Documente Academic
Documente Profesional
Documente Cultură
MASAGANA TELAMART
FACTS 1999:
In 1991, UCPB issued 5 fire insurance policies covering Masagana Telamarts
various properties for the period from 22 May 1991 to 22 May 1992.
On March 1992, 2 months before policy expiration, UCPB evaluated the
policies and decided not to renew them upon expiration of their terms on 22
May 1992. UCPB advised Masaganas broker of its intention not to renew the
policies. On April 1992, 1 month before policy expiration], UCPB gave written
notice to Masagana of the non-renewal of the policies. On June 1992 [policy
already expired], Masaganas propertycovered by 3 UCPB-issued policies
was razed by fire.
On 13 July 1992, Masagana presented to UCPBs cashier 5 managers
checks, representing premium for the renewal of the policies for another
year.
It was only on the following day, 14 July 1992, when Masagana filed
with UCPB a formal claim for indemnification of the insured property razed by
fire. On the same day, UCPB returned the 5 managers checks, and rejected
Masaganas claim since the policies had expired and were not renewed, and
the fire occurred on 13 June 1992 (or before tender of premium payment).
Masagana filed a civil complaint for recovery of the face value of
the policies covering the insured property razed by fire. RTC ruled in favor
of Masagana, as it found it to have complied with the obligation to pay the
premium; hence, the replacement-renewal policy of these policies are
effective and binding for another year [22 May 1992 22 May 1993].
CA affirmed RTC, holding that following previous practice, Masagana
was allowed a 60-90 day credit term for the renewal of its policies, and that
the acceptance of the late premium payment suggested that payment could
be made later.
ISSUE & HOLDING
WON the fire insurance policies had expired on 22 May 1992, or had been
extended or renewed by an implied credit arrangement though actual
payment of premium was tendered on a later date after the occurrence of
the risk insured against [fire].
FIRE INSURANCE POLICIES HAD EXPIRED
RATIO
An insurance policy, other than life is not valid and binding until
actual payment of the premium. Any agreement to the contrary is
void.The parties may not agree expressly or impliedly on the extension of
credit or time to pay the premium and consider the policy binding before
actual payment.
The case of Malayan Insurance v. Cruz-Arnaldo cited by the CA is not
applicable. In that case, payment of the premium was made on before the
occurrence of the fire. In the present case, the payment of the premium for
renewal of the policies was tendered a month after the fire occurred.
Masagana did not even give UCPB a notice of loss within a reasonable time
after occurrence of the fire.
CA DECISION REVERSED
2001:
CA disagreed with UCPBs stand that Masaganas tender of payment of
the premiums on 13 July 1992 did not result in the renewal of the policies,
having been made beyond the effective date of renewal as provided under
Policy Condition No. 26:
Renewal Clause. Unless the company at least 45 days in advance of
the end of the policy period mails or delivers to the assured at the address
shown in the policy notice of its intention not to renew the policy or to
condition its renewal upon reduction of limits or elimination of coverages, the
assured shall be entitled to renew the policy upon payment of the premium
due on the effective date of renewal.
The following facts have been established:
1. For years, UCPB had been issuing fire policies to th Masagana, and these
policies were annually renewed.
2. UCPB had been granting Masagana a 60-90-day credit term within which to
pay the premiums on the renewed policies.
3. There was no valid notice of non-renewal of the policies, as there is no proof
that the notice sent by ordinary mail was received by Masagana, and the
copy allegedly sent to Zuellig was ever transmitted to Masagana.
4. The premiums for the policies were paid by Masagana within the 60- 90-day
credit term and were duly accepted and received by UCPBs cashier.
ISSUE & HOLDING
WON IC 77 must be strictly applied to UCPBs advantage despite its practice
of granting a 60- to 90-day credit term for the payment of premiums.
NO. MASAGANA WINS THIS TIME. 1999 DECISION SET ASIDE; CA
DECISION AFFIRMED
SEC. 77. An insurer is entitled to payment of the premium as soon as the
thing insured is exposed to the peril insured against. Notwithstanding any
agreement to the contrary, no policy or contract of insurance issued by an
insurance company is valid and binding unless and until the premium thereof
has been paid, except in the case of a life or an industrial life policy
whenever the grace period provision applies.
SEC. 72. An insurer is entitled to payment of premium as soon as the thing
insured is exposed to the peril insured against, unless there is clear
agreement to grant the insured credit extension of the premium due. No
policy issued by an insurance company is valid and binding unless and until
the premium thereof has been paid. (Underscoring supplied)
Facts:
Azucena Palomo obtained a loan from Tai Tong Chuache Inc. in the amount of
P100,000.00. To secure the payment of the loan, a mortgage was executed
over the land and the building in favor of Tai Tong Chuache & Co. Arsenio
Chua, representative of Thai Tong Chuache & Co. insured the latter's interest
with Travellers Multi-Indemnity Corporation for P100,000.00 (P70,000.00 for
the building and P30,000.00 for the contents thereof)
Pedro Palomo secured a Fire Insurance Policy covering the building for
P50,000.00 with respondent Zenith Insurance Corporation. On July 16, 1975,
another Fire Insurance was procured from respondent Philippine British
Assurance Company, covering the same building for P50,000.00 and the
contents thereof for P70,000.00.
The building and the contents were totally razed by fire.
Based on the computation of the loss, including the Travellers MultiIndemnity, respondents, Zenith Insurance, Phil. British Assurance and S.S.S.
Accredited Group of Insurers, paid their corresponding shares of the loss.
Complainants were paid the following: P41,546.79 by Philippine British
Assurance Co., P11,877.14 by Zenith Insurance Corporation, and P5,936.57
by S.S.S. Group of Accredited Insurers Demand was made from respondent
Travellers Multi-Indemnity for its share in the loss but the same was refused.
Hence, complainants demanded from the other three (3) respondents the
balance of each share in the loss in the amount of P30,894.31 (P5,732.79Zenith Insurance: P22,294.62, Phil. British: and P2,866.90, SSS Accredited)
but the same was refused, hence, this action.
