Insurance Canilang ToEnriquez Part of W7andW8 Assigned - Cases

Insurance_2019_Digest_Canilang to Enriquez_part of week7 and 8 1
WEEK 7 “(d) Those which prove or tend to prove the existence of a risk
excluded by a warranty, and which are not otherwise material; and
D. Concealment
(Section 26-35, IC) “(e) Those which relate to a risk excepted from the policy and which
are not otherwise material.
SEC. 26. A neglect to communicate that which a party knows and
ought to communicate, is called a concealment. SEC. 31. Materiality is to be determined not by the event, but solely
by the probable and reasonable influence of the facts upon the party
SEC. 27. A concealment whether intentional or unintentional entitles to whom the communication is due, in forming his estimate of the
the injured party to rescind a contract of insurance. disadvantages of the proposed contract, or in making his inquiries.
SEC. 28. Each party to a contract of insurance must communicate to SEC. 32. Each party to a contract of insurance is bound to know all
the other, in good faith, all facts within his knowledge which are the general causes which are open to his inquiry, equally with that of
material to the contract and as to which he makes no warranty, and the other, and which may affect the political or material perils
which the other has not the means of ascertaining. contemplated; and all general usages of trade.
SEC. 29. An intentional and fraudulent omission, on the part of one SEC. 33. The right to information of material facts may be waived,
insured, to communicate information of matters proving or tending either by the terms of insurance or by neglect to make inquiry as to
to prove the falsity of a warranty, entitles the insurer to rescind. such facts, where they are distinctly implied in other facts of which
information is communicated.
SEC. 30. Neither party to a contract of insurance is bound to
communicate information of the matters following, except in answer SEC. 34. Information of the nature or amount of the interest of one
to the inquiries of the other: insured need not be communicated unless in answer to an inquiry,
except as prescribed by Section 51.
“(a) Those which the other knows;
SEC. 35. Neither party to a contract of insurance is bound to
“(b) Those which, in the exercise of ordinary care, the other ought to communicate, even upon inquiry, information of his own judgment
know, and of which the former has no reason to suppose him upon the matters in question.
ignorant;
“(c) Those of which the other waives communication;
Agency_Week6_cases Page 1 of 33
CASES: Vicenta de Ocampo died of cerebral apoplexy. Argente presented a

claim in due form to the West Coast Life Insurance Co. for the
Argente v West Coast Life, GR L-24899, 9 March 1928 payment of the sum of P15,000. It was apparently disclosed that the
(extracted from compiled cases_week2-6) answers given by the insured in their medical examinations with
Facts: regard to their health were untrue. West Coastrefused to pay the
Bernardo Argente signed an application for joint insurance with his claim and wrote Argente to the effect that the claim was rejected due
wife in the sum of P2,000. The wife, Vicenta de Ocampo, signed for to fraud.
the same. All the information contained in the applications was
furnished the agent by Bernardo Argente. The trial court held the policy null and void, hence this appeal.
Issue: WON Argente and Ocampo were guilty of concealment and
Argente was examined by Dr. Sta. Ana, a medical examiner for the thereby misled the insurer into accepting the risk?
West Coast. The result was recorded in the Medical Examiner's
Report, and with the exception of the signature of Bernardo Argente, Held:
was in the hand-writing of Doctor Sta. Ana. But the information or Yes. Petition dismissed.
answers to the questions contained on the face of the Medical
Examiner's Report were furnished the doctor by Argente. Ratio:
Vicenta de Ocampo, in response to the question asked by the medical
Vicenta de Ocampo, wife of the plaintiff, was examined at her examiner, answered no to "Have you ever consulted a physician for
residence by the same doctor. or have you ever suffered from any ailment or disease of the brain
or nervous system?" She also answered “none” as to the question
The spouses submitted to West Coast Life an amended application, whether she consumed alcohol of not.
increasing the amount to P15,000, and asked that the policy be dated
May 15, 1925. The amended application was accompanied by the To the question, "What physician or physicians, if any, not named
documents entitled "Short Form Medical Report." In both of these above, have you consulted or been treated by, within the last five
documents appear certain questions and answers. years and for what illness or ailment?" she answered "None."
A temporary policy for P15,000 was issued to Bernardo Argente and But the facts show that she was taken to San Lazaro Hospital, her
his wife as of May 15, but it was not delivered until the first quarterly case was diagnosed by the admitting physician as "alcoholism”,
premium on the policy was paid. More than thirty days had elapsed moreover, she was diagnosed with "phycho-neurosis."
since the applicants were examined. Each of them was required to
file a certificate of health before the policy was delivered. 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 Great Pacific Life v CA, GR L-31845, 30 April 1979
insufficient to avoid the policy. In an action on a life insurance policy (extracted from compiled cases_week2-6)
where the evidence conclusively shows that the answers to questions Facts:
concerning diseases were untrue, the truth of falsity of the answers Ngo Hing filed an application with the Great Pacific for a twenty-year
become the determining factor. If the true facts been disclosed by endowment policy in the amount of P50,000.00 on the life of his one-
the assured, the insurance would never have been granted. year old daughter Helen. He supplied the essential data which
petitioner Mondragon, the Branch Manager, wrote on the form. The
Concealment must, in the absence of inquiries, be not only material, latter paid the annual premium the sum of P1,077.75 going over to
but fraudulent, or the fact must have been intentionally withheld. If the Company, but he retained the amount of P1,317.00 as his
no inquiries are made and no fraud or design to conceal enters into commission for being a duly authorized agent of Pacific Life.
the concealment the contract is not avoided. Upon the payment of the insurance premium, the binding deposit
receipt was issued Ngo Hing. Likewise, petitioner Mondragon
The assurer is entitled to know every material fact of which the handwrote at the bottom of the back page of the application form his
assured has exclusive or peculiar knowledge, as well as all material strong recommendation for the approval of the insurance application.
facts which directly tend to increase the hazard or risk which are Then Mondragon received a letter from Pacific Life disapproving the
known by the assured, or which ought to be or are presumed to be insurance application. The letter stated that the said life insurance
known by him. And a concealment of such facts vitiates the policy. application for 20-year endowment plan is not available for minors
If the assured has exclusive knowledge of material facts, he should below seven years old, but Pacific Life can consider the same under
fully and fairly disclose the same, whether he believes them material the Juvenile Triple Action Plan, and advised that if the offer is
or not. The determination of the point whether there has or has not acceptable, the Juvenile Non-Medical Declaration be sent to the
been a material concealment must rest largely in all cases upon the company.
exact terms of the contract.
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: The deposit paid by private respondent shall have to be refunded

1. Whether the binding deposit receipt constituted a temporary by Pacific Life.
contract of the life insurance in question
2. Ngo Hing had deliberately concealed the state of health of his
2. Whether Ngo Hing concealed the state of health and physical daughter Helen Go. When he supplied data, he was fully aware
condition of Helen Go, which rendered void the policy that his one-year old daughter is typically a mongoloid child. He
withheld the fact material to the risk insured.
Held:
No. Yes. Petition dismissed. “The contract of insurance is one of perfect good faith uberrima
fides meaning good faith, absolute and perfect candor or openness
Ratio: and honesty; the absence of any concealment or demotion,
1. The receipt was intended to be merely a provisional insurance however slight.”
contract. Its perfection was subject to compliance of the following
conditions: (1) that the company shall be satisfied that the The concealment entitles the insurer to rescind the contract of
applicant was insurable on standard rates; (2) that if the company insurance.
does not accept the application and offers to issue a policy for a
different plan, the insurance contract shall not be binding until the
applicant accepts the policy offered; otherwise, the deposit shall
be refunded; and (3) that if the company disapproves the
application, the insurance applied for shall not be in force at any
time, and the premium paid shall be returned to the applicant.
The receipt is merely an acknowledgment that the latter's branch

office had received from the applicant the insurance premium and
had accepted the application subject for processing by the
insurance company. There was still approval or rejection the same
on the basis of whether or not the applicant is "insurable on
standard rates." Since Pacific Life disapproved the insurance
application of respondent Ngo Hing, the binding deposit receipt in
question had never become in force at any time. The binding
deposit receipt is conditional and does not insure outright. This
was held in Lim v Sun.
Saturnino v Philippine American Life, GR L-16163, 28 The question to determine is: Are the facts then falsely represented
February 1963 material? The Insurance Law provides that “materiality is to be determined not
(extracted from compiled cases_week2-6) by the event, but solely by the probable and reasonable influence of the facts
Facts: upon the party to whom the communication is due, in forming his estimate of
> 2 months prior to the insurance of the policy, Saturnino was operated on for the proposed contract, or making his inquiries.
cancer, involving complete removal of the right breast, including the pectoral
muscles and the glands, found in the right armpit. The contention of appellants is that the facts subject of the representation was
not material in view of the non-medical nature of the insurance applied for,
> Notwithstanding the fact of her operation, Saturnino did not make a disclosure which does away with the usual requirement of medical examination before the
thereof in her application for insurance. policy is issued. The contention is without merit. If anything, the waiver of
medical examination renders even more material the information required of
> She stated therein that she did not have, nor had she ever had, among others the applicant concerning previous condition of health and diseases suffered,
listed in the application, cancer or other tumors; that she had not consulted any for such information necessarily constitutes an important factor which the
physician, undergone any operation or suffered any injury within the preceding insurer takes into consideration in deciding whether to issue the policy or not.
5 years. Appellants also contend that there was no fraudulent concealment of the truth
inasmuch as the insured herself did not know, since her doctor never told her,
> She also stated that she had never been treated for, nor did she ever have that the disease for which she had been operated on was cancer. In the first
any illness or disease peculiar to her sex, particularly of the breast, ovaries, place, concealment of the fact of the operation itself was fraudulent, as there
uterus and menstrual disorders. could not have been any mistake about it, no matter what the ailment.
> The application also recited that the declarations of Saturnino constituted a Secondly, in order to avoid a policy, it is not necessary to show actual fraud on
further basis for the issuance of the policy. the part of the insured. In this jurisdiction, concealment, whether intentional or
unintentional entitled the insurer to rescind the contract of insurance,
Issue: concealment being defined as “negligence to communicate that which a party
Whether or not the insured made such false representation of material facts as knows and ought to communicate.” The basis of the rule vitiating the contract
to avoid the policy. in cases of concealment is that it misleads or deceives the insurer into
accepting the risk, or accepting it at a rate of premium agreed upon. The
Held: insurer, relying upon the belief that the insured will disclose every material fact
YES. within his actual or presumed knowledge, is misled into a belief that the
There can be no dispute that the information given by her in the application for circumstances withheld does not exist, and he is thereby induced to estimate
insurance was false, namely, that she never had cancer or tumors or consulted the risk upon a false basis that it does not exist.
any physician or undergone any operation within the preceding period of 5
years.
Canilang v CA and Great Pacific Life, GR 92492,17 June 1993 Held:

