IGNACIO SATURNINO vs. THE PHILIPPINE AMERICAN LIFE INSURANCE COMPANY G.R. No.

L-16163, 28 February 1963 FACTS: Estefania Saturnino obtained a 20-year endowment non-medical insurance. This kind of policy dispenses with the medical examination of the applicant usually required in ordinary life policies. However, two months prior to the issuance of the policy, Saturnino was operated on for cancer, involving mastectomy of the right breast. She did not make a disclosure thereof in her application for insurance. On the contrary, she stated therein that she did not have, nor had she ever had, among other ailments listed in the application, cancer or other tumors. Sometime after, Saturnino died of pneumonia, secondary to influenza. Appellants here, who are her surviving husband and minor child, respectively, demanded payment of the face value of the policy. The claim was rejected and hence an action was subsequently instituted.

ISSUE: Whether the insured made such false representations of material facts as to avoid the policy

HELD: YES. The Insurance Law provides that materiality is to be determined not by the event, but solely by the probable and reasonable influence of the facts upon the party to whom the communication is due, in forming his estimate of the proposed contract, or in making his inquiries. The waiver of medical examination renders even more material the information required of the applicant concerning previous condition of health and diseases suffered, for such information necessarily constitutes an important factor which the insurer takes into consideration in deciding whether to issue the policy or not. It is logical to assume that if appellee had been properly apprised of the insureds medical history she would at least have been made to undergo medical examination in order to determine her insurability. A concealment, whether intentional or unintentional, entitles the insurer to rescind the contract of insurance, concealment being defined as negligence to communicate that which a party knows and ought to communicate. The basis of the rule vitiating the contract in cases of concealment is that it misleads or deceives the insurer into accepting the risk, or accepting it at the rate of premium agreed upon. The insurer, relying upon the belief that the assured will disclose every material facts within his actual or presumed knowledge, is misled into a belief that the circumstance withheld does not exist, and he is thereby induced to estimate the risk upon a false basis that it does not exist. The judgment appealed from, dismissing the complaint and awarding the return to appellants of the premium already, paid, with interest at 6% up to January 29, 1959, affirmed, with costs against appellants.

MELECIO COQUIA ET AL vs. FIELDMEN'S INSURANCE CO., INC. G.R. No. L-23276 FACTS: Dec. 1, 1961: Fieldmens Insurance (Company) issued in favor of Manila Yellow Taxicab (Insured) a common carrier accident insurance policy from the period of Dec. 1, 1961 up to Dec. 1, 1962. Terms of the contract:1. Company will indemnify the Insured in the event of accident caused by/arising out of the use of Motor Vehicle against all sums w/Insured will be legally liable to pay in respect of death/bodily injury to any fare-paying passenger including the driver, conductor, and/or inspector riding in the motor vehicle insured at the time of accident/injury.2. In the event of the death of any person entitled to indemnity, the Company will indemnify his personal representatives as though they were the Insured, observe, fulfill & be subject to the terms of this policy, insofar as they can apply.3. Company has the option to make the indemnity payable directly to the claimants/heirs of claimants w/ or w/o securing the consent of or prior notification to the Insured. Feb. 10, 1962: Insureds taxicab driven by Carlito Coquia met an accident as a result of w/c, the driver died. Insured filed for a claim of P5k, Company then offered to pay P2k. Insured rejected such & made a counter-offer of P4k but such was rejected. Thus, Insured & heirs of Carlito filed a complaint against the Company to collect proceeds of the policy. Trial court sentenced company to pay plaintiffs P4k + costs. ISSUES: 1. WON the Coquias (heirs of the driver) have a contractual relationwith the company & thus entitled to indemnity. 2. WON insured failed to comply w/the provisions of the policyconcerning arbitration. RULING: As regards to the first issue: YES. General rule: only parties to a contract may bring an action based thereon. Exception: CC Art. 1311 If a contract should contain some stipulation in favor of a 3rd person, he may demand its fulfillment provided he communicated his acceptance to the obligor before its revocation. Exception is the well-known principle concerning contracts pour autrui, enforcement of w/c may be demanded by a 3rd party for whose benefit it was made, although not a party to the contract, before the stipulation in his favor has been revoked. Terms of the policy clearly show that the heirs of the driver are entitled to indemnity. True intention of the policy was to protect the liabilities of the insured towards the passengers of the motor vehicle & the public or third persons in other words. This is further strengthened by the fact that the driver paid50% of the corresponding premiums w/c were deducted from his weekly commissions. The heirs have a direct cause of action. They could have maintained an independent action w/o the assistance of the insured. All the more that they can properly join the latter in filing this complaint. As regards to the 2nd issue: Claim is based on Sec. 17 of the policy w/c provides that should any difference/dispute arise, it shall be referred to the decision of a single arbitrator agreed upon by both parties or failing such agreement, to the decision of 2 arbitrators. However, none of the parties invoked this section or made any reference to arbitration during the negotiations before case was instituted. Counsels did not suggest the settlement of the issue by arbitration. Such may be considered as a waiver of their respective rights to demand arbitration. Decision appealed from affirmed in toto November 29, 1968