In their answers, Philippine British Assurance and Zenith Insurance
Corporation denied liability on the ground that the claim of the complainants
had already been waived, extinguished or paid. Both companies set up
counterclaim in the total amount of P 91,546.79.
SSS Accredited Group of Insurers informed the Commission that the claim of
complainants for the balance had been paid in the amount in full.
Travellers Insurance, on its part, admitted the issuance of a Policy and
alleged defenses that Fire Policy, covering the furniture and building of
complainants was secured by a certain Arsenio Chua and that the premium
due on the fire policy was paid by Arsenio Chua.
Tai Tong Chuache & Co. also filed a complaint in intervention claiming the
proceeds of the fire Insurance Policy issued by respondent Travellers MultiIndemnity.
As adverted to above respondent Insurance Commission dismissed spouses
Palomos' complaint on the ground that the insurance policy subject of the
complaint was taken out by Tai Tong Chuache & Company, for its own
interest only as mortgagee of the insured property and thus complainant as
mortgagors of the insured property have no right of action against the
allegation that the civil case flied by Arsenio Chua was in his capacity as
personal creditor of spouses Palomo has no basis. The policy, then had legal
force and effect.
Sec. 51. A policy of insurance must specify:
(a) The parties between whom the contract is made;
(b) The amount to be insured except in the cases of open or
running policies;
(c) The premium, or if the insurance is of a character where
the exact premium is only determinable upon the termination
of the contract, a statement of the basis and rates upon
which the final premium is to be determined;
(d) The property or life insured;
(e) The interest of the insured in property insured, if he is not
the absolute owner thereof;
(f) The risks insured against; and
(g) The period during which the insurance is to continue.
Sun v CA G.R. No. 89741 March 13, 1991
J. Paras
Facts:
Tan took from Sun Insurance a Php 300,000 policy to cover his electrical
store in Iloilo city. Tans request for an indemnity in 1983 was repeatedly
denied, firstly in 1984. He wrote for a reconsideration in the same year. This
was rejected in 1985, prompting him to file a civil case in the same year. The
insurance company filed a motion to dismiss due to prescription in 1987, but
this was denied. The company went to the court of appeals to petition the
same thing, but this was denied.
Issue:
1. WON the filing of a motion for reconsideration interrupts the twelve
months prescriptive period to contest the denial of the insurance claim.
2. WON the rejection of the claim shall be deemed final only if it contains
words to the effect that denial is final. (ie. the first letter in 1984)
3. When does the cause of action accrue?
Held:
1.No
2.No
3. At the time of the first rejection of the insurance company
Ratio:
1. The policy states in section 27.
Action or suit clause If a claim be made and rejected and an action or suit
be not commenced either in the Insurance Commission or in any court of
competent jurisdiction within twelve (12) months from receipt of notice of
such rejection, or in case of arbitration taking place as provided herein,
within twelve (12) months after due notice of the award made by
thearbitrator or arbitrators or umpire, then the claim shall for all purposes be
deemed to have been abandoned and shall not thereafter be recoverable
hereunder.
Respondent Tan admitted that he received a copy of the letter of rejection
on April 2, 1984. Thus, the 12-month prescriptive period started to run from
the said date of April 2, 1984, under section 27.
2. It was clear in the letter.
Ang v. Fulton Fire Insurance Co.- The condition contained in an insurance
policy that claims must be presented within one year after rejection is not
merely a procedural requirement but an important matter essential to a
prompt settlement of claims against insurance companies as it demands that
insurance suits be brought by the insured while the evidence as to the origin
and cause of destruction have not yet disappeared.
Therefore, there was a necessity of bringing suits against the Insurer within
one year from the rejection of the claim. (1984) The contention of the
respondents that the one-year prescriptive period does not start to run until
the petition for reconsideration had been resolved by the insurer (1985), runs
counter to the doctrine.
The provision in the contract was pursuant to Sec. 63.
A condition, stipulation or agreement in any policy of insurance, limiting the
time for commencing an action thereunder to a period of less than one year
from the time when the cause of action accrues, is void.
3. Eagle star- The right of the insured to the payment of his loss accrues from
the happening of the loss. However, the cause of action in an insurance
contract does not accrue until the insured's claim is finally rejected by the
insurer. This is because before such final rejection there is no real necessity
for bringing suit.
The cause of action, then, started when the insurer denied his claim in the
first instance(1984). This rejection of a petition for reconsideration as
insisted by respondents wasnt the beginning of the cause of action.
Sec. 60. An open policy is one in which the value of the thing
insured is not agreed upon, but is left to be ascertained in case of
loss.
worth P3,000, is bound by this valuation in the absence of fraud on the part
of the insured. All statements of value are, of necessity, to a large extent
matters of opinion, and it would be outrageous to hold that the validity of all
valued policies must depend upon the absolute correctness of such
estimated value.
This is an appeal from the decision of the Court of First Instance of Albay,
dismissing an action for recovery of amount of fire insurance policy.
Paulino was the owner of the JUNIOR CAFE, BAKERY & GROCERY STORE
She accepted a fire insurance policy issued by the defendant and that on
April 30, 1952, the plaintiff wrote the defendant requesting cancellation of
the policy, which the latter received on May 10, 1952
The plaintiff did not return the policy or demanded for the return of the
proportionate premium and neither did the defendant offer to return the
premium
The property covered by the policy was destroyed by fire on August 16,
1952.
The defendant refused to make payment on plaintiff's claim, on the
ground that the policy was cancelled as of May 10, 1952.
Plaintiff contends in this appeal that her letter, dated April 30, 1952, was
a mere request or offer to cancel the policy and did not terminate the
same since it was not accompanied by the surrender of the policy for
cancellation.
collect the amount of the policy, because the unconditional return thereof
upon request of the company implied "a waiver of his right to treat the
policy as in full force and effect until the company paid or tendered to him
the unearned premium."
Decision affirmed.