Facts: SC took note of the fact that Canilang failed to disclose that hat he
Canilang consulted Dr. Claudio and was diagnosed as suffering from had twice consulted Dr. Wilfredo B. Claudio who had found him to be
"sinus tachycardia." Mr. Canilang consulted the same doctor again on suffering from "sinus tachycardia" and "acute bronchitis. Under the
3 August 1982 and this time was found to have "acute bronchitis." relevant provisions of the Insurance Code, the information concealed
must be information which the concealing party knew and "ought to
On the next day, 4 August 1982, Canilang applied for a "non-medical" [have] communicate[d]," that is to say, information which was
insurance policy with Grepalife naming his wife, as his "material to the contract.
beneficiary. Canilang was issued ordinary life insurance with the face
value of P19,700. The information which Canilang failed to disclose was material to the
ability of Grepalife to estimate the probable risk he presented as a
On 5 August 1983, Canilang died of "congestive heart failure," subject of life insurance. Had Canilang disclosed his visits to his
"anemia," and "chronic anemia." The wife as beneficiary, filed a doctor, the diagnosis made and the medicines prescribed by such
claim with Grepalife which the insurer denied on the ground that the doctor, in the insurance application, it may be reasonably assumed
insured had concealed material information from it. that Grepalife would have made further inquiries and would have
probably refused to issue a non-medical insurance policy or, at the
Vda Canilang filed a complaint with the Insurance Commissioner very least, required a higher premium for the same coverage.
against Grepalife contending that as far as she knows her husband
was not suffering from any disorder and that he died of kidney The materiality of the information withheld by Canilang from
disorder. Grepalife did not depend upon the state of mind of Jaime Canilang.
A man's state of mind or subjective belief is not capable of proof in
Grepalife was ordered to pay the widow by the Insurance our judicial process, except through proof of external acts or failure
Commissioner holding that there was no intentional concealment on to act from which inferences as to his subjective belief may be
the Part of Canilang and that Grepalife had waived its right to inquire reasonably drawn. Neither does materiality depend upon the actual
into the health condition of the applicant by the issuance of the policy or physical events which ensue. Materiality relates rather to the
despite the lack of answers to "some of the pertinent questions" in "probable and reasonable influence of the facts" upon the party to
the insurance application. CA reversed. whom the communication should have been made, in assessing the
risk involved in making or omitting to make further inquiries and in
Issue: accepting the application for insurance; that "probable and
Whether or not Grepalife is liable. reasonable influence of the facts" concealed must, of course, be
determined objectively, by the judge ultimately.
SC found it difficult to take seriously the argument that Grepalife had Petitioner discovered that two weeks prior to his application for
waived inquiry into the concealment by issuing the insurance policy insurance, the insured was examined and confined at the Lung Center
notwithstanding Canilang's failure to set out answers to some of the of the Philippines, where he was diagnosed for renal failure. During
questions in the insurance application. Such failure precisely his confinement, the deceased was subjected to urinalysis tests.
constituted concealment on the part of Canilang. Petitioner's
argument, if accepted, would obviously erase Section 27 from the Bernarda Bacani and her husband filed an action for specific
Insurance Code of 1978. performance against petitioner with the RTC. The court ruled in favor
of the spouses and ordered Sunlife to pay P100,000.00.
Sun Life v Bacani, GR 105135, 22 June 1995 In ruling for private respondents, the trial court concluded that the
Facts: facts concealed by the insured were made in good faith and under a
Robert John B. Bacani procured a life insurance contract for himself belief that they need not be disclosed. The court also held that the
from Sunlife. He was issued a policy for P100,000.00, with double medical history was irrelevant because it wasn’t medical insurance.
indemnity in case of accidental death. The designated beneficiary was
his mother, Bernarda Bacani. The Court of Appeals affirmed the decision of the trial court. The
appellate court ruled that petitioner cannot avoid its obligation by
The insured died in a plane crash. Respondent Bernarda Bacani filed claiming concealment because the cause of death was unrelated to
a claim with petitioner, seeking the benefits of the insurance policy the facts concealed by the insured. Petitioner's motion for
taken by her son. Petitioner conducted an investigation and its reconsideration was denied. Hence, this petition.
findings prompted it to reject the claim.
Issue:
Sunlife informed Bacani that the insured did not disclose material WON the insured was guilty of misrepresentation which made the
facts relevant to the issuance of the policy, thus rendering the contract void.
contract of insurance voidable. A check representing the total
premiums paid in the amount of P10,172.00 was attached to said Held:
letter. Yes. Petition dismissed.
Petitioner claimed that the insured gave false statements in his Ratio:
application. The deceased answered claimed that he consulted a Dr. Section 26 of The Insurance Code required a party to a contract of
Raymundo of the Chinese General Hospital for cough and flu insurance to communicate to the other, in good faith, all facts within
complications. The other questions were answered in the negative. 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.
“A neglect to communicate that which a party knows and ought to Saturnino v. Philippine American Life Insurance " . . . the waiver of a
communicate, is called concealment.” medical examination [in a non-medical insurance contract] renders
even more material the information required of the applicant
“Materiality is to be determined not by the event, but solely by the concerning previous condition of health and diseases suffered, for
probable and reasonable influence of the facts upon the party to such information necessarily constitutes an important factor which
whom communication is due, in forming his estimate of the the insurer takes into consideration in deciding whether to issue the
disadvantages of the proposed contract or in making his inquiries.” policy or not . . . "
The terms of the contract are clear. The insured is specifically Anent the finding that the facts concealed had no bearing to the cause
required to disclose to the insurer matters relating to his health. of death of the insured, it is well settled that the insured need not die
of the disease he had failed to disclose to the insurer. It is sufficient
The information which the insured failed to disclose were material that his non-disclosure misled the insurer in forming his estimates of
and relevant to the approval and issuance of the insurance policy. the risks of the proposed insurance policy or in making inquiries as
The matters concealed would have definitely affected petitioner's held in Henson.
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 Yu Pang Cheng v CA, GR L-12465, 29 May 1959
examination of the insured by petitioner in order for it to reasonably Facts:
assess the risk involved in accepting the application. Yu Pang Eng submitted application for insurance consisting of the
medical declaration made by him to the medical examiner and the
Vda. de Canilang v. Court of Appeals- materiality of the information report. Yu then paid the premium in the sum of P591.70.
withheld does not depend on the state of mind of the insured. Neither
does it depend on the actual or physical events which ensue. The insured, in his application for insurance, said “no” to ever having
stomach disease, cancer, and fainting-spells. He also claimed to not
“Good faith" is no defense in concealment. The insured's failure to have consulted a physician regarding such diseases.
disclose the fact that he was hospitalized raises grave doubts about
his eligibility. Such concealment was deliberate on his part. After submitting the form, he entered the hospital where he
complained of dizziness, anemia, abdominal pains and tarry stools.
The argument, that petitioner's waiver of the medical examination of He was found to have peptic ulcer.
the insured debunks the materiality of the facts concealed, is
untenable. The insured entered another hospital for medical treatment but he
died of "infiltrating medullary carcinoma, Grade 4, advanced cardiac
and of lesser curvature, stomach metastases spleen."
Yu Pang Cheng aimed to collect P10,000.00 on life of one Yu Pang Under the law, a neglect to communicate that which a party knows
Eng from an insurance company. The company set up the defense and ought to communicate, is called concealment. This entitles the
that the insured was guilty of misrepresentation and concealment of insurer to rescind the contract. The insured is required to
material facts. They subsequently refused to give the indemnity. communicate to the insurer all facts within his knowledge which are
material to the contract and which the other party has not the means
The trial court rendered judgment ordering defendant to pay plaintiff of ascertaining. The materiality is to be determined not by the event
the sum of P10,000.00, plus P2,000.00 as attorney's fees. The Court but solely by the probable and reasonable influence of the facts upon
of Appeals reversed the decision of the trial court, holding that the the party to whom the communication is due.
insured was guilty of concealment of material facts. Hence the
present petition. Argente vs. West Coast- “One ground for the rescission of a contract
of insurance under the insurance Act is "a concealment", which in
Issue: Section 25 is defined "A neglect to communicate that which a party
Whether or not the insured is guilty of concealment of some facts knows and ought to communicate."
material to the risk insured that consequently avoids the policy.
“In an action on a life insurance policy where the evidence
Held: conclusively shows that the answers to questions
Yes. Petition dismissed. concerning diseases were untrue, the truth or falsity of
the answers become the determining factor. If the policy was
Ratio: procured by fraudulent representations, the contract of insurance
The first confinement took place from January 29, 1950 to February was never legally existent. It can fairly be assumed that had the true
11, while his application was submitted on September 5, 1950. When facts been disclosed by the assured, the insurance would never have
he gave his answers to the policy, he concealed the ailment of which been granted.”
he was treated in the hospital.
The negative answers given by the insured regarding his

