II.

INSURANCE POLICY
1. Great Pacific Life Assurance Co. vs Court of Appeals
GREAT PACIFIC LIFE ASSURANCE COMPANY, petitioner, vs. HONORABLECOURT OF APPEALS,
respondents.

G.R. No. L-31845
April 30, 1979

LAPULAPU D. MONDRAGON, petitioner, vs. HON. COURT OF APPEALS and NGO HING, respondents.

G.R. No. L-31878
April 30, 1979

Facts: Respondent Ngo Hing filed an application with petitioner Great Pacific Life Assurance Company
(Pacific Life) for a twenty-year endowment policy in the life of Helen Go, his one year old daughter.
Petitioner Lapulapu D. Mondragon, the branch manager, prepared application form using the essential
data supplied by respondent. The latter paid the annual premium and Mondragon retained a portion of
it as his commission. The binding deposit receipt was issued to respondent. Mondragon wrote his strong
recommendation for the approval of the insurance application. However, Pacific Life disapproved the
application since the plan was not available for minors below 7 years old but it can consider the same
under another plan. The non-acceptance of the insurance plan was allegedly not communicated by
Mondragon to respondent. Mondragon again asserted his strong recommendation. Helen Go died of
influenza. Thereupon, respondent sought the payment of the proceeds of the insurance, but having
failed in his effort, he filed an action for the recovery of the same. Hence the case at bar.

Issue: Whether the binding deposit receipt constituted a temporary contract of the life insurance in
question, and thus negate the claim that the insurance contract was perfected.

Held: YES. The provisions printed on the binding deposit receipt show that the binding deposit receipt is
intended to be merely a provisional or temporary insurance contract and only upon compliance of the
following conditions: (1) that the company shall be satisfied that the applicant was insurable on
standard rates; (2) that if the company 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 applicant is not insurable according to the
standard rates, and 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.

Clearly implied from the aforesaid conditions is that the binding deposit receipt in question is merely an
acknowledgment, on behalf of the company, that the latter's branch office had received from the
applicant the insurance premium and had accepted the application subject for processing by
theinsurance company; and that the latter will either approve or reject the same on the basis of
whether or not the applicant is "insurable on standard rates." Since Pacific Life disapproved the
insurance application of Ngo Hing, the binding deposit receipt in question had never become in force at
any time. Upon this premise, the binding deposit receipt is, manifestly, merely conditional and does not
insure outright. Where an agreement is made between the applicant and the agent, no liability shall
attach until the principal approves the risk and a receipt is given by the agent. The acceptance is merely
conditional, and is subordinated to the act of the company in approving or rejecting the application.

Thus, in life insurance, a "binding slip" or "binding receipt" does not insure by itself. It bears repeating
that through the intra-company communication of 30 April 1957, Pacific Life disapproved the insurance
application in question on the ground that it is not offering the 20-year endowment insurance policy to
children less than 7 years of age. What it offered instead is another plan known as the Juvenile Triple
Action, which Ngo Hing failed to accept. In the absence of a meeting of the minds between Pacific Life
and Ngo Hing over the 20-year endowment life insurance in the amount of P50,000.00 in favor of the
latter's one-year old daughter, and with the non-compliance of the abovequoted conditions stated in
the disputed binding deposit receipt, there could have been no insurance contract duly perfected
between them. Accordingly, the deposit paid by Ngo Hing shall have to be refunded by Pacific Life.