Facts:
Bernardo Argente signed an application for joint insurance with his wife in
the sum of P2,000. The wife, Vicenta de Ocampo, signed for the same. All the
information contained in the applications was furnished the agent by
Bernardo Argente.
Argente was examined by Dr. Sta. Ana, a medical examiner for the West
Coast. The result was recorded in the Medical Examiner's Report, and with
the exception of the signature of Bernardo Argente, was in the hand-writing
of Doctor Sta. Ana. But the information or answers to the questions
contained on the face of the Medical Examiner's Report were furnished the
doctor by Argente.
Vicenta de Ocampo, wife of the plaintiff, was examined at her residence by
the same doctor.
The spouses submitted to West Coast Life an amended application,
increasing the amount to P15,000, and asked that the policy be dated May
15, 1925. The amended application was accompanied by the documents
entitled "Short Form Medical Report." In both of these documents appear
certain questions and answers.
A temporary policy for P15,000 was issued to Bernardo Argente and his wife
as of May 15, but it was not delivered until the first quarterly premium on the
policy was paid. More than thirty days had elapsed since the applicants were
examined. Each of them was required to file a certificate of health before the
policy was delivered.
Vicenta de Ocampo died of cerebral apoplexy. Argente presented a claim in
due form to the West Coast Life Insurance Co. for the payment of the sum of
P15,000. It was apparently disclosed that the answers given by the insured in
their medical examinations with regard to their health were untrue. West
Coastrefused to pay the claim and wrote Argente to the effect that the claim
was rejected due to fraud.
The trial court held the policy null and void, hence this appeal.
Issue: WON Argente and Ocampo were guilty of concealment and thereby
misled the insurer into accepting the risk?
Held: Yes. Petition dismissed.
Ratio:
Vicenta de Ocampo, in response to the question asked by the medical
examiner, answered no to "Have you ever consulted a physician for or have
you ever suffered from any ailment or disease of the brain or nervous
system?" She also answered none as to the question whether she
consumed alcohol of not.
To the question, "What physician or physicians, if any, not named above,
have you consulted or been treated by, within the last five years and for
what illness or ailment?" she answered "None."
But the facts show that she was taken to San Lazaro Hospital, her case was
diagnosed by the admitting physician as "alcoholism, moreover, she was
diagnosed with "phycho-neurosis."
Section 25 of the Insurance Code defined concealment as "a neglect to
communicate that which a party knows and ought to communicate."
The court held that the alleged concealment was not immaterial and
insufficient to avoid the policy. In an action on a life insurance policy where
the evidence conclusively shows that the answers to questions concerning
diseases were untrue, the truth of falsity of the answers become the
determining factor. If the true facts been disclosed by the assured, the
insurance would never have been granted.
Concealment must, in the absence of inquiries, be not only material, but
fraudulent, or the fact must have been intentionally withheld. If no inquiries
are made and no fraud or design to conceal enters into the concealment the
contract is not avoided.
The assurer is entitled to know every material fact of which the assured has
exclusive or peculiar knowledge, as well as all material facts which directly
tend to increase the hazard or risk which are known by the assured, or which
ought to be or are presumed to be known by him. And a concealment of such
facts vitiates the policy.
If the assured has exclusive knowledge of material facts, he should fully and
fairly disclose the same, whether he believes them material or not. The
determination of the point whether there has or has not been a material
concealment must rest largely in all cases upon the exact terms of the
contract.
Great Pacific Life v CA and Teodoro Cortez, G.R. No. L-57308, April
23, 1990
Issue: Whether the insured may claim the refund of the premium he has
paid
Ruling: The insured is entitled to the refund of the premium paid including
damages.
Basis: When the petitioner advised private respondent on June 1, 1973, four
months after he had paid the first premium, that his policy had never been in
force, and that he must pay another premium and undergo another medical
examination to make the policy effective, the petitioner committed a serious
breach of the contract of insurance.
Petitioner should have informed Cortez of the deadline for paying the first
premium before or at least upon delivery of the policy to him, so he could
have complied with what was needful and would not have been misled into
believing that his life and his family were protected by the policy, when
actually they were not. And, if the premium paid by Cortez was unacceptable
for being late, it was the company's duty to return it. By accepting his
premiums without giving him the corresponding protection, the company
acted in bad faith.
Sections 79, 81 and 82 of P.D. 612 of the Insurance Code of 1978 provide
when the insured is entitled to the return of premium paid.
Title 4
CONCEALMENT
Issue: WON Asian Crusader was deceived into entering the contract or in
accepting the risk at the rate of premium agreedupon because of insured's
representation?
Ratio:
Section 27 of the Insurance Law:
Sec. 27. Such party a contract of insurance must communicate to the other,
in good faith, all facts within his knowledge which are material to the
contract, and which the other has not the means of ascertaining, and as to
which he makes no warranty.
"Concealment exists where the assured had knowledge of a fact material to
the risk, and honesty, good faith, and fair dealing requires that he should
communicate it to the assurer, but he designedly and intentionally withholds
the same."
It has also been held "that the concealment must, in the absence of
inquiries, be not only material, but fraudulent, or the fact must have been
intentionally withheld."
Fraudulent intent on the part of the insured must be established to entitle
the insurer to rescind the contract. And as correctly observed by the lower
court, "misrepresentation as a defense of the insurer to avoid liability is an
'affirmative' defense. The duty to establish such a defense by satisfactory
and convincing evidence rests upon the defendant. The evidence before the
Court does not clearly and satisfactorily establish that defense."
It bears emphasis that Kwong Nam had informed the appellant's medical
examiner of the tumor. His statement that said tumor was "associated with
ulcer of the stomach" should be construed as an expression made in good
faith of his belief as to the nature of his ailment and operation.
While the information communicated was imperfect, the same was sufficient
to have induced appellant to make further inquiries about the ailment and
operation of the insured.
