TITLE

WHITE GOLD MARINE SERCICES INC VS

PIONEER INSURANCE AND SURETY
CORPORATION AND THE STEAMSHIP
MUTUAL UNDERWRITING ASSOCIATION
LICENSE
INSURANCE COMPANY LIABLE
PROTECTION AND INDEMNITY COVERAGE
FOR ITS VESSEL
STEAMSHIP MUTUAL = P& I CLUB =
INSURANCE COMPANY ENGAGED IN
MARINE INSURANCE BUSINESS
THEREFORE, IT NEEDS TO OBTAIN LICENSE
FROM THE INSURANCE COMMISSION
PIONEER INSURANCE = INSURANCE
COMPANY AGENT OF STEAMSHIP
MUTUAL IT NEEDS A SEPARATE LICENSE
TO ACT AS INSURANCE AGENT FOR
STEAMSHIP MUTUAL
DOCTRINES:
1.
TEST TO TERMINE IF A CONTRACT IS
AN INSURANCE CONTRACT = Depends
on the nature of the promise, the act
required to be performed and the exact
nature of the agreement in the light of the
occurrence, contingency or circumstances
under which the performance becomes
requisite
2.
INSURANCE CONTRACT = CONTRACT
OF INDEMNITY
3.
INSURANCE CONTRACT REGULATION
BY THE STATE IS NECESSARY =
therefore, no insurer or insurance company
is allowed to engage in the insurance
business without a license or a certificate of
authority from the Insurance Commission

PHILAMCARE HEALTH SYSTEMS, INC. vs.

FACTS
White gold procured a protection and
indemnity coverage for its vessel from
The Steamship Mutual through Pioneer
Insurance and Surety Corporation
White Gold was issued a Certificate of
Entry and Acceptance
Pioneer also issued receipts
When White Gold failed to pay its account,
Steamship Mutual refused to renew the
coverage
Steamship mutual thereafter filed a case
against White Gold for collection of sum of
money to recover for unpaid balance
White Gold, on the other hand, filed a
complaint before the Insurance
Commission claiming that Steamship
Mutual and Pioneer violated the provisions
of the insurance Code stating that
Steamship Mutual is not a licensed
insurance company
The insurance commission dismissed the
complaint it said that there was no need
for Steamship Mutual to secure a license
because it was not engaged in the
insurance business and that was a
Protection and Indemnity club (P&I)
Pioneer was not required to obtain another
license as insurance agent because
Steamship mutual was not engaged in the
insurance business it also said that
Pioneer was already licensed, hence a
separate license is not needed
CA affirmed the decision of the Insurance
Commissioner the CA distinguished
between P&I club members vis--vis
conventional insurance and that Pioneer
merely acted a collection agent of
Steamship Inurance
Hence this petition by White Gold
White Gold insists that Steamship Mutual
as a P&I Club is engaged in the insurance
business
It cites the definition as an association
composed of shipowners in general who
band together for the specific purpose of
providing insurance over on a mutual basis
against liabilities incidental to shipowning
that members incur in favor of third parties
WG argued that Steamship Mutuals
primary purpose is to solict and provide
protection and indemnity coverage and for
this purpose, it has engaged the services of
Pioneer to act as its agenbt
Respondents contended that although SM
is a P&I club, it is not engaged in the
business in the insurance business in the
Philippines it is merely an association of
vessel owners who have come together to
provide mutual protection against liabilities
incidental to shipowning
Ernani Trinos applied for a health care

1.
2.

ISSUE
W/N Steamship Mutual, A P&I club, is
engaged in the insurance business in the
Philippines
W/N Pioneer needs a license an insurer
agent/broker of Steamship Mutual

HELD
YES! PETITION GRANTED

A P & I Club is a form of insurance

against third party liability, where the
third party is anyone other than the P & I
Club and the members. By definition
then, Steamship Mutual as a P & I Club
is a mutual insurance association
engaged in the marine insurance
business.