EN BANC
G.R. No. 41702 September 4, 1935
FORTUNATA LUCERO VIUDA DE SINDAYEN, Plaintiff-Appellant,
vs. THE INSULAR LIFE ASSURANCE CO., LTD., Defendant-
Appellee.
Jos. N. Wolfson for appellant.
Araneta, Zaragoza and Araneta for appellee.
BUTTE, J.:
This if, an appeal from a judgment of the Court of First Instance of
Manila in an action brought by the plaintiff-appellant as beneficiary
to recover P1,000 upon a life insurance policy issued by the
defendant on the life of her deceased husband, Arturo Sindayen.chanroblesvirtualawl ibrarychanrobles vi rtual law
library
The essential facts upon which this case turns are not in dispute and
may be stated as follows:chanrobles vi rtual law library
Arturo Sindayen, up to the time of his death on January 19, 1933,
was employed as a linotype operator in the Bureau of Printing at
Manila and had been such for eleven years prior thereto. He and his
wife went to Camiling, Tarlac, to spend the Christmas vacationwith
his aunt, Felicidad Estrada. While there he made a written
application on December 26, 1932, to the defendant Insular Life
Assurance Co., Ltd., through its agent, Cristobal Mendoza, for a
policy of insurance on his life in the sum of P1,000 and he paid to
the agent P15 cash as part of the first premium. It was agreed with
the agent that the policy, when and if issued, should be delivered to
his aunt. Felicidad Estrada, with whom Sindayen left the sum of
P26.06 to complete the payment of the first annual premium of
P40.06. On January 1, 1933, Sindayen, who was then twenty-nine
years of age, was examined by the company's doctor who made a
favorable report, to the company. On January 2, 1933, Sindayen
returned to Manila and resumed his work a linotype operator in the
Bureau of Printing. On January 11, 1933, The company accepted the
risk and issued policy No. 47710 dated back to December 1, 1932,
and mailed the same to its agent, Cristobal Mendoza, in Camiling,
Tarlac, for delivery to the insured. On January 11, 1933, Sindayen
was at work in the Bureau of Printing. On January 12, he
complained of a severe headache and remained at home. On
January 15, he called a physician who found that he was suffering
from acute nephritis and uremia. His illness did not yield to
treatment and on January 19, 1933, he died.chanroblesvi rtualawlibrary chanrobles vi rtual law li brary
The policy which the company issued and mailed in Manila on
January 11, 1933, was received by its agent in Camiling, Tarlac, on
January 16, 1933. On January 18, 1933, the agent, in accordance
with his agreement with the insured, delivered the policy to
Felicidad Estrada upon her payment of the balance of the first
year's annual premium. The agent asked Felicidad Estrada if her
nephew was in good health and she replied that she believed so
because she had no information that he was sick and he thereupon
delivered to her the policy.chanroblesvirtualawli brary chanrobles virtual law l ibrary
On January 20, 1933, the agent learned of the death of Arturo
Sindayen and called on Felicidad Estrada and asked her to return
the policy. He testified: "pedia a ella que me devolviera a poliza
para traerla a Manila para esperar la de decision de la compaia" (t.
s. n. p. 19). But he did not return or offer to return the premium
paid. Felicidad Estrada on his aforesaid statement gave him the
policy.chanroblesvirtualawl ibrary chanrobles virtual law l ibrary
On February 4, 1933, under circumstances which it is not necessary
to relate here, the company obtained from the beneficiary, the
widow of Arturo Sindayen, her signature to a legal documententitled
"ACCORD, SATISFACTION AND RELEASE" whereby in consideration
of the sum of P40.06 paid to her by a check of the company, she
"assigns, releases and forever discharges said Isular Life Assurance
Co., Ltd., its successors and assigns, of all claims, obligation in or
indebtedness which she, as such beneficiary ever had or now has,
hereafter ca, shall, or may have, for, upon, or by reason of said
policy of life insurance numbered 47710 upon the life of said Arturo
Sindayen, the latter now deceased, or arising therefrom or
connected therewith in any manner", which appears in the record as
Exhibit A, attached to the deposition of the notary who executed th
fraudulent acknowledgment to Exhibit A. The said check for P40.06
was never cashed but returned to the company and appears in the
record of this case as Exhibit D. Thereupon this action was brought
to enforce payment of the policy.chanroblesvi rtualawlibrary chanrobles vi rtual law library
By the terms of the policy, an annual premium of P40.06 is due on
the first day of December of each year, the first premium already
paid by the insured covering the period from December 1, 1932. It
is to December 1, 1933. It is to be noted that the policy was not
issued and the company assumed no actual risk prior to January 11,
1933.chanroblesvirtualawli brary chanrobles virtual law l ibrary
The policy contains the following paragraph:
THE CONTRACT. This Policy and the application herefor constitute
the entire contract between the parties hereto. All statements made
by the Insured shall, in the absence of fraud, be deemed
representations and not warranties, and no such statement shall
void the Policy unless it is contained in the written application, a
copy of which is attached to this Policy. Only the President, or the
Manager, acting jointly with the Secretary or Assistant
Secretary (and then only in writing signed by them) have power in
behalf of the Company to issue permits, or to modify this or any
contract, or to extend the time for making any premium payment,
and the Company shall t bound by any promise or representation
heretofore hereafter given by any person other than the above-
named officials, and by them only in writing and signed conjointly
as stated.".
The application which the insured signed in Camiling, Tarlac, on
December 26, 1932, contained among others the following
provisions:
2. That if this application is accepted and a policy issued in my
favor, I bind myself to accept the same and to pay at least the first
year's premium thereon in the City of Manila.chanroblesvi rtualawlibrary chanrobles vi rtual law library
3. That the said policy shall not take effect until the first premium
has been paid and the policy has been delivered to and accepted by
me, while I am in good health.chanroblesvirtualawli brary chanrobles virtual law l ibrary
4. That the agent taking this application has no authority to make,
modify or discharge contracts, or to waive any of the Company's
right or requirements.".
The insurance company does not set up any defense of fraud,
misconduct or omission of duty of the insured or his agent, Felicidad
Estrada or of the beneficiary. In its answer it pleads the "ACCORD,
SATISFACTION AND RELEASE" (Exhibit A) signed by the widow of
Arturo Sindayen, the plaintiff-appellant. With respect to Exhibit A, it
suffices to say that this release is so inequitable, not to say
fraudulent, that we are pleased to note that counsel for the
defendant company, on page 51 of their brief, state: "si resultara
que la poliza aqui en cuestion es valida la apelada seria la primera
en no dar validez alguno al documento Exhibit A aunque la apelante
hubiera afirmado que lo otorgo con conocimiento de causa."chanrobles virtual law l ibrary
It is suggested in appellee's brief that fhere was no delivery of the
policy in this case because the policy was not delivered to and
accepted by the insured in person. Delivery to the insured in person
is not necessary. Delivery may be made by mail or to a duly
constituted agent. Appellee cites no authorities to support its
proposition and none need be cited to refute it.chanroblesvi rtualawlibrary chanrobles vi rtual law library
We come now to the main defense of the company in this case,
namely, that the said policy never took effect because of paragraph
3 of the application above quoted, for at the time of its delivery by
the agent as aforesaid the insured was not in good health. We have
not heretofore been called upon to interpret and apply this clause in
life insurance application, but identical or substantially identical
clauses have been construed and applied in a number of cases in
the United States and the decisions thereon are far from uniform or
harmonious. We do not find it practicable to attempt to determine
where the weight of the authority lies and propose to resolve this
case on its own facts.chanroblesvi rtualawlibrary chanrobles vi rtual law library
There is one line of cases which holds that the stipulation contained
in paragraph 3 is in the nature of a condition precedent, that is to
say, that there can be no valid delivery to the insuredunless he is in
good health at the time; that this condition precedent goes to the
very essence of the contract and cannot be waived by the agent
making delivery of the policy, (Rathbun is. New York Life Insurance
Co., 30 Idaho, 34; 165 Pac., 997; American Bankers Insurance
Co. vs. Thomas, 53 Okla., 11; 154 Pac., 44; Gordon vs. Prudential
Insurance Co., 231 Pa., 404; Reliance Life Insurance
Co. vs. Hightower, 148 Ga., 843; 98 S.E., 469.)chanrobles virtual law li brary
On the other hand, a number of American decisions hold that an
agent to whom a life insurance policy similar to the one here
involved was sent with instructions to deliver it to the insured has
authority to bind the company by making such delivery, although
the insured was not in good health at the time of delivery, on the
theory that the delivery of the policy being the final act to the
consummation of the contract, the condition as to the insurer's good
health was waived by the company. (Kansas City Life Insurance
Co. vs. Ridout, 147 Ark., 563; 228 S.W., 55; Metropolitan Life
