GULF RESORTS v.
PHIL CHARTER INSURANCE
FACTS: Gulf Resorts, Inc at Agoo, La Union was insured
with American Home Assurance Company which includes loss or
damage to shock to any of the property insured by this Policy
occasioned by or through or in consequence of earthquake. An
earthquake struck Central Luzon and Northern Luzon so the
properties and 2 swimming pools in its Agoo Playa Resort were
damaged. Gulf's claim was denied on the ground that its insurance
policy only afforded earthquake shock coverage to the two
swimming pools of the resort. Petitioner contends that pursuant
to this rider, no qualifications were placed on the scope of the
earthquake shock coverage. Thus, the policy extended
earthquake shock coverage to all of the insured properties.
 RTC: Favored American Home - endorsement rider means
that only the two swimming pools were insured against
earthquake shock
 CA: affirmed RTC
ISSUE: WON Gulf can claim for its properties aside from the 2
swimming pools
HELD: YES. Affirmed. It is basic that all the provisions of the
insurance policy should be examined and interpreted in
consonance with each other. All its parts are reflective of the true
intent of the parties.
Section 2(1)
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
An insurance premium is the consideration paid an insurer for
undertaking to indemnify the insured against a specified peril. In
the subject policy, no premium payments were made with regard
to earthquake shock coverage, except on the two swimming
pools.
ENRIQUEZ v. SUN LIFE
FACTS: Herrer made an application to SunLife through its office
in Manila for life annuity. Two days later, he paid the sum of P6000
to the company’s manager in its Manila office and was given a
receipt. On Nov. 26, 1917, the head office gave notice of
acceptance by cable to Manila. On the same date, the Manila office
prepared a letter notifying Herrer that his application has been
accepted and this was placed in the ordinary channels of
transmission, but as far as known was never actually mailed
and never received by Herrer. Herrer died on Dec. 20, 1917. The
plaintiff as administrator of Herrer’s estate brought this action to
recover the 6T paid by the deceased.
ISSUE: Whether or not the insurance contract was perfected.
HELD: 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
insurance, as the locus poenitentiae is ended when an acceptance
has passed beyond the control of the party.
NOTE: Life annuity is the opposite of a life insurance. In life
annuity, a big amount is given to the 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.

INSULAR LIFE v. EBRADO
FACTS: Cristor Ebrado was issued by The Life Assurance Co., Ltd.,
a policy for P5,882.00 with a rider for Accidental Death. He
designated Carponia T. Ebrado as the revocable beneficiary in his
policy. He referred to her as his wife. Cristor was killed when he
was hit by a failing branch of a tree. Insular Life was made liable
to pay the coverage in the total amount of P11,745.73,
representing the face value of the policy in the amount of
P5,882.00 plus the additional benefits for accidental death.
Carponia T. Ebrado filed with the insurer a claim for the proceeds
as the designated beneficiary therein, although she admited that
she and the insured were merely living as husband and wife
without the benefit of marriage. Pascuala Vda. de Ebrado also filed
her claim as the widow of the deceased insured. She asserts that
she is the one entitled to the insurance proceeds. Insular
commenced an action for Interpleader before the trial court as to
who should be given the proceeds. The court declared Carponia as
disqualified.
ISSUE: WON a common-law wife named as beneficiary in the life
insurance policy of a legally married man can claim the proceeds
in case of death of the latter?
Held: NO.Section 50 of the Insurance Act which provides that "the
insurance shall be applied exclusively to the proper interest of the
person in whose name it is made"
The word "interest" highly suggests that the provision refers only
to the "insured" and not to the beneficiary, since a contract of
insurance is personal in character. Otherwise, the prohibitory
laws against illicit relationships especially on property and
descent will be rendered nugatory, as the same could easily be
circumvented by modes of insurance. When not otherwise
specifically provided for by the Insurance Law, the contract of life
insurance is governed by the general rules of the civil law
regulating contracts. And under Article 2012 of the same Code,
any person who is forbidden from receiving any donation under
Article 739 cannot be named beneficiary of a fife insurance policy
by the person who cannot make a donation to him. Common-law
spouses are barred from receiving donations from each other.