Section 32 of Insurance Law:
Section 32. The right to information of material facts maybe waived either by
the terms of insurance or by neglect to make inquiries as to such facts where
they are distinctly implied in other facts of which information is
communicated.
suffering
from
> Bernarda and her husband, filed an action for specific performance
against Sun Life. RTC ruled for Bernarda holding that the facts concealed by
the insured were made in good faith and under the belief that they need not
be disclosed. Moreover, it held that the health history of the insured was
immaterial since the insurance policy was "non-medical." CA affirmed.
Issue:
Whether or not the beneficiary can claim despite the concealment.
Held:
NOPE.
Section 26 of the Insurance Code is explicit in requiring a party to a contract
of insurance to communicate to the other, in good faith, all facts within his
knowledge which are material to the contract and as to which he makes no
warranty, and which the other has no means of ascertaining.
Materiality is to be determined not by the event, but solely by the probable
and reasonable influence of the facts upon the party to whom
communication is due, in forming his estimate of the disadvantages of the
proposed contract or in making his inquiries (The Insurance Code, Sec 31)
The terms of the contract are clear. The insured is specifically required to
disclose to the insurer matters relating to his health. The information which
the insured failed to disclose were material and relevant to the approval and
the issuance of the insurance policy. The matters concealed would have
definitely affected petitioner's action on his application, either by approving
it with the corresponding adjustment for a higher premium or rejecting the
same. Moreover, a disclosure may have warranted a medical examination of
the insured by petitioner in order for it to reasonably assess the risk involved
in accepting the application.
Thus, "good faith" is no defense in concealment.+ The insured's failure to
disclose the fact that he was hospitalized for two weeks prior to filing his
application for insurance, raises grave doubts about his bonafides. It appears
that such concealment was deliberate on his part.
Great Pacific v CA G.R. No. L-31845 April 30, 1979
J. De Castro
Facts:
Ngo Hing filed an application with the Great Pacific for a twenty-year
endowment policy in the amount of P50,000.00 on the life of his one-year old
daughter Helen. He supplied the essential data which petitioner Mondragon,
the Branch Manager, wrote on the form. The latter paid the annual premium
the sum of P1,077.75 going over to the Company, but he retained the
amount of P1,317.00 as his commission for being a duly authorized agent of
Pacific Life.
Upon the payment of the insurance premium, the binding deposit receipt
was issued Ngo Hing. Likewise, petitioner Mondragon handwrote at the
bottom of the back page of the application form his strong recommendation
for the approval of the insurance application. Then Mondragon received a
letter from Pacific Life disapproving the insurance application. The letter
stated that the said life insurance application for 20-year endowment plan is
not available for minors below seven years old, but Pacific Life can consider
the same under the Juvenile Triple Action Plan, and advised that if the offer
is acceptable, the Juvenile Non-Medical Declaration be sent to the company.
The non-acceptance of the insurance plan by Pacific Life was allegedly not
communicated by petitioner Mondragon to private respondent Ngo Hing.
Instead, on May 6, 1957, Mondragon wrote back Pacific Life again strongly
recommending the approval of the 20-year endowment insurance plan to
children, pointing out that since the customers were asking for such
coverage.
Helen Go died of influenza. Ngo Hing sought the payment of the proceeds of
the insurance, but having failed in his effort, he filed the action for the
recovery before the Court of First Instance of Cebu, which ruled against him.
Issues:
1. Whether the binding deposit receipt constituted a temporary contract of
the life insurance in question
2. Whether Ngo Hing concealed the state of health and physical condition of
Helen Go, which rendered void the policy
Issue:
WON Philam didnt have the right to rescind the contract of insurance as
rescission must allegedly be done during the lifetime of the insured within
two years and prior to the commencement of action.
Ratio:
The Insurance Code states in Section 48:
Whenever a right to rescind a contract of insurance is given to the insurer
by any provision of this chapter, such right must be exercised previous to the
commencement of an action on the contract.
After a policy of life insurance made payable on the death of the insured
shall have been in force during the lifetime of the insured for a period of two
years from the date of its issue or of its last reinstatement, the insurer
cannot prove that the policy is void ab initio or is rescindable by reason of
the fraudulent concealment or misrepresentation of the insured or hisagent.
MISREPRESENTATIONS
Form and when made
Sec. 36. A representation may be oral or written.
Sec. 37. A representation may be made at the time of, or before,
issuance of the policy.
Sec. 42. A representation must be presumed to refer to the date on
which the contract goes into effect.
Sec. 47. The provisions of this chapter apply as well to a
modification of a contract of insurance as to its original formation.
As to future
Sec. 39. A representation as to the future is to be deemed a
promise, unless it appears that it was merely a statement of belief
or expectation.
As to information
Sec. 43. When a person insured has no personal knowledge of a
fact, he may nevertheless repeat information which he has upon
the subject, and which he believes to be true, with the explanation
that he does so on the information of others; or he may submit the
information, in its whole extent, to the insurer; and in neither case
is he responsible for its truth, unless it proceeds from an agent of
the insured, whose duty it is to give the information.
Effects
Sec. 44. A representation is to be deemed false when the facts fail
to correspond with its assertions or stipulations.
Sec. 45. If a representation is false in a material point, whether
affirmative or promissory, the injured party is entitled to rescind
the contract from the time when the representation becomes
false. The right to rescind granted by this Code to the insurer is
waived by the acceptance of premium payments despite
knowledge of the ground for rescission. (As amended
by Batasang Pambansa Blg. 874).
As to age
Edillon v Manila Bankers Life G.R. No. L-34200 September 30, 1982
Facts:
Carmen O, Lapuz applied with Manila Bankers for insurance coverage against
accident and injuries. She gave the date of her birth as July 11, 1904. She
paid the sum of P20.00 representing the premium for which she was issued
the corresponding receipt. The policy was to be effective for 90 days.
During the effectivity, Carmen O. Lapuz died in a vehicular accident in the
North Diversion Road.
Petitioner Regina L. Edillon, a sister of the insured and the beneficiary in the
policy, filed her claim for the proceeds of the insurance. Her claim having
been denied, Regina L. Edillon instituted this action in the trial court.