Insurance Co. vs. Willis, 37 Ind. App., 48; 76 N.E., 560;
Griervs. Mutual Life Insurance Co. of New York, 132 N.C., 543; 44
S.E., 38; Bell vs. Missouri State Life Insurance Co., 166 Mo. App.,
390; 149 S.W., 33.)chanrobles vi rtual law library
A number of these cases go to the of holding that the delivery of the
policy by the agent to the insured consummates the contract even
though the agent knew that the insured was not in good health at
the time, the theory being that his knowledge is the company's
knowledge and his delivery of the policy is the company's delivery;
that when the delivery is made notwithstanding this knowledge of
the defect, the company is deemed to have waived the defect.
Although that appears to be the prevailing view in the American
decisions (14 R.C.L., 900) and leads to the same conclusion,
namely, that the act of delivery of the policy in the absence of fraud
or other ground for recission consummates the insurance, we are
inclined to the view that it is more consonant with the well known
practice of life insurance companies and the evidence in the present
case to rest our decision on the proposition that Mendoza was
authorized by the company to make the delivery of the policy when
he received the payment of the first premium and he was satisfied
that the insured was in good health. As was well said in the case of
MeLaurin vs.Mutual Life Insurance Co. (115 S.C., 59; 104 S.E.,
327):
So much comes from the necessity of the case; the president, the
vice-president, and the secretary cannot solicit, or collect, or
deliver; they must commit that to others, and along with it the
discretions we have adverted to. . . . The power in the local agent to
withhold the policy involves the power to deliver it; there is no
escape from that conclusion.chanroblesvi rtualawlibrary chanrobles vi rtual law library
But the appellant says, even though the local agent should have
concluded that the applicant was in good health, yet, if the fact be
the contrary, then the policy never operated. The parties intended
to make a contract, and that involved the doing of everything
necessary to carry it into operation, to wit, the acceptance of the
applicant as a person in good health. They never intended to leave
open that one essential element of the contract, when the parties
dealth fairly one with the other. It is plain, therefore, that upon the
facts it is not necessarily a case of waiver or of estoppel, but a case
where the local agents, in the exercise of the powers lodged in
them, accepted the premium and delivered the policy. That act
binds their principal, the defendant.
Mendoza was duly licensed by the Insurance Commissioner to act as
the agent of the defendant insurance company. The well known
custom of the insurance business and the evidence in this case
prove that Mendoza was not regarded by the company as a mere
conduit or automaton for the performance of the physical act of
placing the policy in the hands of the insured. If Mendoza were only
an automaton then the legally effective delivery of the policy and
the consummation of the contract occurred when the company
expressed its will to release the policy by mailing it to its agent,
namely, on January 11, 1933. In such a case the agent would
perform a purely ministerial act and have no discretion. He could do
nothing but make unconditional delivery. The legal result would be
the same as if the company had mailed the policy on January 11,
1933, to the insured directly using the post-office as its conduit for
delivery. On January 11, 1933, the insured was in good health
performing his regular duties in the Bureau of Printing.chanroblesvirtualawl ibrary chanrobles virtual law l ibrary
But we are not inclined to take such a restrictive view of the agent's
authority because the evidence in the record shows that Mendoza
had the authority, given him by the company, to withhold the
delivery of the policy to the insured "until the first premium has
been paid and the policy has been delivered to and accepted by me
(the insured) while I am in good health". Whether that condition
had been met or not plainly calls for the exercise of discretion.
Granted that Mendoza's decision that the condition had been met by
the insured and that it was proper to make a delivery of the policy
to him is just as binding on the company as if the decision had been
made by its board of directors. Granted that Mendoza made a
mistake of judgement because he acted on insufficient evidence as
to the state of health of the insured. But it is not charged that the
mistake was induced by any misconduct or omission of duty of the
insured.chanroblesvi rtualawlibrary chanrobles virtual law li brary
It is the interest not only the applicant but of all insurance
companies as well that there should be some act which gives the
applicant the definite assurance that the contract has been
consummated. This sense of security and of peace of mind that
one's defendants are provided for without risk either of loss or of
litigation is the bedrock of life insurance. A cloud will be thrown over
the entire insurance business if the condition of health of the the
insured at the time of delivery of the policy may be required into
years afterwards with the view to avoiding the policy on the ground
that it never took effect because of an alleged lack of good health,
at the time of delivery. Suppose in the present instance that
Sindayen had recovered his health, but was killed in an automobile
accident six months after the delivery of the policy; and that when
called on to pay the loss, the company learns of Sindayen's grave
illness on January 18, 1933, and alleges that the policy had never
taken effect. It is difficult to imagine that the insurance company
would take such a position in the face of the common belief of the
insuring public that when the policy is delivered, in the absence of
fraud or other grounds for rescission, the contract of insurance is
consummated. The insured rests and acts on that faith. So does the
insurance company, for that matter, for from the date of delivery of
the policy it appropriates to its own use the premium paid by the
insured. When the policy is issued and delivered, in the absence of
fraud or other grounds for rescission, it is plainly not within the
intention of the parties that there should be any questions held in
abeyance or reserved for future determination that leave the very
existence of the contract in suspense and doubt. If this were not so,
the entire business world which deals so voluminously in insurance
would be affected by this uncertainly. Policies that have been
delivered to the insured are constantly being assigned for credit and
other purposes. Although such policies are not negotiable
instruments and are subject to defenses for fraud, it would be a
most serious handicap to business if the very existence of the
contract remains in doubt even though the policy has been issued
and delivered with all the formalities required by the law. It is
therefore in the public interest, for the public is profoundly and
generally interested in life insurance, as well as in the interest of the
insurance companies themselves by giving certainly and security to
their policies, that we are constrained to hold, as we, do, that the
delivery of the policy to the insured by an agent of the company
who is authorized to make delivery or without delivery is the final
act which binds the company (and the insured as well) in the
absence of fraud or other legal ground for rescission. The fact that
the agent to whom it has entrusted this duty (and corporation can
only act through agents) is derelict or negligent or even dishonest in
the performance of the duty which has been entrusted to him would
create a liability of the agent to the company but does not resolve
the company's obligation based upon the authorized acts of the
agent toward a third party who was not in collusion with the
agent.chanroblesvirtualawli brary chanrobles virtual law l ibrary
Paragraph 4 of the application to the effect "that the agent taking
this application has no authority to make, modify or discharge
contracts or to waive any of the company's rights or requirements"
is not in point. Mendoza neither waived nor pretended to waive any
right or requirement of the company. In fact, his inquiry as to the
state of health of the insured discloses that he was endeavoring to
assure himself that this requirement of the company had been
satisfied. In doing so, he acted within the authority conferred on
him by his agency and his acts within that authority bind the
company. The company therefore having decided that all the
conditions precedent to the taking effect of the policy had been
complied with and having accepted the premium and delivered the
policy thereafter to the insured, the company is now estopped to
assert that it never intended that the policy should take effect. (Cf.
Northwestern Life Association vs. Findley, 29 Tex. Civ. App., 494;
68 S.W, 695; McLaurin vs. Mutual Life Insurance Co., 115 S.C., 59;
104 S.E., 327; 14 Aal. Jur., par. 12, pages 425-427.)chanrobles virtual law li brary
In view of the premises, we hold that the defendant company
assumed the risk covered by policy No. 47710 on the life of Arturo
Sindayen on January 18, 1933, the date when the policy was
delivered to the insured. The judgment appealed from is therefore
reversed with directions to enter judgment against the appellee in
the sum of P1,000 together with interest at the legal rate from and
after May 4, 1933, with costs in both instances against the
appellee.chanroblesvi rtualawlibrary chanrobles vi rtual law library
Malcolm. Villa-Real, Abad Santos, Hull, Vickers, Goddard, and Recto,
JJ., concur.
Insurance Case Digest: Pacific Timber V. CA
(1982)