previous ailment deprived defendant of the opportunity to make the
necessary inquiry as to the nature of his past illness so that as it may
form its estimate relative to the approval of his application. Had
defendant been given such opportunity, the company would probably
had never consented to the issuance of the policy in question. In fact,
according to the death certificate, the insured’s death may have
direct connection with his previous illness.
Ng Gan Zee v Asian Crusader Life lnsurance, GR L-30685, 30 appellant's medical examiner false and misleading information as to
May 1983 his ailment and previous operation. The company contended that he
Facts: was operated on for peptic ulcer 2 years before the policy was applied
Kwong Nam applied for a 20-year endowment insurance on his life for and that he never disclosed such an operation.
for the sum of P20,000.00, with his wife, appellee Ng Gan Zee
as beneficiary. On the same date, Asian Crusader, upon receipt of Issue:
the required premium from the insured, approved the application and WON Asian Crusader was deceived into entering the contract or in
issued the corresponding policy. Kwong Nam died of cancer of the accepting the risk at the rate of premium agreed upon because of
liver with metastasis. All premiums had been paid at the time of his insured's representation?
death.
Held:
Ng Gan Zee presented a claim for payment of the face value of the No. Petition dismissed.
policy. On the same date, she submitted the required proof of death
of the insured. Appellant denied the claim on the ground that Ratio:
the answers given by the insured to the questions in Section 27 of the Insurance Law:
his application for life insurance were untrue. Sec. 27. Such party a contract of insurance must communicate to the
other, in good faith, all facts within his knowledge which are material
Appellee brought the matter to the attention of the Insurance to the contract, and which the other has not the means of
Commissioner. The latter, after conducting an investigation, wrote ascertaining, and as to which he makes no warranty.
the appellant that he had found no material concealment on the part
of the insured and that, therefore, appellee should be paid the full "Concealment exists where the assured had knowledge of a fact
face value of the policy. The company refused to settle its obligation. material to the risk, and honesty, good faith, and fair dealing requires
that he should communicate it to the assurer, but he designedly and
Appellant alleged that the insured was guilty of misrepresentation intentionally withholds the same."
when he answered "No" to the following question appearing in
the application for life Insurance-Has any life insurance company It has also been held "that the concealment must, in the absence of
ever refused your application for insurance or for reinstatement of a inquiries, be not only material, but fraudulent, or the fact must have
lapsed policy or offered you a policy different from that applied for? been intentionally withheld."
If, so, name company and date. The lower court ruled against the
company on lack of evidence. Fraudulent intent on the part of the insured must be established to
entitle the insurer to rescind the contract. And as correctly observed
Appellant further maintains that when the insured was examined in by the lower court, "misrepresentation as a defense of the insurer to
connection with his application for life insurance, he gave the avoid liability is an 'affirmative' defense. The duty to establish such a
defense by satisfactory and convincing evidence rests upon the Colado v lnsular Life, 51 O.G. (No. 12), 1955
defendant. The evidence before the Court does not clearly and Facts:
satisfactorily establish that defense." Vivencio Collado applied for an insurance contract with Insular life in
1948. His application was approved and he began started making
It bears emphasis that Kwong Nam had informed the appellant's premium payments. However, he defaulted and the insurance was
medical examiner of the tumor. His statement that said tumor was cancelled.
"associated with ulcer of the stomach" should be construed as an
expression made in good faith of his belief as to the nature of He then applied for the reinstatement of his insurance policy in Nov.
his ailment and operation. of 1951 and tendered the amount of premium for the years 1950-
1951.
While the information communicated was imperfect, the same was
sufficient to have induced appellant to make further inquiries about He stated that he was as of Nov. 1951 of good health, and that he
the ailment and operation of the insured. had no injuries, ailments or illnesses and had not been sick for any
case since 1948 (his medical check-up when he applied for insurance)
Section 32 of Insurance Law: and that he had not consulted any physician or practitioner for any
Section 32. The right to information of material facts may be waived case since the date of such latest medical exam.
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 However, when Vivencio applied for the reinstatement, he was
information is communicated. already sick of a fatal disease known as carcinoma of the liver and
that 4 days prior to his application for insurance, he consulted a
Where a question appears to be not answered at all or to be doctor regarding his condition.
imperfectly answered, and the insurers issue a policy without any
further inquiry, they waive the imperfection of the answer and render The reinstatement was approved. Vivencio again failed to pay the
the omission to answer more fully immaterial. premiums for the last quarter of Nov. 1951 and as such, Insular life
sent him a notice canceling the policy.
The company or its medical examiner did not make any further
inquiries on such matters from the hospital before acting on Vivencio then died. The beneficiaries instituted the present action to
the application for insurance. The fact of the matter is that the recover from Insular life the death benefits of a life insurance policy
defendant was too eager to accept the application and receive the valued at 2T. Insular refused to pay claiming concealment on the
insured's premium. It would be inequitable now to allow the part of Vivencio.
defendant to avoid liability under the circumstances."
Collado contends that Insular life had waived the right to rescind the The evidence at hand shows that insofar as the payment of the last
policy in view of its repeated acceptance of the overdue premiums quarterly premium for 1951 was concerned, Insular had availed of
for the second and third years. the right to rescind the policy by notifying the Insured that the policy
had lapsed.
Municipal court of Manila found for Collado and Insular filed an appeal
with CFI of Manila. CFI rendered judgment in favor of Insular and
dismissed Collado’s complaint. E. Representation
(Sections 37-48, IC)
Issue:
Whether or not Insular life was estopped and could no longer cancel SEC. 36. A representation may be oral or written.
the contract due to the fact that it accepted the tender of overdue
payments from Vivencio. SEC. 37. A representation may be made at the time of, or before,
issuance of the policy.
Held:
NO. SEC. 38. The language of a representation is to be interpreted by the
same rules as the language of contracts in general.
It is enormously clear that when the deceased applied for a
reinstatement of his policy in Nov. 1951, he had already been SEC. 39. A representation as to the future is to be deemed a promise,
afflicted with the fatal ailment for a period of about four months. unless it appears that it was merely a statement of belief or
Furthermore, in submitting together with his application for expectation.
reinstatement, a health statement to the effect that he was in good
health, Vivencio concealed the material fact that he had consulted a SEC. 40. A representation cannot qualify an express provision in a
doctor and was then found to be afflicted with the malady. contract of insurance, but it may qualify an implied warranty.
The acceptance of Insular life of the overdue premiums did not SEC. 41. A representation may be altered or withdrawn before the
necessarily deprive it of the right to cancel the policy in case of insurance is effected, but not afterwards.
default incurred by the Insured in the payment of future premiums.
The case would be different had the insured died at any time after SEC. 42. A representation must be presumed to refer to the date on
the payment of overdue premiums but previous to the reinstatement which the contract goes into effect.
of the policy, for the, Insular, by its acceptance of its overdue
premiums is deemed to have waived its right to rescind the policy. 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 Edillon v Manila Bankers Life, GR L-34200,30 September 1982
information, in its whole extent, to the insurer; and in neither case is Facts:
he responsible for its truth, unless it proceeds from an agent of the Sometime in April 1969, Carmen O, Lapuz applied Manila Bankers for
insured, whose duty it is to give the information. insurance coverage against accident and injuries. She filled up the
blank application form given to her and filed the same with the
SEC. 44. A representation is to be deemed false when the facts fail respondent insurance corporation. In the said application form she
to correspond with its assertions or stipulations. gave the date of her birth as July 11, 1904. On the same date, she
paid the sum of P20.00 representing the premium for which she was
SEC. 45. If a representation is false in a material point, whether issued the corresponding receipt signed by an authorized agent of
affirmative or promissory, the injured party is entitled to rescind the Manila Bankers.
contract from the time when the representation becomes false.
Upon the filing and the payment of the premium, the respondent
SEC. 46. The materiality of a representation is determined by the insurance corporation issued to Carmen O. Lapuz its Certificate of
same rules as the materiality of a concealment. Insurance. The policy was to be effective for a period of 90 days.
During the effectivity of the certificate of insurance Carmen Lapuz
SEC. 47. The provisions of this chapter apply as well to a modification died on a vehicular accident in the North Diversion Road. On June 7,
of a contract of insurance as to its original formation. 1969, petitioner Regina L. Edillon, a sister of the insured and who
was the named beneficiary in the policy, filed her claim for the
SEC. 48. Whenever a right to rescind a contract of insurance is given proceeds of the insurance, submitting all the necessary papers and
to the insurer by any provision of this chapter, such right must be other requisites.
exercised previous to the commencement of an action on the
contract. However, her claim was denied by the respondent corporation hence
her filing of complaint in the Court of First Instance of Rizal on August
“After a policy of life insurance made payable on the death of the 27, 1969. The respondent insurance corporation asserts that since
insured shall have been in force during the lifetime of the insured for Carmen Lapuz was over 60 years of age the policy in question was
a period of two (2) years from the date of its issue or of its last null and void because there is a provision in the certificate of
reinstatement, the insurer cannot prove that the policy is void ab insurance excluding its liability to pay claims under the policy in
initio or is rescindable by reason of the fraudulent concealment or behalf of persons who are under the age of sixteen (16) years of age
misrepresentation of the insured or his agent. or over the age of sixty (60) years.
The trial court dismissed the complaint. Hence, this petition.
Issue:
Whether or not the acceptance by the private respondent insurance lnsular Life v Feliciano, GR L-47593, 29 December 1943
corporation of the premium and the issuance of the corresponding This case was in response to the Motion for Reconsideration filed by
certificate of insurance should be deemed a waiver of the the Insular Life after the September 13, 1941 decision of the SC
exclusionary condition of overage stated in the said certificate of where the SC affirmed the judgment of CA.
insurance
FACTS:
Held: Evaristo Feliciano, who died on September 29, 1935, was suffering
Yes. The age of the insured Carmen 0. Lapuz was not concealed to with advanced pulmonary tuberculosis when he signed his
the insurance company. Her application for insurance coverage which applications for insurance with the petitioner on October 12, 1934.
was on a printed form furnished by private respondent and which On that same date Doctor Trepp, who had taken X-ray pictures of his
contained very few items of information clearly indicated her age of lungs, informed the respondent Dr. Serafin D. Feliciano, brother of
the time of filing the same to be almost 65 years of age. Despite such Evaristo, that the latter "was already in a very serious ad practically
information which could hardly be overlooked in the application form, hopeless condition." Nevertheless, the question contained in the
