Mailene A.

Caparroso Insurance Case Digest

G.R. No. 114427 February 6, 1995 ARMANDO GEAGONIA, petitioner, vs. COURT OF APPEALS and COUNTRY BANKERS INSURANCE CORPORATION, respondents.

FACTS: Geagonia, owner of a store, obtained from Country Bankers fire insurance policy for P100,000.00. The 1 year policy and covered the stock trading of dry goods. The policy noted the requirement that "3. 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 or properties consisting of stocks in trade, goods in process and/or inventories only hereby insured, and unless notice be given and the particulars of such insurance or insurances be stated therein or endorsed in this policy pursuant to Section 50 of the Insurance Code, by or on behalf of the Company before the occurrence of any loss or damage, all benefits under this policy shall be deemed forfeited, provided however, that this condition shall not apply when the total insurance or insurances in force at the time of the loss or damage is not more than P200,000.00." The petitioners stocks were destroyed by fire. He then filed a claim which was subsequently denied because the petitioners stocks were covered by two other fire insurance policies for Php 200,000 issued by PFIC. The basis of the private respondent's denial was the petitioner's alleged violation of Condition 3 of the policy. The insurance Commission rendered a decision in favor of Geagonia but was reversed by the CA. ARGUMENTS: Petitioner: Geagonia claimed that he knew the existence of the other two policies. But, he had no knowledge of the provision in the private respondent's policy requiring

him to inform it of the prior policies and this requirement was not mentioned to him by the private respondent's agent. Country Bankers Fire and Insurance/ CA: Private respondent alleged that there was violation of Condition 3 of the Policy as belied by the letter of petitioner. The CA on the other hand avers that the petitioner has a prior knowledge of the policies issued by PFIC.

ISSUES: WON the petitioner is prohibited from recovering.

HELD: No. Petition granted.

DISCUSSION: The provisions, conditions or exceptions in policies which tend to work a forfeiture of insurance policies should be construed most strictly against those for whose benefits they are inserted, and most favorably toward those against whom they are intended to operate. With these principles in mind, Condition 3 of the subject policy is not totally free from ambiguity and must be meticulously analyzed. Such analysis leads us to conclude that (a) the prohibition applies only to double insurance, and (b) the nullity of the policy shall only be to the extent exceeding P200,000.00 of the total policies obtained. Furthermore, by stating within Condition 3 itself that such condition shall not apply if the total insurance in force at the time of loss does not exceed P200,000.00, the private respondent was amenable to assume a co-insurer's liability up to a loss not exceeding P200,000.00. What it had in mind was to discourage over-insurance. Indeed, the rationale behind the incorporation of "other insurance" clause in fire policies is to prevent over-insurance and thus avert the perpetration of fraud. When a property owner obtains insurance policies from two or more insurers in a total amount that exceeds the property's value, the insured may

have an inducement to destroy the property for the purpose of collecting the insurance. The public as well as the insurer is interested in preventing a situation in which a fire would be profitable to the insured.

G.R. No. 115278 May 23, 1995 FORTUNE INSURANCE AND SURETY CO., INC., petitioner, vs. COURT OF APPEALS and PRODUCERS BANK OF THE PHILIPPINES, respondents. FACTS: Producers Banks money was stolen while it was being transported from Pasay to Makati. The people guarding the money were charged with the theft. The bank filed a claim for the amount of Php 725,000, and such was refused by the insurance corporation due to the stipulation which includes the general exception The company shall not be liable under this policy in report of (b) any loss caused by any dishonest, fraudulent or criminal act of the insured or any officer, employee, partner, director, trustee or authorized representative of the Insured whether acting alone or in conjunction with others. . . . Trial court rendered a decision in favor of PRODUCERS BANK OF THE PHILIPPINES which was affirmed by the CA. ARGUMENTS:

FORTUNE INSURANCE AND SURETY CO., INC.: The loss falls within the general exceptions clause considering that driver Magalong and security guard Atiga were Producers' authorized representatives or employees in the transfer of the money and payroll from its branch office in Pasay City to its head office in Makati.