Article 739 provides that void donations are those made between
persons who were guilty of adultery or concubinage at the time of
donation. There is every reason to hold that the bar in donations
between legitimate spouses and those between illegitimate ones
should be enforced in life insurance policies since the same are
based on similar consideration. So long as marriage remains the
threshold of family laws, reason and morality dictate that the
impediments imposed upon married couple should likewise be
imposed upon extra-marital relationship.
A conviction for adultery or concubinage isn’t required exacted
before the disabilities mentioned in Article 739 may effectuate.
The article says that in the case referred to in No. 1, the action for
declaration of nullity may be brought by the spouse of the donor
or donee; and the guilty of the donee may be proved by
preponderance of evidence in the same action. The underscored
clause neatly conveys that no criminal conviction for the offense
is a condition precedent. The law plainly states that the guilt of the
party may be proved “in the same acting for declaration of nullity
of donation.” And, it would be sufficient if evidence
preponderates.
The insured was married to Pascuala Ebrado with whom she has
six legitimate children. He was also living in with his common-law
wife with whom he has two children.
COMPANIA MARITIMA v. INSURANCE CO. OF N. AMERICA
FACTS: Macleod and Company of the Philippines contracted by
telephone the services of the Compañia Maritima, a shipping
corporation, for the shipment of 2,645 bales of hemp from the
former's Sasa private pier at Davao City to Manila and for their
subsequent transhipment to Boston, Massachusetts, U.S.A. on
board the S.S. Steel Navigator. Petitioner sent to Macleod's private
wharf LCT Nos. 1023 and 1025 which was manned by a patron to
get the cargo. They issued a receipt which show that they have
transported the cargo from Davao to Manila for further
transshipment to US. One of the barge was sank resulting in the
loss and damages of its cargo.
Macloud filed its claim of insurance which was paid by the
insurance company. Subrogated in the right of Macloud, the
insurance company demand from the petitioner its liability but
the latter refused to comply. The insurance company filed a
complaint against the petitioner before the trial court who order
the petitioner to pay the plaintiff insurance company and this was
affirmed by the CA.
ISSUE: WON the insurance company maintain this suit without
proof of its personality to do so?
HELD: According to the Supreme Court, since the contract
between the shipper and the carrier in this case was valid and
properly established, when macloud suffered damages because of
the doing of petitioner, the insurer who pay the insurance claim
was subrogated on behalf of Macloud giving the insurance
company a personality to institute this case.
WHEREFORE, the decision appealed from is affirmed, with costs
against petitioner.
PHIL. CHARTER INSURANCE v. CHEMOIL LIGHTERAGE
FACTS: Philippine Charter Insurance Corporation is a domestic
corporation engaged in the business of non-life insurance.
Respondent Chemoil Lighterage Corporation is also a domestic
corporation engaged in the transport of goods. On 24 January
1991, Samkyung Chemical Company, Ltd., based in South Korea,
shipped 62.06 metric tons of the liquid chemical DIOCTYL
PHTHALATE (DOP) on board MT “TACHIBANA” which was valued
at US$90,201.57 and another 436.70 metric tons of DOP valued at
US$634,724.89 to the Philippines. The consignee was Plastic
Group Phils., Inc. in Manila. PGP insured the cargo with Philippine
Charter Insurance Corporation against all risks. The insurance
was under Marine Policies No. MRN-30721[5]dated 06 February
1991. Marine Endorsement No. 2786[7] dated 11 May 1991 was
attached and formed part of MRN-30721, amending the latter’s
insured value to P24,667,422.03, and reduced the premium
accordingly. The ocean tanker MT “TACHIBANA” unloaded the
cargo to the tanker barge, which shall transport the same to Del
Pan Bridge in Pasig River and haul it by land to PGP’s storage tanks
in Calamba, Laguna. Upon inspection by PGP, the samples taken
from the shipment showed discoloration demonstrating that it
was damaged. PGP then sent a letter where it formally made an
insurance claim for the loss it sustained.
Petitioner requested the GIT Insurance Adjusters, Inc. (GIT), to
conduct a Quantity and Condition Survey of the shipment which
issued a report stating that DOP samples taken were discolored.