QUA CHEE GAN vs. LAW UNION AND ROCK INSURANCE CO., LTD. G.R. No. L-4611, 17 December 1955 FACTS: Plaintiff-appellee owned four bodegas used for the storage of copra and hemp. These buildings, together with their contents, were insured with the defendant company since 1937 and the loss made payable to the Philippine National Bank as mortgage of the hemp and crops, to the extent of its interest. Sometime after, three of the bodegas, together with the merchandise inside, were completely destroyed by fire of an undetermined origin. Consequently, Qua Chee Gan notified the insurance company of his loss. The latter conducted an extensive investigation. The damage was determined to be equivalent to P398,562.81 which was later reduced to the full amount of the insurance, Php370,000.00. However, the insurance company refused payment, claiming violation of warranties and conditions, filing of fraudulent claims, and that the fire had been deliberately caused by the insured or by other persons in connivance with him. If moreover argued that since the bodegas insured had an external wall perimeter of 500 meters or 1,640 feet, the appellee should have 11 fire hydrants in the compound, and that he actually had only 2 with a further pair nearby, belonging to the municipality of Tabaco.

ISSUE: Whether or not the insurer company is liable HELD: YES. The SC is in agreement with the trial court that the appellant is barred by waiver (or rather estoppel) to claim violation of the so-called fire hydrants warranty, for the reason that knowing fully all that the number of hydrants demanded therein never existed from the very beginning, the appellant nevertheless issued the policies in question subject to such warranty, and received the corresponding premiums. It would be perilously close to conniving at fraud upon the insured to allow appellant to claims now as void ab initio the policies that it had issued to the plaintiff without warning of their fatal defect, of which it was informed, and after it had misled the defendant into believing that the policies were effective. The contract of insurance is one of perfect good faith (uferrimae fidei) not for the insured alone, but equally so for the insurer, in fact, it is mere so for the latter, since its dominant bargaining position carries with it stricter responsibility. We find no reversible error in the judgment appealed from, wherefore the same is hereby affirmed. Costs against the appellant.