considering its prominence thereon and its materiality to the application — "Have you ever suffered from any ailment or disease
coverage applied for, the respondent insurance corporation received of the lungs, pleurisy, pneumonia or asthma?" — appears to have
her payment of premium and issued the corresponding certificate of been answered, "No" And above the signature of the applicant,
insurance without question. The accident which resulted in the death following the answers to the various questions propounded to him, is
of the insured, a risk covered by the policy, occurred on May 31, 1969 the following printed statement:
or FORTY-FIVE (45) DAYS after the insurance coverage was applied
for. There was sufficient time for the private respondent to process “I declare on behalf of myself and of any person who shall have or
the application and to notice that the applicant was over 60 years of claim any interest in any policy issued hereunder, that each of the
age and thereby cancel the policy on that ground if it was minded to above answers is full, complete and true, and that to the best of my
do so. knowledge and belief I am a proper subject for life insurance. “
If the private respondent failed to act, it is either because it was The false answer above referred to, as well as the others, was written
willing to waive such disqualification; or, through the negligence or by the Company's soliciting agent Romulo M. David, in collusion with
incompetence of its employees for which it has only itself to blame, the medical examiner Dr. Gregorio Valdez, for the purpose of
it simply overlooked such fact. Under the circumstances, the securing the Company's approval of the application so that the policy
insurance corporation is already deemed in estoppel. Its inaction to to be issued thereon might be credited to said agent in connection
revoke the policy despite a departure from the exclusionary condition with the inter- provincial contest which the Company was then
contained in the said policy constituted a waiver of such condition. holding among its soliciting agents to boost the sales of its policies.
Agent David bribed Medical Examiner Valdez with money which the
former borrowed from the applicant's mother by way of advanced Moreover, from the facts of the case we cannot escape the conclusion
payment on the premium, according to the finding of the Court of that the insured acted in connivance with the soliciting agent and the
Appeals. Said court also found that before the insured signed the medical examiner of the Company in accepting the policies in
application he, as well as the members of his family, told the agent question. When the applicant signed the application he was "having
and the medical examiner that he had been very sick but that in spite difficulty in breathing, . . . with a very high fever." He had gone three
of such information the agent and the medical examiner told them times to the Santol Sanatorium and had X-ray pictures taken of his
that the applicant was a fit subject for insurance. lungs. He therefore knew that he was not "a proper subject for life
insurance." When he accepted the policy, he knew that he was not in
Insular Life insists that upon the facts of the case the policies in good health. Nevertheless, he not only accepted the first policy of
question are null and void ab initio and that all that the respondents P20,000 but then and there applied for and later accepted another
are entitled to is the refund of the premiums paid thereon. policy of P5,000.
ISSUE: The SC also believed that it was impossible for Feliciano to not have
Whether the insurance policies in question are void ab initio for being read the answers contained in the copy of the application attached to
fraudulently procured by the respondents. the policy before he accepted the same and paid premium thereon.
He must have notice that the answers to the questions therein asked
RULING: concerning his clinical history were false, and yet he accepted the
YES. From all the facts and circumstances of this case, we are first policy and applied for another. By accepting the policy, he
constrained to conclude that the insured was a co-participant, and became charged with knowledge of its contents, whether he actually
co-responsible with Agent David and Medical Examiner Valdez, in the read it or not. He knew, or was chargeable with knowledge, from the
fraudulent procurement of the policies in question and that by reason very terms of the two policies sued upon (one of which is printed in
thereof said policies are void ab initio. English and the other in Spanish) that the soliciting agent and the
medical examiner had no power to bind the Company by any verbal
When Evaristo Feliciano, the applicant for insurance, signed the promise or oral representation. The insured, therefore, had no right
application in blank and authorized the soliciting agent and/or to rely — and we cannot believe he relied in good faith — upon the
medical examiner of the Company to write the answers for him, he oral representation. The insured, therefore, had no right to rely —
made them his own agents for that purpose, and he was responsible and we cannot believe he relied in good faith — upon the oral
for their acts in that connection. If they falsified the answers for him, representation of said agent and medical examiner that he (the
he could not evade the responsibility for the falsification. He was not applicant) was a fit subject for insurance notwithstanding that he had
supposed to sign the application in blank. He knew that the answers been and was still suffering with advanced pulmonary tuberculosis.
to the questions therein contained would be "the basis of the policy,"
and for that every reason he was required with his signature to vouch The motion for reconsideration is therefore sustained and the
for truth thereof. decision of CA is hereby reversed.
(shorter version INSULAR vs FELICIANO) Tan Chay Heng v West Coast Life, GR L-27541,21 Nov. 1927
FACTS: Facts:
From the court’s decision rendered in the case of Insular Life Tan Chay applied for a life insurance policy of for the sum of P10,000
Assurance vs Feliciano (1941), Insular Life filed a motion for where he was the sole beneficiary. The company approved this. The
reconsideration. Insular avers that Feliciano is not entitled to the policy was issued upon the payment by Tan Ceang of the first year's
claim because the insurance policy is void ab initio; that he connived premium worth P936. The company agreed to pay the beneficiary the
with the insurance agent and the medical examiner; and that at best, amount of the policy upon the receipt of the proofs of the death of
Feliciano is only entitled to refund or the reimbursement of what he the insured while the policy was in force. Without any premium due
has paid in premium. or unpaid, Ceang died. Tan Chay plaintiff submitted the proofs of the
death of Tan Ceang with a claim for the payment. The company
ISSUE: refused to pay.
Whether or not Insular Life is correct.
The company alleged that Tan Ceang obtained the policy by means
HELD: of deceit to the effect that the medical certificate had false
Yes. This time, the Supreme Court held that Insular Life’s contention statements about his health. They also claimed that he didn’t pay the
is correct. When Evaristo Feliciano, the applicant for insurance, premium. The court ruled for Tan Chay and commanded the company
signed the application in blank and authorized the soliciting agent to pay 10,000 pesos.
and/or medical examiner of Insular to write the answers for him, he
made them his own agents for that purpose, and he was responsible Issue:
for their acts in that connection. If they falsified the answers for him, WON Section 47 of the Insurance Code applies to this case.
he could not evade the responsibility for the falsification. He was not
supposed to sign the application in blank. He knew that the answers Held:
to the questions therein contained would be “the basis of the policy,” No. Petition dismissed.
and for that very reason he was required with his signature to vouch
for truth thereof. Ratio:
The plaintiff contends that section 47 of the Insurance Act should be
applied, and that when so applied, the company is barred and
estopped to plead the matters alleged in its special defense. That
section states:
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.
If all of the material matters set forth and alleged in the defendant's
The defendant contends that section 47 does not apply to this special special plea are true, there was no valid contract of insurance, for the
defense. If in legal effect defendant's special defense is in the nature simple reason that the minds of the parties never met and never
of an act to rescind "a contract of insurance," then such right must agreed upon the terms and conditions of the contract. If such matters
be exercised prior to an action enforce the contract. Defendant are known to exist by a preponderance of the evidence, they would
denied that if ever issued the policy in question. constitute a valid defense to plaintiff's cause of action. Upon the
question as to whether or not they or are not true, the court couldn’t
The word "rescind" has a well-defined legal meaning, and as applied say, but they were sure that section 47 does not apply to the
to contracts, it presupposes the existence of a contract to rescind. allegations made in the answer.
The rescission relates only to the unfulfilled part, and not to the entire
agreement, making the party rescinding liable on notes executed
pursuant to the contract which matured before the rescission. The Tan v Court of Appeals, GR 48049,29 June 1989
rescission is the unmaking of a contract, requiring the same Facts:
concurrence of wills as that which made it, and nothing short of this Tan Lee Siong, father of the petitioners, applied for life insurance in
will suffice. the amount of P 80,000.00 with Philamlife. It was approved. Tan Lee
Siong died of hepatoma. Petitioners then filed a claim for the
After a contract has been broken, whether by an inability to perform proceeds. The company denied petitioners' claim and rescinded the
it, or by rescinding against right or otherwise, the party not in fault policy by reason of the alleged misrepresentation and concealment
may sue the other for the damages suffered, or, if the parties can be of material facts. The premiums paid on the policy were refunded.
placed in status quo, he may, should he prefer, return what he has The petitioners filed a complaint in the Insurance Commission. The
received and recover in a suit value of what he has paid or done. The latter dismissed the complaint.
latter remedy is termed "rescission."
The Court of Appeals dismissed ' the petitioners' appeal from
In the instant case, the defendant does not seek to have the alleged the Insurance Commissioner's decision for lack of merit. Hence, this
insurance contract rescinded. It only denies that it ever made any petition.
contract of insurance on the life of Tan Ceang or that any such a
contract ever existed. If the defendant never made or entered into Issue:
the contract in question, there is no contract to rescind, and, hence, WON Philam didn’t have the right to rescind the contract
section 47 doesn’t apply. As stated, an action to rescind a contract is of insurance as rescission must allegedly be done during the lifetime
founded upon and presupposes the existence of the contract which is of the insured within two years and prior to the commencement of
sought to be rescinded. action.
Held:
No. Petition dismissed. the insured. They also argue that no evidence was presented by
respondent company to show that the questions appearing in Part II
Ratio: of the application for insurance were asked, explained to and
The Insurance Code states in Section 48: understood by the deceased so as to prove concealment on his part.
“Whenever a right to rescind a contract of insurance is given to This couldn’t be accepted because the insured signed the form. He
the insurer by any provision of this chapter, such right must be affirmed the correctness of all the entries.
exercised previous to the commencement of an action on the
contract. The company records show that the deceased was examined by Dr.
Victoriano Lim and was found to be diabetic and hypertensive. He
After a policy of life insurance made payable on the death of was also found to have suffered from hepatoma. Because of the
the insured shall have been in force during the lifetime of concealment made by the deceased, the company was thus misled
the insured for a period of two years from the date of its issue or of into accepting the risk and approving his application as medically fit.
its last reinstatement, the insurer cannot prove that the policy is void
ab initio or is rescindable by reason of the fraudulent concealment or ------------------------ end of week 7 ------------------------------
misrepresentation of the insured or his agent.”
The so-called "incontestability clause" in the second paragraph