Inspection of cargo tanks showed manhole covers of ballast tanks’
ceilings loosely secured and that the rubber gaskets of the
manhole covers of the ballast tanks re-acted to the chemical
causing shrinkage thus, loosening the covers and cargo ingress.
Petitioner paid PGP the full and final payment for the loss and
issued a Subrogation Receipt. Meanwhile, PGP paid the
respondent the as full payment for the latter’s services.
On 15 July 1991, an action for damages was instituted by the
petitioner-insurer against respondent-carrier before the RTC,
Br.16, City of Manila. Respondent filed an answer which admitted
that it undertook to transport the shipment, but alleged that
before the DOP was loaded into its barge, the representative of
PGP, Adjustment Standard Corporation, inspected it and found the
same clean, dry, and fit for loading, thus accepted the cargo
without any protest or notice. As carrier, no fault and negligence
can be attributed against respondent as it exercised extraordinary
diligence in handling the cargo. After due hearing, the trial court
rendered a Decision in favor of plaintiff. On appeal, the Court of
Appeals promulgated its Decision reversing the trial court. A
petition for review on certiorar[ was filed by the petitioner with
this Court.
ISSUES: 1. Whether or not the Notice of Claim was filed within the
required period.
2. Whether or not the damage to the cargo was due to the fault or
negligence of the respondent.
HELD: Article 366 of the Code of Commerce has profound
application in the case at bar, which provides that; “Within
twenty-four hours following the receipt of the merchandise a
claim may be made against the carrier on account of damage or
average found upon opening the packages, provided that the
indications of the damage or average giving rise to the claim
cannot be ascertained from the exterior of said packages, in which
case said claim shall only be admitted at the time of the receipt of
the packages.” After the periods mentioned have elapsed, or after
the transportation charges have been paid, no claim whatsoever
shall be admitted against the carrier with regard to the condition
in which the goods transported were delivered.
As to the first issue, the petitioner contends that the notice of
contamination was given by PGP employee, to Ms. Abastillas, at
the time of the delivery of the cargo, and therefore, within the
required period. The respondent, however, claims that the
supposed notice given by PGP over the telephone was denied by
Ms. Abastillas. The Court of Appeals declared:that a telephone call
made to defendant-company could constitute substantial
compliance with the requirement of notice. However, it must be
pointed out that compliance with the period for filing notice is an
essential part of the requirement, i.e.. immediately if the damage
is apparent, or otherwise within twenty-four hours from receipt
of the goods, the clear import being that prompt examination of
the goods must be made to ascertain damage if this is not
immediately apparent. We have examined the evidence, and We
are unable to find any proof of compliance with the required
period, which is fatal to the accrual of the right of action against
the carrier.
Nothing in the trial court’s decision stated that the notice of claim
was relayed or filed with the respondent-carrier immediately or
within a period of twenty-four hours from the time the goods
were received. The Court of Appeals made the same finding.
Having examined the entire records of the case, we cannot find a
shred of evidence that will precisely and ultimately point to the
conclusion that the notice of claim was timely relayed or filed.
The requirement that a notice of claim should be filed within the
period stated by Article 366 of the Code of Commerce is not an
empty or worthless proviso. The object sought to be attained by
the requirement of the submission of claims in pursuance of this
article is to compel the consignee of goods entrusted to a carrier
to make prompt demand for settlement of alleged damages
suffered by the goods while in transport, so that the carrier will be
enabled to verify all such claims at the time of delivery or within
twenty-four hours thereafter, and if necessary fix responsibility
and secure evidence as to the nature and extent of the alleged
damages to the goods while the matter is still fresh in the minds
of the parties. The filing of a claim with the carrier within the time
limitation therefore actually constitutes a condition precedent to
the accrual of a right of action against a carrier for loss of, or
damage to, the goods. The shipper or consignee must allege and
prove the fulfillment of the condition. If it fails to do so, no right of
action against the carrier can accrue in favor of the former. The
aforementioned requirement is a reasonable condition precedent;
it does not constitute a limitation of action.
We do not believe so. As discussed at length above, there is no
evidence to confirm that the notice of claim was filed within the
period provided for under Article 366 of the Code of Commerce.