The records reveal Steamship Mutual is

doing business in the country albeit
without the requisite certificate of
authority mandated by Section 187 of
the Insurance Code. It maintains a
resident agent in the Philippines to solicit
insurance and to collect payments in its
behalf. Steamship Mutual even
renewed its P & I Club cover until it was
cancelled due to non-payment of the calls.
Thus, to continue doing business
here, Steamship Mutual or through its
agent Pioneer, must secure a license
from the Insurance Commission.

Since a contract of insurance involves

public interest, regulation by the State is
necessary. Thus, no insurer or
insurance company is allowed to engage in
the insurance business without a license or
a certificate of authority from the Insurance
Commission.
2. YES

Pioneer is the resident agent of

Steamship Mutual as evidenced by the
certificate of registration issued by the
Insurance Commission. It has been
licensed to do or transact insurance
business by virtue of the certificate of
authority issued by the same agency.
However, a Certification from the
Commission states that Pioneer does not
have a separate license to be an
agent/broker of Steamship Mutual.

Although Pioneer is already licensed as an

insurance company, it needs a separate
license to act as insurance agent for
Steamship Mutual.

Section 299 of the Insurance Code clearly

states: SEC. 299 No person shall act as an
insurance agent or as an insurance broker
in the solicitation or procurement of
applications for insurance, or receive for
services in obtaining insurance, any
commission or other compensation from
any insurance company doing business in
the Philippines or any agent thereof,
without first procuring a license so to
act from the Commissioner

1.

W/N the health care agreement is not an

1. YES!

COURT OF APPEALS
HEART ATTACK
INSURANCE COMPANY LIABLE
ERNANI WAS INSURED BY PHILAM CARE
HEALTH SYSTEM HOSPITALIZED DUE IN
MMC TO HEART ATTACH PHILAM CARE
REFUSED TO PAY BECAUSE ALLEGEDLY
CONCEALED HEART PROBLEMS DIED IN
CHINESE GENERAL HOSPITAL WIFE
FILED CASE AGAISNST PHILAMCARE TC
RULED IN FAVOR OF PHILAMCARE CA
AFFIRMED DECISION THUS THIS APPEAL
HEALTH CARE AGREEMENT = NON-LIFE
INSURANCE = CONTRACT OF INDEMNITY

CONCEALMENT BY ERMANI = DONE IN GF, X

MEDICAL DOCTOR, X INTENT TO DECEIVE (X
PROVEN = ENTITLED TO INSURANCE
FRAUDULENT INTENT MUST BE
ESTABLISHED BY SATISFACTORY AND
CONVINCING EVIDENCE BY INSURER
RESCISSION OF CONDITIONS NOT
FULFILLED IN THE CASE AT BAR It should
be exercised previous to the commencement
of an action on the contract
INSURABLE INTEREST = HEALTH OF THE
ERMANI (THE INSURED)

CONTRACT OF ADHESION CONSTRUED

STRICTLY AGAINST THE INSURER
DOCTRINE:
ELEMENTS OF INSURANCE CONTRACT:
1.
The insured has an insurable interest
2.
The insured is subject to a risk of loss
by the happening of the designated
peril
3.
The insurer assumed the risk
4.
Such assumption of risk is part of a
general scheme to distribute actual
losses among a large group of
persons bearing a similar risk
5.
In consideration of the insurers
promise, the insured pays a premium

