15Pacific Timber Corp.

vs Court of AppealsGR No L-38613February 25, 1982Facts:Pacific Timber secured a temporary insurance for its exportation of Philippine Lauan andApitong logs to be shipped from Dapitan Bay to Tokyo Japan. The insurance company issued acover note subj ect to the term s and conditions of the compan y. After wards, 2 regular m arine cargo policies were issued to the petitioner.It so happened that after the cover note was issued but before the 2 regular marine cargopolicies were issued to the petitioner, approximately 30 of its logs were declared loss during theoperation in Dapitan Bay. Petitioner immediately notified the insurance company uponknowledge of the loss but was answered by the insurance company with denial of the proceeds. Thezzzzzzzzzzzzzzzzzzzsx WORKMEN'S INSURANCE COMPANY, INC. stated that the logs though were covered inthe cover note, the sam e were not covered with the issuance of the 2 m arine cargo policies. Itcontends that the c over note becam e null and void upon the issuanc e of the 2 regular m arine cargo policies and for lack of consideration.

Issue:Whether the cover note is null and void for lack of consideration

Held:Petitioner did pay a consideration as evidence by the express stipulation in the cover notethat a payment of premium is necessary as it is subject to the same terms and conditions as thatof a marine policy. The cover note is not a separate policy from insurance. It is a part of it, a realcontract and not a mere offer of insurance. The fact that no separate prem ium was paid on the Cover Note before the loss insur ed againstoccurred, does not m ilitate against the validit y of petitioner's contention, for no s uch prem ium could have been paid, s ince b y the nature of the Cover Note, it did not c ontain, as all Cover Notes do not contain particulars of the shipment that would serve as basis for the computation of the prem ium s. As a logic al consequence, no separate prem ium s are intended or required to bepaid on a Cover Note. This is a fact adm itted b y an official of responden t com pany, J uan Jose Camacho, in charge of issuing cover notes of the respondent company.For obvious reasons, it was not necessary to ask petitioner to pay premium on the Cover Note,for the loss insured against having alread y occurred, the m ore practical procedur e is sim ply to deduct the premium from the amount due the petitioner on the Cover Note. The non-payment of prem ium on the Cover Note is, therefore, no caus e for the petitioner to los e what is due it as if there had been payment of premium, for non-payment by it was not chargeable against its fault.Had all the logs been lost during the loading operations, but after the issuance of the Cover Note,liability on the note would have already arisen even before payment of premium. This is how thecover note as a "binder" should legally operate otherwise, it would serve no practical purpose in the realm of commerce, and is supported by the doctrine that where a policy is delivered withoutrequiring pa ym ent of the prem ium , the presum ption is that a credit was i ntended and polic y is valid.

Insurance Case Digest: Qua Chee Gan v. Law Union and Rock Insurance Co., Ltd. (1955) FACTS:

Qua Chee Gan, a merchant of Albay, owned four bodegas which he insured with Law Union & Rock Insurance Co., Ltd (Law Union) since

1937 and the lose made payable to the Philippine National Bank (PNB) as mortgage of the hemp and crops, to the extent of its interest July 21, 1940 morning: fire broke out in bodegas 1,2 and 4 which lasted for almost a week. o Qua Chee Gan informed Law Union by telegram Law Union rejected alleging that it was a fraudulent claim that the fire had been deliberately caused by the insured or by other persons in connivance with him Que Chee Gan, with his brother, Qua Chee Pao, and some employees of his, were indicted and tried in 1940 for the crime of arson but was subsequently acquitted During the pendency of the suit, Que Chee Gan paid PNB
Law Union states that ff. assignment of errors: o 1. memo of warranty requires 11 hydrants instead of 2 o 2. violation of hemp warranty against storage of gasoline since it prohibits oils o 3. fire was due to fraud o 4. burned bodegas could not possibly have contained the

quantities of copra and hemp stated in the fire claims

ISSUE: W/N

Qua Chee Gan should be allowed to claim.