Petitioner’s contention proceeds from a false presupposition that
the notice of claim was timely filed. Considering that we have
resolved the first issue in the negative, it is therefore unnecessary
to make a resolution on the second issue.
Gaisano Cagayan, Inc. vs Insurance Company of North
America
FACTS: Intercapitol Marketing Corporation (IMC) is a maker of
Wrangler Blue Jeans. Levi Strauss (Phils.) Inc.(LSPI) is the local
distributor of products bearing trademarks owned by
Levi Strauss and Co. IMC and LSPI both obtained from respondent
fire insurance policies with book debt endorsements. It provides
for coverage on book debts in connection with ready-made
clothing materials which have been sold or delivered to various
customers and dealers of the insured everywhere in the
Philippines. The policies defined book debts as the unpaid account
still appearing in the Book of Account of the Insured 45 days after
the time of the loss covered under the said policy.- Petitioner is a
customer and dealer of the products of IMC and LSPI. Feb 25,
1991, The Gaisano Superstore Complex in Cagayan de Oro City,
owned by petitioner, burned down. Included in the items lost in
the fire were the ready-made clothing materials sold and
delivered by IMC and LSPI.- Feb 1992, Respondent filed
a complaint for damages against petitioner, alleging that IMC and
LSPI filed with respondent their claims, that as of Feb 25, 1991,
the unpaid accounts of petitioner on the sale and delivery of the
clothing materials with IMC was P2,119,205.00 while with LSPI
was P535,613.020, that respondent paid the claims of IMC and
LSPI, that respondent made several demands for payment upon
petitioner but were ignored.- They failed to reach an amicable
settlement. RTC rendered their decision dismissing respondent's
complaint stating that the fire was accidental and was not
attributable to the negligence of the petitioner, that it has not
established that petitioner is the debtor of IMC and LSPI,
that since the invoice states that IMC and LSPI retain ownership
over the clothing materials until the purchase price is fully paid.-
CA reversed the RTC decision.
ISSUE: Whether the petitioner is liable for the unpaid accounts
HELD: Yes. Petitioner ordered to pay P2,119.205.60 for IMC's
claims, but not P535,613 for LSPI's claims for lack of factual basis.-
The insurance in this case is not for loss of goods by fire but for
petitioner's accounts with IMC and LSPI that remained unpaid 45
days after the fire. Petitioner's obligation is for the payment of
money. Where the obligation consists in the payment of money,
the failure of the debtor to make the payment even by reason of a
fortuitous event shall not relieve him of his liability. The rule that
the obligor should be held exempt from liability when the loss
occurs thru a fortuitous event only holds true when the obligation
consists in the delivery of a determinate thing and there is no
stipulation holding him liable even in case of fortuitous event. It
does not apply when the obligation is pecuniary in nature.- Under
Art 1263, if the obligation is generic in the sense that the object
thereof is designated merely by its class or genus without any
particular designation or physical segregation from all others
of the same class, the loss or destruction of anything of the
same kind even without the debtor's fault and before he has
incurred in delay will not have the effect of extinguishing the
obligation. An obligation to pay money is generic; therefore, it
is not excused by fortuitous loss of any specific property of the
debtor.
PHILAMCARE v. CA
FACTS: Ernani Trinos applied for a health care coverage with
Philamcare Health Systems, 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 out-patient benefits. The coverage was approved for a period
of one year from March 1, 1988 to March 1, 1989. The agreement
was however extended yearly until June 1, 1990 which increased
the amount of coverage to a maximum sum of P75,000 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. While in the hospital, his wife Julita tried to claim the
benefits under the health care agreement. However, the
Philamcare denied her claim alleging that the agreement was void
because Ernani concealed his medical history. Doctors at the MMC
allegedly discovered at the time of Ernani’s 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 Ernani was discharged from the MMC, he was
attended by a physical therapist at home. Later, he was admitted
at the Chinese General Hospital. Due to financial difficulties,
however, respondent brought her husband home again. In the
morning of April 13, 1990, Ernani had fever and was feeling very
weak. Respondent was constrained to bring him back to the
Chinese General Hospital where he died on the same day.