FORTUNE VS CA
GUARDS NG BANK; THEFT
INSURANCE COMPANY X LIABLE
ENTERED INTO CASUALTY INSURANCE

coverage with Philam Care Health System

Inc
To the question Have you or any of your
family members ever consulted or been
treated for high blood pressure, heart
trouble, diabetes, cancer, liver disease,
asthma or peptic ulcer?, Ernani
answered NO
Under the agreement, Ernani is entitled to
avail of hospitalization benefits and outpatient benefits. coverage was approved
for a period of 1 year from March 1, 1998 to
March 1, 1989 Agreement was extended
yearly until June 1, 1990 which increased
the amount of coverage to a maximum sum
of 75k per disability
During the period of said coverage, Ernani
suffered a heart attack and was confined
at the Manila Medical Center (MMC) for
one month wife tried to avail of the
benefits BUT Philamcare denied her
claim alleging that the agreement was void
because Ermani concealed his medical
history Doctors at the MMC allegedly
discovered at the time of Ernanis
confinement that he was hypertensive,
diabetic and asthmatic, contrary to his
answer in the application form. Thus,
Julita paid for all the hospitalization
expenses.
After Ermani was discharged from MMC
he was attended by physical therapists at
home later he was admitted to Chinese
general hospital but due to financial
difficulties, Ermani was brought home
high fever brought back to CGH where
he died on the same day
Julita filed an action for damages and
reimbursement of her expenses plus moral
damages against Philam care RTC
rendered judgement in favor of Julita CA
affirmed but deleted awards for damages
and absolved Reverente (Pres. Of Philam
care)
Hence this petition for review raising that a
health care agreement is not an insurance
contract; hence the incontestability clause
under the Insurance Code does not apply

Producers Banks money was stolen while

it was being transported from Pasay to
Makati The people guarding (GUARDS)
the money were charged with THEFT
the bank filed a claim for the amount of
P725K and such was refused by the
insurance corporation due to the

2.

insurance contract
W/N there is concealment of material facts
made by Ermani

W/N the guards fall under the general exception

clause of the insurance policy and thus absolved
the insurance company from liability

Sect 2 (1) of the Insurance Code defines a

contract of insurance as an agreement
whereby one undertakes for a
consideration to indemnify another against
loss, damage or liability arising from an
unknown or contingent event
Sec 3 - any contingent or unknown event,
whether past or future, which my damnify a
person having an insurable against him,
may be insured against. Every person has
an insurable interest in the life and health of
himself.
Sec 10 - Every person has an insurable
interest in the life and health (1) of himself
of his (2) spouse and of his (3) children
Insurable interest of respondents
husband in obtaining the health care
agreement was his own health.
The health care agreement was in the
nature of non-life insurance, which is
primarily a contract of indemnity.
Once the member incurs hospital, medical
or any other expense arising from sickness,
injury or other stipulated contingent, the
health care provider must pay for the same
to the extent agreed upon under the
contract.

2. NO!

Answer was made in response to the

question relating to the medical history of
the applicant depends on opinion rather
than fact, especially coming from the
husband who is not a medical doctor
made in GF and without intent to deceive =
X avoid a policy even though they are
untrue

Fraudulent intent must be proved

Petitioner is liable for claims under the

contract having assumed a responsibility
under the agreement

The liability of the health care provider

attaches once the member is hospitalized
for the disease or injury covered by the
agreement or wherever he avails of the
covered benefits which he has prepaid.

Contract of adhesion construed strictly

against the party which prepared the
contract (insurer)

Ambiguity must be resolved in favor of the

insured, especially to avoid forfeiture this
is equally applicable to Health Care
Agreements

Payment should be made to the party who

made the expenses (Julita)
YES!

The guards fall under the general exception

The insurance company is not liable
The insurance agency contended that the
guards automatically become the
AUTHORIZED REPRESENTATIVES OF

(THEFT OR ROBBERY INSURANCE)

GUARDS OF BANK LIABLE FOR THEFT
GUARDS = AUTHORIZED REPRESENTATIVES
= FALLS UNDER EXCEPTION TO LIABILITY =
X ENTITLED TO INSURANCE
BANKS ASSERTION: GUARDS X
EMPLOYEES (LABOR ONLY CONTRACT)

stipulation:
GENERAL EXCEPTIONS
The company shall not be liable under this policy
in report of 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. . . .

