-ormation o- t(e nature or amount o- t(e interest o- one insured need not )e "ommuni"ated
uness in ans+er to an inGuiry6 e5"ept as pres"ri)ed )y se"tion -i-ty:one.
What %oe thi !"o*iion !"o*i%e'
Under Se". F1(e&6 it is reGuired t(at a poi"y o- an insuran"e must spe"i-y t(e interest o- t(e insured in t(e property
insured6 i- (e is not t(e a$o#&te o(ne" t(ereo-. So a mortgagee must dis"ose (is parti"uar interest e2en i- no inGuiry is
made )y t(e insurer in reation t(ereto. Su"( reGuirement is made so t(at t(e insurer may determine t(e e5tent o- t(e
insured=s insura)e interest.
'(is se"tion t(ere-ore says6 t(at t(ere is NB NEE! to dis"ose t(e interest in t(e property insured i- t(e interest is
a$o#&te. '(e e5"eption o- "ourse is t(e insurer as*s.
P"o$#e29
' fire ins!rance #oic( was iss!ed in which 2meda (ins!red) was described as the owner of the ins!red residentia #ro#ert($
B!t act!a(, 2meda was on( )iven the #rivie)e of occ!#(in) the ho!se rent-free for ife$ 2meda re#resented hersef as
owner$ 2s the #oic( vaid>
NB. S(e is guity o- misrepresentation. S(e s(oud (a2e dis"osed t(e nature o- (er interest in t(e property in as mu"(
as s(e +as not t(e a)soute o+ner t(ereo-.
Section /1. Neit(er party to a "ontra"t o- insuran"e is )ound to "ommuni"ate6 e2en upon inGuiry6 in-ormation
o- (is o+n Iudgment upon t(e matters in Guestion.
To (hat i the %&t4 to %ic#oe con)ine%'
'(e duty to dis"ose is "on-ined to )act. '(ere is no duty to dis"ose mere opinion6 spe"uation6 intention or
e5pe"tation. '(is is true e2en i- t(e insured is as*ed.
E@a2!#e'
3eatri5 Uiddo +as as*ed )y t(e insurerJ =ow on) do (o! think (o! wi ive> I- 3eatri5 uses t(e F:point e5poding (eart
te"(niGue on t(e insurer6 s(e +i )e "on2i"ted o- murderP. (not t(e point o- t(e arti"e& 7BWEVER6 i- s(e said6 ,'s on) as
the moon rises over the )rave of @ai Mei4 and s(e dies t(e ne5t day6 (er error in ans+ering t(at Guestion +(i"( "aed -or an
e5pression o- an opinion does not "onstitute -raud in a+.
Att45 :&i2on a;e% & to #oo; at Sec5 1-,5 What %oe it a4'
Se"tion 1%0 pro2ides t(at ,In marine insuran"e6 in-ormation o- t(e )eie- or e5pe"tation o- a t(ird person6 in re-eren"e to
a materia -a"t6 is materia.1
TITLE V . REPRESENTATION
Section /65 A representation may )e ora or +ritten.
What i a "e!"eentation'
A representation is a -a"tua statement made )y t(e insured at t(e time o-6 or prior to6 t(e issuan"e o- t(e poi"y to gi2e6
in-ormation to t(e insurer and ot(er+ise indu"e (im to enter into t(e insuran"e "ontra"t.
What i the %i))e"ence $et(een a "e!"eentation an% concea#2ent'
A concea#2ent is a negati2e a"t6 meaning it is t(e -aiure to do somet(ing +(i"( is reGuired +(ie "e!"eentation is
positi2e a"t as t(e insured 2ounteers su"( -a"ts. Concea#2ent usuay o""urs prior to ma*ing o- t(e insuran"e "ontra"t6
+(ie a "e!"eentation may )e made at t(e time o- t(e issuan"e o- t(e "ontra"t.
What i a 2i"e!"eentation'
A >isrepresentation is a statementJ
1. As a -a"t o- somet(ing +(i"( is untrue
C. W(i"( t(e insured stated +it( *no+edge t(at it is untrue and +it( an intent to de"ei2e or +(i"( (e states as
true +it(out *no+ing it to )e true and +(i"( (as t(e tenden"y to misead; and
INSURANCE REVIEWER Atty. Quimson page $%
9. W(ere su"( -a"t in eit(er "ase is materia to t(e ris*.
What i the e))ect o) a 2i"e!"eentation'
A misrepresentation )y t(e insured renders t(e insuran"e "ontra"t 2oida)e at t(e option o- t(e insurer6 at(oug( t(e
poi"y is not t(ere)y rendered 2oid a) initio.
I 2i"e!"eentation 4non42o& (ith concea#2ent'
NB. !e <eon )oo* says misrepresentation is an a"ti2e -orm o- "on"eament.
What i the %&t4 o) the !e"on a!!#4in3 )o" in&"ance'
It is duty to gi2e t(e insurer a su"( in-ormation "on"erning t(e ris* as +i )e o- use to t(e atter in estimating its
"(ara"ter and in determining +(et(er or not to assume it. '(is in-ormation may )e gi2en oray or +ritten in papers not
"onne"ted +it( t(e "ontra"t su"( as in t(e appi"ation or e5aminer=s report. Sometimes6 it may appear on t(e poi"y itse-.
Wh4 i &ch in)o"2ation i2!o"tant'
'(e in-ormation -orms t(e )asis o- t(e "ontra"t as made. It des"ri)es6 mar*s out and de-ines t(e ris* assumed. 7en"e
t(e untrut(-uness o- any representation +i ne"essariy a2oid t(e "ontra"t.
Can 4o& 3i*e an e@a2!#e o) 2i"e!"eentation &ch that the in&"e" a*oi% an4 #ia$i#it4 to the in&"e%'
I- t(e insurer +as made to )eie2e t(at (e +as insuring a )ri"* (ouse +(en in trut( and in -a"t6 t(e (ouse +as made o-
nipa6 or +(en t(e insurer insured a man o- t(irty and it turns out t(at t(e man +(o dies +as a 19%.
Section /7. A representation may )e made at t(e time o-6 or )e-ore6 issuan"e o- t(e poi"y.
Att45 :&i2on (ant & to #oo; at Sec5 015 What %oe it a4'
Se"tion #1 pro2ides t(at ,A representation may )e atered or +it(dra+n )e-ore t(e insuran"e is e--e"ted6 )ut
not a-ter+ards.1
Section /,. '(e anguage o- a representation is to )e interpreted )y t(e same rues as t(e anguage o-
"ontra"ts in genera.
Ho( a"e 2i"e!"eentation cont"&e%'
'(ey are "onstrued i)eray in -a2or o- t(e insured.
?&t the "e!"eentation $e #ite"a##4 t"&e'
No. It is su--i"ient t(at t(ey )e su)stantiay true.
Ho( can a "e!"eentation $e &$tantia##4 t"&e an% not #ite"a##4 t"&e'
!e <eon "ites t+o e5ampesJ
I- one is as*ed i- (e drin*s6 t(e Guestion +i )e "onstrued as re-erring to (a)itua use. So i- you drin* ony +(en t(ere
is an o""asion6 t(ey you "an say NB.
I- you are as*ed i- you (ad any inesses6 o"a disease or inIury in any organ6 you "an sti say NB e2en i- t(ree +ee*s
)e-ore you +ere su--ering -rom <3> )e"ause you ate one *aing o- a2o"ados.
Section /9. A representation as to t(e -uture is to )e deemed a promise6 uness it appears t(at it +as merey a
statement o- )eie- or e5pe"tation.
What a"e the %i))e"ent ;in% o) "e!"eentation'
'(ey may eit(er )eJ
1. Bra or +ritten;
C. >ade at t(e time o- t(e issuan"e o- t(e poi"y or )e-ore;
9. A--irmati2e or promissory
What i an a))i"2ati*e "e!"eentation'
It is any aegation as to t(e e5isten"e or non:e5isten"e o- a -a"t +(en t(e "ontra"t )egins. An e5ampe +oud )e +(en
t(e insured states t(at t(e (ouse su)Ie"t o- t(e insuran"e is used ony -or residentia purposes.
What i a !"o2io"4 "e!"eentation'
INSURANCE REVIEWER Atty. Quimson page $1
A promissory representation is any promise to )e -u-ied a-ter t(e "ontra"t (as "ome into e5isten"e or any statement
"on"erning +(at is to (appen during t(e e5isten"e o- t(e insuran"e.
What i the nat&"e o) a !"o2io"4 "e!"eentation'
@irst6 it used to indi"ate a paro or ora promise made in "onne"tion +it( t(e insuran"e6 )ut NB' in"orporated in t(e
poi"y. '(e non:per-orman"e o- su"( a promise CANNB' )e s(o+n )y t(e insurer in de-ense to an a"tion on t(e poi"y6 )ut
proo- t(at t(e promise +as made +it( -rauduent intent and +i ser2e to de-eat t(e insuran"e.
Se"ond6 it is an underta*ing )y t(e insured6 inserted in t(e poi"y6 )ut NB' spe"i-i"ay made a +arranty6 is "aed a
promissory representation. It is (o+e2er in su"( a "ase merey an e5e"utory term o- t(e "ontra"t6 and not propery a
representation. A promissory representation6 is t(ere-ore6 su)stantiay a "ondition or a +arranty.
Can 4o& 3i*e e@a2!#e o) !"o2io"4 "e!"eentation'
1. An appi"ant -or -ire insuran"e on a )uiding oray promised t(at t(e )uiding +i )e o""upied.
C. An appi"ant -or -ire insuran"e on a )uiding oray promised to insta t+o -ire e5tinguis(ers +it(in t(e )dg.
9. A 'V (ostess saying ,Wi )e )a"*.. promise.. sarang(ameda poP1
Doe a )a#e "e!"eentation $ae% on an o!inion o" e@!ectation a*oi% the !o#ic4'
I' !EPEN!S. A representation o- an e5pe"tation6 intention6 )eie- opinion or Iudgment o- t(e insured6 at(oug( -ase6
+i NB' a2oid t(e poi"y o- insuran"e i- t(ere is NB a"tua -raud in indu"ing t(e a""eptan"e o- t(e ris* or its a""eptan"e at a
o+er rate o- premium and t(is is i*e+ise t(e rue at(oug( t(e statement is materia to t(e ris*. In su"( a "ase6 t(e insurer
is not Iusti-ied in reying upon su"( statement )ut is o)igated to ma*e -urt(er inGuiry.
What 2&t the in&"e" then to %o to a*oi% #ia$i#it4'
'(e insurer must pro2e $oth t(e materiaity o- t(e insured=s opinion and t(e atter=s intent to de"ei2e. I- t(e
representation is one o- -a"t6 a t(e insurer needs to pro2e is its -asity and materiaity. '(e intent to de"ei2e is aready
presumed.
When i a "e!"eentation %ee2e% a 2e"e e@!"eion o) o!inion'
An ora representation as to a -uture e2ent6 or "ondition o2er +(i"( t(e insured (as no "ontro6 +it( re-eren"e to property
or i-e insured +i )e deemed a mere e5pression o- opinion6 +(i"( +i a2oid a "ontra"t BN<A +(en made in )ad -ait(.
P"o$#e25
Mar( a##ied for ins!rance$ -hen asked if she was =2P-#ositive, she said that her bod( was who( free from the =2P vir!s$
2f it t!rns o!t that Mar( is wron), is the ins!rer free from iabiit( beca!se of the misre#resentation>
No. '(e insurer *no+s t(at t(e insured=s opinion may )e mista*en a-ter a6 no one "an )e "ertain a)out anyt(ing. '(e
insurer s(oud (a2e su)Ie"ted >ary to a )attery o- tests )e-ore entering into a "ontra"t.
John a##ied for a motor vehice ins!rance$ -hen asked if he knew how to drive, he said D2Hm a ver( )ood driver$4 2t t!rned
o!t, he doesnHt know how to drive and after a few min!tes he crashed into the car of 'rvin$ 2s the ins!rer iabe des#ite
JohnHs misre#resentation>
NB. Aan is guity o- -rauduent misrepresentation o- a materia -a"t. 7e s(oud (a2e dis"osed t(at (e doesn=t *no+
(o+ to dri2e.
Section 0-. A representation "annot Guai-y an e5press pro2ision in a "ontra"t o- insuran"e6 )ut it may Guai-y
an impied +arranty.
Wh4 i it that a "e!"eentation cannot =&a#i)4 an e@!"e !"o*iion in a cont"act o) in&"ance'
A representation "annot Guai-y an e5press pro2ision or an e5press +arranty in a "ontra"t o- insuran"e )e"ause a
representation is not a part o- t(e "ontra"t )ut ony a "oatera indu"ement to it.
Can 4o& 3i*e t(o e@a2!#e'
1& I- t(e poi"y e5pressy pro2ides t(at t(e (ouse insured is used as a +are(ouse6 any representation made )y
t(e insured prior to t(e issuan"e o- t(e poi"y to t(e e--e"t t(at t(e (ouse +as used ony as a residen"e is NB'
a de-ense in t(e a"tion -or t(e re"o2ery o- t(e amount o- t(e insuran"e.
INSURANCE REVIEWER Atty. Quimson page $C
C& '(e representation o- t(e insured to t(e e--e"t t(at t(e ast time t(e 2esse +as drydo"*ed +as si5 mont(s ago
+oud NB' Guai-y t(e impied +arranty t(at t(e 2esse is sea+ort(y.
Section 01. A representation may )e atered or +it(dra+n )e-ore t(e insuran"e is e--e"ted6 )ut not a-ter+ards.
What i the "eaon )o" thi !"o*iion'
As representations indu"e t(e insurer in assuming t(e ris* insured against and in issuing t(e insuran"e poi"y6 it is )ut
ogi"a t(at representations may not )e atered or +it(dra+n a-ter t(e insuran"e is a--e"ted.
Section 06. A representation must )e presumed to re-er to t(e date on +(i"( t(e "ontra"t goes into e--e"t.
To (hat ti2e %oe "e!"eentation "e)e"'
Representations re-er ony to t(e time o- ma*ing t(e "ontra"t. We earier said t(at promissory statements o- "onditions
t(at e5ist su)seGuent to t(e "ompetion o- t(e "ontra"t are "onditions or +arranties and not representations (See annotations
under Se". 9.&. 3ut no+6 +e re-er BN<A to "onditions represented as A<REA!A EDIS'IN8. '(ese "onditions must e5ist
during t(e ma*ing o- t(e "ontra"t.
When i the"e )a#e "e!"eentation'
'(ere is NB -ase representation i- t(e representation +as true at t(e time t(e "ontra"t ta*es e--e"t6 at(oug( it )e"ame
-ase at t(e time it +as made.
'(ere is -ase representation i- at(oug( t(e representation +as true at t(e time it +as made6 it su)seGuenty )e"ame
-ase at t(e time t(e "ontra"t too* e--e"t.
P"o$#e29
' re#resented that his (acht was in *aiwan when in fact it was in =S$ B!t at the takin) effect of the contract, the (acht had
aread( reached the #ort in *aiwan$ -as there fase re#resentation>
NB. At(oug( t(e representation +as -ase at t(e time it +as made6 it +as aready true at t(e time +(en t(e "ontra"t
too* e--e"t.
' re#resented that his (acht was in *aiwan and in fact it was in *aiwan$ B!t at the takin) effect of the contract the (acht had
aread( saied to =S and then it was shi#wrecked$ 2s 2ns!rer iabe>
NB. 7ere t(ere is -ase representation. '(is time6 t(e representation at(oug( true +(en made6 su)seGuenty )e"ame
-ase at t(e time t(e "ontra"t too* e--e"t.
't the time he a##ied for a ife ins!rance #oic( on '!) 1G, 0GG4, ' had never s!ffered from an( of the diseases
en!merated in the #oic( b( the ins!rer$ ./ '!)$ 1,, 0GG4, ' became afficted with an en!merated disease in the #oic($
Bort!nate(, he com#ete( recovered$ -hen the #oic( was deivered and the first #remi!m #aid on '!)$ 3G, 0GG4, ' did not
discose his havin) been sick$ 2s there fase re#resentation>
AES.
-hen B a##ied for a ife ins!rance #oic( on /ov$ C, 0GG4, she was asked to state her a)e$ She said that she was 04$
=owever, when the #oic( was deivered to her on Fec$ C, 0GG4, she had aread( t!rned 0C$ -hen time to coect the
#roceeds of the ins!rance, the ins!rer denied iabiit( on the )ro!nd of fase re#resentation, beca!se at the time the #oic(
took effect, B was no on)er 04 (rs od as she ae)ed$ 2s the ins!rer correct>
'(e insurer is stupid. '(e trut( o- t(e statement made )y t(e insured at t(e date o- t(e appi"ation o- (er age is surey
to )e tested as o- t(e date o- t(e appi"ation. It +oud e a)surd to say t(at t(is representation +as -atay -ase )e"ause at
t(e time o- t(e a""eptan"e o- t(e appi"ation and t(e "ompetion o- t(e "ontra"t it +as no onger true.
Section 0/5 W(en a person insured (as no persona *no+edge o- a -a"t6 (e may ne2ert(eess repeat
in-ormation +(i"( (e (as upon t(e su)Ie"t6 and +(i"( (e )eie2es to )e true6 +it( t(e e5panation t(at (e does so
on t(e in-ormation o- ot(ers; or (e may su)mit t(e in-ormation6 in its +(oe e5tent6 to t(e insurer; and in neit(er "ase
is (e responsi)e -or its trut(6 uness it pro"eeds -rom an agent o- t(e insured6 +(ose duty it is to gi2e t(e
in-ormation.
What i the e))ect (he"e in)o"2ation i o$taine% )"o2 thi"% !e"on'
Under Se". #96 t(e insured is gi2en dis"retion to "ommuni"ate to t(e insurer +(at (e *no+s o- a matter o- +(i"( (e (as
no persona *no+edge. I- t(e representation turns out to )e -ase6 (e is NB' responsi)e t(ere-or6 pro2ided (e gi2es t(e
e5panation t(at (e represents so on t(e in-ormation o- ot(ers.
E@a2!#e'
I- t(e insured (as no persona *no+edge o- t(e "auses o- t(e deat( o- (is parents )e"ause t(ey died +(en t(e inIured
+as sti an in-ant6 (e may report in-ormation o)tained -rom -riends and reati2es i- (e i*es. In +(i"( "ase6 (e is not
responsi)e -or t(e trut( o- t(e in-ormation.
What i the e))ect (he"e in)o"2ation i o$taine% )"o2 the a3ent o) the in&"e%'
I- t(e in-ormation pro"eeds -rom an agent o- t(e insured6 +(ose duty it is in t(e ordinary "ourse o- )usiness to
"ommuni"ate su"( in-ormation to (is prin"ipa6 and it is possi)e -or t(e agent under su"( "ir"umstan"es in t(e e5er"ise o-
due diigen"e to (a2e made su"( "ommuni"ation )e-ore t(e ma*ing o- t(e "ontra"t6 t(e insured +i )e ia)e -or t(e trut(.
P"o$#e2.
' is the ca#tain of *itanic$ James is the shi#owner$ .n Se#t$ 19, 0GG4, James a##es for an ins!rance !#on *itanic DEost or
/ot Eost4 with Jack and Rose 2ns!rance +o$ =owever as of Se#t$ 11, 0GG4, ' aread( knew that the shi# was ost at sea b!t
did not te James$ +an James sti recover on the #oic(>
NB. a "aptain o- t(e s(ip is )ound to "ommuni"ates its oss to t(e o+ner6 and i- t(e atter e--e"ts an insuran"e on t(e
s(ip ,ost or not ost1 in ignoran"e o- t(e ante"edent oss due to t(e -raud or negigen"e o- t(e "aptain6 t(e insured "annot
re"o2er on t(e poi"y.
Cae9
7668 Ha"%in3 *5 Co22e"cia# Union A&"ance Co2!an4
/, PHIL 060
Fact9
7enry 7arding )oug(t a "ar -or C' in 1.1F. 7e t(en ga2e t(e "ar to (is +i-e >rs. 7arding.
W(ie >rs. 7arding +as (a2ing t(e "ar repaired at t(e <uneta 8arage (<uneta +as an agent o- Smit( 3e and Co.6
+(i"( in turn is Commer"ia Union=s agent&6 t(e atter indu"ed >rs. 7arding to insure t(e "are +it( Commer"ia.