The insurance corporation relies on a provision contained in the contract
excluding its liability to pay claims under the policy in behalf of "persons who
are under the age of sixteen (16) years of age or over the age of sixty (60)
years" They pointed out that the insured was over sixty (60) years of age
when she applied for the insurance coverage, hence the policy became void.
The trial court dismissed the complaint and ordered edillon to pay P1000.
The reason was that a policy of insurance being a contract of adhesion, it
was the duty of the insured to know the terms of the contract he or she is
entering into.
The insured could not have been qualified under the conditions stated in said
contract and should have asked for a refund of the premium.
Issue: Whether or not the acceptance by the insurance corporation of the
premium and the issuance of the corresponding certificate of insurance
should be deemed a waiver of the exclusionary condition of coverage stated
in the policy.
Held: Yes. Petition granted.
Ratio: The age of Lapuz was not concealed to the insurance company. Her
application clearly indicated her age of the time of filing the same to be
almost 65 years of age. Despite such information which could hardly be
in the subject policy are those of P30,000.00 with Malayan P50,000.00 with
South Sea and P25.000.00 with Victory.
The defense of fraud, in the form of non-declaration of co-insurances which
was not pleaded in the answer, was also not pleaded in the Motion to
Dismiss.
The trial court denied the respondents motion. Oriental filed another motion
to include additional evidence of the co-insurance which could amount to
fraud.
The trial court still made Oriental liable for P 61,000. The CA reversed the
trial court decision. Pacific Banking filed a motion for reconsideration of the
said decision of the respondent Court of Appeals, but this was denied for lack
of merit.
Issues:
1. WON unrevealed co-insurances Violated policy conditions No. 3
2. WON the insured failed to file the required proof of loss prior to court
action.
Held: Yes. Petition dismissed.
Ratio:
1. Policy Condition No. 3 explicitly provides:
3. The Insured shall give notice to the Company of any insurance already
effected, or which may subsequently be effected, covering any of the
property hereby insured, and unless such notice be given and the particulars
of such insurance or insurances be stated in or endorsed on this Policy by or
on behalf of the Company before the occurrence of any loss or damage, all
benefit under this policy shall be forfeited.
The insured failed to reveal before the loss three other insurances. Had the
insurer known that there were many co-insurances, it could have hesitated
or plainly desisted from entering into such contract. Hence, the insured was
guilty of clear fraud.
Concrete evidence of fraud or false declaration by the insured was furnished
by the petitioner itself when the facts alleged in the policy under clauses
"Co-Insurances Declared" and "Other Insurance Clause" are materially
different from the actual number of co-insurances taken over the subject
property.
As the insurance policy against fire expressly required that notice should be
given by the insured of other insurance upon the same property, the total
absence of such notice nullifies the policy.
Petitioner points out that Condition No. 3 in the policy in relation to the
"other insurance clause" supposedly to have been violated, cannot certainly
defeat the right of the petitioner to recover the insurance as
mortgagee/assignee. Hence, they claimed that the purpose for which the
endorsement or assignment was made was to protect the
mortgagee/assignee against any untoward act or omission of the insured. It
would be absurd to hold that petitioner is barred from recovering the
insurance on account of the alleged violation committed by the insured.
It is obvious that petitioner has missed all together the import of subject
mortgage clause which specifically provides:
Loss, if any, under this policy, shall be payable to the PACIFIC BANKING
CORPORATION Manila mortgagee/trustor as its interest may appear, it being
hereby understood and agreed that this insurance as to the interest of the
mortgagee/trustor only herein, shall not be invalidated by any act or neglect
except fraud or misrepresentation, or arsonof the mortgagor or
owner/trustee of the property insured; provided, that in case the mortgagor
or owner/ trustee neglects or refuses to pay any premium, the mortgagee/
trustor shall, on demand pay the same.
The paragraph clearly states the exceptions to the general rule that
insurance as to the interest of the mortgagee, cannot be invalidated; namely:
fraud, or misrepresentation or arson. Concealment of the aforecited coinsurances can easily be fraud, or in the very least, misrepresentation.
Undoubtedly, it is but fair and just that where the insured who is primarily
entitled to receive the proceeds of the policy has by its fraud and/or
misrepresentation, forfeited said right.
Petitioner further stressed that fraud which was not pleaded as a defense in
private respondent's answer or motion to dismiss, should be deemed to have
been waived. It will be noted that the fact of fraud was tried by express or at
least implied consent of the parties. Petitioner did not only object to the
introduction of evidence but on the contrary, presented the very evidence
that proved its existence.
2. Generally, the cause of action on the policy accrues when the loss occurs,
But when the policy provides that no action shall be brought unless the claim
is first presented extrajudicially in the manner provided in the policy, the
cause of action will accrue from the time the insurer finally rejects the claim
for payment
In the case at bar, policy condition No. 11 specifically provides that the
insured shall on the happening of any loss or damage give notice to the
company and shall within fifteen (15) days after such loss or damage deliver
to the private respondent (a) a claim in writing giving particular account as
to the articles or goods destroyed and the amount of the loss or damage and
(b) particulars of all other insurances, if any.
Twenty-four days after the fire did petitioner merely wrote letters to private
respondent to serve as a notice of loss. It didnt even furnish other
documents. Instead, petitioner shifted upon private respondent the burden of
fishing out the necessary information to ascertain the particular account of
the articles destroyed by fire as well as the amount of loss. Since the
required claim by insured, together with the preliminary submittal of relevant
documents had not been complied with, it follows that private respondent
could not be deemed to have finally rejected petitioner's claim and therefore
there was no cause of action.
It appearing that insured has violated or failed to perform the conditions
under No. 3 and 11 of the contract, and such violation or want of
performance has not been waived by the insurer, the insured cannot recover,
much less the herein petitioner.
The court was therefore asked to render judgment against the Great Eastern
Life Assurance Company, Ltd., and its general agent, West G. Smith, by
sentencing them to pay to the plaintiff the sum of P5,000, the value of policy
No. 5592, plus the sum of P1,000 for damages inflicted upon them, in
addition to the costs of the suit.