The bank claimed that the suspects were

not any of the abovementioned TC ruled
in favor of them CA affirmed on the basis
that the bank had no power to hire or
dismiss the guard and could only ask for
replacement from security agency

ENRIQUEZ VS SUN LIFE ASSURANCE OF

CANADA

X PERFECTED CONTRACT OF LIFE ANNUITY

BECAUSE APPROVAL LETTER WAS NEVER
RECEIVED

INSURANCE COMPANY X LIABLE

HERRER MADE APPLICATION TO
INSURANCE COMPANY FOR LIFE ANNUITY
PAID SUM TO MANAGER OF COMPANY IN
MANILA OFICE AND WAS GIVEN RECEIPT
HEAD OFFICE GAVE NOTICE OF
ACCEPTANCE BY CAPABLE TO MANILA
MANILA OFFICE PREPARED LETTER
NOTIFYING H THAT HIS APPLICATION WAS
APPROVED AND WAS PLACED FOR
TRANSMISSION BUT WAS NEVER ACTUALLY
MAILED AND WAS NEVER RECEIVED BY
APPLICANT DIED ON DEC 20, 1917
INSURANCE X COMMUNICATED TO
APPLICANT = X PERFECTED CONTRACT
FOR LIFE ANNUITY
Life annuity is the opposite of a life
insurance.
In life annuity - a big amount is given to the

Joaquin Herrer made application to the Sun

Life Assurance Company of Canada
through its office in Manila for a life annuity
2 days later he paid P6,000 to the
manager of the company's Manila office
given a receipt
According to the provisional receipt, 3 things
had to be accomplished by the insurance
company before there was a contract:
o
(1) There had to be a
medical examination of the
applicant; -check
o
(2) there had to be
approval of the application by
the head office of the company;
and check
o
(3) this approval had in
some way to be
communicated by the
company to the applicant
The head office at Montreal, Canada gave
notice of acceptance by cable to Manila but
this was not mailed
Policy was issued at Montreal attorney
Aurelio A. Torres wrote to the Manila office
of the company stating that Herrer desired
to withdraw his application
Local office replied to Mr. Torres, stating
that the policy had been issued, and called

THE BANK = EMPLOYER-EMPLOYEE

RELATIONSHIP between the owner of the
project and the employees of the laboronly contractor
The bank asserted that the guards were
not its employees since it had nothing
to do with their selection and
engagement, the payment of their
wages, their dismissal, and the control
of their conduct.

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 laboronly, 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.
W/N the insurance contract was perfect

NO!

The contract for life annuity was NOT

perfected because it had NOT been proved
satisfactorily that the acceptance of the
application ever came to the knowledge of
the applicant.
An acceptance of an offer of insurance
NOT actually or constructively
communicated to the proposer does NOT
make a contract of insurane, as the locus
poenitentiae is ended when an acceptance
has passed beyond the control of the party.
Enriquez shall have and recover from the
Sun Life the sum of P6,000 with legal
interest from November 20, 1918, until
paid, without special finding as to costs in
either instance

insurance company, and if after a certain period

of time the insured is stil living, he is entitled to
regular smaller amounts for the rest of his life.
Examples of Life annuity are pensions.
Life Insurance - on the other hand, the insured
during the period of the coverage makes small
regular payments and upon his death, the insurer
pays a big amount to his beneficiaries.

GREAT PACIFIC LIFE INSURANCE COMPANY

VS CA

INFLUENZA, MONGOLOID
INSURANCE COMPANY X LIABLE
NGO HING APPLIED FOR INSURANCE FOR
20 YEAR ENDOWMENT FOR 1 YEAR OLD
DAUGHTER HELEN HANDLED BY
MONDRAGON REJECTED BY GREAT
PACIFIC INSURANCE AND OFFERED
JUVENILE TRIPLE ACTION PLAN INSTEAD
HELEN DIED OF INFLUENZA FILED
ACTION FOR RECOVERY OF INSURANCE
BENEFIT