Julita filed an action for damages and reimbursement of her
expenses plus moral damages attorney’s fees against Philamcare
and its president, Dr. Benito Reverente. The Regional Trial court
or Manila rendered judgment in favor of Julita. On appeal, the
decision of the trial court was affirmed but deleted all awards for
damages and absolved petitioner Reverente. Hence, this petition
for review raising the primary argument that a health care
agreement is not an insurance contract; hence the
“incontestability clause” under the Insurance Code does not apply.
ISSUES: (1) Whether or not the health care agreement is not an
insurance contract (2) Whether or not there is concealment of
material fact made by Ernani
HELD: (1)YES. Section2 (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.
Section 3 of the Insurance Code states that 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.
Section 10 provides that every person has an insurable interest in insurance company over the terms and phraseology of the
the life and health (1) of himself, of his spouse and of his children. insurance contract, ambiguity must be strictly interpreted against
The insurable interest of respondent’s husband in obtaining the the insurer and liberally in favor of the insured, especially to avoid
health care agreement was his own health. The health care forfeiture. This is equally applicable to Health Care Agreements.
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. The answer assailed by petitioner was in response to the

question relating to the medical history of the applicant. This
largely depends on opinion rather than fact, especially coming
from respondent’s husband who was not a medical doctor. Where
matters of opinion or judgment are called for answers made I
good faith and without intent to deceive will not avoid a policy
even though they are untrue. The fraudulent intent on the part of
the insured must be established to warrant rescission of the
insurance contract. Concealment as a defense for the health care
provider or insurer to avoid liability is an affirmative defense and
the duty to establish such defense by satisfactory and convincing
evidence rests upon the provider or insurer. In any case, with or
without the authority to investigate, petitioner is liable for claims
made under the contract. Having assumed a responsibility under
the agreement, petitioner is bound to answer to the extent agreed
upon. In the end, 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.

Being a contract of adhesion, the terms of an insurance contract

are to be construed strictly against the party which prepared the
contract – the insurer. By reason of the exclusive control of the
DBP v. RMN
FACTS: In the evening of July 27, 1988, the radio station of Radio
Mindanao Network located at the SSS Building in Bacolod City was
burned down causing damage in the amount of over one million
pesos. Respondent sought to recover under two insurance policies
but the claims were denied on the basis that the case of the loss
was an excepted risk under condition no. 6 (c) and (d), to wit:
6. This insurance does not cover any loss or damage occasioned by
or through or in consequence, directly or indirectly, of any of the
following consequences, namely:
(c) War, invasion, act of foreign enemies, hostilities, or warlike
operations (whether war be declared or not), civic war.
(d) Mutiny, riot, military or popular uprising, insurrection,
rebellion, revolution, military or usurped power.
The insurers maintained that based on witnesses and evidence
gathered at the site, the fire was caused by the members of the
Communist Party of the Philippines/New People’s Army. Hence
the refusal to honor their obligations.
The trial court and the CA found in favor of the respondent. In its
findings, both courts mentioned the fact that there was no credible
evidence presented that the CCP/NPA did in fact cause the fire
that gutted the radio station in Bacolod.
ISSUE: WON the insurance companies are liable to pay Radio
Mindanao Network under the insurance policies?
HELD: Yes. The Court will not disturb the factual findings of the
appellant and trial courts absent compelling reason. Under this
mode of review, the jurisdiction of the court is limited to
reviewing only errors of law.
– Particularly in cases of insurance disputes with regard to
excepted risks, it is the insurance companies which have the
burden to prove that the loss comes within the purview of the
exception or limitation set up. It is sufficient for the insured to
prove the fact of damage or loss. Once the insured makes out a
prima facie case in its favor, the duty or burden of evidence shifts
to the insurer to controvert said prima facie case.
Disposition Petition dismissed. Decision of the CA is affirmed.
AMERICAN HOME ASSURANCE v. TANTUCO
FACTS: Tantuco Enterprises, Inc. is a coconut oil milling and
refining company. It owned two mills (the first oil mill and a new
one), both located at its factory compound at Iyam, Lucena City.
The two oil mills are separately covered by fire insurance policies
issued by American Home Assurance Co.
On Sept. 30, 1991, a fire broke out and gutted and consumed the
new oil mill. American Home rejected the claim for the insurance
proceeds on the ground that no policy was issued by it covering
the burned oil mill. It stated that the new oil mill was under
Building No. 15 while the insurance coverage extended only to the
oil mill under Building No. 5.