>rs. 7arding agreed6 and Smit( 3e sent an agent to <uneta 8arage6 +(o toget(er +it( t(e manager o- <Uneta6
appraised t(e "ar and de"ared t(at its present 2aue +as P9'. '(is amt +as +ritten in t(e proposa -orm +(i"( >rs.
7arding signed.
Su)seGuenty6 t(e "ar +as damaged )y -ire. Commer"ia re-used to pay )e"ause t(e "ar=s present 2aue +as ony C.0'
and not 9'.
I&e9 WBN Commer"ia is ia)e.
He#%9 Co22e"cia# i #ia$#e5
W(ere it appears t(at t(e proposa -orm6 +(ie signed )y t(e insured +as made out )y t(e person aut(ori4ed to soi"it
t(e insuran"e (<uneta and Smit( 3e& t(e -a"ts stated in t(e proposa6 e2en i- in"orre"t6 +i not )e regarded as +arranted )y
t(e insured6 in t(e a)sen"e o- +i-u misstatement. Under su"( "ir"umstan"es6 t(e proposa is to )e regarded as t(e a"t o-
t(e insurer.
Section 00. A representation is to )e deemed -ase +(en t(e -a"ts -ai to "orrespond +it( its assertions or
stipuations.
What i the i2!o"tance o) Sec5 00'
'(is de-ines misrepresentation.
INSURANCE REVIEWER Atty. Quimson page $#
?&t "e!"eentation $e #ite"a##4 t"&e'
No. See Se"tion 90. Representations are not reGuired to )e iteray true uni*e +arranties +(i"( must )e iteray true.
It is su--i"ient t(at representations are su)stantiay true.
I the a2e t"&e in cae o) 2a"ine in&"ance'
NB. In marine insuran"e6 t(e su)stantia trut( o- a representation is NB' su--i"ient. A""dg. to Se". 1%/6 t(e insured is
reGuired to state t(e e5a"t and +(oe trut( in reation to a matters t(at (e represents6 or upon inGuiry6 dis"oses or assumes
to dis"ose.
When (i## a "e!"eentation "e#ie% &!on a*oi% a !o#ic4'
In order t(at a representation s(a a2oid a poi"y6 it must )e reied upon and )e -aise in a su)stantia and materia
respe"t.
Section 015 I- a representation is -ase in a materia point6 +(et(er a--irmati2e or promissory6 t(e inIured party
is entited to res"ind t(e "ontra"t -rom t(e time +(en t(e representation )e"omes -ase. '(e rig(t to res"ind granted
)y t(is Code to t(e insurer is +ai2ed )y t(e a""eptan"e o- premium payments despite *no+edge o- t(e ground -or
res"ission. (As amended )y 3atasang Pam)ansa 3g. 0/#&
What %oe thi ection !"o*i%e'
It pro2ides t(at t(e -asity o- a representation entites t(e inIured party to res"ind t(e "ontra"t -rom t(e time +(en t(e
representation )e"omes -ase. And ordinariy6 under t(is se"tion6 -rauduent intent is I>>A'ERIA<. In ot(er +ords6 t(e
inIured party "an res"ind t(e "ontra"t o- insuran"e +(ere t(ere is a misrepresentation e2en +it(out -raud. And not t(at t(e
-ase representation >US' )e materia.
76/8 Sat&"nino *5 Phi#a2#i)e (repeat "ase O #$&
7 SCRA /16
Fact9
years.
He#%9 >ES5
or not.
+(at t(e aiment.
INSURANCE REVIEWER Atty. Quimson page $F
7608 ?&n3i *5 Wet Coat Li)e A&"ance Co5
61 PHIL ,60
Fact9
Arsenio 8ar"ia +as insured )y West Coast t+i"e in 1.91. In )ot( poi"ies6 (e +as as*ed to ans+er t(e GuestionJ , what
#h(sician or #ractitioners have (o! cons!ted or been treated b(, and for what iness or aiment>
In )ot( poi"ies6 (e ans+ered in t(e negati2e. It turned out t(at -rom 1.C. to 1.9.6 (e +ent to see se2era p(ysi"ians
-or a num)er o- aiments. So +(en (e died in 1.#C6 t(e "ompany re-used to pay t(e pro"eeds o- t(e insuran"e.
I&e9 WBN t(e ans+er gi2en )y Arsenio in t(e poi"ies Iusti-ies t(e "ompany=s re-usa to payH
He#%9 >ES5
Aresenio *noe+ t(at (e +as su--ering -rom a num)er o- aiments6 yet6 (e "on"eaed t(is. Su"( "on"eament and (is
-ase statements "onstituted -raud6 )e"ause t(e insuran"e "ompany )y reasons o- su"( statement a""epted t(e ris* +(i"( it
+oud ot(er+ise (a2e reIe"ted.
7618 In&#a" Li)e *5 Fe#iciano (repeat "ase O F$&
7/ PHIL 6-1
Fact9
E2aristo @ei"iano -ied an appi"ation +it( Insuar <i-e upon t(e soi"itation o- one o- its agents.
It appears t(at during t(at time6 E2aristo +as aready su--ering -rom tu)er"uosis. Su"( -a"t appeared during t(e
medi"a e5am6 )ut t(e e5aminer and t(e "ompany=s agent ignored it.
A-ter t(at6 E2aristo +as made to sign an appi"ation -orm and t(erea-ter t(e )an* spa"es +ere -ied )y t(e medi"a
e5aminer and t(e agent ma*ing it appear t(at E2aristo +as a -it su)Ie"t o- insuran"e. (E2aristo "oud not read and
understand Engis(&
W(en E2aristo died6 Insuar i-e re-used to pay t(e pro"eeds )e"ause o- "on"eament.
He#%9 >e5
'(e insuran"e )usiness (as gro+n so 2ast and u"rati2e +it(in t(e past "entury. No+adays6 e2en peope o- modest
means enter into insuran"e "ontra"ts. Agents +(o soi"it "ontra"ts are paid arge "ommissions on t(e poi"ies se"ured )y
t(em. '(ey a"t as genera representati2es o- insuran"e "ompanies.
IN t(e "ase at )ar6 t(e true state o- (eat( o- t(e insured +as "on"eaed )y t(e agents o- t(e insurer. '(e insurer=s
medi"a e5aminer appro2ed t(e appi"ation *no+ing -uy +e t(at t(e appi"ant +as si"*. '(e situation is one in +(i"( o-
t+o inno"ent parties must )ear a oss -or (is reian"e upon a t(ird person. In t(is "ase6 it is t(e one +(o dra-ted and
a""epted t(e poi"y and "onsummated t(e "ontra"t. It seems reasona)e t(at as )et+een t(e t+o o- t(em6 t(e one +(o
empoyed and ga2e "(ara"ter to t(e t(ird person as its agent s(oud )e t(e one to )ear t(e oss. 7en"e6 Insuar is ia)e to
t(e )ene-i"iaries.
7618 In&#a" #i)e *5 Fe#iciano (repeat "ase O F/&
70 PHIL 06,1
Fact9
Insuar i-e -ied a motion -or re"onsideration o- t(e de"ision in t(e pre"eding "ase.
He#%9 NO (what the fO>)
INSURANCE REVIEWER Atty. Quimson page $$
'(ere +as "ousion )et+een E2aristo and t(e agent and t(e medi"a e5aminer in ma*ing it appear t(at E2aristo +as a
-it su)Ie"t -or insuran"e. W(en E2aristo aut(ori4ed t(em to +rite t(e ans+ers -or (im6 (e made t(em (is o+n agents -or t(at
purpose and (e +as responsi)e -or t(eir a"ts in t(at "onne"tion.
I- t(ey -asi-ied t(e ans+ers -or (im6 (e "oud not e2ade ia)iity -or t(e -asi-i"ation. 7e +as not supposed to sign t(e
appi"ation in )an*. 7e *ne+ t(at (is ans+ers +oud )e t(e )asis -or t(e poi"y6 and +as reGuired +it( (is signature to
2ou"( -or t(eir trut(. '(e Iudgment rendered t(ere-ore in t(e pre"eding "ase is t(us re2ersed6 and Insuar <i-e is a)so2ed
-rom ia)iity. (bakit ka(a na)reverse>$$$ the #ot thickensO =mmO$)
7668 E%i##on *5 ?ani#a Ean;e" Li)e In&"ance Co"!5
117 SCRA 1,7
Fact9
In Apr. 1.$.6 Carmen <apu4 appied -or insuran"e +it( >ania 3an*ers. In t(e appi"ation s(e stated t(e date o- (er
)irt( as Euy 116 1.%# (around $# yrs od&. '(e poi"y +as t(erea-ter issued.
Su)seGuenty6 in >ay 1.$.6 Carmen died o- a "ar a""ident. 7er sister6 as )ene-i"iary "aimed t(e pro"eeds o- t(e
insuran"e.
>ania 3an*ers re-used to pay )e"ause t(e "erti-i"ate o- insuran"e "ontained a pro2ision e5"uding it=s ia)iity to pay
"aims to persons under 1$ or o2er $%.
I&e9 WBN t(e poi"y is 2oid "onsidering t(at t(e insured +as o2er $% +(en s(e appied.
He#%9 NO5
'(e age o- Carmen +as not "on"eaed to t(e insuran"e "ompany. 7er appi"ation -orm indi"ated (er true age. !espite
su"( in-ormation6 >ania 3an*ers a""epted t(e premium and issued t(e poi"y. It (ad a t(e time to pro"ess t(e appi"ation
and noti"e t(e appi"ant=s age. I- it -aied to a"t6 it +as )e"ause >ania 3an*ers +as +iing to +ai2e su"( disGuai-i"ations or
it simpy o2eroo*ed su"( -a"t. It is t(ere-ore estopped -rom dis"aiming any ia)iity.
7678 GonFa#eF Lao *5 >e; Ton3 Lin Fi"e H ?a"ine In&"ance
11 PHIL /,6
Fact9
8on4aes +as issued C -ire insuran"e poi"ies )y Ae* -or 1%%' "o2ering (is ea- to)a""o prdu"ts.
'(ey +ere stored in 8on4aes= )uiding on Soer St.6 +(i"( on Ean. 116 1.C06 )urned do+n.
Art. 9 o- t(e Insuran"e poi"ies pro2ided t(atJ ,'n( ins!rance in force !#on a or #art of the thin)s !ns!red m!st be
decared in writin) b( the ins!red and he (ins!red) sho!d ca!se the com#an( to insert or mention it in the #oic($
-itho!t s!ch re3!isite, s!ch #oic( wi be re)arded as n! and void and the ins!red wi be de#rived of a ri)hts of
indemnit( in case of oss$4
Not+it(standing said pro2ision6 8on4aes entered into ot(er insuran"e "ontra"ts. W(en (e soug(t to "aim -rom Ae*
a-ter t(e -ire6 t(e atter denied any ia)iity on t(e ground o- 2ioation o- Art. 9 o- t(e said poi"ies.
8on4aes (o+e2er pro2ed t(at t(e insurer *ne+ o- t(e ot(er insuran"e poi"ies o)tained )y (im ong e-ore t(e -ire6 and
t(e insurer did NB' res"ind t(e insuran"e poi"es in Guestion )ut demanded and "oe"ted -rom t(e insured t(e
premiums.
I&e9 WBN Ae* is sti entited to annu t(e "ontra"t.
He#%9 NOPE5
'(e a"tion )y t(e insuran"e "ompany o- ta*ing t(e premiums o- t(e insured not+it(standing *no+edge o- 2ioations o-
t(e pro2isions o- t(e poi"ies amounted to +ai2er o- t(e rig(t to annu t(e "ontra"t o- insuran"e.
76,8 Tan Cha4 Hen3 *5 Wet Coat Li)e
11 Phi# ,-
Fact9
In 1.C$6 'an C(ay 7eng sued West Coast on t(e poi"y aegedy issued to (is ,un"e16 'an Caeng +(o died in 1.CF.
7e +as t(e soe )ene-i"iary t(ereo-.
West Coast re-used on t(e ground t(at t(e poi"y +as o)tained )y 'an Caeng +it( t(e (ep o- agents 8o C(uiian6
@ran"is"o San"(e4 and !r. <o"sin o- West Coast.
West Coast said t(at it +as made to appear t(at 'an Caeng +as singe6 a mer"(ant6 (eat( and not a drug user6 +(en
in -a"t (e +as married6 a a)orer6 su--ering -orm tu)er"uosis and addi"ted to drugs.
INSURANCE REVIEWER Atty. Quimson page $/
West Coast no+ denies ia)iity )ased on t(ese misrepresentations.
'an C(ay "ontends t(at West Coast may not res"ind t(e "ontra"t )e"ause an a"tion -or per-orman"e (as aready )een
-ied.
'ria "ourt -ound -or 'an C(ay (oding t(at an insurer "annot a2oid a poi"y +(i"( (as )een pro"ured )y -raud uness (e
)rings an a"tion to res"ind it )e-ore (e is sued t(ereon.
I&e9 WBN West Coast=s a"tion -or res"ission is t(ere-ore )arred )y t(e "oe"tion suit -ied )y 'an C(ay.
He#%9 NO5
Pre"isey6 t(e de-ense o- West Cast +as t(at t(roug( -raud in its e5e"ution6 t(e poi"y is 2oid a) initio6 and t(ere-ore6 no
2aid "ontra"t +as e2er made. Its a"tion t(en "annot )e -ore res"ission )e"ause an a"tion to res"ind is -ounded upon and
presupposes t(e e5isten"e o- t(e "ontra"t. 7en"e6 West Coast=s de-ense is not )arred )y Se". #/.
In t(e instant "ase6 it +i )e noted t(at e2en in its prayer6 t(e de-endant does not see* to (a2e t(e aeged insuran"e
"ontra"t res"inded. It denies t(at it e2er made any "ontra"t o- insuran"e on t(e i-e o- 'an Caeng6 or t(at any su"( a "ontra"t
e2er e5isted6 and t(at is t(e Guestion +(i"( it see*s to (a2e itigated )y its spe"ia de-ense. In t(e 2ery nature o- t(ings6 i- t(e
de-endant ne2er made or entered into t(e "ontra"t in Guestion6 t(ere is no "ontra"t to res"ind6 and6 (en"e6 se"tion #/ upon
+(i"( t(e o+er "ourt )ased its de"ision in sustaining t(e demurrer does not appy.
As stated6 an a"tion to res"ind a "ontra"t is -ounded upon and presupposes t(e e5isten"e o- t(e "ontra"t +(i"( is
soug(t to )e res"inded. I- a o- t(e materia matters set -ort( and aeged in t(e de-endantLs spe"ia pea are true6 t(ere +as
no 2aid "ontra"t o- insuran"e6 -or t(e simpe reason t(at t(e minds o- t(e parties ne2er met and ne2er agreed upon t(e
terms and "onditions o- t(e "ontra"t. We are "eary o- t(e opinion t(at6 i- su"( matters are *no+n to e5ist )y a
preponderan"e o- t(e e2iden"e6 t(ey +oud "onstitute a 2aid de-ense to painti--Ls "ause o- a"tion. Upon t(e Guestion as to
+(et(er or not t(ey are or are not true6 +e do not at t(is time (a2e or e5press any opinion6 )ut +e are "ear t(at se"tion #/
does not appy to t(e aegations made in t(e ans+er6 and t(at t(e tria "ourt erred in sustaining t(e demurrer.
7698 :&a Chee Gan *5 La( Union H Roc; In&"ance
9, PHIL ,1
Fact9
3e-ore t(e ast +ar6 Qua C(ee 8an o+ned # +are(ouses or )odegas (designated as 3odegas nos. 1 to #& in 'a)a"o6
A)ay6 used -or t(e storage o- sto"*s o- "opra and o- (emp6 )aed and oose6 in +(i"( (e deat e5tensi2ey.
'(ey (ad )een6 +it( t(eir "ontents6 insured +it( <a+ Union sin"e 1.9/6 and t(e oss made paya)e to t(e P(iippine
Nationa 3an* as mortgagee o- t(e (emp and "opra6 to t(e e5tent o- its interest.
@ire )ro*e out in6 1.#%6 and asted amost one +ee*6 gutted and "ompetey destroyed 3odegas Nos. 16 9 and #6 +it(
t(e mer"(andise stored t(erein.
Qua in-ormed t(e insurer )y teegram on t(e same date; and on t(e ne5t day6 t(e insurer sent -ire adIusters to estimate
t(e oss. '(e oss +as estimated at 9/%'. <a+ Union re-used to pay "ontending t(at Qua purposey set -ire to (is
)odegas and 2ioation o- +arranties and "onditions as agreed.
<a+ Union t(en -ied a "rimina "ase -or arson6 )ut t(e same +as dismissed )y t(e tria "ourt. Qua C(ee t(erea-ter
instituted t(is "i2i "ase -or t(e "oe"tion o- t(e pro"eeds o- insuran"e.
As de-ense6 <a+ Union Ro"* "ontends t(at Qua C(ee 2ioated t(e pro2isions agreed upon in a rider in t(e insuran"e
poi"y +(ereJ
o a -ire (ydrants s(oud )e pa"ed e2ery 1F% -eet o- t(e e5terna +a measurement6 sin"e t(ere are ony C and
anot(er C in a -urt(er area o+ned )y t(e muni"ipaity.
o Qua C(ee -aied to maintain t(e agreed +ater pressure and t(e 1%% -eet o- -ire (ose
o 7e did maintain C% -ire )rigade men +it(in t(e premises
Insurer aso a2erred t(at Qua C(ee 2ioated t(e pro2ision o- t(e 7emp Warranty +(i"( pro(i)its t(e storage o- ois +(en
(e stored gasoine in )odega C.
I&e9 WBN t(e "ompany "an res"ind t(e "ontra"t on t(e )asis o- su"( aeged 2ioation.
He#%9 NO5
<a+ Union is )arred )y +ai2er (or rat(er estoppe& to "aim 2ioation o- t(e so: "aed -ire (ydrants +arranty6 -or t(e
reason t(at *no+ing -uy a t(at t(e num)er o- (ydrants demanded t(erein ne2er e5isted -rom t(e 2ery )eginning6 t(e <a+
Union ne2ert(eess issued t(e poi"ies in Guestion su)Ie"t to su"( +arranty6 and re"ei2ed t(e "orresponding premiums. It
+oud )e periousy "ose to "onni2ing at -raud upon t(e insured to ao+ <a+ Union to "aim no+ as 2oid a) initio t(e poi"ies
t(at it (ad issued to t(e painti-- +it(out +arning o- t(eir -ata de-e"t6 o- +(i"( it +as in-ormed6 and a-ter it (ad mised t(e
de-endant into )eie2ing t(at t(e poi"ies +ere e--e"ti2e.
'(e insuran"e "ompany +as a+are6 e2en )e-ore t(e poi"ies +ere issued6 t(at in t(e premises insured t(ere +ere ony
t+o -ire (ydrants instaed )y Qua C(ee 8an and t+o ot(ers near)y6 o+ned )y t(e muni"ipaity o- 'a)a"o6 "ontrary to t(e
reGuirements o- t(e +arranty in Guestion. Su"( -a"t appears -rom positi2e testimony -or t(e insured t(at appeantLs agents
inspe"ted t(e premises; and t(e simpe denias o- appeantLs representati2e (Eami"4on& "an not o2er"ome t(at proo-. '(at
su"( inspe"tion +as made is moreo2er rendered pro)a)e )y its )eing a prereGuisite -or t(e -i5ing o- t(e dis"ount on t(e
premium to +(i"( t(e insured +as entited6 sin"e t(e dis"ount depended on t(e num)er o- (ydrants6 and t(e -ire -ig(ting
eGuipment a2aia)e
'(e aeged 2ioation o- t(e +arranty o- 1%% -eet o- -ire (ose -or e2ery t+o (ydrants6 must )e eGuay reIe"ted6 sin"e t(e
appeantLs argument t(ereon is )ased on t(e assumption t(at t(e insured +as )ound to maintain no ess t(an ee2en
(ydrants (one per 1F% -eet o- +a&6 +(i"( reGuirement appeant is estopped -rom en-or"ing.