The demurrer filed to the foregoing complaint having been overruled,
counsel for the insurance company and for West G. Smith replied thereto,
admitting the allegations of the complaint with respect to the legal status of
the parties by denying all the rest, and setting forth in special defense that
the insurance policy issued in the name of Dominador [Albay] had been
obtained through fraud and deceit known and consented to by the interested
parties and is therefore completely illegal, void, and ineffective; wherefore he
prayed that the defendants be absolved from the complaint, with the costs
against the plaintiff.
Issue:WON the life insurance obtained is legal and valid or whether on the
contrary it was issued through fraud and deceit, and in such case, whether
the defendant, The Great Eastern Life Assurance Company, Ltd., is still under
obligation to pay the value thereof to the plaintiff.
Ruling: It appears from the record that the insured had knowledge of the
false replied contained in the two applications for insurance and knowing
permitted fraud to be practised upon the insurance company, for in his
acknowledgment and consent his mother-in-law was designated as the
beneficiary of the insurance, despite the fact that he had children and his
mother was still living. In the present case the fraud consisted in the fact
that a healthy and robust person was substituted in place of insured invalid
when Dr. Vidal made the physical examination of the one who seeking to be
insured, for the real person who desired to be insured and who ought to have
been examined was in bad health on and before the date of executing the
insurance contract of which facts the insured Dominador Albay and the
insurance agent Ponciano Remigio had full knowledge.
It is therefore proven that the signatures on the insurance applications
reading "Dominador Albay" are false and forged; that the person who
presented himself to Dr. Vidal to be examined was not the real Dominador
Albay, but another different person; that at the time of the application for
insurance and the issuance of the policy which is the subject matter of this
suit the real Dominador Albay was informed of all those machinations,
wherefore it is plain that the insurance contract between the defendant and
Dominador Albay is null and void because it is false, fraudulent and illegal.
Article 1269 of the Civil Code states:
There is deceit when by words or insidious machinations on the
part of one of the contracting parties the other is induced to execute a
contract which without them he would not have made.
It is essential to the nature of the deceit, to which the foregoing article
refers, that said deceit be prior to or contemporaneous with the consent that
is a necessary requisite for perfecting the contract, but not that it may have
occurred or happened thereafter. A contract is therefore deceitful, for the
execution whereof the consent of one of the parties has been secured by
means of fraud, because he was persuaded by words or insidious
machinations, statements or false promises, and a defective consent wrung
from him, even though such do not constitute estafa or any other criminal
subject to the penal law.
With this array of circumstantial evidence derived from facts duly
proven as a result of the present suit, we get, if not a moral certainly, at least
a full conviction that when Castor Garcia presented himself to be examined
by the physician Vidal in place of Dominador Albay, serious deceit occurred
in perfecting the insurance contract, for had the agent of the company not
been deceived it would not have granted the insurance applied for by Albay,
nor would it have executed the contract by virtue of whereof payment is
claimed of the value of policy obtained through fraud; and consequently on
such assumptions it is improper, nor is it permitted by the law, to order
collection of the amount claimed.
In a contract executed with the requisites fixed in article 1261, one of the
contracting parties may have given his consent through error, violence,
intimidation, or deceit, and in any of such cases the contract is void, even
though, despite this nullity, no crime was committed. (Article 1265, Civil
Code.) There may not have been estafa in the case at bar, but it was
conclusively demonstrated by the trial that deceit entered into the insurance
contract, fulfillment whereof is claimed, and therefore the conclusions
reached by the court in the judgment it rendered in the criminal proceedings
for estafa do not affect this suit, nor do they influence the decision proper
herein, nor can they produce in the present suit, over the exception of the
defendant, the force of res adjudicata.
WARRANTIES
Facts:Qua owned 4 warehouses used for the storage of copra and hemp.
They were insured with the Law Union.
Fire broke out and completely destroyed 3 bodegas. The plaintiff submitted
claims totalling P398,562.81. The Insurance Company resisted payment on
the grounds that the fire had been deliberately caused by the insured or by
other persons in connivance with him.
Que Chee Gan and his brother were tried for arson, but were acquitted by
the trial court. As regards the insurance claim, the trial court ruled in favor
of Qua and entitled him to recover more than Php 300,000 for indemnities
from the insurance company. Hence, the company appealed to the SC.
In its first assignment of error, the insurance company alleged that the trial
Court should have held that the policies were avoided for breach of warranty.
The contract noted that fire hydrants were required in a particular
measurement of space (every 150 feet). Hence, they argued that since the
bodegas insured had an external wall perimeter of 500 meters, the appellee
should have 11 fire hydrants in the compound, and that he actually had only
2, with a further pair.
Issues:
1. WON the insurance company can void the policies it had issued
2. WON the insured violated the "Hemp Warranty" provisions of the policy
against the storage of gasoline
3. WON the insured planned the destruction of the bodega
action to recover for a loss thereafter occurring and at the same time treat it
as valid for the purpose of earning and collecting further premiums.
Moreover, taking into account the well known rule that ambiguities or
obscurities must be strictly interpreted against the party that caused them,
the "memo of warranty" invoked by appellant bars the latter from
questioning the existence of the appliances called for in the insured premises
2. The ambiguity must be held strictly against the insurer and liberally in
favor of the insured, specially to avoid a forfeiture. So long as insurance
companies insist upon the use of ambiguous, intricate and technical
provisions, which conceal rather than frankly disclose, their own intentions,
the courts must, in fairness to those who purchase insurance, construe
everyambiguity in favor of the insured.
Appellee admitted that there were 36 cans of gasoline in the building
designed. It However, gasoline is not specifically mentioned among the
prohibited articles listed in the so-called "hemp warranty." The cause relied
upon by the insurer speaks of "oils", and is uncertain because, "Oils" usually
mean "lubricants" and not gasoline or kerosene.