PRODUCERS BANK OF THE PHILIPPINES: They contend that security guards Atiga and Magalong are not its "officer, employee . . . trustee or authorized representative . . . at the time of the robbery.

ISSUE: WON the guards fall under the general exceptions clause of the insurance policy and thus absolved the insurance company from liability. HELD: Yes. Petition granted.

DISCUSSION: The case was governed by Article 174 of the Insurance Code where it stated that casualty insurance awarded an amount to loss cause by accident or mishap. The term "employee," should be read as a person who qualifies as such as generally and universally understood, or jurisprudentially established in the light of the four standards in the determination of the employer-employee relationship, or as statutorily declared even in a limited sense as in the case of Article 106 of the Labor Code which considers the employees under a "labor-only" contract as employees of the party employing them and not of the party who supplied them to the employer. But even if the contracts were not labor-only, the bank entrusted the suspects with the duty to safely transfer the money to its head office, thus, they were representatives. According to the court, a representative is defined as one who represents or stands in the place of another; one who represents others or another in a special capacity, as an agent, and is interchangeable with agent.

G.R. No. L-9146

January 27, 1959

TERESA VDA. DE FERNANDEZ, ET AL., plaintiffs-appellants, vs. THE NATIONAL LIFE INSURANCE COMPANY OF THE PHILIPPINES, defendantappellee.

FACTS: National Life Insurance Company of the Philippines insured the life of Juan D. Fernandez for the sum of P10,000 under Policy No. 16346 upon payment by the latter of the amount of P444 for the period from July 15, 1944, to July 14, 1945, the beneficiaries thereof being his mother Teresa Duat Vda. de Fernandez and his sisters Maria Teresa Fernandez and Manuel Fernandez. The insured died on November 2, 1944, at Muntinglupa, Rizal, while the policy was in force. After a lapse of more than seven years, or on August 1st, 1952, Atty. Alberto L. de la Torre, in representation of the beneficiaries, wrote the company advising it that and insured had died in 1944, and claimed the proceeds of the policy. The company advised the beneficiaries that inasmuch as the policy matured upon the death of the insured on November 2, 1944, the proceeds should be computed in accordance with the Ballantyne scale, which amount only to P500. In view of this, the beneficiaries commenced suit on August 6, 1954, but the lower court sustained the stand of the company and dismissed the complaint, awarding however to plaintiffs the sum of P500 in Philippine currency, without interest; hence the appeal.

ARGUMENTS: TERESA VDA. DE FERNANDEZ, ET AL.,: Appellants vigorously maintain that the obligation of the company to pay the proceeds of the insurance accrued not upon the death of the insured on November 2, 1944, but only upon receipt and approval by the company, at its Home Office, of proof of death of the insured, which was on July 9, 1954 in accordance with the provision of the policy which reads

National Life Insurance Company of the Philippine hereby agrees to pay at its Home Office, Manila, Ten Thousand Pesos to Juan D. Fernandez (hereinafter called the insured) on the 15th day of July, 1964, if the Insured is living and this Policy is in force, or upon receipt and approved at its Office of due proofs of the title of the claimant and of the prior death of the Insured while this Policy is in force to Teresa Duat Vda. De Fernandez, Maria T. and Manuela Fernandez, mother and sisters respectively of the Insured (Hereinafter called the Beneficiary) subject to the right of the Insured to change the beneficiary as stated on the second page of this Policy. THE NATIONAL LIFE INSURANCE COMPANY OF THE PHILIPPINES: That in as much as the status of the policies issued during the Japanese occupation was still pending consideration before the courts the policy matured upon the death of the insured on November 2, 1944, the proceeds should be computed in accordance with the Ballantyne scale, which amount only to P500. ISSUE: WON, the policy matures either upon the expiration of the term set forth therein in which case its proceeds are immediately payable to the insured himself, or upon his death occurring at any time prior to the expiration of such stipulated term, in which case, the proceeds are payable to his beneficiaries within sixty days after their filing of proof of death (Sec. 91-A Insurance Law).

HELD: NO. Petition denied.