'(e supposed )rea"( o- t(e +ater pressure "ondition is made to rest on t(e testimony o- +itness Serra6 t(at t(e +ater
suppy "oud -i a F:gaon "an in 9 se"onds; appeant t(ereupon in-erring t(at t(e ma5imum Guantity o)taina)e -rom t(e
(ydrants +as 1%% gaons a minute6 +(en t(e +arranty "aed -or C%% gaons a minute. '(e trans"ript s(o+s6 (o+e2er6 t(at
Serra repeatedy re-used and pro-essed ina)iity to estimate t(e rate o- dis"(arge o- t(e +ater6 and ony ga2e t(e MF:gaon
per 9:se"ondM rate )e"ause t(e insisten"e o- appeantLs "ounse -or"ed t(e +itness to (a4ard a guess. B)2iousy6 t(e
testimony is +ort(ess and insu--i"ient to esta)is( t(e 2ioation "aimed6 spe"iay sin"e t(e )urden o- its proo- ay on
appeant.
As to maintenan"e o- a trained -ire )rigade o- C% men6 t(e re"ord is preponderant t(at t(e same +as organi4ed6 and
dried6 -rom time to gi2e6 at(o not maintained as a permanenty separate unit6 +(i"( t(e +arranty did not reGuire. Any+ay6 it
+oud )e unreasona)e to e5pe"t t(e insured to maintain -or (is "ompound aone a -ire -ig(ting -or"e t(at many
muni"ipaities in t(e Isands do not e2en possess. '(ere is no merit in appeantLs "aim t(at su)ordinate mem)ers(ip o- t(e
)usiness manager (Co Cuan& in t(e -ire )rigade6 +(ie its dire"tion +as entrusted to a minor empoyee6 renders t(e
testimony impro)a)e. A )usiness manager is not ne"essariy adept at -ire -ig(ting6 t(e Guaities reGuired )eing di--erent -or
)ot( a"ti2ities.
It is +e to note t(at gasoine is not spe"i-i"ay mentioned among t(e pro(i)ited arti"es isted in t(e so: "aed M(emp
+arranty.M '(e "ause reied upon )y t(e insurer spea*s o- Mois (anima andKor 2egeta)e andKor minera andKor t(eir iGuid
produ"ts (a2ing a -as( point )eo+ 9%%Y @a(ren(eitM6 and is de"idedy am)iguous and un"ertain; -or in ordinary paran"e6
MBisM mean Mu)ri"antsM and not gasoine or *erosene. And (o+ many insured6 it may +e )e +ondered6 are in a position to
understand or determine M-as( point )eo+ %%9Y @a(ren(eit. 7ere6 again6 )y reason o- t(e e5"usi2e "ontro o- t(e insuran"e
"ompany o2er t(e terms and p(raseoogy o- t(e "ontra"t6 t(e am)iguity must )e (ed stri"ty against t(e insurer and i)eray
in -a2or o- t(e insured6 spe"iay to a2oid a -or-eiture
77-8 Co#a%o *5 In&#a" Li)e
11 OG 7No 168 6669
Fact9
Vi2en"io Coado appied -or an insuran"e "ontra"t +it( Insuar i-e in 1.#0. 7is appi"ation +as appro2ed and (e )egan
started ma*ing premium payments. 7o+e2er6 (e de-auted and t(e insuran"e +as "an"eed.
7e t(en appied -or t(e reinstatement o- (is insuran"e poi"y in No2. o- 1.F1 and tendered t(e amount o- premium -or
t(e years 1.F%:1.F1.
7e stated t(at (e +as as o- No2. 1.F1 o- good (eat(6 and t(at (e (ad no inIuries6 aiments or inesses and (ad not
)een si"* -or any "ase sin"e 1.#0 ((is medi"a "(e"* up +(en (e appied -or insuran"e& and t(at (e (ad not "onsuted
any p(ysi"ian or pra"titioner -or any "ase sin"e t(e date o- su"( atest medi"a e5am.
7o+e2er6 +(en Vi2en"io appied -or t(e reinstatement6 (e +as aready si"* o- a -ata disease *no+n as "ar"inoma o-
t(e i2er and t(at # days prior to (is appi"ation -or insuran"e6 (e "onsuted a do"tor regarding (is "ondition.
'(e reinstatement +as appro2ed. Vi2en"io again -aied to pay t(e premiums -or t(e ast Guarter o- No2. 1.F1 and as
su"(6 Insuar i-e sent (im a noti"e "an"eing t(e poi"y.
Vi2en"io t(en died. '(e )enei-i"iaries instituted t(e present a"tion to re"o2er -rom Insuar i-e t(e deat( )ene-its o- a i-e
insuran"e poi"y 2aued at C'. Insuar re-used to pay "aiming "on"eament on t(e part o- Vi2en"io.
Coado "ontends t(at Insuar i-e (ad +ai2ed t(e rig(t to res"ine t(e poi"y in 2ie+ o- its repeated a""eptan"e o- t(e
o2erdue premiums -or t(e se"ond and t(ird years.
>uni"ipa "ourt o- >ania -ound -or Coado and Insuar -ied an appea +it( C@I o- >ania. C@I rendered Iudgment in
-a2or o- Insuar and dismissed Coado=s "ompaint.
I&e9 WBN Insuar i-e +as estopped and "oud no onger "an"e t(e "ontra"t due to t(e -a"t t(at it a""epted t(e tender o-
o2erdue payments -rom Vi2en"io.
INSURANCE REVIEWER Atty. Quimson page $.
He#%9 NO5
It is enormousy "ear t(at +(en t(e de"eased appied -or a reinstatement o- (is poi"y in No2. 1.F16 (e (ad aready
)een a--i"ted +it( t(e -ata aiment -or a period o- a)out -our mont(s. @urt(ermore6 in su)mitting toget(er +it( (is
appi"ation -or reinstatement6 a (eat( statement to t(e e--e"t t(at (e +as in good (eat(6 Vi2en"io "on"eaed t(e materia
-a"t t(at (e (ad "onsuted a do"tor and +as t(en -ound to )e a--i"ted +it( t(e maady.
'(e a""eptan"e o- Insuar i-e o- t(e o2erdue premiums did not ne"essariy depri2e it o- t(e rig(t to "an"e t(e poi"y in
"ase o- de-aut in"urred )y t(e Insured in t(e payment o- -uture premiums. '(e "ase +oud )e di--erent (ad t(e insured died
at any time a-ter t(e payment o- o2erdue premiums )ut pre2ious to t(e reinstatement o- t(e poi"y6 -or t(e6 Insuar6 )y its
a""eptan"e o- its o2erdue premiums is deemed to (a2e +ai2ed its rig(t to res"ind t(e poi"y.
'(e e2iden"e at (and s(o+s t(at inso-ar as t(e payment o- t(e ast Guartery premium -or 1.F1 +as "on"erned6 Insuar
(ad a2aied o- t(e rig(t to res"ind t(e poi"y )y noti-ying t(e Insured t(at t(e poi"y (ad apsed.
(2Hm sorr( k!n) ma)!o (!n) di)est$$ sobran) #an)it (!n) co#(a n!n) case$$ nde ko mabasa$$ mas maaa #a sa reviewer
na Kero&)
Section 065 '(e materiaity o- a representation is determined )y t(e same rues as t(e materiaity o- a
"on"eament.
What i the tet o) 2ate"ia#it4'
'(e materiaity o- t(e representation is to )e determined NB' )y t(e e2ent6 )ut soey )y t(e pro)a)e and reasona)e
in-uen"e o- t(e -a"ts upon t(e party to +(om t(e representation is made6 in -orming (is estimates o- t(e disad2antages o-
t(e proposed "ontra"t or in ma*ing (is inGuiries.
Who %ete"2ine 2ate"ia#it4'
It is a Iudi"ia Guestion. It is NB' e-t to t(e insuran"e "ompany to say a-ter t(e oss (as o""urred t(at it +oud or +oud
not (a2e issued t(e poi"y (ad an ans+er )een truy gi2en. '(e matter misrepresented must )e o- t(at "(ara"ter +(i"( t(e
"ourt "an say +oud reasona)y a--e"t t(e insurer=s Iudgment.
What a"e the %i))e"ence an% i2i#a"itie $et(een a concea#2ent an% 2i"e!"eentation' (aread( disc!ssed in #rior
sections, b!t for the convenience of aO #resented in a o)ica format$)
CONCEAL?ENT ?ISREPRESENTATION
Insured +it((ods in-ormation o- materia -a"ts -rom t(e
insurer
Insured ma*es erroneous statements o- -a"ts +it( t(e
intent o- indu"ing t(e insurer to enter into t(e insuran"e
"ontra"t.
>ateriaity is determined )y t(e same rues appied in "ases o- misrepresentation.
Con"eament on t(e part o- t(e insured (as t(e a2e e))ect as a misrepresentation and gi2es t(e insurer t(e rig(t
to res"ind t(e "ontra"t.
W(et(er intentiona# or not intentiona#6 t(e inIured party is entited to res"ind t(e "ontra"t o- insuran"e on ground
o- "on"eament or -ase representation.
Rues on "on"eament and representation appy i*e+ise to t(e insurer sin"e t(e "ontra"ts o- insuran"e is said to
)e one o- utmost good -ait( on part o- )ot( parties to t(e agreement.
Section 07. '(e pro2isions o- t(is "(apter appy as +e to a modi-i"ation o- a "ontra"t o- insuran"e as to its
origina -ormation.
What %oe thi ection 2ean'
'(is se"tion means t(at t(e pro2isions o- Se". C$ to 9F go2erning "on"eament and Se". 9$:#0 go2erning
representation appy NB' BN<A to t(e origina -ormation o- t(e "ontra"t )ut aso to a modi-i"ation o- t(e same during t(e
time it is in -or"e.
Section 0,. W(ene2er a rig(t to res"ind a "ontra"t o- insuran"e is gi2en to t(e insurer )y any pro2ision o- t(is
"(apter6 su"( rig(t must )e e5er"ised pre2ious to t(e "ommen"ement o- an a"tion on t(e "ontra"t.
A-ter a poi"y o- i-e insuran"e made paya)e on t(e deat( o- t(e insured s(a (a2e )een in -or"e during t(e
i-etime o- t(e insured -or a period o- t+o years -rom t(e date o- its issue or o- its ast reinstatement6 t(e insurer
INSURANCE REVIEWER Atty. Quimson page /%
"annot pro2e t(at t(e poi"y is 2oid a) initio or is res"inda)e )y reason o- t(e -rauduent "on"eament or
misrepresentation o- t(e insured or (is agent.
When 2&t the in&"e" e@e"cie hi "i3ht to "ecin%'
In a non+#i)e in&"ance poi"y6 t(e insurer may res"ind a "ontra"t o- insuran"e #rior to the commencement of an action
on the contract$
In a #i)e in&"ance poi"y6 t(e insurer may res"ind t(e "ontra"t o- insuran"e d!rin) the first two (ears when the #oic(
was in force d!rin) the ifetime of the ins!red from the date of its iss!e or of its ast reinstatement$
What a"e the "e=&iite in o"%e" that the in&"e" 2a4 "ecin% a #i)e in&"ance !o#ic4'
1& '(ere must )e a )asis -or t(e res"ission ()rea"( o- +arranty6 "on"eament6 misrepresentation6 et".&
C& '(e res"ission must )e "ouped +it( a "(e"* -or t(e amount o- premiums aready paid. (+it(out t(is6 t(e res"ission
is not e--e"ti2e&
9& '(e res"ission must )e e5er"ised +it(in t(e t+o years t(at t(e insuran"e is in -or"e during t(e i-etime o- t(e
insured.
(2 "!st tried to #!t to)ether a of what 'tt($ M!imson said in cass)
What i an AInconteta$i#it4 C#a&eB'
In"ontesta)iity "auses are t(ose "auses in i-e insuran"e poi"ies stipuating t(at t(e poi"y s(a )e in"ontesta)e a-ter
a stated period. Se". #0 par. C no+ reGuires t(at t(e in"ontesta)iity o- a i-e insuran"e poi"y starts a-ter t(e apse o- t(e C
years t(at t(e insuran"e +as in -or"e during t(e i-e time o- t(e insured.
What i the "eaon )o" thi inconteta$i#it4'
's to the 2ns!rer
'(e insurer is gi2en a reasona)e opportunity to in2estigate t(e statements +(i"( t(e appi"ant ma*es in pro"uring (is
poi"y and t(at a-ter t(e de-inite period6 t(e insurer s(oud not )e permitted to Guestion t(e 2aidity o- t(e poi"y6 eit(er )y
a--irmati2e a"tion6 or )y de-ense to a suit )roug(t on t(e i-e poi"y )y t(e )ene-i"iary.
's to the ins!red$
Su"( "auses gi2e assuran"e to t(e poi"y (oder t(at (is )ene-i"iaries +oud re"ei2e payment +it(out Guestion as to t(e
2aidity o- t(e poi"y or t(e e5isten"e o- t(e "o2erage on"e t(e period o- "ontesta)iity passes. It is designed to prote"t t(e
poi"y(oder or )ene-i"iary -rom a a+suit "ontesting t(e 2aidity o- t(e poi"y a-ter a "onsidera)e time (as passed and
e2iden"e o- t(e -a"ts surrounding t(e pur"(ase may )e una2aia)e.
What a"e the "e=&iite )o" INCONTESTAEILIT>'
1& '(e poi"y is a i-e insuran"e poi"y
C& It is paya)e on t(e deat( o- t(e insured; and
9& It (as )een in )o"ce during t(e #i)eti2e o- t(e insured -or at east C years -rom its date o- issue or o- its ast
reinstatement.
?a4 the !e"io% o) 6 4ea" $e ho"tene% $4 a3"ee2ent $et(een the in&"e" an% the in&"e%'
It may )e s(ortened )ut it "annot )e e5tended )y stipuation.
What %oe the !hae A%&"in3 the #i)eti2eB o) the in&"e% 2ean'
Simpy means t(at t(e poi"y is no onger "onsidered in -or"e a-ter t(e insured (as died.
What i the e))ect (hen the #i)e in&"ance !o#ic4 $eco2e inconteta$#e'
'(e insurer may NB' re-use to pay t(e same )y "aiming t(atJ
1& '(e poi"y is 2oid a) initio; or
C& It is res"issi)e )y reason o- t(e -rauduent misrepresentations o- t(e insured or (is agent6 no matter (o+
patent or +e:-ounded; or
9& It is res"issi)e )y reason o- t(e -rauduent misrepresentations o- t(e insured agent.
What a"e the %e)ene that the in&"e" 2a4 "aie to a*oi% #ia$i#it4 e*en a)te" the #a!e o) the 6 4ea"'
1& '(at t(e person ta*ing t(e insuran"e a"*ed insura)e interest as reGuired )y a+;
C& Cause o- deat( o- t(e insured is an e5pe"ted ris*;
9& '(at t(e premiums (a2e not )een paid WSe"s. //6 C//()&6 CC0()&6 C9%()&X;
#& '(at t(e "onditions o- t(e poi"y reating to miitary or na2a ser2i"e (a2e )een 2ioated WSe". CC/()&6 CC0()&X;
F& '(at t(e -raud is o- a parti"uary 2i"ious type6 as +(ere t(e poi"y +as ta*en out in -urt(eran"e o- a s"(eme to
murder t(e insured6 or +(ere t(e insured su)stitutes anot(er person -or t(e medi"a e5amination6 or +(ere t(e
)ene-i"iary -eoniousy *is t(e insured.
INSURANCE REVIEWER Atty. Quimson page /1
$& '(at t(e )ene-i"iary -aied to -urnis( proo- o- deat( or to "ompy +it( any "ondition imposed )y t(e poi"y a-ter t(e
oss (as (appened (Se". C#C&
/& '(at t(e a"tion +as not )roug(t +it(in t(e time spe"i-ied.
What %oe Sec5 6677$8C Sec5 66, 7$8 an% Sec5 6/- 7$8 !"o*i%e'
Section 667. In t(e "ase o- indi2idua i-e or endo+ment insuran"e6 t(e poi"y s(a "ontain in su)stan"e t(e -oo+ing
"onditionsJ
555
()& A pro2ision t(at t(e poi"y s(a )e in"ontesta)e a-ter it s(a (a2e )een in -or"e during t(e i-etime o- t(e insured -or
a period o- t+o years -rom its date o- issue as s(o+n in t(e poi"y6 or date o- appro2a o- ast reinstatement6 e5"ept -or non:
payment o- premium and e5"ept -or 2ioation o- t(e "onditions o- t(e poi"y reating to miitary or na2a ser2i"e in time o- +ar;
Section 66,. No poi"y o- group i-e insuran"e s(a )e issued and dei2ered in t(e P(iippines uness it "ontains in
su)stan"e t(e -oo+ing pro2isions6 or pro2isions +(i"( in t(e opinion o- t(e Commissioner are more -a2ora)e to t(e
persons insured6 or at east as -a2ora)e to t(e persons insured and more -a2ora)e to t(e poi"y:(odersJ
555
()& A pro2ision t(at t(e 2aidity o- t(e poi"y s(a not )e "ontested6 e5"ept -or non:payment o- premiums a-ter it (as
)een in -or"e -or t+o years -rom its date o- issue; and t(at no statement made )y any insured under t(e poi"y reating to (is
insura)iity s(a )e used in "ontesting t(e 2aidity o- t(e insuran"e +it( respe"t to +(i"( su"( statement +as made a-ter
su"( insuran"e (as )een in -or"e prior to t(e "ontest -or a period o- t+o years during su"( personLs i-etime nor uness
"ontained in +ritten instrument signed )y (im;
Section 6/-5 In t(e "ase o- industria i-e insuran"e6 t(e poi"y s(a "ontain in su)stan"e t(e -oo+ing pro2isionsJ
555
()& A pro2ision t(at t(e poi"y s(a )e in"ontesta)e a-ter it (as )een in -or"e during t(e i-etime o- t(e insured -or a
spe"i-ied period6 not more t(an t+o years -rom its date o- issue6 e5"ept -or non:payment o- premiums and e5"ept -or
2ioation o- t(e "onditions o- t(e poi"y reating to na2a or miitary ser2i"e6 or ser2i"es au5iiary t(ereto6 and e5"ept as to
pro2isions reating to )ene-its in t(e e2ent o- disa)iity as de-ined in t(e poi"y6 and t(ose granting additiona insuran"e
spe"i-i"ay against deat( )y a""ident or )y a""identa means6 or to additiona insuran"e against oss o-6 or oss o- use o-6
spe"i-i" mem)ers o- t(e )ody;
P"o$#e25
' #roc!red ins!rance on his ife thro!)h fra!d!ent conceament or misre#resentation$ -hat is the effect if ' dies within two
(ear from the iss!ance of the #oic(, and the ins!rer earned of the conceament or misre#resentation>
7is )ene-i"iary "annot re"o2er on t(e poi"y )e"ause t(e a+ says t(at t(e poi"y must (a2e )een in -or"e during t(e
i-etime o- t(e insured -or a period o- t+o years. '(e deat( o- t(e insured ma*es t(e poi"y no onger ,in -or"e1 and t(e
insurer "an sti res"ind t(e "ontra"t.
-hat if the two (ears had aread( a#sed>
'(en t(e insurer "annot e5er"ise (is rig(t o- res"ission anymore. W(et(er A is dead or ai2e is immateria6 +(at is
important is t(e -a"t t(at t+o years (a2e aready apsed and (as "ured t(e -raud "ommitted )y A.
B #roc!red a ife ins!rance in Jan 2000$ =e attested that he was in )ood heath which was tr!e$ Before 0GGG ended, B
defa!ted in the #a(ment of the #remi!m and thereafter the ins!rance com#an( canceed his #oic($ 2n Mar 2001, B a##ied
for the reinstatement of his ife ins!rance #oic( tenderin) the overd!e amo!nts$ 's re3!ired, B s!bmitted that a certificate
statin) that he is sti in )ood heath$ *he tr!th however was that in Feb. 2001, B was dia)nosed with cancer and on( had 0
(ears to ive$ *he ins!rance was reinstated on Aril 2001$ B died on Feb. 200! and +, his beneficiar( fied a caim a)ainst
the ins!rance com#an($ *he atter ref!sed caimin) that B conceaed the fact that he was afficted with cancer$ + contends
that the 0 (ears co!ntin) from Jan 2000 had aread( a#sed and therefore the ins!rance com#an( cannot contest the
conceament made b( B$ 2s + correct>
No. Se". #0 pro2ides t(at t(e t+o years are "ounted -rom t(e time t(e date o- its issue or o- its ast reinstatement.