G.R. No. L-38613 February 25, 1982

Lessons Applicable: Rules on cover notes (if premium CANNOT yet be computed)
(Insurance)
Laws Applicable: Section 84 of the Insurance Code


FACTS:
March 19, l963: Pacific Timber secured temporary insurance from Workmen's
Insurance Company, Inc. for its exportation of 1,250,000 board feet of
Philippine Lauan and Apitong logs to be shipped from the Diapitan Bay, Quezon
Province to Tokyo, Japan.
Workmen's issued Cover Note insuring the cargo "Subject to the Terms and Conditions of
the Workmen's Insurance Company, Inc."
April 2, 1963: regular marine cargo policies were issued for a total of 1,195.498
bd. ft. Due to the bad weather some of the logs were lost during loading
operations. 45 pieces of logs were salvaged, but 30 pieces were lost. Pacific
informed Workmen's who refused stating that the logs covered in the 2 marine
policies were received in good order at the point of destination and that the
cover note was null and void upon the issuance of the Marine Policies
CFI: cover note is valid
CA: reversed
ISSUE: W/N the cover note is valid despite the absence of premium payment upon it


HELD: YES. CA set aside. CFI reinstated
it was not necessary to ask for payment of the premium on the Cover Note , for the loss insured
against having already occurred, the more practical procedure is simply to
deduct the premium from the amount due on the Cover Note
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
cover note as a "binder"
supported by the doctrine that where a policy is delivered without requiring payment of the premium,
the presumption is that a credit was intended and policy is valid
it sent its adjuster to investigate and assess the loss to determine if petitioner was guilty of delay in
communicating the loss but there was none
Section 84
Delay in the presentation to an insurer of notice or proof of loss is waived if caused by any act of his
or if he omits to take objection promptly and specifically upon that ground


In 1963, Pacific Timber Export Corporation (PTEC) applied for a temporary marine insurance from
Workmens Insurance Company (WIC) in order for the latter to insure 1,250,000 board feet of logs to
be exported to Japan. In March 1963, WIC issued a cover note to PTEC for the said logs. On April 2,
1963, WIC issued two policies for the logs. However, the total board feet covered this time is only
1,195,498. On April 4, 1963, while the logs were in transit to Japan, bad weather prevailed and this
caused the loss of 32 pieces of logs.
WIC then asked an adjuster to investigate the loss. The adjuster submitted that the logs lost were
not covered by the two policies issued on April 2, 1963 but said logs were included in the cover note
earlier issued.
WIC however denied the insurance claim of PTEC as it averred that the cover note became null and
void when the two policies were subsequently issued. The Court of Appeals ruled that the cover note
is void for lack of valuable consideration as it appeared that no premium payment therefor was
made by PTEC.
ISSUE: Whether or not a separate premium is needed for cover notes.
HELD: No. The Cover Note was not without consideration for which the Court of Appeals held the
Cover Note as null and void, and denied recovery therefrom. The fact that no separate premium was
paid on the Cover Note before the loss insured against occurred, does not militate against the
validity of PTECs contention, for no such premium could have been paid, since by the nature of the
Cover Note, it did not contain, as all Cover Notes do not contain particulars of the shipment that
would serve as basis for the computation of the premiums. As a logical consequence, no separate
premiums are intended or required to be paid on a Cover Note.
At any rate, it is not disputed that PTEC paid in full all the premiums as called for by the statement
issued by WIC after the issuance of the two regular marine insurance policies, thereby leaving no
account unpaid by PTEC due on the insurance coverage, which must be deemed to include the
Cover Note. If the Note is to be treated as a separate policy instead of integrating it to the regular
policies subsequently issued, the purpose and function of the Cover Note would be set at naught or
rendered meaningless, for it is in a real sense a contract, not a mere application for insurance which
is a mere offer.

Insurance Case Digest: Malayan Insurance
Co., Inc. V. Arnaldo (1987)

G.R. No. L-67835 October 12, 1987

Lessons Applicable: Authority to Receive Payment/Effect of Payment (Insurance)
Laws Applicable: Article 64, Article 65, Section 77, Section 306 of the Insurance Code


FACTS:
June 7, 1981: Malayan insurance co., inc. (MICO) issued to Coronacion Pinca, Fire Insurance
Policy for her property effective July 22, 1981, until July 22, 1982

October 15,1981: MICO allegedly cancelled the policy for non-payment, of the premium and sent
the corresponding notice to Pinca
December 24, 1981: payment of the premium for Pinca was received by Domingo Adora, agent
of MICO
January 15, 1982: Adora remitted this payment to MICO,together with other payments
January 18, 1982: Pinca's property was completely burned
February 5, 1982: Pinca's payment was returned by MICO to Adora on the ground that her policy
had been cancelled earlier but Adora refused to accept it and instead demanded for payment
Under Section 416 of the Insurance Code, the period for appeal is thirty days from notice of the
decision of the Insurance Commission. The petitioner filed its motion for reconsideration
on April 25, 1981, or fifteen days such notice, and the reglementary period began to run again
after June 13, 1981, date of its receipt of notice of the denial of the said motion for
reconsideration. As the herein petition was filed on July 2, 1981, or nineteen days later, there is
no question that it is tardy by four days.
Insurance Commission: favored Pinca
MICO appealed
ISSUE: W/N MICO should be liable because its agent Adora was authorized to receive it


HELD: YES. petition is DENIED
SEC. 77. An insurer is entitled to payment of the premium as soon as the thing is exposed to
the peril insured against. Notwithstanding any agreement to the contrary, no policy or contract of
insurance issued by an insurance company is valid and binding unless and until the premium
thereof has been paid, except in the case of a life or an industrial life policy whenever the grace
period provision applies.
SEC. 306. xxx xxx xxx