DISCUSSION: The delay in the presentation of proof of death does not make any difference, for it does not alter the date of maturity of the policy nor the ability of the company to pay the proceeds of the insurance during the Japanese occupation. Moreover, it is through no fault of the company that such delay was incurred. At any rate, irrespective of whether there was delay or not in the filing of proof of death, the hard fact remains that the policy matured and was payable during the Japanese

occupation, and under the doctrine in the Valero vs. Sycip case, supra, payment should be adjusted in accordance with the Ballantyne scale of values.

G.R. No. 113899. October 13, 1999

GREAT PACIFIC LIFE ASSURANCE CORP., petitioner vs. COURT OF APPEALS AND MEDARDA V. LEUTERIO, respondents. FACTS: A contract of group life insurance was executed between petitioner Great Pacific Life Assurance Corporation (hereinafter Grepalife) and Development Bank of the Philippines (hereinafter DBP). Grepalife agreed to insure the lives of eligible housing loan mortgagors of DBP. In November 1983, Wilfredo Leuterio, mortgagor of DBP applied to be a member of the group life insurance. He filled out a form where he indicated he never consulted any physician regarding any illness (heart condition etc) and that he is in good health. He was eventually included in the group life insurance and he was covered for the amount of his indebtedness (P86, 200.00). In August 1984, Wilfredo died. DBP submitted a death claim but it was denied by Grepalife as it insisted that Wilfredo actually concealed that he was suffering from hypertension at the time of his insurance application. Grepalife relied on the statement made by the doctor who issued Wilfredos death certificate wherein it was stated that Wilfredos immediate cause of death was massive cerebral hemorrhage secondary to hypertension or hypertension as a possible cause of death. Since Grepalife refused to pay the insurance claim filed by DBP, Medarda Leuterio (widow) sued Grepalife. Grepalife assailed the suit and insisted that Medarda is not a proper party in interest. The lower court ruled in favor of Medarda and the court ordered Grepalife to pay the amount of the insurance to DBP. The Court of Appeals affirmed this decision in 1993. Grepalife appealed to the Supreme Court. In 1995, pending resolution of the case in the SC, DBP foreclosed the property of Medarda.

ARGUMENTS: GREAT PACIFIC LIFE ASSURANCE CORP.: It insisted that Wilfredo actually concealed that he was suffering from hypertension at the time of his insurance application. Grepalife relied on the statement made by the doctor who issued Wilfredos death certificate wherein it was stated that Wilfredos immediate cause of death was massive cerebral hemorrhage secondary to hypertension or hypertension as a possible cause of death. MEDARDA V. LEUTERIO: She states that DBP foreclosed in 1995 their residential lot, in satisfaction of mortgagors outstanding loan. Considering this supervening event, the insurance proceeds shall inure to the benefit of the heirs of the deceased person or his beneficiaries. Equity dictates that DBP should not unjustly enrich itself at the expense of another (Nemo cum alterius detrimenio protest). Hence, it cannot collect the insurance proceeds, after it already foreclosed on the mortgage. ISSUE: Whether or not Grepalife is liable to pay the insurance claim.

HELD: Yes. Grepalife is liable to pay the insurance claim.

DISCUSSION: Medarda is a proper party in interest. It was Wilfredo who has been paying the premium, as the insured, he is the real party in interest and this status was transferred to his widow. The group life insurance or mortgage redemption insurance provides that DBP as the mortgagee is merely an assignee of Wilfredo; and that in the event of Wilfredos death before his indebtedness to DBP is paid, proceeds from the insurance shall first be applied to the sum of the balance Grepalife insured. failed But this does not cease Wilfredo to be he a party to the insurance contract. to prove that Wilfredo concealed that was suffering from hypertension at the time of his application. The doctors finding as to the cause of

death is not conclusive because no autopsy was conducted. The doctor who issued the death certificate has no knowledge of Wilfredos hospital confinement [if there are any]. The fraudulent intent on the part of the insured must be established to entitle the insurer to rescind the contract. Misrepresentation as a defense of the insurer to avoid liability is an affirmative defense and the duty to establish such defense by satisfactory and convincing evidence rests upon the insurer. Grepalife must however pay the claim to Medarda considering that DBP already foreclosed the property.