prevents the insurer from raising the defenses of false
representations insofar as health and previous diseases are
concerned if the insurance has been in force for at least two years
during the insured's lifetime.
The policy was in force for a period of only one year and five months.
Considering that the insured died before the two-year period
had lapsed, respondent company is not, therefore, barred from
proving that the policy is void ab initio by reason of the insured's
fraudulent concealment or misrepresentation.
The "incontestability clause" added by the second paragraph of

Section 48 is in force for two years. After this, the defenses of
concealment or misrepresentation no longer lie.
The petitioners argue that no evidence was presented to show that

the medical terms were explained in a layman's language to
WEEK 8 SEC. 51. A policy of insurance must specify:

(a) The parties between whom the contract is made;
F. The Policy (b) The amount to be insured except in the cases of open or running
(1. Sections 49-52; Sec.232, IC) policies;
(c) The premium, or if the insurance is of a character where the exact
SEC. 49. The written instrument in which a contract of insurance is premium is only determinable upon the termination of the contract,
set forth, is called a policy of insurance. a statement of the basis and rates upon which the final premium is
to be determined;
SEC. 50. The policy shall be in printed form which may contain blank (d) The property or life insured;
spaces; and any word, phrase, clause, mark, sign, symbol, signature, (e) The interest of the insured in property insured, if he is not the
number, or word necessary to complete the contract of insurance absolute owner thereof;
shall be written on the blank spaces provided therein. (f) The risks insured against; and
(g) The period during which the insurance is to continue.
“Any rider, clause, warranty or endorsement purporting to be part of
the contract of insurance and which is pasted or attached to said SEC. 52. Cover notes may be issued to bind insurance temporarily
policy is not binding on the insured, unless the descriptive title or pending the issuance of the policy. Within sixty (60) days after issue
name of the rider, clause, warranty or endorsement is also mentioned of a cover note, a policy shall be issued in lieu thereof, including
and written on the blank spaces provided in the policy. within its terms the identical insurance bound under the cover note
and the premium therefor.
“Unless applied for by the insured or owner, any rider, clause,
warranty or endorsement issued after the original policy shall be “Cover notes may be extended or renewed beyond such sixty (60)
countersigned by the insured or owner, which countersignature shall days with the written approval of the Commissioner if he determines
be taken as his agreement to the contents of such rider, clause, that such extension is not contrary to and is not for the purpose of
warranty or endorsement. violating any provisions of this Code. The Commissioner may
promulgate rules and regulations governing such extensions for the
“Notwithstanding the foregoing, the policy may be in electronic form purpose of preventing such violations and may by such rules and
subject to the pertinent provisions of Republic Act No. 8792, regulations dispense with the requirement of written approval by him
otherwise known as the ‘Electronic Commerce Act’ and to such rules in the case of extension in compliance with such rules and
and regulations as may be prescribed by the Commissioner. regulations.
SEC. 232. No policy, certificate or contract of insurance shall be

issued or delivered within the Philippines unless in the form
previously approved by the Commissioner, and no application form
shall be used with, and no rider, clause, warranty or endorsement application shall be indorsed upon or attached to the policy when
shall be attached to, printed or stamped upon such policy, certificate issued, and in such case the policy shall contain a provision that the
or contract unless the form of such application, rider, clause, policy and the application therefor shall constitute the entire contract
warranty or endorsement has been approved by the Commissioner. between the parties;
(d) A provision that if the age of the insured is considered in

[Sec. 233, lC (mandatory provisions - individual life insurance determining the premium and the benefits accruing under the policy,
policies)] and the age of the insured has been misstated, the amount payable
under the policy shall be such as the premium would have purchased
SEC. 233. In the case of individual life or endowment insurance, the at the correct age;
policy shall contain in substance the following conditions:
(e) If the policy is participating, a provision that the company shall
(a) A provision that the policyholder is entitled to a grace period periodically ascertain and apportion any divisible surplus accruing on
either of thirty (30) days or of one (1) month within which the the policy under conditions specified therein;
payment of any premium after the first may be made, subject at the
option of the insurer to an interest charge not in excess of six percent (f) A provision specifying the options to which the policyholder is
(6%) per annum for the number of days of grace elapsing before the entitled to in the event of default in a premium payment after three
payment of the premium, during which period of grace the policy (3) full annual premiums shall have been paid. Such option shall
shall continue in full force, but in case the policy becomes a claim consist of:
during the said period of grace before the overdue premium is paid, (1) A cash surrender value payable upon surrender of the policy
the amount of such premium with interest may be deducted from the which shall not be less than the reserve on the policy, the basis of
amount payable under the policy in settlement; which shall be indicated, for the then current policy year and any
dividend additions thereto, reduced by a surrender charge which shall
(b) A provision that the policy shall be incontestable after it shall not be more than one-fifth (1/5) of the entire reserve or two and
have been in force during the lifetime of the insured for a period of one-half percent (2½%) of the amount insured and any dividend
two (2) years from its date of issue as shown in the policy, or date of additions thereto; and
approval of last reinstatement, except for nonpayment of premium (2) One or more paid-up benefits on a plan or plans specified in
and except for violation of the conditions of the policy relating to the policy of such value as may be purchased by the cash surrender
military or naval service in time of war; value.
(c) A provision that the policy shall constitute the entire contract (g) A provision that at any time after a cash surrender value is
between the parties, but if the company desires to make the available under the policy and while the policy is in force, the
application a part of the contract it may do so provided a copy of such company will advance, on proper assignment or pledge of the policy
and on sole security thereof, a sum equal to, or at the option of the would have been applicable to said premiums and indebtedness in
owner of the policy, less than the cash surrender value on the policy, the policy years prior to reinstatement.
at a specified rate of interest, not more than the maximum allowed
by law, to be determined by the company from time to time, but not “Any of the foregoing provisions or portions thereof not applicable to
more often than once a year, subject to the approval of the single premium or term policies shall to that extent not be
Commissioner; and that the company will deduct from such loan incorporated therein; and any such policy may be issued and
value any existing indebtedness on the policy and any unpaid balance delivered in the Philippines which in the opinion of the Commissioner
of the premium for the current policy year, and may collect interest contains provisions on any one or more of the foregoing requirements
in advance on the loan to the end of the current policy year, which more favorable to the policyholder than hereinbefore required.
provision may further provide that such loan may be deferred for not
exceeding six (6) months after the application therefor is made; “This section shall not apply to policies of group life or industrial life
insurance.
(h) A table showing in figures cash surrender values and paid-up
options available under the policy each year upon default in premium Sec. 234, lC (mandatory provisions - group life insurance
payments, during at least twenty (20) years of the policy beginning policy)
with the year in which the values and options first become available,
together with a provision that in the event of the failure of the SEC. 234. No policy of group life insurance shall be issued and
policyholder to elect one of the said options within the time specified delivered in the Philippines unless it contains in substance the
in the policy, one of said options shall automatically take effect and following provisions, or provisions which in the opinion of the
no policyholder shall ever forfeit his right to same by reason of his Commissioner are more favorable to the persons insured, or at least
failure to so elect; as favorable to the persons insured and more favorable to the
policyholders:
(i) In case the proceeds of a policy are payable in installments or
as an annuity, a table showing the minimum amounts of the “(a) A provision that the policyholder is entitled to a grace period of
installments or annuity payments; either thirty (30) days or of one (1) month for the payment of any
premium due after the first, during which grace period the death
(j) A provision that the policyholder shall be entitled to have the benefit coverage shall continue in force, unless the policyholder shall
policy reinstated at any time within three (3) years from the date of have given the insurer written notice of discontinuance in advance of
default of premium payment unless the cash surrender value has the date of discontinuance and in accordance with the terms of the
been duly paid, or the extension period has expired, upon production policy. The policy may provide that the policyholder shall be liable for
of evidence of insurability satisfactory to the company and upon the payment of a pro ratapremium for the time the policy is in force
payment of all overdue premiums and any indebtedness to the during such grace period;
company upon said policy, with interest rate not exceeding that which
“(b) A provision that the validity of the policy shall not be contested, a part of such sum not exceeding Five hundred pesos (P500.00) to
except for nonpayment of premiums after it has been in force for two any person appearing to the insurer to be equitably entitled thereto
(2) years from its date of issue; and that no statement made by any by reason of having incurred funeral or other expenses incident to
insured under the policy relating to his insurability shall be used in the last illness or, death of the person insured;
contesting the validity of the insurance with respect to which such
statement was made after such insurance has been in force prior to “(g) A provision that the insurer will issue to the policyholder for
the contest for a period of two (2) years during such person’s lifetime delivery to each person insured a statement as to the insurance
nor unless contained in a written instrument signed by him; protection to which he is entitled, to whom the insurance benefits are
payable, and the rights set forth in paragraphs (h), (i) and (j)
“(c) A provision that a copy of the application, if any, of the following;
policyholder shall be attached to the policy when issued, that all
statements made by the policyholder or by persons insured shall be “(h) A provision that if the insurance, or any portion of it, on a person
deemed representations and not warranties, and that no statement covered under the policy ceases because of termination of
made by any insured shall be used in any contest unless a copy of employment or of membership in the class or classes eligible for
the instrument containing the statement is or has been furnished to coverage under the policy, such person shall be entitled to have
such person or to his beneficiary; issued to him by the insurer, without evidence of insurability, an
individual policy of life insurance without disability or other
“(d) A provision setting forth the conditions, if any, under which the supplementary benefits, provided application for the individual policy
insurer reserves the right to require a person eligible for insurance to and payment of the first premium to the insurer shall be made within
furnish evidence of individual insurability satisfactory to the insurer thirty (30) days after such termination, and provided further that:
as a condition to part or all of his coverage;
“(1) The individual policy shall be on any one of the forms, except
“(e) A provision specifying an equitable adjustment of premiums or term insurance, then customarily issued by the insurer at the age
of benefits or of both to be made in the event that the age of a person and for an amount not in excess of the coverage under the group
insured has been misstated, such provision to contain a clear policy; and
statement of the method of adjustment to be used; “(2) The premium on the individual policy shall be at the insurer’s
then customary rate applicable to the form and amount of the
“(f) A provision that any sum becoming due by reason of death of the individual policy, to the class of risk to which such person then
person insured shall be payable to the beneficiary designated by the belongs, and to his age attained on the effective date of the individual
insured, subject to the provisions of the policy in the event that there policy.
is no designated beneficiary, as to all or any part of such sum, living
at the death of the insured, and subject to any right reserved by the “(i) A provision that if the group policy terminates or is amended so
insurer in the policy and set forth in the certificate to pay at its option as to terminate the insurance of any class of insured persons, every
person insured thereunder at the date of such termination whose Sec. 236, 237, lC (mandatory provisions - industrial life
insurance terminates and who has been so insured for five (5) years insurance)
prior to such termination date shall be entitled to have issued to him
by the insurer an individual policy of life insurance subject to the SEC. 236. In the case of industrial life insurance, the policy shall
same limitations as set forth in paragraph (h), except that the group contain in substance the following provisions:
policy may provide that the amount of such individual policy shall not
exceed the amount of the person’s life insurance protection ceasing; “(a) A provision that the insured is entitled to a grace period of four
“(j) A provision that if a person insured under the group policy dies (4) weeks within which the payment of any premium after the first
during the thirty (30)-day period within which he would have been may be made, except that where premiums are payable monthly, the
entitled to an individual policy issued to him in accordance with period of grace shall be either one (1) month or thirty (30) days; and
paragraphs (h) and (i) above and before such individual policy shall that during the period of grace, the policy shall continue in full force,
have become effective, the amount of life insurance which he would but if during such grace period the policy becomes a claim, then any
have been entitled to have issued to him as an individual policy shall overdue and unpaid premiums may be deducted from any amount
be payable as a claim under the group policy whether or not payable under the policy in settlement;
application for the individual policy or the payment of the first
premium has been made; “(b) A provision that the policy shall be incontestable after it has been
in force during the lifetime of the insured for a specified period, not
“(k) In the case of a policy issued to a creditor to insure debtors of more than two (2) years from its date of issue, except for
such creditor, a provision that the insurer will furnish to the nonpayment of premiums and except for violation of the conditions
policyholder for delivery to each debtor insured under the policy a of the policy relating to naval or military service, or services auxiliary
form which will contain a statement that the life of the debtor is thereto, and except as to provisions relating to benefits in the event
insured under the policy and that any death benefit paid thereunder of disability as defined in the policy, and those granting additional
by reason of his death shall be applied to reduce or extinguish insurance specifically against death by accident or by accidental
indebtedness. means, or to additional insurance against loss of, or loss of use of,
specific members of the body;
“The provisions of paragraphs (f) to (j) shall not apply to policies
issued to a creditor to insure his debtors. If a group life policy is on “(c) A provision that the policy shall constitute the entire contract
a plan of insurance other than term, it shall contain a non-forfeiture between the parties, or if a copy of the application is endorsed upon
provision or provisions which in the opinion of the Commissioner is and attached to the policy when issued, a provision that the policy
or are equitable to the insured or the policyholder: Provided, That and the application therefor shall constitute the entire contract
nothing herein contained shall be so construed as to require group between the parties, and in the latter case, a provision that all
life policies to contain the same non-forfeiture provisions as are statements made by the insured shall, in the absence of fraud, be
required of individual life policies. deemed representations and not warranties;
the due date of a premium in default for the specified cash