Any insurance company which delivers to an insurance agant or insurance broker a policy or
contract of insurance shall be demmed to have authorized such agent or broker to receive on its
behalf payment of any premium which is due on such policy or contract of insurance at the time of its
issuance or delivery or which becomes due thereon.
Payment to an agent having authority to receive or collect payment is equivalent to payment to
the principal himself; such payment is complete when the money delivered is into the agent's
hands and is a discharge of the indebtedness owing to the principal.
SEC. 64. No policy of insurance other than life shall be cancelled by the insurer except upon
prior notice thereof to the insured, and no notice of cancellation shall be effective unless it is
based on the occurrence, after the effective date of the policy, of one or more of the following:

(a) non-payment of premium;

(b) conviction of a crime arising out of acts increasing the hazard insured against;

(c) discovery of fraud or material misrepresentation;

(d) discovery of willful, or reckless acts or commissions increasing the hazard insured against;

(e) physical changes in the property insured which result in the property becoming uninsurable;or

(f) a determination by the Commissioner that the continuation of the policy would violate or would
place the insurer in violation of this Code.

As for the method of cancellation, Section 65 provides as follows:

SEC. 65. All notices of cancellation mentioned in the preceding section shall be in writing,
mailed or delivered to the named insured at the address shown in the policy, and shall state (a)
which of the grounds set forth in section sixty-four is relied upon and (b) that, upon written
request of the named insured, the insurer will furnish the facts on which the cancellation is
based.
A valid cancellation must, therefore, require concurrence of the following conditions:

(1) There must be prior notice of cancellation to the insured;

(2) The notice must be based on the occurrence, after the effective date of the policy, of one or
more of the grounds mentioned;


(3) The notice must be (a) in writing, (b) mailed, or delivered to the named insured, (c) at the
address shown in the policy;

(4) It must state (a) which of the grounds mentioned in Section 64 is relied upon and (b) that upon
written request of the insured, the insurer will furnish the facts on which the cancellation is based.
All MICO's offers to show that the cancellation was communicated to the insured is its
employee's testimony that the said cancellation was sent "by mail through our mailing section."
without more
It stands to reason that if Pinca had really received the said notice, she would not have made
payment on the original policy on December 24, 1981. Instead, she would have asked for a new
insurance, effective on that date and until one year later, and so taken advantage of the
extended period.
Incidentally, Adora had not been informed of the cancellation either and saw no reason not to
accept the said payment
Although Pinca's payment was remitted to MICO's by its agent on January 15, 1982, MICO
sought to return it to Adora only on February 5, 1982, after it presumably had learned of the
occurrence of the loss insured against on January 18, 1982 make the motives of MICO highly
suspicious


[G.R. No. 82036. May 22, 1997]
Travellers Insurance & Surety Corporation vs. Hon. Court of Appeals & Vicente Mendoza

Facts:
Vicente Mendoza, Jr. as heir of his mother (Feliza Vineza de Mendoza) who was
killed in a vehicular accident, filed an action for damages against the erring taxicab
driver (Rodrigo Dumlao), the owner (Armando Abellon) of the taxicab (Lady Love
Taxi with Plate No. 438-HA Pilipinas Taxi 1980) and the alleged insurer of the vehicle
which featured in the vehicular accident. The erring taxicab was allegedly covered by a
third-party liability insurance policy issued by petitioner Travellers Insurance & Surety
Corporation. Petitioner was included in the complaint as the compulsory insurer of the
said taxicab under Certificate of Cover No. 1447785-3.
The trial court rendered judgment in favor of private respondent and ordered
Rodrigo Dumlao, Armando Abellon and petitioner to pay private respondent death
indemnity, moral damages, exemplary damages, attorneys fees and other litigation
expenses, jointly and severally.
The decision was affirmed by the CA and the subsequent MR was denied.
Hence this petition.

ISSUE: Whether petitioner is liable to private respondent?
HELD: NO.
I. The right of the person injured to sue the insurer of the party at fault (insured),
depends on whether the contract of insurance is intended to benefit third persons also
or on the insured. And the test applied has been this: Where the contract provides for
indemnity against liability to third persons, then third persons to whom the insured is
liable can sue the insurer. Where the contract is for indemnity against actual loss or
payment, then third persons cannot proceed against the insurer, the contract being
solely to reimburse the insured for liability actually discharged by him thru payment
to third persons, said third persons recourse being thus limited to the insured alone.
The trial court did not distinguish between the private respondents cause of action
against the owner and the driver of the Lady Love taxicab and his cause of action
against petitioner. The former is based on torts and quasi-delicts while the latter is
based on contract. Confusing these two sources of obligations as they arise from the
same act of the taxicab fatally hitting private respondents mother, and in the face of
overwhelming evidence of the reckless imprudence of the driver of the Lady Love
taxicab, the trial court brushed aside its ignorance of the terms and conditions of the
insurance contract and forthwith found all three - the driver of the taxicab, the owner of
the taxicab, and the alleged insurer of the taxicab - jointly and severally liable for actual,
moral and exemplary damages as well as attorneys fees and litigation expenses. This
is clearly a misapplication of the law by the trial court, and respondent appellate court
grievously erred in not having reversed the trial court on this ground.
While it is true that where the insurance contract provides for indemnity against
liability to third persons, such third persons can directly sue the insurer, however, the
direct liability of the insurer under indemnity contracts against third-party liability
does not mean that the insurer can be held solidarily liable with the insured and/or the
other parties found at fault. The liability of the insurer is based on contract; that of the
insured is based on tort.
II. At the time of the vehicular incident which resulted in the death of private
respondents mother, during which time the Insurance Code had not yet been amended
by Batas Pambansa (B.P.) Blg. 874, Section 384 provided as follows:
Any person having any claim upon the policy issued pursuant to this chapter shall,
without any unnecessary delay, present to the insurance company concerned a written
notice of claim setting forth the amount of his loss, and/or the nature, extent and
duration of the injuries sustained as certified by a duly licensed physician. Notice of
claim must be filed within six months from date of the accident, otherwise, the claim
shall be deemed waived. Action or suit for recovery of damage due to loss or injury
must be brought in proper cases, with the Commission or the Courts within one year
from date of accident, otherwise the claimants right of action shall prescribe
[emphasis and underscoring supplied].
It is significant to note that the aforecited Section 384 was amended by B.P. Blg.
874 to categorically provide that action or suit for recovery of damage due to loss or
injury must be brought in proper cases, with the Commissioner or the Courts within one
year from denial of the claim, otherwise the claimants right of action shall prescribe
[emphasis ours].
We have certainly ruled with consistency that the prescriptive period to bring suit in
court under an insurance policy, begins to run from the date of the insurers rejection of
the claim filed by the insured, the beneficiary or any person claiming under an insurance
contract. This ruling is premised upon the compliance by the persons suing under an
insurance contract, with the indispensable requirement of having filed the written claim
mandated by Section 384 of the Insurance Code before and after its
amendment. Absent such written claim filed by the person suing under an insurance
contract, no cause of action accrues under such insurance contract, considering that it
is the rejection of that claim that triggers the running of the one-year prescriptive period
to bring suit in court, and there can be no opportunity for the insurer to even reject a
claim if none has been filed in the first place, as in the instant case.