ISSUE: Whether or not the new oil mill is covered by the fire
insurance policy
HELD: In construing the words used descriptive of a building
insured, the greatest liberality is shown by the courts in giving
effect to the insurance. In view of the custom of insurance agents
to examine buildings before writing policies upon them, and since
a mistake as to the identity and character of the building is
extremely unlikely, the courts are inclined to consider the policy
of insurance covers any building which the parties manifestly
intended to insure, however inaccurate the description may be.
Notwithstanding, therefore, the failure of description in the policy,
it is beyond dispute, to our mind, that what the parties manifestly
intended to insure was the new oil mill.
If the parties really intended to protect the first oil mill, then there
is no need to specify it as new. Indeed, it would be absurd to
assume that the respondent would protect its first oil mill for
different amounts and leave uncovered its second one.
NEW LIFE v. CA
FACTS: Julian Sy, owner of New Life, insured his building in 3
different insurance agencies for 350,000, 1,000,000, and 200,000.
When his building and the goods inside burned down, he claimed
for insurance indemnities, but these were rejected by the three
companies for violation of policy conditions.
Sy filed for 3 different suits in the trial court, where he won all
suits against the insurance companies. The court of appeals
reversed the decision of the trial court.
ISSUE: Did the petitioner violate conditions 3 and 27 of the three
insurance policies, thereby foreiting collection of indemnities?
HELD: Yes.
Condition 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 such notice be
given and the particulars of such insurance or insurances be
stated therein or endorsed on 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 loss or damage not more than P200,000.00.
Sy never disclosed co-insurance in the contracts he entered into
with the three corporations. The insured is specifically required
to disclose the insurance that he had contracted with other
companies. Sy also contended that the insurance agents knew of
the co-insurance. However, the theory of imputed knowledge, that
the knowledge of the agent is presumed to be known by the
principal, is not enough.
When the words of the document are readily understandable by
an ordinary reader, there is no need for construction anymore.
The conformity of the insured to the terms of the policy is implied
with his failure to disagree with the terms of the contract. Since
Sy, was a businessman, it was incumbent upon him to read the
contracts.
Pioneer Insurance and Surety Corporation vs. Yap- The obvious
purpose of the aforesaid requirement in the policy is to prevent
over-insurance and thus avert the perpetration of fraud. The
public, as well as the insurer, is interested in preventing the
situation in which a fire would be profitable to the insured.
“Also, policy condition 15 was used. It stated: 15.. . . if any
false declaration be made or used in support thereof, . . .
all benefits under this Policy shall be forfeited . . .”
As for condition number 27, the stipulation read:
27. Action or suit clause. — If a claim be made and rejected
and an action or suit be not commenced either in the
Insurance Commission or any court of competent
jurisdiction of notice of such rejection, or in case of
arbitration taking place as provided herein, within twelve
(12) months after due notice of the award made by the
 arbitrator or arbitrators or umpire, then the claim shall for
all purposes be deemed to have been abandoned and shall
not thereafter be recoverable hereunder.
This is regarding Sy’s claim for one of the companies. Recovery
was filed in court by petitioners only on January 31, 1984, or after
more than one (1) year had elapsed from petitioners' receipt of
the insurers' letter of denial on November 29, 1982. This made it
void.
GREAT PACIFIC v CA
FACTS: A contract of group life insurance was executed between
petitioner Great Pacific and Development Bank Grepalife agreed
to insure the lives of eligible housing loan mortgagors of DBP.
Wilfredo Leuterio, a physician and a housing debtor of DBP,
applied for membership in the group life insurance plan. In
an application form, Dr. Leuterio answered questions concerning
his health condition as follows:
“7. Have you ever had, or consulted, a physician for a heart
condition, high blood pressure, cancer, diabetes, lung,
kidney or stomach disorder or any other physical
impairment?
8. Are you now, to the best of your knowledge, in good
health?”
Grepalife issued a coverage to the value of P86,200.00 pesos.