If the company intended to rely upon a condition of that character, it ought
to have been plainly expressed in the policy.
The contract of insurance is one of perfect good faith not for the
insured alone, but equally so for the insurer; in fact, it is mere so for the
latter, since its dominant bargaining position carries with it stricter
responsibility.
Also, the gasoline kept in Bodega No. 2 was only incidental to his business,
being no more than a customary 2 day's supply for the five or six motor
vehicles used for transporting of the stored merchandise. "It is well settled
that the keeping of inflammable oils on the premises though prohibited by
the policy does not void it if such keeping is incidental to thebusiness."
3. It was unlikely that Qua burned the warehouse to defraud the company
because he had the resources to pay off the National Bank in a short time.
Also, no motive appears for attempt to defraud the insurer. While the
acquittal of the insured in the arson case is not res judicata on the present
civil action, the insurer's evidence, to judge from the decision in the criminal
case, is practically identical in both cases and must lead to the same result,
since the proof to establish the defense of connivance at the fire in order to
defraud the insurer "cannot be materially less convincing than that required
in order to convict the insured of the crime of arson."
As to the defense that the burned bodegas could not possibly have contained
the quantities of copra and hemp stated in the fire claims, the insurer relied
on its adjuster investigator who examined the premises during and after the
fire. His testimony, however, was based on inferences from the photographs
and traces found after the fire, and must yield to the contradictory testimony
of those who actually saw the contents of the bodegas shortly before the fire,
while inspecting them for the mortgagee Bank.
Young vs. Midland Textile insurance company
Facts: The purpose of the present action is to recover the sum of P3,000
upon an insurance policy. The lower court rendered a judgment in favor of
the plaintiff and against the defendant for the sum of P2,708.78, and costs.
From that judgment the defendant appealed to this court.
The undisputed facts upon which said action is based are as follows:
The plaintiff occupied a building at '321 Calle Claveria, as a residence
and bodega (storehouse). On the 29th of May, 1912, the defendant, in
consideration of the payment of a premium of P60, entered into a contract of
insurance with the plaintiff promising to pay to the plaintiff the sum of
P3,000, in case said residence and bodega and contents should be destroyed
by fire. One of the conditions of said contract was that no hazardous goods
be stored or kept in the building.
On the 4th or 5th of February, 1913, the plaintiff placed in said
residence and bodega three boxes which belonged to him and which were
filled with fireworks for the celebration of the Chinese new year.
On the 18th day of March, 1913, said residence and bodega and the
contents thereof were partially destroyed. Fireworks were found in a part of
the building not destroyed by the fire; that they in no way contributed to the
fire, or to the loss occasioned thereby.
Issue: Whether or not the placing of said fireworks in the building insured,
under the conditions above enumerated, they being "hazardous goods," is a
violation of the terms of the contract of insurance.
Held: Yes.
The word "stored" has been defined to be a deposit in a store or
warehouse for preservation or safe keeping; to put away for future use,
especially for future consumption; to place in a warehouse or other place of
deposit for safe keeping. Said definition does not include a deposit in a store,
in small quantities, for daily use. "Daily use" precludes the idea of deposit for
preservation or safe keeping, as well as a deposit for future consumption or
safe keeping.
Form
Sec. 69. No particular form of words is necessary to create a
warranty.
Facts: Respondent Oliva Yap was the owner of a store in a two-storey building
where she sold shopping bags and footwear. Chua Soon Poon, her son-in-law,
was in charge of the store.
Yap took out a Fire Insurance Policy No. 4216 from Pioneer Insurance with a
value of P25,000.00 covering her stocks, office furniture, fixtures and fittings.
Among the conditions in the policy executed by the parties are the following:
unless such notice be given and the particulars of such insurance or
insurances be stated in, or endorsed on this Policy by or on behalf of the
Company before the occurrence of any loss or damage, all benefits under
this Policy shall be forfeited Any false declaration or breach or this
condition will render this policy null and void.
Another insurance policy for P20,000.00 issued by Great American covering
the same properties. The endorsement recognized co-insurance by
Northwest for the same value.
Oliva Yap took out another fire insurance policy for P20,000.00 covering the
same properties from the Federal Insurance Company, Inc., which was
procured without notice to and the written consent of Pioneer.
A fire broke out in the building, and the store was burned. Yap filed an
insurance claim, but the same was denied for a breach.
Oliva Yap filed a case for payment of the face value of her fire insurance
policy. The insurance company refused to pay because she never informed
Pioneer of another insurer. The trial court decided in favor of Yap. The CA
affirmed.
The conformity of the insured to the terms of the policy is implied with his
failure to disagree with the terms of the contract.
Since Sy, was a businessman, it was incumbent upon him to read the
contracts.
Pioneer Insurance and Surety Corporation vs. Yap- The obvious purpose of
the aforesaid requirement in the policy is to prevent over-insurance and thus
avert the perpetration of fraud. The public, as well as the insurer, is
interested in preventing the situation in which a fire would be profitable to
the insured.
Also, policy condition 15 was used. It stated: 15.. . . if any false declaration
be made or used in support thereof, . . . all benefits under this Policy shall be
forfeited . . .
As for condition number 27, the stipulation read:
27. Action or suit clause. If a claim be made and rejected and an action or
suit be not commenced either in the Insurance Commission or any court of
competent jurisdiction of notice of such rejection, or in case
of arbitration taking place as provided herein, within twelve (12) months
after due notice of the award made by the arbitrator or arbitrators or umpire,
then the claim shall for all purposes be deemed to have been abandoned and
shall not thereafter be recoverable hereunder.
This is regarding Sys claim for one of the companies. Recovery was filed in
court by petitioners only on January 31, 1984, or after more than one (1)
year had elapsed from petitioners' receipt of the insurers' letter of denial on
November 29, 1982. This made it void.