Sin"e t(e reinstatement +as made in Apr. C%%16 t(e "ounting o- t(e t+o:year period s(oud start -rom t(ere. '(e
"on"eament t(at 3 made +(en (e appied -or t(e reinstatement is not in"ontesta)e. '(e insurer is on"e again gi2en t+o
years -rom t(e date o- reinstatement to in2estigate t(e 2era"ity o- t(e -a"ts represented )y t(e insured in t(e appi"ation -or
reinstatement. (Soiman 2. US <i-e& Counting -rom Apr. C%%16 it is appro5imatey 1 year and 1% mos up unti t(e deat( o- 36
and t(e insurer "an raise t(e de-ense o- "on"eament.
INSURANCE REVIEWER Atty. Quimson page /C
Same facts$ B!t instead, B died on Fecember 0GG3$ 2s the answer sti the same>
'(is time6 C "an no+ "oe"t -rom t(e insuran"e "ompany. Sin"e t(e date o- reinstatement +as Apri C%%16 and 3 died
in !e"em)er C%%96 t(e t+o year period (as apsed and t(e poi"y (as )e"ome in"ontesta)e.
Cae9
7718 Phi#a2ca"e *5 CA (repeat "ase O.&
/79 SCRA /16 76--68
Fact9
disa)iity.
I&e an% Reo#&tion9
mentioned;
7768 So#i2an *5 US Li)e
1-0 PHIL 1-06
Fact9
US <i-e issued a C% yr endo+ment i-e poi"y on t(e Ioint i2es o- Patri"io Soiman and (is +i-e Rosario6 ea"( o- t(em
)eing t(e )ene-i"iary o- t(e ot(er.
In >ar. 1.#.6 t(e spouses +ere in-ormed t(at t(e premium -or Ean 1.#. +as sti unpaid not+it(standing t(at t(e 91:day
gra"e period (as aready e5pired6 and t(ey +ere -urnis(ed at t(e same time ong:-orm (eat( "erti-i"ates -or t(e
reinstatement o- t(e poi"ies.
In Apr 1.#.6 t(ey su)mitted t(e "erti-i"ates and paid t(e premiums.
In Ean. 1.F%6 Rosario died o- a"ute diation o- t(e (eart6 and t(erea-ter6 Patri"io -ied a "aim -or t(e pro"eeds o- t(e
insuran"e.
US i-e denied t(e "aim and -ied -or t(e res"ission o- t(e "ontra"t on t(e ground t(at t(e "erti-i"ates -aied to dis"ose
t(at Rosario (ad )een su--ering -rom )ron"(ia ast(ma -or 9 years prior to t(eir su)mission.
I&e9 WBN t(e "ontra"t "an sti )e res"inded.
He#%9 >e5
INSURANCE REVIEWER Atty. Quimson page /#
'(e insurer is on"e again gi2en t+o years -rom t(e date o- reinstatement to in2estigate into t(e 2era"ity o- t(e -a"ts
represented )y t(e insured in t(e appi"ation -or reinstatement. W(en US i-e soug(t to res"ind t(e "ontra"t on t(e ground o-
"on"eamentKmisrepresentation6 t+o years (ad not yet eapsed. 7en"e6 t(e "ontra"t "an sti )e res"inded.
77/8 Tan *5 CA
170 SCRA 0-/
Fact9
'an <ee Siong +as issued a poi"y )y P(iami-e on No2. $6 1./9.
Bn Apr C$6 1./F6 'an died o- (epatoma. 7is )ene-i"iaries t(en -ied a "aim +it( P(iami-e -or t(e pro"eeds o- t(e
insuran"e.
P(iami-e +rote t(e )ene-i"iaries in Sep. 1./F denying t(eir "aim and res"inding t(e "ontra"t on t(e ground o-
misrepresentation. '(e )ene-i"iaries "ontend t(at P(iami-e "an no onger res"ind t(e "ontra"t on t(e ground o-
misrepresentation as res"ission must aegedy )e done ,during t(e i-etime o- t(e insured1 +it(in t+o years and prior to
t(e "ommen"ement o- t(e a"tion -oo+ing t(e +ording o- Se". #06 par. C.
I&e9 WBN P(iami-e "an res"ind t(e "ontra"t.
He#%9 >ES5
'(e p(rase ,during t(e i-etime1 -ound in Se". #0 simpy means t(at t(e poi"y is no onger in -or"e a-ter t(e insured (as
died. '(e *ey p(rase in t(e se"ond paragrap( is ,-or a period o- t+o years1.
What i a i2!#e" i##&t"ation o) the "&#in3 in Tan *5 CA'
'(e period to "onsider in a i-e insuran"e poii"y is ,t+o years1 -rom t(e date o- issue or o- t(e ast reinstatement. So i-
-or e5ampe t(e poi"y +as issuedKreinstated on Ean 16 C%%%6 t(e insurer "an sti e5er"ise (is rig(t to res"ind up to Ean. 16
C%%9 or t+o years -rom t(e date o- issueKreinstatement6 RE8AR!<ESS o- +(et(er t(e insured died )e-ore or a-ter Ean. 16
C%%9.
7708 Tan Cha4 Hen3 *5 Wet Coat Li)e (repeat "ase O$0&
11 PHIL ,-
Fact9
In 1.C$6 'an C(ay 7eng sued West Coast on t(e poi"y aegedy issued to (is ,un"e16 'an Caeng +(o died in 1.CF.
7e +as t(e soe )ene-i"iary t(ereo-.
West Coast re-used on t(e ground t(at t(e poi"y +as o)tained )y 'an Caeng +it( t(e (ep o- agents 8o C(uiian6
@ran"is"o San"(e4 and !r. <o"sin o- West Coast.
West Coast said t(at it +as made to appear t(at 'an Caeng +as singe6 a mer"(ant6 (eat( and not a drug user6 +(en
in -a"t (e +as married6 a a)orer6 su--ering -orm tu)er"uosis and addi"ted to drugs.
West Coast no+ denies ia)iity )ased on t(ese misrepresentations.
'an C(ay "ontends t(at West Coast may not res"ind t(e "ontra"t )e"ause an a"tion -or per-orman"e (as aready )een
-ied.
'ria "ourt -ound -or 'an C(ay (oding t(at an insurer "annot a2oid a poi"y +(i"( (as )een pro"ured )y -raud uness (e
)rings an a"tion to res"ind it )e-ore (e is sued t(ereon.
I&e9 WBN West Coast=s a"tion -or res"ission is t(ere-ore )arred )y t(e "oe"tion suit -ied )y 'an C(ay.
He#%9 NO5
Pre"isey6 t(e de-ense o- West Cast +as t(at t(roug( -raud in its e5e"ution6 t(e poi"y is 2oid a) initio6 and t(ere-ore6 no
2aid "ontra"t +as e2er made. Its a"tion t(en "annot )e -ore res"ission )e"ause an a"tion to res"ind is -ounded upon and
presupposes t(e e5isten"e o- t(e "ontra"t. 7en"e6 West Coast=s de-ense is not )arred )y Se". #/.
In t(e instant "ase6 it +i )e noted t(at e2en in its prayer6 t(e de-endant does not see* to (a2e t(e aeged insuran"e
"ontra"t res"inded. It denies t(at it e2er made any "ontra"t o- insuran"e on t(e i-e o- 'an Caeng6 or t(at any su"( a "ontra"t
e2er e5isted6 and t(at is t(e Guestion +(i"( it see*s to (a2e itigated )y its spe"ia de-ense. In t(e 2ery nature o- t(ings6 i- t(e
de-endant ne2er made or entered into t(e "ontra"t in Guestion6 t(ere is no "ontra"t to res"ind6 and6 (en"e6 se"tion #/ upon
+(i"( t(e o+er "ourt )ased its de"ision in sustaining t(e demurrer does not appy.
As stated6 an a"tion to res"ind a "ontra"t is -ounded upon and presupposes t(e e5isten"e o- t(e "ontra"t +(i"( is
soug(t to )e res"inded. I- a o- t(e materia matters set -ort( and aeged in t(e de-endantLs spe"ia pea are true6 t(ere +as
no 2aid "ontra"t o- insuran"e6 -or t(e simpe reason t(at t(e minds o- t(e parties ne2er met and ne2er agreed upon t(e
terms and "onditions o- t(e "ontra"t. We are "eary o- t(e opinion t(at6 i- su"( matters are *no+n to e5ist )y a
INSURANCE REVIEWER Atty. Quimson page /F
preponderan"e o- t(e e2iden"e6 t(ey +oud "onstitute a 2aid de-ense to painti--Ls "ause o- a"tion. Upon t(e Guestion as to
+(et(er or not t(ey are or are not true6 +e do not at t(is time (a2e or e5press any opinion6 )ut +e are "ear t(at se"tion #/
does not appy to t(e aegations made in t(e ans+er6 and t(at t(e tria "ourt erred in sustaining t(e demurrer.
TITLE VI . THE POLIC>
Section 09. '(e +ritten instrument in +(i"( a "ontra"t o- insuran"e is set -ort(6 is "aed a poi"y o- insuran"e.
Section 1-. '(e poi"y s(a )e in printed -orm +(i"( may "ontain )an* spa"es; and any +ord6 p(rase6 "ause6
mar*6 sign6 sym)o6 signature6 num)er6 or +ord ne"essary to "ompete t(e "ontra"t o- insuran"e s(a )e +ritten on
t(e )an* spa"es pro2ided t(erein.
Any rider6 "ause6 +arranty or endorsement purporting to )e part o- t(e "ontra"t o- insuran"e and +(i"( is
pasted or atta"(ed to said poi"y is not )inding on t(e insured6 uness t(e des"ripti2e tite or name o- t(e rider6
"ause6 +arranty or endorsement is aso mentioned and +ritten on t(e )an* spa"es pro2ided in t(e poi"y.
Uness appied -or )y t(e insured or o+ner6 any rider6 "ause6 +arranty or endorsement issued a-ter t(e origina
poi"y s(a )e "ountersigned )y t(e insured or o+ner6 +(i"( "ountersignature s(a )e ta*en as (is agreement to
t(e "ontents o- su"( rider6 "ause6 +arranty or endorsement.
8roup insuran"e and group annuity poi"ies6 (o+e2er6 may )e type+ritten and need not )e in printed -orm.
What i a !o#ic4 o) in&"ance'
Se". #. de-ines a poi"y o- insuran"e as a +ritten instrument in +(i"( t(e "ontra"t o- insuran"e is set -ort(.
Who i3n the !o#ic4 o) in&"ance9
8eneray6 ony t(e insurer or (is duy aut(ori4ed agent signs t(e poi"y. It need not )e singed )y t(e insured EDCEP'
+(ere t(e e5press +arranties are "ontained in a separate instrument -orming part o- t(e poi"y6 in +(i"( "ase6 Se". /%
reGuires t(at t(e instrument )e so signed.
Wh4 a"e the te"2 o) the !o#ic4 i2!o"tant'
'(ey are important )e"ause t(ey measure t(e ia)iity o- t(e insurer on one (and6 and t(e ot(er (and6 stri"t "ompian"e
+it( t(e terms are reGuired -or t(e re"o2ery on t(e part o- t(e insured.
I the !o#ic4 an% the Cont"act one an% the a2e thin3'
NBPE. A "ontra"t is a meeting o- t(e minds o- t(e insured and t(e insurer. (Remem)er C<VH& '(e poi"y BN<A t(e
-orma +ritten instrument e2iden"ing t(e "ontra"t.
What i &&a##4 the $et e*i%ence that a cont"act ha $een ente"e% into $et(een the in&"e" an% the in&"e%'
!ei2ery o- t(e poi"y )y t(e insurer to t(e insured.
What a"e the e))ect o) the %e#i*e"4 o) the !o#ic4'
I- t(e dei2ery is con%itiona#6 non:-u-iment o- t(e "ondition )ars t(e "ontra"t -rom ta*ing e--e"t.
I- t(e dei2er is &ncon%itiona#6 t(e insuran"e )e"omes e--e"ti2e at t(e time o- dei2ery.
What i a "i%e"'
It is a printed or typed stipuation "ontained on a sip o- paper atta"(ed to t(e poi"y and -orming an integra part o- t(e
poi"y. Riders are usuay atta"(ed to t(e poi"y )e"ause t(ey "onstitute additiona stipuations )et+een t(e parties.
What ha!!en i) the"e i an inconitenc4 $et(een the !o#ic4 an% the "i%e"'
RI!ER pre2ais6 as )eing a more dei)erate e5pression o- t(e agreement o- t(e "ontra"ting parties.
What a"e the "e=&i"e2ent in o"%e" that a "i%e" $e $in%in3 &!on the in&"e%'
1& !es"ripti2e tite or name o- t(e rider +(i"( is pasted or atta"(ed to a poi"y >US' )e mentioned and +ritten on t(e
)an* spa"es pro2ided -or in t(e poi"y; and
C& Uness appied -or )y t(e insured or o+ner6 said insured or o+ner >US' "ountersign t(e rider.
Do the !"ece%in3 "e=&i"e2ent a!!#4 on#4 to "i%e"'
NB. t(ey appy aso to +arranties6 "auses and endorsements.
INSURANCE REVIEWER Atty. Quimson page /$
What a"e (a""antie'
Warranties are inserted or atta"(ed to a poi"y to eiminate spe"i-i" potentia in"reases o- (a4ard during t(e poi"y term
o+ing to a"tions o- t(e insured6 or "onditions o- property.
What a"e c#a&e'
Causes are agreements )et+een t(e insurer and t(e insured on "ertain matters reating to t(e ai)iity o- t(e insurer in
"ase o- oss.
What a"e e@a2!#e o) c#a&e9
1& Z Cause +(ere t(e insurer is ia)e -or ony Z o- t(e oss or damage to t(e insured
C& <oss Paya)e "ause +(ere t(e oss i- any is paya)e to t(e party or parties named6 as t(eir interests may appear.
9& C(ange o- B+ners(ip "ause +(ere t(e insuran"e +i insure to t(e )ene-it o- +(omsoe2er6 during t(e "ontinuan"e
o- t(e ris*6 may )e"ome t(e o+ner o- t(e interest insured.
What i an en%o"e2ent'
An endorsement is any pro2ision added to an insuran"e "ontra"t atering its s"ope or appi"ation. E5ampes +oud )e
t(ose additions to t(e "ontra"t "(anging t(e amount6 t(e rate or t(e term o- t(e same.
What %oe Sec5 666 a4'
Section 666. No poi"y6 "erti-i"ate or "ontra"t o- insuran"e s(a )e issued or dei2ered +it(in t(e P(iippines uness in
t(e -orm pre2iousy appro2ed )y t(e Commissioner6 and no appi"ation -orm s(a )e used +it(6 and no rider6 "ause6
+arranty or endorsement s(a )e atta"(ed to6 printed or stamped upon su"( poi"y6 "erti-i"ate or "ontra"t uness t(e -orm o-
su"( appi"ation6 rider6 "ause6 +arranty or endorsement (as )een appro2ed )y t(e Commissioner.
Cae9
7718 Sin%a4en *5 In&#a" Li)e
66 PHIL 9
Fact9
Arturo Sindayen +as a inotype operator in t(e 3ureau o- Printing. 7e and (is +i-e @ortunat +ent to Camiing to spend
C(ristmas +it( (is aunt @ei"idad Estrada.
Bn !e". C$6 1.9C6 +(ie sti in Camiing6 (e made a +ritten appi"ation to Insuar <i-e6 t(roug( its agent6 Cristo)a
7endo4a6 -or a poi"y o- insuran"e on (is i-e in t(e sum o- 16%%%.
7e paid t(e agent P1F as part o- t(e -irst premium. It +as agreed t(at t(e poi"y6 +(en and i- issued6 s(oud )e
dei2ered to @ei"idad +it( +(om Sindayen e-t t(e sum PCF.%$ to "ompete t(e payment o- t(e -irst annua premium o-
P#%.%$.
Bn Ean 16 1.996 Sindayen +as e5amined )y Insuar=s do"tor +(o made a -a2ora)e report to Insuar.
'(e ne5t day6 Sindayen returned to >ania and resumed (is +or*. Bn Ean. 116 1.996 Insuar a""epted t(e ris* and
issued a poi"y6 and maied t(e same to its agent -or dei2ery to t(e insured.
Bn Ean. 1C6 1.996 Sindayen "ompained o- a se2ere (eada"(e. BN Ean. 1F6 1.996 (e "aed a p(ysi"ian +(o -ound t(at
Sindayen +as su--ering -rom a"ute nep(ritis and uremia. 7is iness did not yied to treatment and on Ean. 1.6 1.996 (e
died.
'(e poi"y +(i"( t(e "ompany issued and maied in mania on Ean. 11 1.99 +as re"ei2ed )y its agent in Camiin on
Ean. 1$6 1.99. Bn Ean 106 1.996 t(e agent6 in a""ordan"e +it( (is agreement +it( t(e insured dei2ered t(e poi"y to
@ei"ided upon (er payment o- t(e )aan"e o- t(e 1
st
year=s premium.
'(e agent as*ed @ei"idad i- (er nep(e+ +as in good (eat( and s(e repied t(at s(e )eie2ed so )e"ause s(e (ad no
in-ormation t(at (e +as si"*6 and t(ereupon 6 t(e poi"y +as (anded to (er )y t(e agent.
Bn Ean. C%6 1.996 t(e agent earned o- t(e deat( o- Sindayen6 a-ter+(i"( (e "aed upon @ei"idad and as*ed (er to
return t(e poi"y. @ei"idad did so.
Bn @e). #6 1.996 t(e "ompany o)tained -rom Sindayen=s +ido+ @ortunata (aso t(e )ene-i"iary&6 (er signature on a
ega do"ument +(ere)y in "onsideration o- t(e sum #%.%$ representing t(e amount o- premium paid6 @ortunata t(ere)y
reeases -ore2er and dis"(arges Insuar -rom any and a "aims and o)igations s(e may (a2e against t(e atter.
A "(e"* -or t(e a)o2e:mentioned amount +as dra+n in t(e name o- @ortunata6 )ut t(e same +as ne2er en"as(ed.
Instead6 it +as returned to Insuar and t(is "ompaint to en-or"e payment under t(e poi"y +as instituted.
'(e appi"ation +(i"( Sindayen signed in Camiing "ontained t(e -oo+ing pro2isionsJ
D&&&
(3) *hat the said #oic( sha not take effect !nti the first #remi!m has been #aid and the #oic( has been deivered
to and acce#ted b( me, whie 2 am in )ood heath$4
INSURANCE REVIEWER Atty. Quimson page //
'(e main de-ense o- t(e "ompany is t(e poi"y ne2er too* e--e"t )e"ause o- par. 9 o- t(e appi"ation6 sin"e at t(e time o-
t(e dei2ery o- t(e agent6 t(e insured +as not in good (eat(.
I&e9 WBN t(e poi"y too* e--e"t.
He#%9 >ES5
'(ere is one ine o- Ameri"an "ases +(i"( (ods t(at t(e stipuation "ontained par. 9 is in t(e nature o- a "ondition
pre"edent6 t(at is to say6 t(at t(ere "an )e no 2aid dei2ery to t(e insured uness (e is in good (eat( at t(at time; t(at t(is
"ondition pre"edent goes to t(e 2ery essen"e o- t(e "ontra"t and "annot )e +ai2ed )y t(e agent ma*ing dei2ery o- t(e
poi"y; 7BWEVER6 t(ere is aso a num)er o- Ameri"an de"ision +(i"( state t(e "ontrary.
'(ese de"isions say t(at an agent to +(om a i-e insuran"e poi"y (simiar to t(e one at )ar& +as sent +it( instru"tion to
dei2er it to t(e insured6 (as aut(ority to )ind t(e "ompany )y ma*ing su"( dei2ery6 A<'7BU87 t(e insured +as NB' in
good (eat( at t(e time o- dei2ery6 on t(e t(eory t(at t(e dei2ery o- t(e poi"y )eing t(e -ina a"t to t(e "onsummation o- t(e
"ontra"t6 t(e "ondition as to t(e insured=s good (eat( +as WAIVE! )y t(e "ompany.