G.R. No. L-36232 December 19, 1974 PIONEER INSURANCE AND SURETY CORPORATION, vs. OLIVA YAP, represented by her attorney-in-fact, CHUA SOON POON . FACTS: Oliva Yap was the owner of a store in a two-storey building located at No. 856 Juan Luna Street, Manila, where in 1962 she sold shopping bags and footwear, such as shoes, sandals and step-ins. Chua Soon Poon Oliva Yap's son-in-law, was in charge of the store. On April 19, 1962, respondent Yap took out Fire Insurance Policy No. 4216 from petitioner Pioneer Insurance & Surety Corporation with a face value of P25,000.00 covering her stocks, office furniture, fixtures and fittings of every kind and description. Among the conditions in the policy executed by the parties are the following: "The Insured shall give notice to the Company of any insurance or insurances already effected, or which may subsequently be effected, covering any of the property hereby insured, and unless such notice be given and the particulars of such insurance or insurances be stated in, or endorsed on this Policy by or on behalf of the Company before the occurrence of any loss or damage, all benefits under this Policy shall be forfeited. It is understood that, except as may be stated on the face of this policy there is no other insurance on the property hereby covered and no other insurance is allowed except by the consent of the Company endorsed hereon. Any false declaration or breach or this condition will render this policy null and void." At the time of the insurance on April 19, 1962 of Policy No. 4219 in favor of respondent Yap, an insurance policy for P20,000.00 issued by the Great American Insurance Company covering the same properties was noted on said policy as co-insurance. Still later, or on September 26, 1962, respondent Oliva Yap took out another fire insurance policy for P20,000.00 covering the same properties, this time from the Federal Insurance Company, Inc., which new policy was, however, procured without notice to and the written consent of petitioner Pioneer Insurance & Surety Corporation and, therefore, was not noted as a co-insurance in Policy No. 4219. At dawn on December 19, 1962, a fire broke out in the building housing respondent Yap's above-mentioned store, and the said store was burned. Hence Yap filed an insurance claim, but the same was denied in petitioner's letter of May 17, 1963, on the ground of "breach and/or violation of any and/or all terms and conditions" of Policy No. 4219. upon denial she filed with the Court of First Instance of Manila the present complaint, asking, among others, for payment of the face value of her fire insurance policy. In its answer, petitioner alleged that no property belonging to plaintiff Yap and covered by the insurance policy was destroyed by the fire; that Yap's claim was filed out of time; and that Yap took out an insurance policy from another insurance company without petitioner's knowledge and/or endorsement, in violation of the express stipulations in Policy No. 4219, hence, all benefits accruing from the policy were deemed forfeited. The trial court decided for plaintiff Oliva Yap; and its judgment was affirmed in full by the Court of Appeals. ISSUE: Whether YAP's claimed with Pioneer Insurance is without merit because of violation committed by her on the terms and conditions (co-insurance clause) on the policy contract HELD: The SC held that by the plain terms of the policy, other insurance without the consent of petitioner would ipso facto avoid the contract. It required no affirmative act of election on the part of the company to make operative the clause avoiding the contract, wherever the specified conditions should occur. Its obligations ceased, unless, being informed of the fact, it consented to the additional insurance. The validity of a clause in a fire insurance policy to the effect that the procurement of additional insurance without the consent of the insurer renders ipso facto the policy void is wellsettled.in nor endorsed on Policy No. 471 of defendant. And as stipulated in the above-quoted provisions of such policy "all benefit under this policy shall be forfeited. The obvious purpose of the aforesaid requirement in the policy is to prevent over-insurance and thus avert the perpetration of fraud. The public, as well as the insurer, is interested in preventing the situation in which a fire would be profitable to the insured. According to Justice Story: "The insured has no right to complain, for he assents to comply with all the stipulation on his side, in order to entitle himself to the benefit of the contract, which, upon reason or principle, he has no right to ask the court to dispense with the performance of his own part of the agreement, and yet to bind the other party to obligations, which, but for those stipulation would not have been entered into." In view of the above conclusion, We deem it unnecessary to consider the other defenses interposed by petitioner.

G.R. No. L-23491

July 31, 1968

TAURUS TAXI CO., INC., FELICITAS V. MONJE, ET AL., vs. THE CAPITAL INSURANCE & SURETY CO., INC., FACTS: Alfredo Monje, was employed as taxi driver by the Taurus Taxi Co., Inc. On December 6, 1962, the taxi he was driving collided with a Transport Taxicab at the intersection of Old Sta. Mesa and V. Mapa Streets, Manila, resulting in his death. At the time of the accident, there was subsisting and in force Commercial Vehicle Comprehensive Policy No. 101, 737 ... issued by CAPITAL INSURANCE & SURETY CORP. to herein Taurus Taxi Co., Inc. The amount for which each passenger, including the driver, is insured is P5,000.00. After the issuance of policy No. 101, 737, which was issued to Taurus Taxi Co., Inc. After which Taurus Taxi Co., Inc. made representations "for the payment of the insurance benefit corresponding to her and her children since it was issued in its name, benefit corresponding to her and her children, but despite demands, Capital Insurance company refused and still refuses to pay them. Capital Insurance & Surety Co. Inc. alleged "that in view of the fact that the deceased Alfredo Monje was entitled to indemnity under another insurance policy issued by Ed. A. Keller Co., Ltd., the heirs of the said deceased are not entitled to indemnity under the insurance policy issued by it for the reason that the latter policy contains a stipulation that "the company will indemnify any authorized driver provided that such authorized driver is not entitled to indemnity under any other policy. ISSUE: Whether the heirs of ALFREDO MONJE be entitled to the proceeds of the insurance policy issued by Capital Insurance Company even if there is an existing indemnity contract with another insurance company at the time of his death. HELD: The Supreme Court held that what is prohibited by the insurance policy in question is that any "authorized driver of plaintiff Taurus Taxi Co., Inc." should not be "entitled to any indemnity under any policy", it would appear indisputable that the obligation of Capital Insurance under the policy had not in any wise been extinguished. It is too well-settled to need the citation of authorities that what the law requires enters into and forms part of every contract. The Workmen's Compensation Act, explicitly requires that an employee suffering any injury or death arising out of or in the course of employment be compensated. The fulfillment of such statutory obligation cannot be the basis for evading the clear, explicit and mandatory terms of a policy. In the same way as was held in Benguet Consolidated, Inc. v. Social Security System that sickness benefits under the Social Security Act may be recovered simultaneously with disability benefits under the Workmen's Compensation Act, the previous payment made of the compensation under such legislation is no obstacle by virtue of a clause like that invoked by defendant-appellant to the payment of indemnity under the insurance policy. A contract of insurance couched in language chosen by the insurer is, if open to the construction contended for by the insured, to be construed most strongly, or strictly, against the insurer and liberally in favor of the contention of the insured, which means in accordance with the rule contra proferentem." . The other issue made by Capital Insurance is that by joining the heirs of Alfredo Monje as a party, plaintiff Taurus Taxi Co., Inc. committed a breach of policy condition and thus forfeited whatever benefits, if any, to which it might be entitled under appellant's policy." The basis for such an allegation is one of the conditions set forth in the policy. Thus: No admission, offer, promise or payment shall be made by or on behalf of the insured without the written consent of the Company which shall be entitled if it so desires to take over and conduct in his name the defense or settlement of any claim or to prosecute in his name for its own benefit any claim for indemnity or damages or otherwise and shall have full discretion in the conduct of any proceedings and in the settlement of any claim and the Insured shall give all such information and assistance as the Company may require .The institution of the action cannot possibly be construed as an admission, offer, promise, or payment by the company, for it merely seeks to enforce, by court action, the only legal remedy available to it, its rights under the contract of insurance to which it is a party.