“(d) A provision that if the age of the person insured, or the age of value: Provided, That the insurer may defer payment for not more
any person, considered in determining the premium, or the benefits than six (6) months after the application therefor is made;
accruing under the policy, has been misstated, any amount payable
or benefit accruing under the policy shall be such as the premium “(h) A table that shows in figures the nonforfeiture benefits available
paid would have purchased at the correct age; under the policy every year upon default in payment of premiums
during at least the first twenty (20) years of the policy, such table to
“(e) A provision that if the policy is a participating policy, the begin with the year in which such values become available, and a
company shall periodically ascertain and apportion any divisible provision that the company will furnish upon request an extension of
surplus accruing on the policy under the conditions specified therein; such table beyond the year shown in the policy;
“(f) A provision that in the event of default in premium payments
after three (3) full years’ premiums have been paid, the policy shall “(i) A provision that specifies which one of the stipulated forms of
be converted into a stipulated form of insurance, and that in the insurance provided for under the provision of paragraph (f) of this
event of default in premium payments after five (5) full years’ section shall take effect in the event of the insured’s failure, within
premiums have been paid, a specified cash surrender value shall be sixty (60) days from the due date of the premium in default, to notify
available, in lieu of the stipulated form of insurance, at the option of the insurer in writing as to which one of such forms he has selected;
the policyholder. The net value of such stipulated form of insurance
and the amount of such cash value shall not be less than the reserve “(j) A provision that the policy may be reinstated at any time within
on the policy and dividend additions thereto, if any, at the end of the two (2) years from the due date of the premium in default unless the
last completed policy year for which premiums shall have been paid cash surrender value has been paid or the period of extended term
(the policy to specify the mortality table, rate of interest and method insurance expired, upon production of evidence of insurability
of valuation adopted to compute such reserve), exclusive of any satisfactory to the company and payment of arrears of premiums
reserve on disability benefits and accidental death benefits, less an with interest at a rate not exceeding six percent (6%) per annum
amount not to exceed two and one-half percent (2½%) of the payable annually;
maximum amount insured by the policy and dividend additions
thereto, if any, when the issue age is under ten (10) years, and less “(k) A provision that when a policy shall become a claim by death of
an amount not to exceed two and one-half percent (2½%) of the the insured, settlement shall be made upon receipt of due proof of
current amount insured by the policy and dividend additions thereto, death, or not later than two (2) months after receipt of such proof;
if any, if the issue age is ten (10) years or older, and less any existing
indebtedness to the company on or secured by the policy; “(l) A title on the face and on the back of the policy correctly
describing its form;
“(g) A provision that the policy may be surrendered to the company
at its home office within a period of not less than sixty (60) days after
“(m) A space on the front or the back of the policy for the name of shall specify the mortality table, rate of interest, and method of
the beneficiary designated by the insured with a reservation of the computing reserves.
insured’s right to designate or change the beneficiary after the
issuance of the policy. The policy may also provide that no SEC. 237. No policy of industrial life insurance shall be issued or
designation or change of beneficiary shall be binding on the insurer delivered in the Philippines if it contains any of the following
until endorsed on the policy by the insurer, and that the insurer may provisions:
refuse to endorse the name of any proposed beneficiary who does
not appear to the insurer to have an insurable interest in the life of “(a) A provision that gives the insurer the right to declare the policy
the insured. Such policy may also contain a provision that if the void because the insured has had any disease or ailment, whether
beneficiary designated in the policy does not surrender the policy with specified or not, or because the insured has received institutional,
due proof of death within the period stated in the policy, which shall hospital, medical or surgical treatment or attention, except a
not be less than thirty (30) days after the death of the insured, or if provision which gives the insurer the right to declare the policy void
the beneficiary is the estate of the insured, or is a minor, or dies if the insured has, within two (2) years prior to the issuance of the
before the insured, or is not legally competent to give valid release, policy, received institutional, hospital, medical or surgical treatment
then the insurer may make any payment thereunder to the executor or attention and if the insured or the claimant under the policy fails
or administrator of the insured, or to any of the insured’s relatives by to show that the condition occasioning such treatment or attention
blood or legal adoption or connections by marriage or to any person was not of a serious nature or was not material to the risk;
appearing to the insurer to be equitably entitled thereto by reason of
having incurred expense for the maintenance, medical attention or “(b) A provision that gives the insurer the right to declare the policy
burial of the insured; and void because the insured has been rejected for insurance, unless such
“(n) A provision that when an industrial life insurance policy is issued right be conditioned upon a showing by the insurer that knowledge
providing for accidental or health benefits, or both, in addition to life of such rejection would have led to a refusal by the insurer to make
insurance, the foregoing provisions shall apply only to the life such contract;
insurance portion of the policy.
“(c) A provision that allows the company to pay the proceeds of the
Any of the foregoing provisions or portions thereof not applicable to policy at the death of the insured to any person other than the named
nonparticipating or term policies shall to that extent not be beneficiary, except in accordance with a standard provision as
incorporated therein. The foregoing provisions shall not apply to specified under the provisions of paragraph (m) of the preceding
policies issued or granted pursuant to the nonforfeiture provisions section;
prescribed in provisions of paragraphs (f) and (i) of this section, nor
shall provisions of paragraphs (f), (g), (h), and (i) hereof be required “(d) A provision that limits the time within which any action at law or
in term insurance of twenty (20) years or less but such term policies in equity may be commenced to less than six (6) years after the
cause of action shall accrue; and
Pacific Banking v CA, GR L-41014,28 November 1988