'(ese same "ases -urt(er (od t(at t(e dei2ery o- t(e poi"y )y t(e agent to t(e insured "onsummates t(e "ontra"t
e2en t(oug( t(e agent *ne+ t(at t(e insured +as NB' in good (eat( at t(e time6 t(e t(eory )eing6 t(at (is *no+edge is t(e
"ompany=s *no+edge; and (is dei2ery is t(e "ompany=s dei2ery; t(at +(en t(e dei2ery is made not+it(standing t(is
*no+edge o- t(e de-e"t6 t(e "ompany is deemed to (a2e WAIVE! su"( de-e"t.
'(e agent6 >endo4a +as duy i"ensed )y t(e Insuran"e Commission to a"t -or Insuar <i-e. 7e (ad t(e aut(ority gi2en
)y (im )y t(e "ompany to +it((od t(e dei2ery o- t(e poi"y to t(e insured unti t(e -irst premium (as )een paid and t(e
poi"y (as )een dei2ered to and a""epted )y t(e insured +(ie (e is in good (eat(. W(et(er t(at "ondition (ad )een met or
not painy "as -or t(e e5er"ise o- dis"retion. >endo4a=s de"ision t(at t(e "ondition (ad )een met )y t(e insured and t(at it
+as proper to ma*e dei2ery o- t(e poi"y to (im is Iust as )inding on t(e "ompany as i- t(e de"ision (ad )een made )y its
3oard o- !ire"tors. Admittedy6 >endo4a made a mista*e o- Iudgment )e"ause (e a"ted on insu--i"ient e2iden"e as to t(e
state o- (eat( o- t(e insured6 and t(is mista*e "annot )e said to )e indu"ed )y any mis"ondu"t on t(e part o- t(e insured.
It is in t(e interest o- not ony o- t(e appi"ant )ut o- a insuran"e "ompanies as +e t(at t(ere s(oud )e some a"t
+(i"( gi2es t(e appi"ant t(e de-inite assuran"e t(at t(e "ontra"t (as )een "onsummated. '(is sense o- se"urity and o-
pie"e o- mind t(at one=s dependents are pro2ided -or +it(out ris* o- eit(er oss or o- itigation is t(e )edro"* o- i-e insuran"e.
A "oud +i )e t(ro+n o2er t(e entire insuran"e )usiness i- t(e "ondition o- (eat( o- t(e insured at t(e time o- t(e
dei2ery o- t(e poi"y may )e inGuired into years a-ter+ards +it( t(e 2ie+ o- a2oiding t(e poi"y on t(e ground t(at it ne2er
too* e--e"t )e"ause o- an aeged a"* o- good (eat( at t(e time o- dei2ery.
It is t(ere-ore in t(e pu)i" interest t(at +e are "onstrained to (od6 as +e do6 t(at t(e dei2ery o- t(e poi"y to t(e insured
)y an agent o- t(e "ompany +(o is aut(ori4ed to ma*e dei2ery or +it((od dei2ery is t(e -ina a"t +(i"( )inds t(e "ompany
and t(e insured6 in t(e a)sen"e o- -raud or ot(er ega grounds -or res"ission. '(e -a"t t(at t(e agent to +(om it (as
entrusted t(is duty is derei"t or negigent or e2en dis(onest in t(e per-orman"e o- t(e duty +(i"( (as )een entrusted to (im
+oud "reate an o)igation )ased upon t(e aut(ori4ed a"ts o- t(e agent to+ard a t(ird party +(o +as not in "ousion +it( t(e
agent.
7768 En"i=&eF *5 S&nLI)e
01 PHIL 669
Fact9
Bn Sept. C# 1.1/6 7errer made an appi"ation to Sun<i-e t(roug( its o--i"e in >ania -or i-e annuity.
C days ater6 (e paid t(e sum o- $' to t(e "ompany=s anager in its >ania o--i"e and +as gi2en a re"eipt.
Bn No2. C$6 1.1/6 t(e (ead o--i"e ga2e noti"e o- a""eptan"e )y "a)e to >ania. Bn t(e same date6 t(e >ania o--i"e
prepared a etter noti-ying 7errer t(at (is appi"ation (as )een a""epted and t(is +as pa"ed in t(e ordinary "(annes o-
transmission6 )ut as -ar as *no+n +as ne*e" act&a##4 maied and ne*e" "ecei*e% )y 7errer.
7errer died on !e". C%6 1.1/. '(e painti-- as administrator o- 7errer=s estate )roug(t t(is a"tion to re"o2er t(e $' paid
)y t(e de"eased.
I&e9 WBN t(e insuran"e "ontra"t +as per-e"ted.
He#%9 NO5
'(e "ontra"t -or i-e annuity +as NB' per-e"ted )e"ause it (ad NB' )een pro2ed satis-a"toriy t(at t(e a""eptan"e o-
t(e appi"ation e2er "ame to t(e *no+edge o- t(e appi"ant. An a""eptan"e o- an o--er o- insuran"e NB' a"tuay or
"onstru"ti2ey "ommuni"ated to t(e proposer does NB' ma*e a "ontra"t o- insurane6 as t(e oc!s #oenitentiae is ended
+(en an a""eptan"e (as passed )eyond t(e "ontro o- t(e party.
NB'EJ <i-e annuity is t(e opposite o- a i-e insuran"e. In i-e annuity6 a )ig amount is gi2en to t(e insuran"e "ompany6 and i-
a-ter a "ertain period o- time t(e insured is sti i2ing6 (e is entited to reguar smaer amounts -or t(e rest o- (is i-e.
E5ampes o- <i-e annuity are pensions. <i-e Insuran"e on t(e ot(er (and6 t(e insured during t(e period o- t(e "o2erage
ma*es sma reguar payments and upon (is deat(6 t(e insurer pays a )ig amount to (is )ene-i"iaries.
7778 Tan3 *5 CA
79- SCRA 6/68
Fact9
Bn Sept. CF6 C.$F6 <ee Su 8uat6 +ido+6 $1 years od and iiterate +(o spo*e ony C(inese6 appied -or i-e insuran"e
-or $%' +it( P(iami-e. '(e appi"ation +as in t+o parts6 )ot( in Engis(.
'(e se"ond part deat +it( (er state o- (eat(. 7er ans+ers (a2ing s(o+n t(at s(e +as (eat(6 P(iami-e issued (er a
poi"y e--e"ti2e B"t. C96 1.$F +it( (er nep(e+ Vi"ente 'ang as )ene-i"iary.
Bn No2. 1F6 1.$F6 <ee again appied -or additiona insuran"e o- (er i-e -or #%'. Sin"e it +as ony re"ent -rom t(e time
s(e -irst appied6 no -urt(er medi"a e5am +as made )ut s(e a""ompis(ed Part 1 (+(i"( "erti-ied t(e trut(-uness o-
statements made in Part. C&
'(e poi"y +as again appro2ed. Bn Apri C% 1.$$6 <ee Su 8uat died o- <ung "an"er.
'ang "aimed t(e amount o 1%%' )ut P(iami-e re-used to pay on t(e ground t(at t(e insured +as guity o- "on"eament
and misrepresentation.
3ot( tria "ourt and CA rued t(at <ee +as guity o- "on"eament.
'ang=s position6 (o+e2er6 is t(at )e"ause <ee +as iiterate and spo*e ony C(inese6 s(e "oud not )e (ed guity o-
"on"eament o- (er (eat( (istory )e"ause t(e appi"ation -or insuran"e +as Engis(6 and t(e insurer (as not pro2en
t(at t(e terms t(ereo- (ad )een -uy e5pained to (er as pro2ided )y Art. 199C o- CC.
I&e9 WBN Art. 199C appies.
He#%9 NO5
Art. 199C is NB' appi"a)e. Under said arti"e6 t(e o)igation to s(o+ t(at t(e terms o- t(e "ontra"t (ad )een -uy
e5pained to t(e party +(o is una)e to read or understand t(e anguage o- t(e "ontra"t6 +(en -raud or mista*e is aeged6
de2o2es on t(e party see*ing to en)o"ce it. 7ere6 t(e insuran"e "ompany is NB' see*ing to en-or"e t(e "ontra"t; on t(e
"ontrary6 it is see*ing to a2oid its per-orman"e.
It is petitioner +(o is see*ing to en-or"e it6 e2en as -raud or mista*e is NB' aeged. A""ordingy6 P(iami-e +as under
no o)igation to pro2e t(at t(e terms o- t(e insuran"e "ontra"t +ere -uy e5pained to t(e ot(er party. E2en i- +e +ere to say
t(at t(e insurer is t(e one see*ing t(e per-orman"e o- t(e "ont "ontra"ts )y a2oiding paying t(e "aim6 it (as to )e noted as
a)o2e stated t(at t(ere (as )een NB imputation o- mista*e o- -raud )y t(e iiterate insured +(ose personaity is represented
)y (er )ene-i"iary. In sum6 Art. 199C is inappi"a)e6 and "onsidering t(e -indings o- )ot( t(e tria "ourt and t(e CA as to t(e
Con"eament o- <ee6 t(e SC a--irms t(eir de"isions.
Con"urringJ E.6 Antonio
In a "ontra"t o- insuran"e6 ea"( party must "ommuni"ate to t(e ot(er6 in good -ait(6 a -a"ts +it(in (is *no+edge +(i"(
are materia to t(e "ontra"t6 and +(i"( t(e ot(er (as no means o- as"ertaining. As a genera rue6 t(e -aiure )y t(e insured
to dis"ose "onditions a--e"ting t(e ris* o- +(i"( (e is a+are ma*es t(e "ontra"t 2oida)e at t(e option o- t(e insurer.
'(e reason -or t(is rue is t(at insuran"e poi"ies are traditionay "ontra"ts u)errimae -idei6 +(i"( means ,most
a)undant good -ait(16 ,a)soute and per-e"t "andor or openness and (onesty61 ,a)sen"e o- any "on"eament or de"eption
(o+e2er sig(t.1 7ere t(e CA -ound t(at t(e insured dei)eratey "on"eaed materia -a"ts a)out (er p(ysi"a "ondition and
(istory andKor "on"eaed +it( +(oe2er assisted (er in reaying -ase in-ormation to t(e medi"a e5aminer. Certainy6 t(e
petitioner "annot assume in"onsistent positions )y attempting to en-or"e t(e "ontra"t o- insuran"e -or t(e purpose o-
"oe"ting t(e pro"eeds o- t(e poi"y and at t(e same time nui-y t(e "ontra"t )y "aiming t(at it +as e5e"uted t(roug( -raud
or mista*e.
NB'EJ Art. 199CJ W(en one o- t(e parties is una)e to read or i- t(e "ontra"t is in a anguage not understood )y (im6 and
mista*e or -raud is aeged6 t(e person en-or"ing t(e "ontra"t must s(o+ t(at t(e terms t(ereo- (a2e )een -uy e5pained to
(im.
77,8 Pe"eF *5 CA
/6/ SCRA 61/ 76---8
INSURANCE REVIEWER Atty. Quimson page /.
Fact9
Primiti2o Pere4 (ad )een insured +it( t(e 3@ <i-eman Insuran"e Corporation sin"e 1.0% -or PC%6%%%.%%.
In B"to)er 1.0/6 an agent o- <i-eman6 Rodo-o <aog6 2isited Pere4 in Que4on and "on2in"ed (im to appy -or additiona
insuran"e "o2erage o- PF%6%%%.%%6 to a2ai o- t(e ongoing promotiona dis"ount o- P#%%.%% i- t(e premium +ere paid
annuay.
Primiti2o 3. Pere4 a""ompis(ed an appi"ation -orm -or t(e additiona insuran"e "o2erage. Virginia A. Pere46 (is +i-e6
paid PC6%/F.%% to <aog. '(e re"eipt issued )y <aog indi"ated t(e amount re"ei2ed +as a Mdeposit.M
Un-ortunatey6 <aog ost t(e appi"ation -orm a""ompis(ed )y Pere4 and so on B"to)er C06 1.0/6 (e as*ed t(e atter to
-i up anot(er appi"ation -orm. Bn No2em)er 16 1.0/6 Pere4 +as made to undergo t(e reGuired medi"a e5amination6
+(i"( (e passed.
<aog -or+arded t(e appi"ation -or additiona insuran"e o- Pere46 toget(er +it( a its supporting papers6 to t(e o--i"e o-
3@ <i-eman Insuran"e Corporationn in Que4on +(i"( o--i"e +as supposed to -or+ard t(e papers to t(e >ania o--i"e.
Bn No2em)er CF6 1.0/6 Pere4 died +(ie (e +as riding a )an"a +(i"( "apsi4ed during a storm.
At t(e time o- (is deat(6 (is appi"ation papers -or t(e additiona insuran"e +ere sti +it( t(e Que4on o--i"e. <aog
testi-ied t(at +(en (e +ent to -oo+ up t(e papers6 (e -ound t(em sti in t(e Que4on o--i"e and so (e personay
)roug(t t(e papers to t(e >ania o--i"e o- 3@ <i-eman Insuran"e Corporation. It +as ony on No2em)er C/6 1.0/ t(at
said papers +ere re"ei2ed in >ania.
Wit(out *no+ing t(at Pere4 died on No2em)er CF6 1.0/6 3@ <i-eman Insuran"e Corporation appro2ed t(e appi"ation
and issued t(e "orresponding poi"y -or t(e PF%6%%%.%% on !e"em)er C6 1.0/
Virginia +ent to >ania to "aim t(e )ene-its under t(e insuran"e poi"ies o- t(e de"eased. S(e +as paid P#%6%%%.%%
under t(e -irst insuran"e poi"y -or PC%6%%%.%% (dou)e indemnity in "ase o- a""ident& )ut t(e insuran"e "ompany
re-used to pay t(e "aim under t(e additiona poi"y "o2erage o- PF%6%%%.%%6 t(e pro"eeds o- +(i"( amount to
P1F%6%%%.%% in 2ie+ o- a tripe indemnity rider on t(e insuran"e poi"y.
In its etter o- Eanuary C.6 1.00 to Virginia A. Pere46 t(e insuran"e "ompany maintained t(at t(e insuran"e -or
PF%6%%%.%% (ad not )een per-e"ted at t(e time o- t(e deat( o- Primiti2o Pere4. ConseGuenty6 t(e insuran"e "ompany
re-unded t(e amount o- PC6%/F.%% +(i"( Virginia Pere4 (ad paid
<i-eman -ied -or t(e res"ission and t(e de"aration o- nuity. Pere46 on t(e ot(er (and6 a2erred t(at t(e de"eased (ad
-u-ied a (is prestations under t(e "ontra"t and a t(e eements o- a 2aid "ontra"t are present.
R'C rued in -a2or o- Pere4. CA re2ersed.
I&e9 WBN t(ere +as a per-e"ted additiona insuran"e "ontra"t.
He#%9 The cont"act (a not !e")ecte%5
Insuran"e is a "ontra"t +(ere)y6 -or a stipuated "onsideration6 one party underta*es to "ompensate t(e ot(er -or oss
on a spe"i-ied su)Ie"t )y spe"i-ied peris. A "ontra"t6 on t(e ot(er (and6 is a meeting o- t(e minds )et+een t+o persons
+(ere)y one )inds (imse-6 +it( respe"t to t(e ot(er to gi2e somet(ing or to render some ser2i"e.
Consent must )e mani-ested )y t(e meeting o- t(e o--er and t(e a""eptan"e upon t(e t(ing and t(e "ause +(i"( are to
"onstitute t(e "ontra"t. '(e o--er must )e "ertain and t(e a""eptan"e a)soute. W(en Primiti2o -ied an appi"ation -or
insuran"e6 paid PC6%/F.%% and su)mitted t(e resuts o- (is medi"a e5amination6 (is appi"ation +as su)Ie"t to t(e
a""eptan"e o- pri2ate respondent 3@ <i-eman Insuran"e Corporation. '(e per-e"tion o- t(e "ontra"t o- insuran"e )et+een
t(e de"eased and respondent "orporation +as -urt(er "onditioned upon "ompian"e +it( t(e -oo+ing reGuisites stated in t(e
appi"ation -ormJ
5there sha be no contract of ins!rance !ness and !nti a #oic( is iss!ed on this a##ication and that the said
#oic( sha not take effect !nti the #remi!m has been #aid and the #oic( deivered to and acce#ted b( me7!s in
#erson whie 27-e, am7are in )ood heath$5
'(e assent o- pri2ate respondent 3@ <i-eman Insuran"e Corporation t(ere-ore +as not gi2en +(en it merey re"ei2ed
t(e appi"ation -orm and a t(e reGuisite supporting papers o- t(e appi"ant. Its assent +as gi2en +(en it issues a
"orresponding poi"y to t(e appi"ant. Under t(e a)o2ementioned pro2ision6 it is ony +(en t(e appi"ant pays t(e premium
and re"ei2es and a""epts t(e poi"y +(ie (e is in good (eat( t(at t(e "ontra"t o- insuran"e is deemed to (a2e )een
per-e"ted.
It is not disputed6 (o+e2er6 t(at +(en Primiti2o died on No2em)er CF6 1.0/6 (is appi"ation papers -or additiona
insuran"e "o2erage +ere sti +it( t(e )ran"( o--i"e o- respondent "orporation in 8uma"a and it +as ony t+o days ater6 or
on No2em)er C/6 1.0/6 +(en <aog personay dei2ered t(e appi"ation papers to t(e (ead o--i"e in >ania. ConseGuenty6
t(ere +as a)soutey no +ay t(e a""eptan"e o- t(e appi"ation "oud (a2e )een "ommuni"ated to t(e appi"ant -or t(e atter
to a""ept inasmu"( as t(e appi"ant at t(e time +as aready dead.
7798 CIR *5 Linco#n Phi# Li)e
/79 SCRA 06/ 76--68
Fact9
In t(e years prior to 1.0#6 <in"on issued a spe"ia *ind o- i-e insuran"e poi"y *no+n as t(e MEunior Estate 3uider
Poi"y6M t(e distinguis(ing -eature o- +(i"( is a "ause pro2iding -or an automati" in"rease in t(e amount o- i-e insuran"e
"o2erage upon attainment o- a "ertain age )y t(e insured +it(out t(e need o- issuing a ne+ poi"y. '(e "ause +as to
ta*e e--e"t in t(e year 1.0#.
!o"umentary stamp ta5es due on t(e poi"y +ere paid to t(e petitioner ony on t(e initia sum assured.
Su)seGuenty6 petitioner issued de-i"ien"y do"umentary stamps ta5 assessment -or t(e year 1.0#6 "orresponding to t(e
amount o- automati" in"rease o- t(e sum assured on t(e poi"y issued )y respondent.
<in"on Guestioned t(e de-i"ien"y assessments and soug(t t(eir "an"eation in a petition -ied in t(e Court o- 'a5
Appeas. C'A -ound no )asis -or t(e assessment. CA a--irmed.
I&e9 WBN t(e automati" in"rease o- t(e sum assured on t(e poi"y is ta5a)e.
He#%9 >ES5
CIR "aims t(at t(e Mautomati" in"rease "auseM in t(e su)Ie"t insuran"e poi"y is separate and distin"t -rom t(e main
agreement and in2o2es anot(er transa"tion; and t(at6 +(ie no ne+ poi"y +as issued6 t(e origina poi"y +as essentiay re:
issued +(en t(e additiona o)igation +as assumed upon t(e e--e"ti2ity o- t(is Mautomati" in"rease "auseM in 1.0#; (en"e6 a
de-i"ien"y assessment )ased on t(e additiona insuran"e not "o2ered in t(e main poi"y is in order. '(e SC agreed +it( t(is
"ontention.
'(e su)Ie"t insuran"e poi"y at t(e time it +as issued "ontained an Mautomati" in"rease "ause.M At(oug( t(e "ause
+as to ta*e e--e"t ony in 1.0#6 it +as +ritten into t(e poi"y at t(e time o- its issuan"e. '(e distin"ti2e -eature o- t(e MIunior
estate )uider poi"yM "aed t(e Mautomati" in"rease "auseM aready -ormed part and par"e o- t(e insuran"e "ontra"t6 (en"e6
t(ere +as no need -or an e5e"ution o- a separate agreement -or t(e in"rease in t(e "o2erage t(at too* e--e"t in 1.0# +(en
t(e assured rea"(ed a "ertain age.