Dr. Leuterio died due to “massive cerebral hemorrhage.” DBP
submitted a death claim to Grepalife. Grepalife denied the claim
alleging that Dr. Leuterio was not physically healthy when he
applied for an insurance coverage. Grepalife insisted that Dr.
Leuterio did not disclose he had been suffering from
hypertension, which caused his death. Allegedly, such non-
disclosure constituted concealment that justified the denial of the
claim.
The widow, respondent Medarda V. Leuterio, filed against
Grepalife.
The trial court rendered a decision in favor of respondent widow
and against Grepalife. The Court of Appeals sustained the trial
court’s decision.
ISSUES: 1. Whether the Court of Appeals erred in holding
petitioner liable to DBP as beneficiary in a group life insurance
contract from a complaint filed by the widow of the
decedent/mortgagor?
2. Whether the Court of Appeals erred in not finding that Dr.
Leuterio concealed that he had hypertension, which would vitiate
the insurance contract?
3. Whether the Court of Appeals erred in holding Grepalife liable
in the amount of eighty six thousand, two hundred (P86,200.00)
pesos without proof of the actual outstanding mortgage payable
by the mortgagor to DBP.
HELD: No to all three. Petition dismissed.
1. Petitioner alleges that the complaint was instituted by the
widow of Dr. Leuterio, not the real party in interest, hence the trial
court acquired no jurisdiction over the case. It argues that when
the Court of Appeals affirmed the trial court’s judgment, Grepalife
was held liable to pay the proceeds of insurance contract in favor
of DBP, the indispensable party who was not joined in the suit.
The insured private respondent did not cede to the mortgagee all
his rights or interests in the insurance, the policy stating that: “In
the event of the debtor’s death before his indebtedness with
the Creditor [DBP] shall have been fully paid, an amount to pay
the outstanding indebtedness shall first be paid to
the creditor and the balance of sum assured, if there is any, shall
then be paid to the beneficiary/ies designated by the debtor.”
When DBP’s claim was denied, it collected the debt from the
mortgagor and took the necessary action of foreclosure on the
residential lot of private respondent.
Gonzales vs. Yek Tong Lin- Insured, being the person with whom
the contract was made, is primarily the proper person to bring suit
thereon. Insured may thus sue, although the policy is taken
wholly or in part for the benefit of another person named or
unnamed, and although it is expressly made payable to another as
his interest may appear or otherwise. Although a policy issued to
a mortgagor is taken out for the benefit of the mortgagee and is
made payable to him, yet the mortgagor may sue thereon in his
own name, especially where the mortgagee’s interest is less than
the full amount recoverable under the policy. Insured may be
regarded as the real party in interest, although he has assigned the
policy for the purpose of collection, or has assigned as collateral
security any judgment he may obtain.
And since a policy of insurance upon life or health may pass by
transfer, will or succession to any person, whether he has an
insurable interest or not, and such person may recover it
whatever the insured might have recovered,[14] the widow of the
decedent Dr. Leuterio may file the suit against the insurer,
Grepalife.
2. The medical findings were not conclusive because Dr. Mejia did
not conduct an autopsy on the body of the decedent. The medical
certificate stated that hypertension was “the possible cause of
death.” Hence, the statement of the physician was properly
considered by the trial court as hearsay.
Contrary to appellant’s allegations, there was no sufficient proof
that the insured had suffered from hypertension. Aside from the
statement of the insured’s widow who was not even sure if the
medicines taken by Dr. Leuterio were for hypertension, the
appellant had not proven nor produced any witness who could
attest to Dr. Leuterio’s medical history.
Appellant insurance company had failed to establish that there
was concealment made by the insured, hence, it cannot refuse
payment of the claim.”
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.
3. A life insurance policy is a valued policy. Unless the interest of
a person insured is susceptible of exact pecuniary measurement,
the measure of indemnity under a policy of insurance upon life or
health is the sum fixed in the policy. The mortgagor paid the
premium according to the coverage of his insurance.
In the event of the debtor’s death before his indebtedness with
the creditor shall have been fully paid, an amount to pay the
outstanding indebtedness shall first be paid to the creditor.
DBP foreclosed one of the deceased person’s lots to satisfy the
mortgage. Hence, the insurance proceeds shall inure to the benefit
of the heirs of the deceased person or his beneficiaries.