G.R. No. L-34200 September 30, 1982 REGINA L. EDILLON, as assisted by her husband, MARCIAL EDILLON, vs. MANILA BANKERS LIFE INSURANCE CORPORATION and the COURT OF FIRST INSTANCE OF RIZAL, BRANCH V, QUEZON CITY FACTS: Sometime in April 1969, Carmen O, Lapuz applied with The Insurance corporation for insurance coverage against accident and injuries. She filled up the blank application form given to her and filed the same with the insurance corporation. In the said application form which was dated April 15, 1969, she 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 issued the corresponding receipt signed by an authorized agent of the respondent insurance corporation. Upon the filing of said application and the payment of the premium on the policy applied for, the respondent insurance corporation issued to Carmen O. Lapuz its Certificate of Insurance No. 128866. The policy was to be effective for a period of 90 days. On May 31, 1969 or during the effectivity of Certificate of Insurance No. 12886, Carmen O. Lapuz died in a vehicular accident in the North Diversion Road. On June 7, 1969, petitioner Regina L. Edillon, a sister of the insured and who was the named beneficiary in the policy, filed her claim for the proceeds of the insurance, submitting all the necessary papers and other requisites with the insurance company. Her claim having been denied, Regina L. Edillon instituted this action in the Court of First Instance of Rizal on August 27, 1969. In resisting the claim of the petitioner, the respondent insurance corporation relies on a provision contained in the Certificate of Insurance, excluding its liability to pay claims under the policy in behalf of "persons who are under the age of sixteen (16) years of age or over the age of sixty (60) years" It is pointed out that the insured being over sixty (60) years of age when she applied for the insurance coverage, the policy was null and void, and no risk on the part of the insurance corporation had arisen therefrom. The trial court sustained the contention of the insurance company and dismissed the complaint. It was reasoned out that a policy of insurance being a contract of adhesion, it was the duty of the insured to know the terms of the contract he or she is entering into; the insured in this case, upon learning from its terms that she could not have been qualified under the conditions stated in said contract, what she should have done is simply to ask for a refund of the premium that she paid. It was further argued by the trial court that the ruling calling for a liberal interpretation of an insurance contract in favor of the insured and strictly against the insurer may not be applied in the present case in view of the peculiar facts and circumstances obtaining therein. ISSUE: Whether the petitioner in this case is not entitled to the proceeds of the insurance taken by the insured because the insured is more than 60 years of age when she applied for the insurance as the age is one the condition being violated in the said policy. HELD: The Supreme Court held that the age of the insured Carmen 0. Lapuz was not concealed to the insurance company. Her application for insurance coverage which was on a printed form furnished by private respondent and which contained very few items of information clearly indicated her age of the time of filing the same to be almost 65 years of age. Despite such information which could hardly be overlooked in the application form, considering its prominence thereon and its materiality to the coverage applied for, the respondent insurance corporation received her payment of premium and issued the corresponding certificate of insurance without question. The accident which resulted in the death of the insured, a risk covered by the policy, occurred on May 31, 1969 or FORTY-FIVE (45) DAYS after the insurance coverage was applied for. There was sufficient time for the private respondent to process the application and to notice that the applicant was over 60 years of age and thereby cancel the policy on that ground if it was minded to do so. If the private respondent failed to act, it is either because it was willing to waive such disqualification; or, through the negligence or incompetence of its employees for which it has only itself to blame, it simply overlooked such fact. Under the circumstances, the insurance corporation is already deemed in estoppel. It inaction to revoke the policy despite a departure from the exclusionary condition contained in the said policy constituted a waiver of such condition.