MEANING OF WARRANTY CONDITION
PRUDENTIAL GUARANTEE and ASSURANCE INC., vs. TRANS-ASIA
SHIPPING
Facts: TRANS-ASIA is the owner of the vessel M/V Asia Korea. In consideration
of payment of premiums, PRUDENTIAL insured M/V Asia Korea for
loss/damage of the hull and machinery arising from perils, inter alia, of fire
and explosion for the sum of P40 Million, beginning from the period of July 1,
1993 up to July 1, 1994.
On October 25, 1993, while the policy was in force, a fire broke out while
[M/V Asia Korea was] undergoing repairs at the port of Cebu. On October 26,
1993 TRANS-ASIA filed its notice of claim for damage sustained by the vessel
without interest and without prejudice to the final evaluation of the claim,
including the amounts of P500,000.00, for survey fees and P200,000.00,
representing attorneys fees.
Trial court ruled in favor of Prudential. It ruled that a determination of the
parties liabilities hinged on whether TRANS- ASIA violated and breached
the policy conditions
on WARRANTED VESSEL CLASSED AND CLASS
MAINTAINED. It interpreted the provision to mean that TRANS-ASIA is
required to maintain the vessel at a certain class at all times pertinent during
the life of the policy. According to the court a quo, TRANS-ASIA failed to prove
compliance of the terms of the warranty, the violation thereof entitled
PRUDENTIAL to rescind the contract.
The court of appeals reversed the decision. It ruled that PRUDENTIAL, as the
party asserting the non-compensability of the loss had the burden of proof to
show that TRANS-ASIA breached the warranty, which burden it failed to
discharge. PRUDENTIAL cannot rely on the lack of certification to
the effect that TRANS-ASIA was CLASSED AND CLASS MAINTAINED
as its sole basis for reaching the conclusion that the warranty was breached.
It opined that the lack of a certification does not necessarily mean that
the warranty was breached by TRANS-ASIA. Instead, it considered
PRUDENTIALs admission that at the time the insurance contract was entered
into between the parties, the vessel was properly classed by Bureau Veritas,
a classification society recognized by the industry. It similarly gave weight to
the fact
that
it
was
the
responsibility
of
Richards
Hogg
International
(Phils.)
Inc.,
the
average
adjuster
hired
by
PRUDENTIAL, to secure a copy of such certification to support its conclusion
that mere absence of a certification does not warrant denial of TRANS-ASIAs
claim under the insurance policy.
Issue: WON Trans-Asia breached the warranty stated in the insurance policy,
thus absolving Prudential from paying Trans-Asia.
Ruling: No.
Rationale:
As found by the Court of Appeals and as supported by the records, Bureau
Veritas is a classification society recognized in the marine industry. As it is
undisputed that TRANS-ASIA was properly classed at the time the contract of
insurance was entered into, thus, it becomes incumbent upon PRUDENTIAL
to show evidence that the status of TRANS-ASIA as being properly CLASSED
by Bureau Veritas had shifted in violation of the warranty. Unfortunately,
PRUDENTIAL failed to support the allegation.
The lack of a certification in PRUDENTIALs records to the effect that TRANSASIAs "M/V Asia Korea" was CLASSED AND CLASS MAINTAINED at the time of
the occurrence of the fire cannot be tantamount to the conclusion that
TRANS-ASIA in fact breached the warranty contained in the policy.
It was likewise the responsibility of the average adjuster, Richards Hogg
International (Phils.), Inc., to secure a copy of such certification, and the
alleged breach of TRANS-ASIA cannot be gleaned from the average adjusters
survey report, or adjustment of particular average per "M/V Asia Korea" of
the 25 October 1993 fire on board.
The Supreme Court is not unmindful of the clear language of Sec. 74 of the
Insurance Code which provides that, "the violation of a material warranty or
other material provision of a policy on the part of either party thereto,
entitles the other to rescind." It is generally accepted that "a warranty is a
statement or promise set forth in the policy, or by reference incorporated
therein, the untruth or non-fulfillment of which in any respect, and without
reference to whether the insurer was in fact prejudiced by such untruth or
non- fulfillment, renders the policy voidable by the insurer."
However, it is similarly indubitable that for the breach of a warranty to avoid
a policy, the same must be duly shown by the party alleging the same.
We cannot sustain an allegation that is unfounded. Consequently,
PRUDENTIAL, not having shown that TRANS-ASIA breached the warranty
condition, CLASSED AND CLASS MAINTAINED, it remains that TRANS-ASIA
must be allowed to recover its rightful claims on the policy.
Assuming arguendo that TRANS-ASIA violated the policy condition on
WARRANTED VESSEL CLASSED AND CLASS MAINTAINED, PRUDENTIAL made
a valid waiver of the same.
PRUDENTIAL can be deemed to have made a valid waiver of TRANS-ASIAs
breach of warranty as alleged. Because after the loss, Prudential renewed
the insurance policy of Trans-Asia for two (2) consecutive years, from noon of
01 July 1994 to noon of 01 July 1995, and then again until noon of 01 July
1996. This renewal is deemed a waiver of any breach of warranty.
PRUDENTIAL, in renewing TRANS-ASIAs insurance policy for two consecutive
years after the loss covered by Policy No. MH93/1363, was considered to
have waived TRANS-ASIAs breach of the subject warranty, if any. Breach of a
warranty or of a condition renders the contract defeasible at the option of
the insurer; but if he so elects, he may waive his privilege and power to
rescind by the mere expression of an intention so to do. In that event his
liability under the policy continues as before. There can be no clearer
intention of the waiver of the alleged breach than the renewal of the policy
the contract has been terminated, by a violation of its terms on the part of
the insured, there can be no recovery. Compliance with the terms of the
contract is a condition precedent to the right of recovery. Courts cannot
make contracts for the parties. While contracts of insurance are construed
most favorably to the insured yet they must be construed according to the
sense and meaning of the terms which the parties themselves have used.
Astute and subtle distinctions should not be permitted, when the language of
the contract is plain and unambiguous. Such distinctions tend to bring the
law itself into disrepute.
The judgment of the lower court is revoked and the defendant is
relieved from any responsibility under said complaint, and, without any
finding as to costs.