WHEREFORE, the instant petition is HEREBY GRANTED.

d2015member

ACCFA v. Alpha Insurance & Surety Co Inc (1968)
Reyes JBL, J.
against loss on account of personal dishonesty, amounting to larceny or estafa of its Secretary-
Treasurer, Ricardo Ladines. Alpha Insurance & Surety then issued a fidelity bond for P5k with Ladines as
principal and Alpha as solidary surety. FACOMA then assigned its rights to ACCFA (Agricultural Credit
Cooperative and Financing Admin). Ladines misappropriated P11,513 of FACOMA funds to his personal
benefit. On October 1958, ACCFA notified in writing the survey company and presented proof of loss.
Surety Alpha refused to pay. ACCFA filed suit 30 May 1960. Alpha seeks to dismiss due to a provision in
the fidelity bond saying that no action shall be had unless commenced within one year from the making
of the claim for loss. Another is that the complaint failed to show an civil or criminal action filed against
Ladines as required by the conditions of the bond. Last, Ladines is an indispensable party but was not
joined. CFI denied dismissal but, upon reconsideration, reversed and dismissed the complaint because
the action was filed beyond the contractual limitation period



Issue: Was contractual limitation void due to Sec. 61-A of Insurance Act? Held: Yes Ratio:

Fidelity bond is in the nature of a contract of insurance against loss from misconduct. Subject to
Insurance Act Sec 61-A: A condition, stipulation or agreement in any policy of insurance, limiting the
time for commencing an action thereunder to a period of less than 1 year from the time when the cause
of action accrues is VOID Cause of action (1) legal right (2) obligation (3) act or omission in violation of
legal right Cause of action ACCRUED when insurance company REFUSED to comply with the bond NOT
from the time of filing claim of loss Stipulation in contract is VOID because of Sec 61-A Condition of
previous conviction was deleted by express agreement Surety assumed solidary liability so creditor may
go against any one of the solidary debtors.

Case remanded to CFI with instructions to require defendant to answer

ACCFA v. Alpha Insurance | Reyes, J.
July 29, 1968|

NATURE
Petition for review on certiorari

FACTS
- To guarantee the Asingan Farmers' Cooperative Marketing Association, Inc. (FACOMA) against loss on
account of personal dishonesty, amounting to larceny/estafa of its Secretary-Treasurer, Ladines,
appellee Alpha Insurance & Surety Company had issued, on 14 February 1958, its bond with Ladines as
principal and the appellee as solidary surety. On the same date, the Asingan FACOMA assigned its rights
to the appellant, Agricultural Credit Cooperative and Financing Administration (ACCFA) with approval of
the principal and the surety.
- During the effectivity of the bond, Ladines converted and misappropriated, to his personal benefit,
some of the FACOMA funds, of which a part belonged to the ACCFA. Upon discovery of the loss, ACCFA
immediately notified in writing the survey company on 10 October 1958, and presented the proof of loss
within the period fixed in the bond; but despite repeated demands the surety company refused and
failed to pay. ACCFA filed suit against appellee on 30 May 1960.
- Defendant Alpha Insurance & Surety Co., Inc., (now appellee) moved to dismiss the complaint as it was
filed more than one year after plaintiff made claim for loss, contrary to the eighth condition of the bond
- At first, the Court of First Instance denied dismissal; but, upon reconsideration, the court reversed its
original stand, and dismissed the complaint on the ground that the action was filed beyond the
contractual limitation period. Hence, this appeal.

ISSUES & ARGUMENTS
WON the provision of a fidelity bond that no action shall be had or maintained thereon unless
commenced within one year from the making of a claim for the loss upon which the action is based, is
valid, in view of Section 61-A of the Insurance Act invalidating stipulations limiting the time for
commencing an action thereon to less than one year from the time the cause of action accrues? NO