G.R. No. 165661 August 28, 2006 SPS. MARIO & CORAZON VILLALVA, vs. RCBC SAVINGS BANK, FACTS: Spouses Mario and Corazon Villalva issued forty-eight (48) checks totaling P547,392.00 to cover installment payments due on promissory notes executed in favor of Toyota, Quezon Avenue (TQA) for the purchase of a 93 Toyota Corolla. The promissory notes were secured by a Chattel Mortgage executed by the petitioner spouses on the vehicle in favor of TQA. Under the Deed of Chattel Mortgage, petitioner spouses were to insure the vehicle against loss or damage by accident, theft and fire, and endorse and deliver the policies to the mortgagor, viz the MORTGAGOR covenants and agrees that they will cause the property mortgaged to be insured against loss or damage by accident, theft and fire for a period of one year from date hereof with an insurance company or companies acceptable to the MORTGAGEEThe MORTGAGOR hereby irrevocably authorizes the MORTGAGEE or its assigns to procure for the account of the MORTGAGOR the insurance coverage every year thereafter until the mortgage obligation is fully paid and any money so disbursed shall be payable and shall bear interest and/or finance charge in the same manner as stipulated in the next preceding sentence. It is understood that MORTGAGEE has no obligation to carry out aforementioned authority to procure insurance for the account of the MORTGAGOR. The evidence shows that the petitioner spouses faithfully complied with the obligation to insure the mortgaged vehicle from 1993 until 1996. For the period of August 14, 1996 to August 14, 1997, petitioner spouses procured the necessary insurance but did not deliver the same to the respondent until January 17, 1997. As a consequence, respondent had the mortgaged vehicle insured for the period of October 21, 1996 to October 21, 1997 and paid a P14,523.36 insurance premium. The insurance policy obtained by respondent was later cancelled due to the insurance policy secured by petitioner spouses over the mortgaged vehicle, and respondent bank was reimbursed P10,939.86 by Malayan Insurance Company. On February 10, 1999, respondent sent a letter of demand to the petitioners for P12,361.02 allegedly representing unpaid obligations on the promissory notes and mortgage as of January 31, 1999. In lieu thereof, respondent demanded that petitioner spouses surrender the mortgaged vehicle within five days from notice. In order to get the 93 Toyota Corolla, filed a complaint for Recovery of Possession with Replevin with the Metropolitan Trial Court of Pasay City, which was raffled to Branch 45 thereof. Two weeks later, or on April 19, 1999, the respondent caused the enforcement of a writ of replevin and recovered possession of the mortgaged vehicle. Petitioners asserted that they insured the mortgaged vehicle in compliance with the Deed of Chattel Mortgage. Metropolitan Trial Court rendered a decision in favor of petitioners. The same was affirmed by the Regional Trial Court but when appealed it was reversed by the Court of Appeals, hence, this petition. ISSUE: Whether the petitioners failed to comply with their obligation to insure the subject vehicle under the Deed of Chattel Mortgage which the Deed of Chattel Mortgage requires that the petitioners to: (1) secure the necessary insurance and (2) deliver the policies so endorsed to the respondent on the day of the execution of this mortgage. HELD: The Supreme Court held that petitioners did not default in the performance of their obligation. As a rule, demand is required before a party may be considered in default. However, demand by a creditor is not necessary in order that delay may exist: (1) when the obligation or the law expressly so declares; (2) when from the nature and the circumstances of the obligation it appears that the designation of the time when the thing is to be delivered or the service is to be rendered was a controlling motive for the establishment of the contract; or (3) when demand would be useless, as when the obligor has rendered it beyond his power to perform. None of the exceptions are present in this case. If petitioner was aware that the insurance coverage was inadequate, why did it not inform private respondent about it? After all, since petitioner was under no obligation to effect renewal thereof, it is but logical that it should relay to private respondents any defect of the insurance coverage before itself assuming the same. Due to the mortgagees failure to notify the mortgagor prior to application of the latters payments to the insurance premiums, this Court held that the mortgagors had not defaulted. In the case at bar, the respondent failed to demand that petitioners comply with their obligation to secure insurance coverage for the mortgaged vehicle. Following settled jurisprudence, we rule that the petitioners had not defaulted on their obligation to insure the mortgaged vehicle and the condition sine qua non for respondent to exercise its right to pay the insurance premiums over the subject vehicle has not been established.