“(e) A provision that specifies any mode of settlement at maturity of Pacific v CA G.R. No. L-41014 November 28,
less value than the amount insured by the policy plus dividend
additions, if any, less any indebtedness to the company on the policy 1988
J. Paras
and less any premium that may by the terms of the policy be
deducted, payments to be made in accordance with the terms of the
Facts:
policy.
An open fire insurance policy, was issued to Paramount Shirt
Manufacturing by Oriental Assurance Corporation to indemnify
“Nothing contained in this section nor in the provision of paragraph
P61,000.00, caused by fire to the factory’s stocks, materials and
(b) of the preceding section, relating to incontestability, shall be
supplies.
construed as prohibiting the life insurance company from placing in
its industrial life policies provisions limiting its liability with respect
The insured was a debtor of Pacific Banking in the amount of
to:
(P800,000.00) and the goods described in the policy were held in
trust by the insured for Pacific Banking under trust receipts.
“(1) Death resulting from aviation other than as a fare-paying
passenger on a regularly scheduled route between definitely
The policy was endorsed to Pacific Banking as mortgagee/ trustor of
established airports; and
the properties insured, with the knowledge and consent of private
“(2) Military or naval service: Provided, That if the liability of the
respondent to the effect that "loss if any under this policy is payable
company is limited as herein provided, such liability shall in no event
to the Pacific Banking Corporation".
be fixed at an amount less than the reserve on the policy (excluding
the reserve for any additional benefits in the event of death by
A fire broke out on the premises destroying the goods contained in
accident or accidental means or for benefits in the event of any type
the building. The bank sent a letter of demand to Oriental for
of disability), less any indebtedness on or secured by such policy; nor
indemnity. The company wasn’t ready to give since it was awaiting
shall any provision of this section apply to any provision in an
the adjuster’s report. The company then made an excuse that the
industrial life insurance policy for additional benefits in the event of
insured had not filed any claim with it, nor submitted proof of loss
death by accident or accidental means.
which is a clear violation of Policy Condition No.11, as a result,
determination of the liability of private respondent could not be
made.
Pacific Banking filed in the trial court an action for a sum of money
for P61,000.00 against Oriental Assurance. At the trial, petitioner
presented communications of the insurance adjuster to Asian Surety
revealing undeclared co-insurances with the following: P30,000 with
Wellington Insurance; P25,000 with Empire Surety and P250,000 insurance or insurances be stated in or endorsed on this Policy
with Asian Surety undertaken by insured Paramount on the same by or on behalf of the Company before the occurrence of any
property covered by its policy with Oriental whereas the only co- loss or damage, all benefit under this policy shall be forfeited.
insurances declared in the subject policy are those of P30,000.00
with Malayan P50,000.00 with South Sea and P25.000.00 with The insured failed to reveal before the loss three other insurances.
Victory. Had the insurer known that there were many co-insurances, it could
have hesitated or plainly desisted from entering into such contract.
The defense of fraud, in the form of non-declaration of co-insurances Hence, the insured was guilty of clear fraud.
which was not pleaded in the answer, was also not pleaded in the
Motion to Dismiss. The trial court denied the respondent’s motion. Concrete evidence of fraud or false declaration by the insured was
Oriental filed another motion to include additional evidence of the co- furnished by the petitioner itself when the facts alleged in the policy
insurance which could amount to fraud. The trial court still made under clauses "Co-Insurances Declared" and "Other Insurance
Oriental liable for P 61,000. Clause" are materially different from the actual number of co-
insurances taken over the subject property.
The CA reversed the trial court decision. Pacific Banking filed a motion
for reconsideration of the said decision of the respondent Court of As the insurance policy against fire expressly required that notice
Appeals, but this was denied for lack of merit. should be given by the insured of other insurance upon the same
property, the total absence of such notice nullifies the policy.
Issues:
1. WON unrevealed co-insurances Violated policy conditions No. 3 Petitioner points out that Condition No. 3 in the policy in relation to
2. WON the insured failed to file the required proof of loss prior to the "other insurance clause" supposedly to have been violated,
court action. cannot certainly defeat the right of the petitioner to recover the
insurance as mortgagee/assignee. Hence, they claimed that the
Held: purpose for which the endorsement or assignment was made was to
Yes. Petition dismissed. protect the mortgagee/assignee against any untoward act or
omission of the insured. It would be absurd to hold that petitioner is
Ratio: barred from recovering the insurance on account of the alleged
1. Policy Condition No. 3 explicitly provides: violation committed by the insured.
3.The Insured shall give notice to the Company of any It is obvious that petitioner has missed all together the import of
insurance already effected, or which may subsequently be subject mortgage clause which specifically provides:
effected, covering any of the property hereby insured, and
unless such notice be given and the particulars of such
“Loss, if any, under this policy, shall be payable to the PACIFIC In the case at bar, policy condition No. 11 specifically provides that
BANKING CORPORATION Manila mortgagee/trustor as its the insured shall on the happening of any loss or damage give notice
interest may appear, it being hereby understood and agreed to the company and shall within fifteen (15) days after such loss or
that this insurance as to the interest of the mortgagee/trustor damage deliver to the private respondent (a) a claim in writing giving
only herein, shall not be invalidated by any act or neglect— particular account as to the articles or goods destroyed and the
except fraud or misrepresentation, or arson—of the mortgagor amount of the loss or damage and (b) particulars of all other
or owner/trustee of the property insured; provided, that in case insurances, if any.
the mortgagor or owner/ trustee neglects or refuses to pay any
premium, the mortgagee/ trustor shall, on demand pay the Twenty-four days after the fire did petitioner merely wrote letters to
same.” private respondent to serve as a notice of loss. It didn’t even furnish
other documents. Instead, petitioner shifted upon private respondent
The paragraph clearly states the exceptions to the general rule that the burden of fishing out the necessary information to ascertain the
insurance as to the interest of the mortgagee, cannot be invalidated; particular account of the articles destroyed by fire as well as the
namely: fraud, or misrepresentation or arson. Concealment of the amount of loss. Since the required claim by insured, together with
aforecited co-insurances can easily be fraud, or in the very least, the preliminary submittal of relevant documents had not been
misrepresentation. complied with, it follows that private respondent could not be deemed
to have finally rejected petitioner's claim and therefore there was no
Undoubtedly, it is but fair and just that where the insured who is cause of action.
primarily entitled to receive the proceeds of the policy has by its fraud
and/or misrepresentation, forfeited said right. It appearing that insured has violated or failed to perform the
conditions under No. 3 and 11 of the contract, and such violation or
Petitioner further stressed that fraud which was not pleaded as a want of performance has not been waived by the insurer, the insured
defense in private respondent's answer or motion to dismiss, should cannot recover, much less the herein petitioner.
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 OrientalAssurance v Court of Appeals, GR 94052, 9 August
the contrary, presented the very evidence that proved its existence. 1991
Facts:
2. Generally, the cause of action on the policy accrues when the loss Panama Sawmill shipped 1208 pieces of apitog logs to Manila and
occurs, but when the policy provides that no action shall be insured the logs with Oriental for the value of Php 1 million. Two
brought unless the claim is first presented extrajudicially in the barges were loaded with 610 and 598 logs. At sea, typhoons ravaged
manner provided in the policy, the cause of action will accrue from one of the barges, resulting in the loss of 497 of 598 of the logs.
the time the insurer finally rejects the claim for payment
The Insurance contract provided for indemnity under the following policy in question shows that the subject matter insured was the
conditions: entire shipment of 2,000 cubic meters of apitog logs. The fact that
the logs were loaded on two different barges did not make
Warranted that this Insurance is against TOTAL LOSS ONLY. Subject the contract several and divisible as to the items insured. The
to the following clauses: logs on the two barges were not separately valued or separately
insured. Only one premium was paid for the entire shipment, making
— Civil Code Article 1250 Waiver clause for only one cause or consideration. The insurance contract must,
— Typhoon warranty clause therefore, be considered indivisible.”
— Omnibus clause.
Also, the insurer's liability was for "total loss only" as stipulated. A
Oriental didn’t give an indemnity because there wasn’t total loss of total loss may be either actual or constructive. An actual total loss
the shipment. under Sec 130 of the Insurance Code is caused by:
The sawmill filed a civil case against Oriental and the court ordered (a) A total destruction of the thing insured;
it to pay 410,000 as value for the missing logs. The CA affirmed the (b) The irretrievable loss of the thing by sinking, or by being broken
lower court judgment but reduced the legal interest. Hence this up;
appeal by Oriental. (c) Any damage to the thing which renders it valueless to the owner
for the purpose for which he held it; or
Issue: (d) Any other event which effectively deprives the owner of the
Whether or not Oriental Assurance can be held liable under its marine possession, at the port of destination, of the thing insured.
insurance policy based on the theory of a divisible contract of
insurance and, consequently, a constructive total loss. A constructive total loss, gives to a person insured a right to abandon
and it means:
Held:
No. Petition granted. SECTION 139. A person insured by a contract of marine
insurance may abandon the thing insured, or any particular portion
Ratio: thereof separately valued by the policy, or otherwise separately
Perla v CA- The terms of the contract constitute the measure of the insured, and recover for a total loss thereof, when the cause of the
insurer liability and compliance therewith is a condition precedent to loss is a peril injured against,
the insured's right to recovery from the insurer. (a) If more than three-fourths thereof in value is actually lost, or
would have to be expended to recover it from the peril;
“Whether a contract is entire or severable is a question of intention (b) If it is injured to such an extent as to reduce its value more than
to be determined by the language employed by the parties. The three-fourths
The appellate court considered the cargo in one barge as separate Petitioner Virginia Perez went to Manila to claim the benefits under
from the other and ruled that 497 of 598 was more than ¾ of the the insurance policies of the deceased. She was paid P40,000.00
amount lost, showing a constructive total loss. under the first insurance policy for P20,000.00 but the insurance
company refused to pay the claim under the additional policy
The SC, however, said that although the logs were placed in two coverage of P50,000.00, the proceeds of which amount to
barges, they were not separately valued by the policy, nor separately P150,000.00.
insured. Of the entirety of 1,208, pieces of logs, only 497 pieces
thereof were lost or 41.45% of the entire shipment. Since the cost of The insurance company maintained that the insurance for
those 497 pieces does not exceed 75% of the value of all 1,208 pieces P50,000.00 had not been perfected at the time of the death of
of logs, the shipment cannot be said to have sustained a constructive Primitivo Perez. Consequently, the insurance company refunded the
total loss under Section 139(a) of the Insurance Code. amount paid.
BF Lifeman Insurance Corporation filed a complaint against Virginia