RATIONALE
-A fidelity bond is, in the nature of a contract of insurance against loss from misconduct, and is governed
by the same principles of interpretation. Consequently, the condition of the bond in question, limiting
the period for bringing action is subject to the provisions of Section 61-A of the Insurance Act (No.
2427), as amended by Act 4101 of the pre-Commonwealth Philippine Legislature, prescribing that:
SEC. 61-A: A condition, stipulation or agreement in any policy of insurance, limiting the time for
commencing an action thereunder to a period of less than one year from the time when the cause of
action accrues is void.
- Since a "cause of action" requires, as essential elements, not only a legal right of the plaintiff and a
correlative obligation of the defendant but also "an act or omission of the defendant in violation of said
legal right," the cause of action does not accrue until the party obligated refuses, expressly or
impliedly, to comply with its duty (in this case, to pay the amount of the bond).
-The year for instituting action in court must be reckoned from the time of appellee's refusal to comply
with its bond. It cant be counted from the creditor's filing of the claim of loss, for that does not import
that the surety company will refuse to pay.
-In so far, therefore, as condition eight of the bond requires action to be filed within one year from the
filing of the claim for loss, such stipulation contradicts the public policy expressed in Section 61-A of the
Philippine Insurance Act.
- Condition eight of the bond, therefore, is null and void, and the appellant is not bound to comply
with its provisions. The discouraging of unnecessary litigation must be deemed a rule of public policy,
considering the unrelieved congestion in the courts.
-As a consequence, the action may be brought within the statutory period of limitation for written
contracts (New Civil Code, Article 1144).
No. L-11728.
May 15, 1959
Plaintiff : LEONA PAULINO
Defendant : THE CAPITAL INSURANCE & SURETY COMPANY, INC.
FACTS:
This is an appeal from the decision of the Court of First Instance of Albay, dismissing an action for recovery of amount of
fire insurance policy.
Paulino was the owner of the JUNIOR CAFE, BAKERY & GROCERY STORE
She accepted a fire insurance policy issued by the defendant and that on April 30, 1952, the plaintiff wrote the defendant
requesting cancellation of the policy, which the latter received on May 10, 1952
The plaintiff did not return the policy or demanded for the return of the proportionate premium and neither did the
defendant offer to return the premium
The property covered by the policy was destroyed by fire on August 16, 1952.
The defendant refused to make payment on plaintiff's claim, on the ground that the policy was cancelled as of May 10,
1952.
Plaintiff contends in this appeal that her letter, dated April 30, 1952, was a mere request or offer to cancel the policy and
did not terminate the same since it was not accompanied by the surrender of the policy for cancellation.
ISSUE: W/N Capital Insurance was liable (NO)
RATIO:
This case hinges on the interpretation of paragraph 10 of the policy, reading:
o This insurance may be terminated at any time at the request of the Insured, in which case the Company will
retain the customary short period rate for the time the policy has been in force. This insurance may also at any
time be terminated at the option of the Company, on notice to that effect being given to the Insured, in which
case the Company shall be liable to repay on demand a ratable proportion of the premium for the expired term
from the date of cancelment."
Pursuant to this stipulation, the contract in question could be terminated, "at any time", upon the unilateral act of either
party. Whichever party exercised the "option", did not need the approval, consent or concurrence of the other thereto.
That consent was given at the time of the making of the contract. Moreover, pursuant to her letter, plaintiff considered
the contract terminated upon receipt of said letter by the defendant ("desde el recibo de la presente).
Furthermore, the case of Buckley vs. Citizens Insurance Co. (81 N.E. 165) relied upon by the plaintiff is not in point.
Although the insurance policy involved in that case contained a clause analogous to the one involved here, the option was
exercised therein, not by the insured, but by the insurance company, which likewise, requested the return of the policy.
Upon receipt of the communication of the company to this effect, the insured returned the policy. Subsequently, but
before the corresponding portion of the premium had been refunded to the insured, the property was destroyed by fire.
Upon these facts, the insured was not entitled to collect the amount of the policy, because the unconditional return
thereof upon request of the company implied "a waiver of his right to treat the policy as in full force and effect until the
company paid or tendered to him the unearned premium."
Decision affirmed.

Constantino vs. Asia Life Insurance Co. [GR# L-1669
August 31, 1950] Peralta vs. Asia Life Insurance Co. [GR#
L-1670 August 31, 1950]
Post under case digests, Commercial Law at Tuesday, February 21, 2012 Posted by Schizophrenic Mind
Facts: FIRST CASE: Respondent Corporation was paid P
176.04 as annual premium by Arcadio Constantino in
exchange for policy no. 93212 on 1941 for P 3,000 which
lasted for 20 years. Petitioner Paz Constantino was made
beneficiary. However after the first payment, no further
premiums were made. Thereafter the insured died on
1944. Later, due to the war (Japanese occupation)
Respondent Corporation had to close down its branch in
the country.

SECOND CASE: Similarly, Respondent Corporation
issued on 1938 another insurance policy no. 78145 for
Spouses Ruiz and Peralta also for P 3,000, lasting for 20
years. Regular payments were made however due also to
the war, it became impossible to transact further
payments. The insured nevertheless was able to borrow P
234 from the policy. Ruiz died on 1945. Peralta was the
beneficiary.

In both cases the plaintiffs demanded payment but was
refused due to Respondent Corporations refusal on the
ground of non-payment of the premiums. The lower court
favored Respondent.

Issues:
(1) Whether or not the beneficiaries are entitled to recover
the amount insured despite non-payment caused by the
Japanese occupation.

(2) Whether or not the periodic payments of the premiums,
those after the first, is not an obligation of the insured so
that it is not a debt enforceable by the action of the
insurer.

Held:
(1) The beneficiaries are not entitled to recover for non-
payment despite the presence of war.

Contracts of insurance are contracts of indemnity within
the terms and condition found therein. An insurance
company for certain considerations guarantee the insured
against loss or damage as may be stipulated, and when
called to pay, the insurer may insist on the fulfillment of
said stipulations. Failure of the insured to do so
disqualifies recovery for the loss. Thus the terms of the
policy determines the insurers liability. Compliance to the
terms of the policy is a must as it is a condition precedent
to the right of recovery. Therefore, from the terms of the
policy it is clear that non-payment of premium produces
avoidance (forfeiture of the policy).

Moreover, since act 2427, Philippine law on insurance and
the Civil Code) are mostly based from the Civil Code of
California, An intention to supplement our laws with the
prevailing principles of the US arises. Thus, Prof. Vance of
Yaled declares that the United States Rule must be
followed, where the contract is not merely suspended but
is abrogated by reason of non-payment of premiums since
the time of payments is peculiar to the essence of the
contract. Further it would be unjust to permit the insurer to
retain the reserve value of the policy or the excess of
premiums paid over the actual risk when the policy was
still effective as held in the Statham Case which was more
logical and juridically sound. In said case it was hold that
promptness of payment is essential in the business of life
insurance since all calculations of the company is based
on the hypothesis of prompt payments. Forfeiture for non-
payment is necessary to protect said business from
embarrassment otherwise confusion would abound. And
that delinquency cannot be tolerated nor redeemed except
at the option of the company. Lastly parties contracted
both for peace and war times since the policies contained
also wartime days. It follows that the parties contemplated
uninterrupted operation of the contract even if armed
conflict ensues.

(2) The annual premium is not a debt, nor is it an
obligation which the insurer can maintain an action against
the insured; nor its settlement governed by the rules on
payment of debts.

A contract of insurance is sui generis. This means though
the insured may hold the insurer to the contract by the
fulfillment of the condition, the latter has no power or right
to compel the insured to maintain the contract relation
longer than the insured may desire. It is optional upon the
insured.