It is "ear -rom Se"tion 1/9 o- t(e NIRC t(at t(e payment o- do"umentary stamp ta5es is done at t(e time t(e a"t is done
or transa"tion (ad and t(e ta5 )ase -or t(e "omputation o- do"umentary stamp ta5es on i-e insuran"e poi"ies under Se"tion
109 o- NIRC is t(e amount -i5ed in poi"y6 uness t(e interest o- a person insured is sus"epti)e o- e5a"t pe"uniary
measurement.
<ogi"ay6 +e )eie2e t(at t(e amount -i5ed in t(e poi"y is t(e -igure +ritten on its -a"e and +(ate2er in"reases +i ta*e
e--e"t in t(e -uture )y reason o- t(e Mautomati" in"rease "auseM em)odied in t(e poi"y +it(out t(e need o- anot(er "ontra"t.
7ere6 at(oug( t(e automati" in"rease in t(e amount o- i-e insuran"e "o2erage +as to ta*e e--e"t ater on6 t(e date o- its
e--e"ti2ity6 as +e as t(e amount o- t(e in"rease6 +as aready de-inite at t(e time o- t(e issuan"e o- t(e poi"y. '(us6 t(e
amount insured )y t(e poi"y at t(e time o- its issuan"e ne"essariy in"uded t(e additiona sum "o2ered )y t(e automati"
in"rease "ause )e"ause it +as aready determina)e at t(e time t(e transa"tion +as entered into and -ormed part o- t(e
poi"y.
'(e Mautomati" in"rease "auseM in t(e poi"y is in t(e nature o- a "onditiona o)igation under Arti"e 11016 0 )y +(i"(
t(e in"rease o- t(e insuran"e "o2erage s(a depend upon t(e (appening o- t(e e2ent +(i"( "onstitutes t(e o)igation. In t(e
instant "ase6 t(e additiona insuran"e t(at too* e--e"t in 1.0# +as an o)igation su)Ie"t to a suspensi2e o)igation6 . )ut sti
a part o- t(e insuran"e sod to +(i"( pri2ate respondent +as ia)e -or t(e payment o- t(e do"umentary stamp ta5.
Section 11. A poi"y o- insuran"e must spe"i-yJ
(a& '(e parties )et+een +(om t(e "ontra"t is made;
()& '(e amount to )e insured e5"ept in t(e "ases o- open or running poi"ies;
("& '(e premium6 or i- t(e insuran"e is o- a "(ara"ter +(ere t(e e5a"t premium is ony determina)e upon t(e
termination o- t(e "ontra"t6 a statement o- t(e )asis and rates upon +(i"( t(e -ina premium is to )e determined;
(d& '(e property or i-e insured;
(e& '(e interest o- t(e insured in property insured6 i- (e is not t(e a)soute o+ner t(ereo-;
(-& '(e ris*s insured against; and
(g& '(e period during +(i"( t(e insuran"e is to "ontinue.
What 2&t a !o#ic4 contain an% (hat a"e the "eaon $ehin% &ch "e=&i"e2ent'
A poi"y must "ontainJ
1. Names o- t(e parties
C. Amount o- insuran"e
to easiy and e5a"ty determine t(e amount o- indemnity to )e paid in "ase o- oss or damage. '(is
reGuirement (o+e2er "an )e dispensed +it( in "ases o- open or running poi"ies.
9. Rate o- premium
3e"ause t(e premium represents t(e "onsideration o- t(e "ontra"t; t(ese rates are de2eoped on t(e )asis o-
t(e nature and "(ara"ter o- t(e ris* assumed. Remem)er Atty. Quimson=s -amous +ordsH As t(e ris*
in"reases6 t(e rate o- premium aso in"reases.
#. Property or i-e or t(ing insured
Constitutes t(e Su)Ie"t >atter
F. Interests o- t(e insured in t(e property
In order to determine a"tua damage. Remem)er6 an o+ner gets t(e -u 2aue o- t(e oss +(ie a mortgagee
gets ony t(e 2aue o- (is "redit.
$. Ris*s insured against
In order to *no+ +(en t(e insurer is "aed to indemni-y t(e insured6 )e"ause i- t(is is NB' stated6 and you
(od t(e insurer ia)e -or any oss due to any "ause +(atsoe2er6 it +i resut to a )ig oss on t(e part o- t(e
insurer.
/. !uration o- t(e insuran"e
'(is period signi-ies t(e i-e o- t(e poi"y. I- t(e duration o- insuran"e (as aready ended6 it "an no onger )e
re2i2ed.
What a"e the ;in% o) in&"a$#e "i;'
1& Persona ris*s i-e or (eat( ris*s
C& Property ris*s oss or damage to property
9& <ia)iity ris*s in2o2e ia)iity o- t(e insured -or an inIury "aused to t(e person or property o- anot(er
What a"e the "e=&i"e2ent in o"%e" that a "i; $e in&"a$#e'
1& '(e oss to )e insured against must )e important enoug( to +arrant t(e e5isten"e o- an insuran"e "ontra"t
C& Ris* must permit a reasona)e statisti"a estimate o- t(e "(an"e o- oss in order to determine t(e amount o-
premium to )e paid
9& '(e oss s(oud )e de-inite as to "ause6 time6 pa"e and amount
#& '(e oss is not "atastrop(i"
F& Ris* is a""identa in nature
NB'EJ Read se"tions CC/6 CC06 and C9% -or additiona matters to )e in"uded in indi2idua6 group and industria i-e poi"ies.
Section 16. Co2er notes may )e issued to )ind insuran"e temporariy pending t(e issuan"e o- t(e poi"y.
Wit(in si5ty days a-ter t(e issue o- t(e "o2er note6 a poi"y s(a )e issued in ieu t(ereo-6 in"uding +it(in its terms
t(e identi"a insuran"e )ound under t(e "o2er note and t(e premium t(ere-or.
Co2er notes may )e e5tended or rene+ed )eyond su"( si5ty days +it( t(e +ritten appro2a o- t(e
Commissioner i- (e determines t(at su"( e5tension is not "ontrary to and is not -or t(e purpose o- 2ioating any
pro2isions o- t(is Code. '(e Commissioner may promugate rues and reguations go2erning su"( e5tensions -or
t(e purpose o- pre2enting su"( 2ioations and may )y su"( rues and reguations dispense +it( t(e reGuirement o-
+ritten appro2a )y (im in t(e "ase o- e5tension in "ompian"e +it( su"( rues and reguations.
What a"e t(o t4!e o) !"e#i2ina"4 cont"act o) in&"ance'
'(e preiminary "ontra"t o- !"eent in&"ance and t(e preiminary e@ec&to"4 cont"act o) in&"ance5
What i a !"e#i2ina"4 cont"act o) !"eent in&"ance'
3y a preiminary "ontra"t o- insuran"e6 t(e insurer insures t(e su)Ie"t matter usuay )y +(at is *no+n as a ,)inding sip1
or ,)inder1 or ,"o2er note1 +(i"( is t(e "ontra"t to )e e--e"ti2e unti t(e -orma poi"y is issued or t(e ris* is reIe"ted.
What i a co*e" note'
'(e "o2er not is merey a +ritten memorandum o- t(e most important terms o- t(e preiminary "ontra"t o- insurane6
intended to gi2e temporary prote"tion pending t(e in2estigation o- t(e ris* )y t(e insurer6 or unti t(e issuan"e o- a -orma
poi"y6 pro2ided t(at it is ater determined t(at t(e appi"ant +as insura)e at t(e time it +as gi2en.
3y its nature6 it is su)Ie"t to a "onditions in t(e poi"y e5pe"ted e2en t(oug( t(at poi"y may ne2er issue. In i-e
insuran"e6 +(ere an agreement is made )et+een an appi"ant and t(e insurers= agent6 no ia)iity s(a atta"( unti t(e
insurer appro2es t(e ris*. '(us6 in #i)e in&"ance6 a )inding sip or )inding re"eipt !BES NB' insure itse-.
Can 4o& e@!#ain a !"e#i2ina"4 e@ec&to"4 cont"act o) in&"ance'
3y a preiminary e5e"utory "ontra"t o- insuran"e6 t(e insurer ma*es a "ontra"t to insure t(e su)Ie"t matter at some
su)seGuent time +(i"( may )e de-inite or inde-inite. Under su"( an e5e"utory "ontra"t6 t(e rig(t a"Guired )y t(e insured is
merey to demand t(e dei2ery o- t(e poi"y in a""ordan"e +it( t(e terms agreed upon and t(e o)igation assumed )y t(e
insurer is to dei2er t(e said poi"y.
What a"e the "&#e 3o*e"nin3 co*e" note'
1& Insuran"e "ompanies doing )usiness in t(e P(iippines may issue "o2er notes to )ind insuran"e temporariy
pending t(e issuan"e o- t(e poi"y
C& A "o2er not s(a e deemed to )e a "ontra"t o- insuran"e +it(in t(e meaning o- Se". 1(1& o- IC.
9& NB "o2er note s(a )e issued or rene+ed uness in t(e -orm pre2iousy appro2ed )y t(e Insuran"e Commission.
#& A "o2er not s(a )e 2aid and )inding -or a period NB' e5"eeding $% days -rom t(e date o- its issuan"e6 +(et(er or
not t(e premium t(ere-ore (as )een paid or not6 3U' su"( "o2er note may )e "an"eed )y eit(er party upon at
east / days noti"e to t(e ot(er party.
F& I- a "o2er not is not so "an"eed6 a poi"y o- insuran"e s(a6 +it(in $% days a-ter t(e issuan"e o- t(e "o2er not )e
issued in ieu t(ereo-. Su"( poi"y s(a in"ude +it(in its terms t(e identi"a insuran"e )ound under t(e "o2er note
and t(e premiums t(ere-ore.
$& A "o2er note may )e e5tended or rene+ed )eyond t(e a-orementioned period o- $% days +it( t(e +ritten appro2a
o- t(e Insuran"e Commissioner6 pro2ided t(at su"( +ritten appro2a may )e dispensed +it( upon t(e "erti-i"ation o-
t(e Pres6 VP or 8enera >gr o- t(e Insuran"e "ompany "on"erned6 t(at t(e ris*s in2o2ed6 t(e 2aues o- su"( ris*s6
and t(e premiums t(ere-ore (a2e not as yet )een determined or esta)is(ed and t(at su"( e5tension or rene+a is
NB' "ontrary to and is not -or t(e purpose o- 2ioating any pro2ision o- t(e IC.
/& '(e insuran"e "ompanies may impose on "o2er notes a deposit premium eGui2aent to at east CF[ o- t(e
estimated premium o- t(e intended insuran"e "o2erage )ut in no "ase ess t(an PF%%.
Cae9
7,-8 Li2 *5 S&n Li)e
01 PHIL 66/
Fact9
Bn Euy $6 1.1/6 <uis <im A 8ar"ia o- Vam)oanga appied -or a poi"y o- i-e insuran"e +it( Suni-e in t(e amount o- F'.
7e designated (is +i-e Piar <im as t(e )ene-i"iary. '(e -irst premium o- P#99 +as paid )y <im and "ompany issued a
,pro2isiona poi"y1
Su"( poi"y "ontained t(e -oo+ing pro2isions D&& the abovementioned ife is to be ass!red in accordance with the
terms and conditions contained or inserted b( the +om#an( in the #oic( which ma( be )ranted b( it in this #artic!ar
case for 4 months on( from the date of the a##ication, @R.P2FIF that the com#an( sha confirm this a)reement b(
iss!in) a #oic( on said a##ication &&&$ Sho!d the com#an( /.* iss!e s!ch a #oic(, then this a)reement sha be n!
and void ab initio and the +om#an( sha be hed not to have been on the risk at a, b!t in s!ch case, the amo!nt herein
sha be ret!rned$
<im died on Aug. C96 1.1/ a-ter t(e issuan"e o- t(e pro2isiona poi"y )ut )e-ore t(e appro2a o- t(e appi"ation )y t(e
(ome o--i"e o- t(e insuran"e "ompany.
'(e instant a"tion is )roug(t )y t(e )ene-i"iary to re"o2er -rom Sun <i-e t(e sum o- F'.
I&e9 WBN t(e )ene-i"iary "an "oe"t t(e F'.
He#%9 NO5
'(e "ontra"t o- insuran"e +as not "onsummated )y t(e parties. '(e a)o2e Guoted agreement "eary stated t(at t(e
agreement s(oud NB' go into e--e"t unti t(e (ome o--i"e o- t(e Company s(a "on-irm it )y issuing a poi"y. It +as not(ing
)ut an a"*no+edgment )y t(e Company t(at it (as re"ei2ed a sum o- money agreed upon as t(e -irst year=s premium upon
a poi"y to )e issued upon t(e appi"ation i- it is a""epted )y t(e Company.
W(en an agreement is made )et+een t(e appi"ant and t(e agent +(et(er )y signing an appi"ation "ontaining su"(
"ondition or ot(er+ise6 t(at no ia)iity s(a atta"( unti t(e prin"ipa appro2es t(e ris* and a re"eipt is gi2en )y t(e agent6
su"( a""eptan"e is merey "onditiona and is su)ordinated to t(e "ompany=s a"t in appro2ing or reIe"ting; so in i-e insuran"e
a ,)inding sip or re"eipt1 does not insure itse-.
7,18 G"e!a#i)e *5 CA
,9 SCRA 10/
Fact9
Bn >ar"( 1#6 1.F/6 respondent Ngo 7ing -ied an appi"ation +it( 8repai-e -or a C%:yr endo+ment poi"y -or F%' on t(e
i-e o- (is one year od daug(ter 7een 8o.
A t(e essentia data regarding 7een +as suppied )y Ngo to <apu:<apu >ondragon6 t(e )ran"( manager o- 8repai-e:
Ce)u. >ondragon t(en typed t(e data on t(e appi"ation -orm +(i"( +as ater signed )y Ngo.
Ngo t(en paid t(e insuran"e premium and a )inding deposit re"eipt +as issued to (im. '(e )inding re"eipt "ontained
t(e -oo+ing pro2isionJ D2f the a##icant sha not have been ins!rabe &&& and the +om#an( decines to a##rove the
a##ication, the ins!rance a##ied for sha not have been in force at an( time and the s!m #aid sha be ret!rned to the
a##icant !#on the s!rrender of this recei#t$4
>ondragon +rote on t(e )ottom o- t(e appi"ation -orm (is strong re"ommendation -or t(e appro2a o- t(e insuran"e
appi"ation.
Bn Apr 9%6 1.F/6 >ondragon re"ei2ed a etter -rom 8repai-e >ain o--i"e disappro2ing t(e insuran"e appi"ation o- Ngo
-or t(e simpe reason t(at t(e C%yr endo+ment pan is not a2aia)e -or minors )eo+ / yrs od.
>ondragon +rote )a"* t(e main o--i"e again strongy re"ommending t(e appro2a o- t(e endo+ment pan on t(e i-e o-
7een6 adding t(at 8repai-e +as t(e ony insuran"e "ompany NB' seing endo+ment pans to "(idren.
Bn may 1.F/6 7een died o- in-uen4a +it( "ompi"ation o- )ron"(o pneumonia. Ngo -ied a "aim +it( 8epai-e6 )ut t(e
atter denied ia)iity on t(e ground t(at t(ere +as no "ontra"t )et+een t(e insurer and t(e insured and a )inding re"eipt
is NB' e2iden"e o- su"( "ontra"t.
I&e9 WBN t(e )inding deposit re"eipt6 "onstituted a temporary "ontra"t o- i-e insuran"e.
He#%9 NO5
'(e )inding re"eipt in Guestion +as merey an a"*no+edgement on )e(a- o- t(e "ompany6 t(at t(e atter=s )ran"(
o--i"e (ad re"ei2ed -rom t(e appi"ant6 t(e insuran"e premium and (ad a""epted t(e appi"ation su)Ie"t -or pro"essing )y
t(e insuran"e "ompany6 and t(at t(e atter +i eit(er appro2e or reIe"t t(e same on t(e )asis o- +(et(er or not t(e appi"ant
is insura)e on standard rates.
Sin"e 8repai-e disappro2ed t(e insuran"e appi"ation o- Ngo6 t(e )inding deposit re"eipt (ad ne2er )e"ame on -or"e at
any time6 pursuant to par. E o- t(e said re"eipt. A )inding re"eipt is mani-esty merey "onditiona and does NB' insure
outrig(t. W(ere an agreement is made )et+een t(e appi"ant and t(e agent6 NB ia)iity s(a atta"( unti t(e prin"ipa
appro2es t(e ris* and a re"eipt is gi2en )y t(e agent.
'(e a""eptan"e is merey "onditiona6 and is su)ordinated to t(e a"t o- t(e "ompany in appro2ing or reIe"ting t(e
appi"ation. '(us in i-e insuran"e6 a )inding sip or )inding re"eipt does NB' insure )y itse-.
7,68 Paci)ic Ti2$e" *5 CA
116 SCRA 199
Fact9
Bn >ar"( 196 1.$96 Pa"i-i" se"ured temporary insuran"e -rom t(e Wor*emen=s Insuran"e Co. -or its e5portation o- ogs
to Eapan. Wor*men issued on said date Co2er Note 1%1% insuring said "argo.
'(e reguar marine poi"ies +ere issued )y t(e "ompany in -a2or o- Pa"i-i" on Apr C6 1.$9. '(e C marine poi"ies )ore
t(e num)er F97%1%9C and F97%1%99.
A-ter t(e issuan"e o- t(e "o2er note )ut 3E@BRE t(e issuan"e o- t(e C poi"ies6 some o- t(e ogs intended to )e
e5ported +ere ost due to a typ(oon.
Pa"i-i" -ied its "aim +it( t(e "ompany6 )ut t(e atter re-used6 "ontending t(at said oss may not )e "onsidered as
"o2ered under t(e "o2er note )e"ause su"( )e"ame nu and 2oid )y 2irtue o- t(e issuan"e o- t(e marine poi"ies.
I&e9 WBN t(e "o2er not +as +it(out "onsideration6 t(us nu and 2oid.
He#%9 It (a (ith coni%e"ation5
SC up(ed Pa"i-i"=s "ontention t(at said "o2er not +as +it( "onsideration. '(e -a"t t(at no separate premium +as paid
on t(e "o2er note )e-ore t(e oss +as insured against o""urred does not miitate against t(e 2aidity o- Pa"i-i"=s "ontention6
-or no su"( premium "oud (a2e )een paid6 sin"e )y t(e nature o- t(e "o2er note6 it did not "ontain6 as a "o2er notes do not
"ontain6 parti"uars o- t(e s(ipment t(at +oud ser2e as )asis -or t(e "omputation o- t(e premiums. As a ogi"a
"onseGuen"e6 no separate premiums are reGuired to )e paid on a "o2er note.
I- t(e note is to )e treated as a separate poi"y instead o- integrating it to t(e reguar poi"ies su)seGuenty issued6 its
purpose +oud )e meaningess -or it is in a rea sense a "ontra"t6 not a mere appi"ation.
7,/8 G#o"ia *5 Phi#a2#i)e In&"ance Co5
7/ OG ,66-
Fact9
In 1.$$6 Ro)erto Narito appied -or a 1%%' i-e insuran"e poi"y +it( P(iami-e Insuran"e Company. Narito +as
e5amined )y !ra. Verge de dios6 t(e insurer=s medi"a e5aminer.
S(e opined t(at Narito +as insura)e. 7er opinion +as "on-irmed )y !r. Bro)ia6 t(e Asso"iate >edi"a !ire"tor o- t(e
insurer.
Bn B". 916 1.$$6 an agent o- t(e insured prepared an appi"ation -or t(e i-e insuran"e +(ose annua premium +as
P161/0. Bn t(e same date6 t(e appi"ation +as signed )y Narito.
Narito paid t(e -irst annua premium on t(e poi"y appied -or. '(e insurer=s appi"ation -orm "ontained a so:"aed
,3inding Re"eipt1 +(i"( +as deta"(a)e.