DEPOSIT RECEIPT = PROVISIONAL

INSURANCE CONTRACT = X BINDING =
ONLY SERVES AS ACKNOWLEDGEMENT
THAT BRANCH RECEIVED THE INSURANCE
PREMIUM
NGO HING CONCEALED FACT THAT HELEN
IS MONGOLOID = X UBBERIMA FIDES =
GROUND FOR RESCISSION OF CONTRACT
OF INSURANCE
UBBERIMA FIDES - The contract of insurance is
one of perfect good faith (uberrima fides meaning
good faith; absolute and perfect candor or
openness and honestly; the absence ofany
concealment or deception, however slight not for
the insured alone but equally so for the insurer.|||

attention to the notification of November 26,

1917
December 21, 1917 morning: received by
Mr. Torres
December 20, 1917: Mr. Herrer died
Rafael Enriquez, as administrator of the
estate of the late Joaquin Ma. Herrer filed
to recover from Sun Life Assurance
Company of Canada through its office in
Manila for a life annuity
RTC ruled in favor of Sun Life
Ngo Hing filed an application with Great
Pacific for a 20 year endowment policy
in the amount of 50k on the life of his 1
year old daughter Helen
He supplied the essential data which
petitioner Mondragon, the Branch Manager,
wrote on the form Mondragon paid the
annual premium to the Company, but
retained a certain amount as his
commission for being a duly authorized
agent of Pacific Life
Upon the payment of the insurance
premium the binding deposit receipt was
issued to Ngo Hing
Likewise, petitioner Mondragon handwrote
at the bottom of the back page of the
application form his strong
recommendation for the approval of the
insurance applicable Mondragon
received a letter from Pacific Life
disapproving the insurance application
The letter stated that the said life insurance
application for 20-year endowment plan
is not available for minors below seven
years old, but Pacific Life can consider
the same under the Juvenile Triple Action
Plan, and advised that if the offer is
acceptable, the Juvenile Non-Medical
Declaration be sent to the company.
The non-acceptance of the insurance plan
by Pacific Life was allegedly not
communicated by petitioner Mondragon to
private respondent Ngo Hing.
Instead, on May 6, 1957, Mondragon wrote
back Pacific Life again strongly
recommending the approval of the 20-year
endowment insurance plan to children,
pointing out that since the customers were
asking for such coverage.
Helen Go died of influenza. Ngo Hing
sought the payment of the proceeds of the
insurance, but having failed in his effort, he
filed the action for the recovery before
the Court of First Instance of Cebu RTC
ruled against him

1.
2.

W/N the binding deposit receipt constituted

a temporary contract of the life insurance in
question
Whether Ngo Hing concealed the state of
health and physical condition of Helen Go,
which rendered the policy void

1. NO!

The receipt was intended to be merely a

provisional insurance contract.
Its perfection was subject to 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
company disapproves the application, the
insurance applied for shall not be in
force at any time, and the premium paid
shall be returned to the applicant.
The receipt = merely an acknowledgment
that the latter's branch office had
received from the applicant the insurance
premium and had accepted the application
subject for processing by the insurance
company. There was still approval or
rejection the same on the basis of whether
or not the applicant is "insurable on
standard rates."
Since Pacific Life disapproved the
insurance application of respondent Ngo
Hing, the binding deposit receipt in
question had never become in force at
any time. The binding deposit receipt is
conditional and does not insure
outright.
The deposit paid by private respondent
shall have to be refunded by Pacific Life.

2. YES

Ngo Hing had deliberately concealed the

state of health of his daughter Helen Go.

When he supplied data, he was fully aware

that his one-year old daughter is typically a
mongoloid child. He withheld the fact
material to the risk insured.

The contract of insurance is one of perfect

good faith uberrima fides meaning good
faith, absolute and perfect candor or
openness and honesty; the absence of
any concealment or demotion, however
slight.

The concealment entitles the insurer to

rescind the contract of insurance.