Perez v CA, GR 112329,28 January 2000 Perez seeking the rescission and declaration of nullity of the
Facts: insurance contract in question.
Primitivo B. Perez had been insured with the BF Lifeman Insurance
Corporation for P20,000.00. Sometime in October 1987, an agent of Petitioner Virginia A. Perez, on the other hand, averred that the
the insurance corporation, visited Perez in Quezon and convinced him deceased had fulfilled all his prestations under the contract and all
to apply for additional insurance coverage of P50,000.00. Virginia A. the elements of a valid contract are present.
Perez, Primitivo’s wife, paid P2,075.00 to the agent. The receipt
issued indicated the amount received was a "deposit." Unfortunately, On October 25, 1991, the trial court rendered a decision in favor of
the agent lost the application form accomplished by Perez and he petitioner ordering respondent to pay 150,000 pesos. The Court of
asked the latter to fill up another application form. The agent sent Appeals, however, reversed the decision of the trial court saying that
the application for additional insurance of Perez to the Quezon office. the insurance contract for P50,000.00 could not have been perfected
Such was supposed to forwarded to the Manila office. since at the time that the policy was issued, Primitivo was already
dead.
Perez drowned. His application papers for the additional insurance of
P50,000.00 were still with the Quezon. It was only after some time Petitioner’s motion for reconsideration having been denied by
that the papers were brought to Manila. Without knowing that Perez respondent court, the instant petition for certiorari was filed on the
died, BF Lifeman Insurance Corporation approved the application and ground that there was a consummated contract of insurance between
issued the corresponding policy for the P50,000.00. the deceased and BF Lifeman Insurance Corporation.
Issue: corporation and is therefore void. The court didn’t agree. A

WON the widow can receive the proceeds of the 2nd insurance policy potestative condition depends upon the exclusive will of one of the
parties and is considered void. The Civil Code states: When the
Held: fulfillment of the condition depends upon the sole will of the debtor,
No. Petition dismissed. the conditional obligation shall be void.
Ratio: The following conditions were imposed by the respondent company

Perez’s application was subject to the acceptance of private for the perfection of the contract of insurance: a policy must have
respondent BF Lifeman Insurance Corporation. The perfection of the been issued, the premiums paid, and the policy must have been
contract of insurance between the deceased and respondent delivered to and accepted by the applicant while he is in good health.
corporation was further conditioned with the following requisites The third condition isn’t potestative, because the health of the
stated in the application form: applicant at the time of the delivery of the policy is beyond the control
or will of the insurance company. Rather, the condition is a
"there shall be no contract of insurance unless and until a policy is suspensive one whereby the acquisition of rights depends upon the
issued on this application and that the said policy shall not take effect happening of an event which constitutes the condition. In this case,
until the premium has been paid and the policy delivered to and the suspensive condition was the policy must have been delivered
accepted by me/us in person while I/We, am/are in good health." and accepted by the applicant while he is in good health. There was
non-fulfillment of the condition, because the applicant was already
BF Lifeman didn’t give its assent when it merely received the dead at the time the policy was issued.
application form and all the requisite supporting papers of the
applicant. This happens only when it gives a policy. As stated above, a contract of insurance, like other contracts, must
be assented to by both parties either in person or by their agents. So
It is not disputed, however, that when Primitivo died on November long as an application for insurance has not been either accepted or
25, 1987, his application papers for additional insurance coverage rejected, it is merely an offer or proposal to make a contract. The
were still with the branch office of respondent corporation in Quezon. contract, to be binding from the date of application, must have been
Consequently, there was absolutely no way the acceptance of the a completed contract.
application could have been communicated to the applicant for the
latter to accept inasmuch as the applicant at the time was already The insurance company wasn’t negligent because delay in acting on
dead. the application does not constitute acceptance even after payment.
The corporation may not be penalized for the delay in the processing
Petitioner insists that the condition imposed by BF that a policy must of the application papers due to the fact that process in a week wasn’t
have been delivered to and accepted by the proposed insured in good the usual timeframe in fixing the application. Delay could not be
health is potestative, being dependent upon the will of the deemed unreasonable so as to constitute gross negligence.
Enriquez v Sun Life, GR L-15895, 29 November 1924 Ratio:

Facts: Sunlife averred that that they prepared the letter on November 26,
This is an action brought by the plaintiff administrator of the estate 1917, and handed it to the local manager for signature. The manager
of the late Joaquin Ma. Herrer to recover from the defendant life said that he received the application November 26, 1917. He said
insurance company the sum of pesos 6,000 paid by the deceased for that on the same day he signed a letter notifying Mr. Herrer of this
a life annuity. The trial court gave judgment for the defendant. acceptance. They said that these letters, after being signed, were
Plaintiff appeals. sent to the chief clerk and placed on the mailing desk for
transmission. The witness could not tell if the letter had every
Joaquin Herrer made application to the Sun Life Assurance Company actually been placed in the mails.
of Canada through its office in Manila for a life annuity. Two days
later he paid the sum of P6,000 to the manager of the company’s The plaintiff’s attorney testified to having prepared Herrer’s will, and
Manila office and was given a receipt. The application was given to his client mentioned his application for a life annuity. He said that the
the head office in Canada. The office gave acceptance by cable on only document relating to the transaction in his possession was the
November 26, 1917. The policy was issued on December 4. provisional receipt. Rafael Enriquez, the administrator of the estate,
testified that he had gone through the effects of the deceased and
The attorney, Mr. Torres then wrote to the Manila office of the had found no letter of notification from the insurance company to Mr.
company stating that Herrer desired to withdraw his application. The Herrer.
following day the local office replied to Mr. Torres, stating that the
policy had been issued, and called attention to the notification. This Our deduction from the evidence on this issue must be that the letter
letter was received by Mr. Torres on the morning of December 21, of November 26, 1917, notifying Mr. Herrer that his application had
1917 and Mr. Herrer died on December 20, 1917. been accepted, prepared, and signed in the local office of the
insurance company and was placed in the ordinary channels for
(Whether on the same day the cable was received notice was sent by transmission. But this was never actually mailed and thus was never
the Manila office of Herrer that the application had been accepted, is received by the applicant.
a disputed point, which will be discussed later.)
The law that applies here is the Civil Code Art 1802, because the
Issue: Insurance Act is silent as to the methods followed to create a contract
WON Herrer received notice of acceptance of his application. of insurance. Article 1802, not only describes a contact of life annuity,
but but in two other articles, also gives strong clues as to the
Held: proper disposition of the case.
No. Judgment reversed.
For instance, article 16 of the Civil Code provides that “In matters
which are governed by special laws, any deficiency of the latter shall
be supplied by the provisions of this Code.” The special law on the notification and place it in the usual channels for transmission to the
subject of insurance is deficient in enunciating the principles addressee.
governing acceptance, the subject-matter of the Civil code, if there
be any, would be controlling. In the Civil Code is found article 1262 The fact as to the letter of notification thus fails to concur with
providing that “Consent is shown by the concurrence of offer and the essential elements of the general rule pertaining to the mailing
acceptance with respect to the thing and the consideration which are and delivery of mail matter as announced by the American courts,
to constitute the contract. An acceptance made by letter shall not namely, when a letter or other mail matter is addressed and mailed
bind the person making the offer except from the time it came to his with postage prepaid there is a rebuttable presumption of fact that it
knowledge. The contract, in such case, is presumed to have been was received by the addressee as soon as it could have been
entered into at the place where the offer was made.” transmitted to him in the ordinary course of the mails. But if any one
of these elemental facts fails to appear, it is fatal to the presumption.
The Civil Code rule, that an acceptance made by letter shall bind the For instance, a letter will not be presumed to have been received by
person making the offer only from the date it came to his knowledge the addressee unless it is shown that it was deposited in the post-
avoids uncertainty and tends to security. office, properly addressed and stamped.
Also, U.S. jurisprudence states that the courts who take this view The contract for a life annuity was not perfected because it has not
have expressly held that an acceptance of an offer of insurance not been proved satisfactorily that the acceptance of the application ever
actually or constructively communicated to the proposer does not came to the knowledge of the applicant.
make a contract. Only the mailing of acceptance, it has been said,
completes the contract of insurance.
The law applicable to the case is found to be the second paragraph

of article 1262 of the Civil Code providing that an acceptance made
by letter shall not bind the person making the offer except from the
time it came to his knowledge. Also, that according to the provisional
receipt, three things had to be accomplished by the insurance
company before there was a contract: (1) There had to be a medical
examination of the applicant; (2) there had to be approval of
the application by the head office of the company; and (3) this
approval had in some way to be communicated by the company to
the applicant. The further admitted facts are that the head office in
Montreal did accept the application, did cable the Manila office to that
effect, did actually issue the policy and did actually write the letter of

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Insurance_2019_Digest_Canilang to Enriquez_part of week7 and 8 1

“(c) Those of which the other waives communication;

CASES: Vicenta de Ocampo died of cerebral apoplexy. Argente presented a

Issues: The deposit paid by private respondent shall have to be refunded

The receipt is merely an acknowledgment that the latter's branch

Canilang v CA and Great Pacific Life, GR 92492,17 June 1993 Held:

The negative answers given by the insured regarding his

The trial court dismissed the complaint. Hence, this petition.

Whenever a right to rescind a contract of insurance is given to the

The so-called "incontestability clause" in the second paragraph

The "incontestability clause" added by the second paragraph of

The petitioners argue that no evidence was presented to show that

WEEK 8 SEC. 51. A policy of insurance must specify:

SEC. 232. No policy, certificate or contract of insurance shall be

(d) A provision that if the age of the insured is considered in

the due date of a premium in default for the specified cash

Pacific Banking v CA, GR L-41014,28 November 1988

BF Lifeman Insurance Corporation filed a complaint against Virginia

Issue: corporation and is therefore void. The court didn’t agree. A

Ratio: The following conditions were imposed by the respondent company

Enriquez v Sun Life, GR L-15895, 29 November 1924 Ratio:

The law applicable to the case is found to be the second paragraph

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