[G.R. No. 119446. January 21, 1999]
PHILIPPINE HOME ASSURANCE CORPORATION, PHILIPPINE
AMERICAN ACCIDENT INSURANCE COMPANY, PHILIPPINE
AMERICAN GENERAL INSURANCE COMPANY and AMERICAN
INTERNATIONAL UNDERWRITERS (Phils.), INC., petitioners,
vs. COURT OF APPEALS, and COMMISSIONER OF INTERNAL
REVENUE, respondents.
D E C I S I O N
MENDOZA, J .:
This is a petition for review on certiorari of the decision of the Court of Appeals, dated
April 27, 1994, which affirmed the decision of the Court of Tax Appeals denying the claims filed
by the petitioners for refund of documentary stamp taxes.
Petitioners are the Philippine Home Assurance Corporation (PHAC), the Philippine
American Accident Insurance Company (PAAIC), the Philippine American General Insurance
Company (PAGIC), and the American International Underwriters (Phils.), Inc. (AIUPI), which
are domestic corporations engaged in the insurance business.
From January to June 1986, they paid under protest the total amount of P10,456,067.83 as
documentary stamp taxes on various life and non-life insurance policies issued by them, broken
down as follows:
PHAC 1,714,459.00
PAAIC 68,046.00
PAGIC 3,816,973.00
AIUPI 4,856,589.83
TOTAL P10,456,067.83
[1]

On August 4, 1987, petitioners filed separate claims for refund from the Bureau of Internal
Revenue.
[2]
They alleged that the premiums on the insurance policies issued by them had not
been paid thus, in accordance with 77 of the Insurance Code,
[3]
no documentary stamp taxes
were due on the policies.
[4]

As the Bureau of Internal Revenue failed to act on their claims,
[5]
the petitioners appealed on
December 29, 1987 to the Court of Tax Appeals. In its decision, dated April 26, 1993,
[6]
the Tax
Courtdenied petitioners claims. It held:
[7]

. . . . the documentary stamp must be affixed to the insurance policy, which is a
contract in itself, between the insurer and the insured, whereby for an agreed
premium, the former undertakes to compensate the latter for the loss of a specific
subject by reason of specific perils, on the date it is issued even if no premium has
been paid. The payment or non-payment of the premium by the insured is immaterial
since a documentary stamp tax is in the nature of an excise tax upon a facility used in
the transaction of a business which is separate and distinct from the business itself.
Such being the case, . . . the subsequent cancellation of an insurance policy will not
exempt the issuer from the corresponding documentary stamp tax. And thus, no
refund can be allowed of the documentary stamp tax paid on an insurance policy
which for some reason or another has been cancelled or for that matter, the premium
was unpaid.
Petitioners filed a joint appeal in the Court of Appeals which, however, in a
judgment,
[8]
dated April 27, 1994, affirmed the decision of the Court of Tax Appeals. In part the
appellate court said:
The respondent court correctly characterized a documentary stamp tax as in the nature
of an excise tax. As such, it is imposed on the privilege of conducting a particular
business or transaction and not on the business or transaction itself. Thus, the
documentary stamp tax on insurance policies is, in effect, imposed on the privilege to
conduct insurance business and not on the insurance business itself or on the
premiums paid under the said insurance policies. This means then that the
documentary stamp tax accrues when the said privilege is exercised. As the
respondent court stated, while it is true that a documentary stamp tax is levied on the
document and not on the property involved, the documentary stamp tax is not
intended to be a tax on the document alone. The law taxes the document because of
the transaction so that the tax becomes due and payable at the time the transaction is
had or accomplished, in this case, at the time of the issuance of the document.
This is the reason that the documentary stamp tax will not be refunded upon the
subsequent cancellation of the insurance policy. Likewise, when a policy already
issued becomes ineffective because of the non-payment of the first premium, the
documentary stamp tax cannot be refunded whether or not the policy has, in fact,
become effective, since the privilege subject of the tax has already been realized.
Hence, this appeal. Petitioners maintain that since the premiums on the subject life and non-
life insurance policies were not paid, the same are considered as never to have taken effect
pursuant to 77 of the Insurance Code and, therefore, no documentary stamp taxes were due
thereon.
The petition is without merit.
The pertinent provisions of the National Internal Revenue Code state:
Sec. 183. Stamp Tax on Life Insurance Policies. On all policies of insurance or
other instruments by whatever name the same may be called, whereby any insurance
shall be made or renewed upon any life or lives, there shall be collected a
documentary stamp tax of fifty centavos on each two hundred pesos or fractional part
thereof, of the amount issued by any such policy.
Sec. 184. Stamp Tax on Policies of Insurance Upon Property. On all policies of
insurance or other instruments by whatever name the same may be called, by which
insurance shall be made or renewed upon property of any description, including rents
or profits, against peril by sea or on inland waters, or by fire or lightning, there shall
be collected a documentary stamp tax of thirty centavos on each four pesos, or
fractional part thereof, of the amount of the premium charged: Provided, however,
that no documentary stamp tax shall be collected on reinsurance contracts or on any
instrument by which cession or acceptance of insurance risks under any reinsurance
agreement is effected or recorded.
In general, documentary stamp taxes are levied on the exercise by persons of certain
privileges conferred by law for the creation, revision, or termination of specific legal
relationships through the execution of specific instruments. Examples of such
privileges, the exercise of which, as effected through the issuance of particular
documents, are subject to the payment of documentary stamp taxes are leases of
lands,
[9]
mortgages, pledges, and trusts,
[10]
and conveyances of real property.
[11]

Documentary stamp taxes are thus levied on the exercise of these privileges through
the execution of specific instruments, independently of the legal status of the
transactions giving rise thereto. The documentary stamp taxes must be paid upon the
issuance of the said instruments, without regard to whether the contracts which gave
rise to them are rescissible, void, voidable, or unenforceable. As the Supreme Court
of the United States held in Du Pont v. United States:
[12]

The tax is not upon the business transacted but is an excise upon the privilege,
opportunity, or facility offered at exchanges for the transaction of the business. It is
an excise upon the facilities used in the transaction of the business separate and apart
from the business itself. In this view it is immaterial whether the transfer of the
account constituted a sale.
This case has been cited in several of this Courts decisions, first in Commissioner of
Internal Revenue v. Heald Lumber Co.,
[13]
then in Philippine Consolidated Coconut Industries,
Inc. v. Collector of Internal Revenue,
[14]
then in Commissioner of Internal Revenue
v. Construction Resources of Asia, Inc.,
[15]
and most recently in Lincoln Philippine Life Insurance
Company, Inc. v. Court of Appeals.
[16]
It is thus settled that the life and non-life insurance
policies in question are subject to documentary stamp taxes pursuant to 183 and 184 of the
National Internal Revenue Code by their mere issuance, and the fact that the policies have not
become effective for non-payment of the corresponding premiums as required by 77 of the
Insurance Code cannot affect petitioners liability for payment of documentary stamp taxes.
Their claim for refund was correctly denied.
WHEREFORE, the decision of the Court of Appeals, dated April 27, 1994, is AFFIRMED.
SO ORDERED.