It is not sure +(et(er or not Narito +as gi2en t(e 3inding Re"eipt upon (is payment o- t(e -irst premium6 )ut +(at is
"ertain t(at (e +as (anded a Cas(ier=s Re"eipt.
@rom t(e time t(e insured re"ei2ed t(e appi"ation -orm its agent on No2. F6 1.$$6 up to !e". $6 1.$$6 it did not ta*e
any a"tion +it( regard to t(e "ontro2erted insuran"e "o2erage.
Bn !e". $6 1.$$6 Narito +as s(ot and *ied. '(e )ene-i"iaries su)mitted a "aim to t(e insurer. A-ter an under+riting
anaysis "ondu"ted )y t(e insurer6 it -ound out t(at Narito +as una""epta)e as an insuran"e ris*. '(e "aim +as
denied.
I&e9 WBN t(e )ene-i"iaries "an "aim.
He#%9 >UP
'(e appi"ation -or insuran"e signed )y t(e de"eased "ontained t(e -oo+ing stipuationJ D*he bindin) recei#t m!st
/.* be iss!ed !ness a bindin) de#osit is #aid which m!st be at east e3!a to the first f! #remi!m$4 '(e preponderan"e o-
e2iden"e is to t(e e--e"t t(at t(e )inding re"eipt +as not issued to t(e de"eased +(en (e paid t(e "ompany=s agent6 t(e -irst
annua premium o- P161/0. 7en"e t(e rig(ts o- t(e )ene-i"iaries and t(e o)igation o- t(e "ompany (a2e to )e determined
soey in t(e appi"ation -or insuran"e an in t(e Cas(ier=s re"eipt.
'(e appi"ation -or insuran"e "ontained t(e -oo+ing "auseJ D*here sha be no contract of ins!rance !ness a #oic( is
iss!ed on this a##ication and the f! first #remi!m thereon act!a( #aid$1 It s(oud )e "on"eded t(at t(ere s(a )e a
"ontra"t o- insuran"e on"e t(e -irst premium is paid and a poi"y is issued. '(ere is no Guestion t(at t(e -irst premium +as
paid.
'(e pro)em is to reso2e +(et(er or not it "an )e said t(at t(e poi"y (as )een issued. IN t(is "onne"tion6 +(at may )e
noted is t(at6 in "ontrast to t(e reGuirement o- a"tua payment o- t(e premium6 it +as NB' reGuired t(at t(e poi"y )e a"tuay
issued. An assuming t(at no poi"y (ad indeed )een issued6 it s(oud sti )e (ed t(at t(e appi"ation -or insuran"e +as
appro2ed )y t(e "ompany6 +it( t(e a"tua issuan"e o- t(e poi"y )eing a mere te"(ni"aity. W(en an insurer a""epts and
retains t(e -irst premium -or an unreasona)e engt( o- time6 it s(oud )e presumed t(at t(e insurer (ad assumed t(e ris*. It
s(oud t(ere-ore )e ia)e -or oss )e-ore t(e appi"ation is su)seGuenty reIe"ted. In t(e "ase at )ar6 t(e "ompany did NB'
a"t on t(e appi"ation -or insuran"e6 one +ay or t(e ot(er6 -rom No2. C to !e". F6 1.$$6 and no Iusti-i"ation -or t(e deay (ad
)een pro2en.
7en"e6 it s(oud )e (ed t(at t(e appi"ation -or insuran"e o- t(e de"eased (ad )een appro2ed prior to (is deat(6
at(oug( t(e poi"y (ad not a"tuay )een issued6 -or +(i"( reason6 t(e "ompany s(oud )e ia)e to t(e )ene-i"iaries.
7,08 San ?i3&e# E"e(e"4 *5 La( Union Roc; In&"ance Co2!an4 (repeat "ase O1C&
0- PHIL 670
Fact9
poi"y.
He#%9 NOPE5
"redit.
Ai%e )"o2 the "&#in3C )o" (hat othe" "eaon %i% Att45 :&i2on a; & to "ea% the cae o) G#o"ia *5 Phi#a2#i)e'
'(e "ase de-ined a )inding re"eipt.
What i a $in%in3 "ecei!t acco"%in3 to G#o"a *5 Phi#a2#i)e'
A )inding re"eipt or sip is ordinariy a do"ument6 sip or memorandum gi2en to t(e insured6 +(i"( )inds t(e insuran"e
"ompany to pay insuran"e s(oud a oss o""ur pending a"tion upon t(e appi"ation and a"tua issuan"e o- a poi"y.
'(e purpose o- a )inder is to pro2ide temporary insuran"e pending an inGuiry )y t(e insurer as to t(e "(ara"ter o- t(e
ris* and to ta*e t(e pa"e o- t(e poi"y unti t(e atter "an )e issued.
'(e issuan"e o- a )inder e2iden"es6 a "ompete6 temporary or preiminary "ontra"t o- insuran"e e--e"ti2e -rom t(at time
unti t(e issuan"e o- t(e -orma poi"y or unti reIe"tion o- t(e ris*. Under a i-e poi"y6 it +oud esta)is( ia)iity upon t(e
insurer i- deat( o""urred prior to t(e issuan"e o- t(e poi"y.
A )inder re"eipt +oud )e misnamed i- it does NB' )ind t(e insurer. I- t(e insurer issues a )inder re"eipt +it( terms
+(i"( +i negate6 or neutrai4e t(e )inding resut o- t(e re"eipt6 t(en t(e insurer +oud (a2e a"tuay pra"ti"ed -raud on t(e
appi"ant -or insuran"e.
Section 1/. '(e insuran"e pro"eeds s(a )e appied e5"usi2ey to t(e proper interest o- t(e person in +(ose
name or -or +(ose )ene-it it is made uness ot(er+ise spe"i-ied in t(e poi"y.
Reca## Section 165
Se"tion 1C pro2idesJ '(e interest o- a )ene-i"iary in a i-e insuran"e poi"y s(a )e -or-eited +(en t(e )ene-i"iary is t(e
prin"ipa6 a""ompi"e or a""essory in +i-uy )ringing a)out t(e deat( o- t(e insured; in +(i"( e2ent6 t(e nearest reati2e o-
t(e insured s(a re"ei2e t(e pro"eeds o- said insuran"e i- not ot(er+ise Guai-ied.
So'
It is an e5"eption to Se"tion F9.
What %oe A"t5 6167 o) the CC a4'
Art. C1C/. '(e mortgage e5tends to t(e natura a""ession6 to t(e impro2ements6 gro+ing -ruits and t(e rents or in"ome
not yet re"ei2ed +(en t(e o)igation )e"omes due6 and t(e amo!nt of the indemnit( )ranted or owin) to the #ro#rietor from
the ins!rers of the #ro#ert( mort)a)ed6 or in 2irtue o- e5propriation -or pu)i" use6 +it( de"arations6 ampi-i"ations and
imitations esta)is(ed )y a+6 +(et(er t(e estate remains in t(e possession o- t(e mortgagor or it passes into t(e (ands o- a
t(ird person.
P"o$#e25
' had taken o!t a #oic( on his car with the sti#!ation8 Doss if an( #a(abe to U, the mort)a)ee of the car4$ *he car )ot ost
and K, the owner of the a!to re#air sho# where the car was fi&ed fied a caim with the ins!rance com#an($ 2s K entited to
coect the cost of re#air>
NB. As -ar as t(e insuran"e "ompany is "on"erned6 D is not pri2y to t(e insuran"e "ontra"t. E2en i- t(ere +as a
pro2ision in t(e "ontra"t aut(ori4ing eit(er A or V to "ontra"t -or repairs6 t(is does not mean t(at D )e"ame entited to "aim
t(e pro"eeds. In t(is "ase6 t(e pro"eeds must )e paid to V6 and in "ase V +as t(e one +(o "ontra"ted -or t(e repairs6 V
must pay D.
Cae9
7,18 Eoni)acio E"o5 *5 ?o"a
6- SCRA 666
Fact9
EnriGue >ora mortgaged (is Bdsmo)ie sedan "ar to 7S Reyes In". +it( t(e "ondition t(at >ora +oud insure t(e "ar
+it( 7S Reyes as )ene-i"iary.
'(e "ar +as t(en insured +it( State Insuran"e Company and t(e poi"y dei2ered to >ora.
!uring t(e e--e"ti2ity o- t(e insuran"e "ontra"t6 t(e "ar -igured in an a""ident. '(e "ompany t(en assigned t(e a""ident
to an insuran"e appraiser -or in2estigation and appraisa o- t(e damage.
>ora +it(out t(e *no+edge and "onsent o- 7S Reyes6 aut(ori4ed 3oni-a"io 3ros to -i5 t(e "ar6 using materias suppied
)y t(e Ayaa Auto Parts Company.
@or t(e "ost o- <a)or and materias6 >ora +as )ied PC61%C./9. '(e )i +as sent to t(e insurer=s appraiser. '(e
insuran"e "ompany dre+ a "(e"* in t(e amount o- t(e insuran"e pro"eeds and entrusted t(e "(e"* to its appraiser -or
dei2ery to t(e proper party.
'(e "ar +as dei2ered to >ora +it(out t(e "onsent o- 7S Reyes6 and +it(out payment to 3oni-a"io 3ros and Ayaa.
Upon t(e t(eory t(at t(e insuran"e pro"eeds s(oud )e dire"ty paid to t(em6 3oni-a"io and Ayaa -ied a "ompaint
against >ora and t(e insurer +it( t(e muni"ipa "ourt -or t(e "oe"tion o- PC61%C./9.
'(e insuran"e "ompany -ied its ans+er +it( a "ounter"aim -or interpeader6 reGuiring 3oni-a"io and 7S Reyes to
interpead in order to determine +(o (as a )etter rig(t to t(e pro"eeds.
I&e9 WBN t(ere is pri2ity o- "ontra"t )et+een 3on-i"a"io and Ayaa on one (and and State Insuran"e on t(e ot(er.
He#%9 NONE5
It is -undamenta t(at "ontra"ts ta*e e--e"t ony )et+een t(e parties t(ereto6 e5"ept in some spe"i-i" instan"e pro2ided
)y a+ +(ere t(e "ontra"t "ontains some stipuation in -a2or o- a t(ird person. Su"( stipuation is *no+n as a stipuation
pour autrui; or a pro2ision in -a2or o- a t(ird person not a party to t(e "ontra"t.
Under t(is do"trine6 a t(ird person is ao+ed to a2ai (imse- o- a )ene-it granted to (im )y t(e terms o- t(e "ontra"t6
pro2ided t(at t(e "ontra"ting parties (a2e "eary and dei)eratey "on-erred a -a2or upon su"( person. ConseGuenty6 a
t(ird person NB' a party to t(e "ontra"t (as NB a"tion against t(e aprties t(ereto6 and "annot generay demand t(e
en-or"ement o- t(e same.
'(e Guestion o- +(et(er a t(ird person (as an en-or"ea)e interest in a "ontra"t must )e setted )y determining +(et(er
t(e "ontra"ting parties intended to tender (im su"( an interest )y dei)eratey inserting terms in t(eir agreement +it( t(e
a2o+ed purpose o- "on-erring -a2or upon su"( t(ird person. IN t(is "onne"tion6 t(is "ourt (as aid do+n t(e rue t(at t(e
-airest test to determine +(et(er t(e interest o- a 9
rd
person in a "ontra"t is a stipuation pour autrui or merey an in"identa
interest6 is to rey upon t(e intention o- t(e parties as dis"osed )y t(eir "ontra"t.
In t(e instant "ase t(e insuran"e "ontra"t does not "ontain any +ords or "auses to dis"ose an intent to gi2e any )ene-it
to any repairmen or materia men in "ase o- repair o- t(e "ar in Guestion. '(e parties to t(e insuran"e "ontra"t omitted su"(
stipuation6 +(i"( is a "ir"umstan"e t(at supports t(e said "on"usion. Bn t(e ot(er (and6 t(e Moss paya)eM "ause o- t(e
insuran"e poi"y stipuates t(at M<oss6 i- any6 is paya)e to 7.S. Reyes6 In".M indi"ating t(at it +as ony t(e 7.S. Reyes6 In".
+(i"( t(ey intended to )ene-it.
A poi"y o- insuran"e is a distin"t and independent "ontra"t )et+een t(e insured and insurer6 and t(ird persons (a2e no
rig(t eit(er in a "ourt o- eGuity6 or in a "ourt o- a+6 to t(e pro"eeds o- it6 uness t(ere )e some "ontra"t o- trust6 e5pressed or
impied6 )y t(e insured and t(ird person. In t(is "ase6 no "ontra"t o- trust6 e5press or impied. In t(is "ase6 no "ontra"t o-
trust6 e5pressed or impied e5ists. We6 t(ere-ore6 agree +it( t(e tria "ourt t(at no "ause o- a"tion e5ists in -a2or o- t(e
appeants in so -ar as t(e pro"eeds o- insuran"e are "on"erned. '(e appeantLs "aim6 i- at a6 is merey eGuita)e in nature
and must )e made e--e"ti2e t(roug( EnriGue >ora +(o entered into a "ontra"t +it( t(e 3oni-a"io 3ros In". '(is "on"usion is
dedu"i)e not ony -rom t(e prin"ipe go2erning t(e operation and e--e"t o- insuran"e "ontra"ts in genera6 )ut is "eary
"o2ered )y t(e e5press pro2isions o- se"tion F% o- t(e Insuran"e A"t (no+ Se". F9&.
'(e poi"y in Guestion (as )een so -ramed t(at M<oss6 i- any6 is paya)e to 7. S. Reyes6 In".M +(i"( unmista*a)y s(o+s
t(e intention o- t(e parties.
7,68 Co=&ia *5 Fie#%2enK In&"ance
66 SCRA 176
Fact9
Bn !e". 16 1.$16 @iedmen=s Insuran"e "o. Issued in -a2or o- t(e >ania Aeo+ 'a5i"a) a "ommon "arrier insuran"e
poi"y +it( a stipuation t(at t(e "ompany s(a indemni-y t(e insured o- t(e sums +(i"( t(e atter +my )e (ed ia)e -or
+it( respe"t to Ddeath or bodi( in"!r( to an( faire-#a(in) #assen)er inc!din) the driver and cond!ctor4.
'(e poi"y aso stated t(at in ,the event of the death of the driver, the +om#an( sha indemnif( his #ersona
re#resentatives and at the +om#an(Hs o#tion ma( make indemnit( #a(abe direct( to the caimants or heirs of the
caimants.1
!uring t(e poi"y=s i-etime6 a ta5i"a) o- t(e insured dri2en )y CoGuia met an a""ident and CoGuia died.
W(en t(e "ompany re-used to pay t(e ony (eirs o- CoGuia6 (is parents6 t(ey institued t(is "ompaint. '(e "ompany
"ontends t(at painti--s (a2e no "ause o- a"tion sin"e t(e CoGuias (a2e no "ontra"tua reations(ip +it( t(e "ompany.
I&e9 WBN painti--s (a2e t(e rig(t to "oe"t on t(e poi"y.
He#%9 >ES5
At(oug(6 in genera6 ony parties to a "ontra"t may )ring an a"tion )ased t(ereon6 t(is rue is su)Ie"t to e5"eptions6 one
o- +(i"( is -ound in t(e se"ond paragrap( o- Arti"e 1911 o- t(e Ci2i Code o- t(e P(iippines6 readingJ M2f a contract sho!d
contain some sti#!ation in favor of a third #erson, he ma( demand its f!fiment #rovided he comm!nicated his acce#tance
to the obi)or before its revocation$ ' mere incidenta benefit or interest of a #erson is not s!fficient$ *he contractin) #arties
m!st have cear( and deiberate( conferred a favor !#on a third #erson$M '(is is )ut t(e restatement o- a +e:*no+n
prin"ipe "on"erning "ontra"ts pour autrui6 t(e en-or"ement o- +(i"( may )e demanded )y a t(ird party -or +(ose )ene-it it
+as made6 at(oug( not a party to t(e "ontra"t6 )e-ore t(e stipuation in (is -a2or (as )een re2o*ed )y t(e "ontra"ting
parties
In t(e "ase at )ar6 t(e poi"y under "onsideration is typi"a o- "ontra"ts pour autrui t(is "(ara"ter )eing made more
mani-est )y t(e -a"t t(at t(e de"eased dri2er paid -i-ty per"ent (F%[& o- t(e "orresponding premiums6 +(i"( +ere dedu"ted
-rom (is +ee*y "ommissions. Under t(ese "onditions6 it is "ear t(at t(e CoGuias N +(o6 admittedy6 are t(e soe (eirs o-
t(e de"eased N (a2e a dire"t "ause o- a"tion against t(e Company6 and6 sin"e t(ey "oud (a2e maintained t(is a"tion )y
t(emse2es6 +it(out t(e assistan"e o- t(e insured it goes +it(out saying t(at t(ey "oud and did propery Ioin t(e atter in
-iing t(e "ompaint (erein.
7,78 G&in3on *5 De# ?onte
,- SCRA 1,1
Fact9
'(e insured o+ned a -eet o- Ieepneys. 7e insured t(e operation o- (is Ieepneys against Daccidents with third #art
iabiit(1 +it( Capita Insuran"e and Surety Co.
Bne day6 one o- (is Ieepney diri2ers6 )umped and *ied 8uingon.
An a"tion -or damages +as t(en -ied against t(e o+ner:insured6 t(e dri2er and t(e "ompany.
'(e "ompany soug( to dismiss t(e "(arges against it on t(e ground o- a"* o- "ause o- a"tion against it.
I&e9 WBN t(ere is a "ause o- a"tion against t(e "ompany.
He#%9 >ES5
'(e rig(t o- a person inIured to sue t(e insurer o- t(e party at -aut depends on +(et(er t(e "ontra"t o- insuran"e +as
intended to )ene-it t(ird persons. '(e test appied (ere isJ W(ere t(e "ontra"t pro2ides -or indemnity against ia)iity to t(ird
persons6 t(en t(ird persons to +(om t(e insured is ia)e6 "an sue t(e insurer. Bn t(e ot(er (and6 +(ere t(e "ontra"t is -or
indemnity against a"tua oss or payment6 t(en t(ird persons "annot pro"eed against t(e insurer6 t(e "ontra"t )eing soey to
reim)urse t(e insured -or ia)iity a"tuay dis"(arged )y (im t(roug( payment to t(ird persons6 said t(ird personsL re"ourse
)eing t(us imited to t(e insured aone
'(e poi"y in t(e present "ase6 is one +(ere)y t(e insurer agreed to indemni-y t(e insured Magainst a sums . +(i"( t(e
Insured s(a )e"ome egay ia)e to pay in respe"t o-J a. deat( o- or )odiy inIury to any person . . .M Ceary6 t(ere-ore6 it is
one -or indemnity against ia)iity -rom t(e -a"t t(en t(at t(e insured is ia)e to t(e t(ird person6 su"( t(ird person is entited
to sue t(e insurer.
Sin"e t(e poi"y in Guestioned "ontained a stipuation pour autrui6 t(en t(e insuran"e "ompany must dei2er t(e
pro"eeds to t(e "aimants.
7,,8 De# Va# *5 De# Va#
69 Phi# 1/1
Fact9
Petitioners and pri2ate respondents are )rot(ers and Sisters and are t(e ony (eirs and ne5t o- *in o- 8regorio de Va
+(o died intestate.
It +as -ound out t(at t(e de"eased too* out insuran"e on (is i-e -or t(e sum o- #%' and made it paya)e to pri2ate
respondents as soe )ene-i"iary.
A-ter 8regorio=s deat(6 Andres "oe"ted t(e pro"eeds o- t(e poi"y.
B- t(e said poi"y6 Andres paid 10' to redeem some rea property +(i"( 8regorio (ad sod to t(ird persons during (is
i-etime.
Said redemption o- t(e property +as made )y Andres= ay+er in t(e name o- Andres and t(e petitioners. (A""dg to
Andres6 said redemption in t(e name o- Petitioners and (imse- +as +it(out (is *no+edge and t(at sin"e t(e
redemption6 petitioners (a2e )een in possession o- t(e property&
Petitioners no+ "ontend t(at t(e amount o- t(e insuran"e poi"y )eonged to t(e estate o- t(e de"eased and not to
Andres personay.