HELD: YES. Affirmed.

1. It is a well settled rule of law that an insurer which with knowledge of facts entitling it to treat a policy as no longer in force, receives and accepts a preium on the policy, estopped to take advantage of the forfeiture 2. oils (animal and/or vegetable and/or mineral and/or their liquid products having a flash point below 300o Fahrenheit", and is decidedly ambiguous and uncertain; for in ordinary parlance, "Oils" mean "lubricants" and not gasoline or kerosene o by reason of the exclusive control of the insurance company over the terms and phraseology of the contract, the ambiguity must be held strictly against the insurer and liberraly in favor of the insured, specially to avoid a forfeiture 3. trial Court found that the discrepancies were a result of the insured's erroneous interpretation of the provisions of the insurance policies and claim forms, caused by his imperfect knowledge of English, and that the misstatements were innocently made and without intent to defraud. 4. Similarly, the 20 per cent overclaim on 70 per cent of the hemo stock, was explained by the insured as caused by his belief that he was entitled to include in the claim his expected profit on the 70 per

cent of the hemp, because the same was already contracted for and sold to other parties before the fire occurred

Vda. De Canilang v. CA - Concealment

223 SCRA 443 (1993)
Facts:
> Canilang consulted Dr. Claudio and was diagnosed as suffering from "sinus tachycardia." Mr. Canilang consulted the same doctor again on 3 August 1982 and this time was found to have "acute bronchitis." > On the next day, 4 August 1982, Canilang applied for a "non-medical" insurance policy with Grepalife naming his wife, as his beneficiary. Canilang was issued ordinary life insurance with the face value of P19,700. > On 5 August 1983, Canilang died of "congestive heart failure," "anemia," and "chronic anemia." The wife as beneficiary, filed a claim with Grepalife which the insurer denied on the ground that the insured had concealed material information from it. > Vda Canilang filed a complaint with the Insurance Commissioner against Grepalife contending that as far as she knows her husband was not suffering from any disorder and that he died of kidney disorder. > Grepalife was ordered to pay the widow by the Insurance Commissioner holding that there was no intentional concealment on the Part of Canilang and that Grepalife had waived its right to inquire into the health condition of the applicant by the issuance of the policy despite the lack of answers to "some of the pertinent questions" in the insurance application. CA reversed.

Issue:
Whether or not Grepalife is liable.

Held:
SC took note of the fact that Canilang failed to disclose that hat he had twice consulted Dr. Wilfredo B. Claudio who had found him to be suffering from "sinus tachycardia" and "acute bronchitis. Under the relevant provisions of the Insurance Code, the information concealed must be information which the concealing party knew and "ought to [have] communicate[d]," that is to say, information which was "material to the contract. The information which Canilang failed to disclose was material to the ability of Grepalife to estimate the probable risk he presented as a subject of life insurance. Had Canilang disclosed his visits to his doctor, the diagnosis made and the medicines prescribed by such doctor, in the insurance application, it may be reasonably assumed that Grepalife would have made further inquiries and would have probably refused to issue a non-medical insurance policy or, at the very least, required a higher premium for the same coverage. The materiality of the information withheld by Canilang from 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 our judicial process, except through proof of external acts or failure to act from which inferences as to his subjective belief may be reasonably drawn. Neither does materiality depend upon the actual or physical events which ensue. Materiality relates rather to the "probable and reasonable influence of the facts" upon the party to whom the communication should have been made, in assessing the risk involved in making or omitting to make further inquiries and in

accepting the application for insurance; that "probable and 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 waived inquiry into the concealment by issuing the insurance policy notwithstanding Canilang's failure to set out answers to some of the questions in the insurance application. Such failure precisely constituted concealment on the part of Canilang. Petitioner's argument, if accepted, would obviously erase Section 27 from the Insurance Code of 1978. http://www.scribd.com/doc/59703766/Insurance-Law-Case-Digests