Pet -ied a "ompaint -or partition o- property in"uding t(e insuran"e pro"eeds
Andress "aims t(at (e is t(e soe o+ner o- t(e pro"eeds and prayed t(at (e )e de"aredJ
Soe o+ner o- t(e rea property6 redeemed +it( t(e use o- t(e insuran"e pro"eeds and its remainder;
Petitioners to a""ount -or t(e use and o""upation o- t(e premises.
I&e9 WBN t(e petitioners (a2e a rig(t to t(e insuran"e pro"eedsH
He#%9 NOPE5
'(e "ontra"t o- i-e insuran"e is a spe"ia "ontra"t and t(e destination o- t(e pro"eeds t(ereo- is determined )y spe"ia
a+s +(i"( dea e5"usi2ey +it( t(e su)Ie"t. Bur "i2i "ode (as no pro2isions +(i"( reate dire"ty and spe"i-i"ay to i-e:
insuran"e "ontra"ts o- to t(e destination o- i-e:insuran"e pro"eeds t(at su)Ie"t is reguated e5"usi2ey )y t(e Code o-
Commer"e. '(us6 "ontention o- petitioners t(at pro"eeds s(oud )e "onsidered as a dontation or gi-t and s(oud )e in"uded
in t(e estate o- t(e de"eased is UN'ENA3<E.
Sin"e t(e repur"(ase (as )een made n t(e names o- a t(e (eirs instead o- t(e de-endant aone6 petitioners "aim t(at
t(e property )eongs to t(e (eirs in "ommon and not to t(e de-endant aone. '(e SC (ed t(at i- it is esta)is(ed )y
e2iden"e t(at t(at +as (is intention and t(at t(e rea estate +as dei2ered to t(e painti--s +it( t(at understanding6 t(en it is
pro)a)e t(at t(eir "ontention is "orre"t and t(at t(ey are entited to s(are eGuay +it( t(e de-endant. 7BWEVER6 it
appears -rom t(e e2iden"e t(at t(e "on2eyan"es +ere ta*en in t(e name o- t(e painti--s +it(out t(e *no+edge and "onsent
o- Andres6 or t(at it +as not (is intention to ma*e a gi-t to t(em o- rea estate6 +(en it )eongs to (im.
7,98 In&#a" Li)e5 E$"a%o
,- SCRA 1,1
Fact9
3uena2entura E)rado +as issued a i-e pan )y Insuar Company. 7e designated Capriona as (is )ene-i"iary6 re-erring
to (er as (is +i-e.
'(e insured t(en died and Carponia tried to "aim t(e pro"eeds o- t(e said pan.
S(e admitted to )eing ony t(e "ommon a+ +i-e o- t(e insured.
Pas"uaa6 t(e ega +i-e6 aso -ied a "aim asserting (er rig(t as t(e ega +i-e. '(e "ompany t(en -ied an a"tion -or
interpeader.
I&e9 WBN t(e "ommon a+ +i-e named as )ene-i"iary "an "oe"t t(e pro"eeds.
He#%9 NOPE5
'(e "i2i "ode pro(i)itions on donations made )et+een persons guity o- aduterous "on"u)inage appies to insuran"e
"ontra"ts. Bn matters not spe"i-i"ay pro2ided -or )y t(e Insuran"e <a+6 t(e genera rues on Ci2i a+ s(a appy. A i-e
insuran"e poi"y is no di--erent -rom a "i2i donation as -ar as t(e )ene-i"iary is "on"erned6 sin"e )ot( are -ounded on
i)eraity.
Wh4 (a the co22on #a( (i)e not a##o(e% to co##ect the !"ocee% %e!ite the )act that he (a the $ene)icia"4'
InKt thi a3aint Sec5 1/'
It is true t(at SC +ent against Se". F9. 7o+e2er6 Se". F9 is NB' t(e ony pro2ision t(at t(e SC (ad to "onsider. Art.
/9. and C%1C o- CC pro(i)it persons +(o are guity o- adutery or "on"u)inage -rom )eing )ene-i"iaries o- t(e i-e insuran"e
poi"ies o- t(e persons +it( +(om t(ey "ommitted adutery or "on"u)inage. I- t(e SC used ony Se". F96 it +oud (a2e gone
against Art. /9. and C%1C.
79-8 RCEC *5 CA
6,9 SCRA 696 7199,8
Fact9
8BAU appied -or "redit -a"iities and a""ommodations +it( RC3C. A-ter due e2auation6 a "redit -a"iity in t(e amount
o- P9% miion +as initiay granted. Upon 8BAULs appi"ation in"reased 8BAULs "redit -a"iity to PF% miion6 t(en to
P.% miion6 and -inay to P11/ miion
As se"urity -or its "redit -a"iities +it( RC3C6 8BAU e5e"uted t+o RE> and t+o C> in -a2or o- RC3C6 +(i"( +ere
registered +it( t(e Registry o- !eeds at. Under ea"( o- t(ese -our mortgage "ontra"ts6 8BAU "ommitted itse- to insure
t(e mortgaged property +it( an insuran"e "ompany appro2ed )y RC3C6 and su)seGuenty6 to endorse and dei2er t(e
insuran"e poi"ies to RC3C.
8BAU o)tained in its name a tota o- 1% insuran"e poi"ies -rom >ICB. In @e)ruary 1..C6 A"(ester Insuran"e Agen"y6
In".6 t(e insuran"e agent +(ere 8BAU o)tained t(e >aayan insuran"e poi"ies6 issued nine endorsements in -a2or o-
RC3C seemingy upon instru"tions o- 8BAU
Bn Apri C/6 1..C6 one o- 8BAULs -a"tory )uidings in Vaen4uea +as gutted )y -ire. ConseGuenty6 8BAU su)mitted its
"aim -or indemnity.
>ICB denied t(e "aim on t(e ground t(at t(e insuran"e poi"ies +ere eit(er atta"(ed pursuant to +rits o-
atta"(mentsKgarnis(ments issued )y 2arious "ourts or t(at t(e insuran"e pro"eeds +ere aso "aimed )y ot(er "reditors
o- 8BAU aeging )etter rig(ts to t(e pro"eeds t(an t(e insured.
8BAU -ied a "ompaint -or spe"i-i" per-orman"e and damages. RC3C6 one o- 8BAULs "reditors6 aso -ied +it( >ICB
its -orma "aim o2er t(e pro"eeds o- t(e insuran"e poi"ies6 )ut said "aims +ere aso denied -or t(e same reasons t(at
A8CB denied 8BAULs "aims.
7o+e2er6 )e"ause t(e endorsements do not )ear t(e signature o- any o--i"er o- 8BAU6 t(e tria "ourt6 as +e as t(e
Court o- Appeas6 "on"uded t(at t(e endorsements are de-e"ti2e and (ed t(at RC3C (as no rig(t o2er t(e insuran"e
pro"eeds.
I&e9 WBN RC3C (as a rig(t o2er t(e insuran"e pro"eeds.
He#%9 RCEC ha a "i3ht o*e" the in&"ance !"ocee%5
INSURANCE REVIEWER Atty. Quimson page .%
It is setted t(at a mortgagor and a mortgagee (a2e separate and distin"t insura)e interests in t(e same mortgaged
property6 su"( t(at ea"( one o- t(em may insure t(e same property -or (is o+n soe )ene-it. '(ere is no Guestion t(at 8BAU
"oud insure t(e mortgaged property -or its o+n e5"usi2e )ene-it. In t(e present "ase6 at(oug( it appears t(at 8BAU
o)tained t(e su)Ie"t insuran"e poi"ies naming itse- as t(e soe payee6 t(e intentions o- t(e parties as s(o+n )y t(eir
"ontemporaneous a"ts6 must )e gi2en due "onsideration in order to )etter ser2e t(e interest o- Iusti"e and eGuity.
It is to )e noted t(at . endorsement do"uments +ere prepared )y A"(ester in -a2or o- RC3C. '(e Court is in a
Guandary (o+ A"(ester "oud arri2e at t(e idea o- endorsing any spe"i-i" insuran"e poi"y in -a2or o- any parti"uar
)ene-i"iary or payee ot(er t(an t(e insured (ad not su"( named payee or )ene-i"iary )een spe"i-i"ay dis"osed )y t(e
insured itse-. It is aso signi-i"ant t(at 8BAU 2ountariy and purposey too* t(e insuran"e poi"ies -rom >ICB6 a sister
"ompany o- RC3C6 and not Iust -rom any ot(er insuran"e "ompany. A"(ester +oud not (a2e -ound out t(at t(e su)Ie"t
pie"es o- property +ere mortgaged to RC3C (ad not su"( in-ormation )een 2ountariy dis"osed )y 8BAU itse-. 7ad it not
)een -or 8BAU6 A"(ester +oud not (a2e *no+n o- 8BAULs intention o- o)taining insuran"e "o2erage in "ompian"e +it( its
underta*ing in t(e mortgage "ontra"ts +it( RC3C6 and 2eri-y6 A"(ester +oud not (a2e endorsed t(e poi"ies to RC3C (ad
it not )een so dire"ted )y 8BAU.
Bn eGuita)e prin"ipes6 parti"uary on t(e ground o- estoppe6 t(e Court is "onstrained to rue in -a2or o- mortgagor
RC3C. RC3C6 in good -ait(6 reied upon t(e endorsement do"uments sent to it as t(is +as ony pursuant to t(e stipuation in
t(e mortgage "ontra"ts. We -ind su"( reian"e to )e Iusti-ied under t(e "ir"umstan"es o- t(e "ase. 8BAU -aied to
seasona)y repudiate t(e aut(ority o- t(e person or persons +(o prepared su"( endorsements. B2er and a)o2e t(is6 8BAU
"ontinued6 in t(e meantime6 to enIoy t(e )ene-its o- t(e "redit -a"iities e5tended to it )y RC3C. A-ter t(e o""urren"e o- t(e
oss insured against6 it +as too ate -or 8BAU to diso+n t(e endorsements -or any imagined or "ontri2ed a"* o- aut(ority o-
A"(ester to prepare and issue said endorsements. I- t(ere (ad not )een a"tuay an impied rati-i"ation o- said
endorsements )y 2irtue o- 8BAULs ina"tion in t(is "ase6 8BAU is at t(e 2ery east estopped -rom assaiing t(eir operati2e
e--e"ts.
'o permit 8BAU to "apitai4e on its non:"on-irmation o- t(ese endorsements +(ie it "ontinued to enIoy t(e )ene-its o-
t(e "redit -a"iities o- RC3C +(i"( )eie2ed in good -ait( t(at t(ere +as due endorsement pursuant to t(eir mortgage
"ontra"ts6 is to "ountenan"e gra2e "ontra2ention o- pu)i" poi"y6 -air deaing6 good -ait(6 and Iusti"e. Su"( an unIust
situation6 t(e Court "annot san"tion. Under t(e pe"uiar "ir"umstan"es o)taining in t(is "ase6 t(e Court is )ound to re"ogni4e
RC3CLs rig(t to t(e pro"eeds o- t(e insuran"e poi"ies i- not -or t(e a"tua endorsement o- t(e poi"ies6 at east on t(e )asis
o- t(e eGuita)e prin"ipe o- estoppe.
8BAU "annot see* reie- under Se"tion F9 o- t(e Insuran"e Code +(i"( pro2ides t(at t(e pro"eeds o- insuran"e s(a
e5"usi2ey appy to t(e interest o- t(e person in +(ose name or -or +(ose )ene-it it is made. '(e pe"uiarity o- t(e
"ir"umstan"es o)taining in t(e instant "ase presents a Iusti-i"ation to ta*e e5"eption to t(e stri"t appi"ation o- said pro2ision6
it (a2ing )een su--i"ienty esta)is(ed t(at it +as t(e intention o- t(e parties to designate RC3C as t(e party -or +(ose
)ene-it t(e insuran"e poi"ies +ere ta*en out. Consider t(us t(e -oo+ingJ
1. It is undisputed t(at t(e insured pie"es o- property +ere t(e su)Ie"t o- mortgage "ontra"ts entered into )et+een
RC3C and 8BAU in "onsideration o- and -or se"uring 8BAULs "redit -a"iities -rom RC3C. '(e mortgage "ontra"ts
"ontained "ommon pro2isions +(ere)y 8BAU6 as mortgagor6 undertoo* to (a2e t(e mortgaged property propery
"o2ered against any oss )y an insuran"e "ompany a""epta)e to RC3C.
C. 8BAU 2ountariy pro"ured insuran"e poi"ies to "o2er t(e mortgaged property -rom >ICB6 no ess t(an a sister
"ompany o- RC3C and de-initey an a""epta)e insuran"e "ompany to RC3C.
9. Endorsement do"uments +ere prepared )y >ICBLs under+riter6 A"(ester Insuran"e Agen"y6 In".6 and "opies
t(ereo- +ere sent to 8BAU6 >ICB and RC3C. 8BAU did not assai6 unti o- ate6 t(e 2aidity o- said endorsements.
#. 8BAU "ontinued unti t(e o""urren"e o- t(e -ire6 to enIoy t(e )ene-its o- t(e "redit -a"iities e5tended )y RC3C
+(i"( +as "onditioned upon t(e endorsement o- t(e insuran"e poi"ies to )e ta*en )y 8BAU to "o2er t(e
mortgaged properties.
'(is Court "an not o2er stress t(e -a"t t(at upon re"ei2ing its "opies o- t(e endorsement do"uments prepared )y
A"(ester6 8BAU6 despite t(e a)sen"e +ritten "on-ormity t(ereto6 o)2iousy "onsidered said endorsement to )e su--i"ient
"ompian"e +it( its o)igation under t(e mortgage "ontra"ts sin"e RC3C a""ordingy "ontinued to e5tend t(e )ene-its o- its
"redit -a"iities and 8BAU "ontinued to )ene-it t(ere-rom. Eust as pain too is t(e intention o- t(e parties to "onstitute RC3C
as t(e )ene-i"iary o- t(e 2arious insuran"e poi"ies o)tained )y 8BAU. '(e intention o- t(e parties +i (a2e to )e gi2en -u
-or"e and e--e"t in t(is parti"uar "ase. '(e insuran"e pro"eeds may6 t(ere-ore6 )e e5"usi2ey appied to RC3C6 +(i"( under
t(e -a"tua "ir"umstan"es o- t(e "ase6 is truy t(e person or entity -or +(ose )ene-it t(e poi"ies +ere "eary intended.
Section 105 W(en an insuran"e "ontra"t is e5e"uted +it( an agent or trustee as t(e insured6 t(e -a"t t(at (is
prin"ipa or )ene-i"iary is t(e rea party in interest may )e indi"ated )y des"ri)ing t(e insured as agent or trustee6 or
)y ot(er genera +ords in t(e poi"y.
INSURANCE REVIEWER Atty. Quimson page .1
Who 2a4 ta;e in&"ance'
An insuran"e may )e ta*en )y a person6 personay or t(roug( (is agent or trustee.
I) the in&"ance i ta;en $4 an a3ent o" t"&teeC (hat 2&t the a3ent o" t"&tee %o'
Sin"e t(e insuran"e is to )e appied e5"usi2ey to t(e interest o- t(e person in +(ose name and -or +(ose )ene-it it is
made6 t(e agent or trustee +(en ma*ing an insuran"e "ontra"t -or or on )e(a- o- (is prin"ipa s(oud6 indi"ate t(at (e is
merey a"ting in a representati2e "apa"ity )y signing as su"( agent or trustee6 or )y ot(er genera terms in t(e poi"y.
Section 11. 'o render an insuran"e e--e"ted )y one partner or part:o+ner6 appi"a)e to t(e interest o- (is "o:
partners or ot(er part:o+ners6 it is ne"essary t(at t(e terms o- t(e poi"y s(oud )e su"( as are appi"a)e to t(e
Ioint or "ommon interest.
What ha!!en (hen the in&"ance i e))ecte% $4 a !a"tne" o" a !a"t+o(ne"'
A partner or part:o+ner +(o insures partners(ip property in (is o+n name imits t(e "ontra"t to (is indi2idua s(are
UN<ESS t(e terms o- t(e poi"y "eary s(o+ t(at t(e insuran"e +as meant to "o2er aso t(e s(ares o- t(e ot(er partners.
Section 165 W(en t(e des"ription o- t(e insured in a poi"y is so genera t(at it may "ompre(end any person
or any "ass o- persons6 ony (e +(o "an s(o+ t(at it +as intended to in"ude (im "an "aim t(e )ene-it o- t(e
poi"y.
What ha!!en (hen the %ec"i!tion o) the in&"e% i 3ene"a#'
In order t(at t(e insuran"e may )e appied to t(e interest o- t(e person "aiming t(e )ene-it o- t(e poi"y6 (e must s(o+
t(at (e is t(e person named or des"ri)ed or t(at (e )eongs to t(e "ass o- persons "ompre(ended in t(e poi"y.
E@a2!#e'
I- t(e poi"y is paya)e ,to t(e "(idren16 you must s(o+ t(at you are a "(id o- t(e de"eased. Not a grand:"(id6 nor a
great:grand:"(id.
Section 17. A poi"y may )e so -ramed t(at it +i inure to t(e )ene-it o- +(omsoe2er6 during t(e "ontinuan"e
o- t(e ris*6 may )e"ome t(e o+ner o- t(e interest insured.
Section 1,. '(e mere trans-er o- a t(ing insured does not trans-er t(e poi"y6 )ut suspends it unti t(e same
person )e"omes t(e o+ner o- )ot( t(e poi"y and t(e t(ing insured.
What i the "eaon $ehin% Sec5 1,'
Se". F0 -oo+s -rom t(e +e esta)is(ed prin"ipe t(at a poi"y is a persona "ontra"t +it( t(e insured and does NB'
run +it( t(e insured property uness so e5pressy stipuated6 and in t(e a)sen"e o- an assignment o- t(e poi"y +it( t(e
insurer=s "onsent6 t(e pur"(aser o- t(e interest o- t(e property reGuires no pri2ity +it( t(e insurer.
In "ea%in3 ec5 1,C ta;e not o) Sec5 19 an% 6-5
Section 195 An interest in property insured must e5ist +(en t(e insuran"e ta*es e--e"t6 and +(en t(e oss o""urs6 )ut
need not e5ist in t(e meantime; and interest in t(e i-e or (eat( o- a person insured must e5ist +(en t(e insuran"e ta*es
e--e"t6 )ut need not e5ist t(erea-ter or +(en t(e oss o""urs.
Section 6-5 E5"ept in t(e "ases spe"i-ied in t(e ne5t -our se"tions6 and in t(e "ases o- i-e6 a""ident and (eat(
insuran"e6 a "(ange o- interest in any part o- a t(ing insured6 una""ompanied )y a "orresponding "(ange o- interest in t(e
insuran"e6 suspends t(e insuran"e to an eGui2aent e5tent6 unti t(e interests in t(e t(ing and t(e interest in t(e insuran"e
are 2ested in t(e same person.
P"o$#e25
' borrowed C,GGG from B, and to sec!re #a(ment of his obi)ation, he mort)a)ed his ho!se to B$ B then ins!red the ho!se
for C*$ S!bse3!ent(, B assi)ned his mort)a)e credit to K, b!t did not make the corres#ondin) transfer of his ri)ht over the
ins!rance #oic($ 2B the ho!se b!rns down, is @a! entited to coect the ins!rance mone( as assi)nee-mort)a)ee>
INSURANCE REVIEWER Atty. Quimson page .C
NB6 sin"e 3 did not assign (is rig(t o2er t(e insuran"e poi"y to D. A pur"(aser o- insured property +(o does Not ta*e
t(e pre"aution to o)tain a trans-er o- t(e poi"y on t(e insuran"e6 "annot in "ase o- oss6 re"o2er upon t(e "ontra"t6 as t(e
trans-er o- t(e property (as t(e e--e"t o- suspending t(e insuran"e unti t(e pur"(aser )e"omes t(e o+ner o- t(e poi"y as
+e as t(e property insured.
Cae9
7918 San ?i3&e# *5 La( Union Roc; (repeat Case O 1C&
0- PHIL 670
Fact9
poi"y.
He#%9 NOPE5
"redit.

RHYS MURILLO Insurance Reviewer Ateneo Law School

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