1
WHITE GOLD vs PIONEER (Is a Protection and
Indemnity contract considered insurance?)
Section 2(2) of the Insurance Code enumerates what
constitutes doing an
insurance business or transacting an insurance
business. These are:
(a) making or proposing to make, as insurer, any
insurance contract;
(b) making, or proposing to make, as surety, any
contract of suretyship as a
vocation and not as merely incidental to any other
legitimate business or
activity of the surety;
(c) doing any kind of business, including a
reinsurance business, specifically
recognized as constituting the doing of an insurance
business within the
meaning of this Code;
(d) doing or proposing to do any business in
substance equivalent to any of the
foregoing in a manner designed to evade the
provisions of this Code.
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
Verendia vs CA
(Is the lease contract where the true lessee is not
indicated considered fraudulent?) Roberto vs Marcelo
Garcia
Basically a contract of indemnity, an insurance
contract is the law between the parties (Pacific
Banking Corporation vs. Court of Appeals 168
SCRA 1 [1988]). Its terms and conditions constitute
the measure of the insurer's liability and compliance
therewith is a condition precedent to the insured's
right to recovery from the insurer (Oriental
Assurance Corporation vs. Court of Appeals, 200
SCRA 459 [1991], citing Perla Compania de
Seguros, Inc. vs. Court of Appeals, 185 SCRA 741
[1991]). As it is also a contract of adhesion, an
insurance contract should be liberally construed in
favor of the insured and strictly against the insurer
company which usually prepares it
Considering, however, the foregoing discussion
pointing to the fact that Verendia used a false lease
contract to
support his claim under Fire Insurance Policy No. F-
18876, the terms of the policy should be strictly
construed
against the insured. Verendia failed to live by the
terms of the policy, specifically Section 13 thereof
which is
expressed in terms that are clear and unambiguous,
that all benefits under the policy shall be forfeited "If
the claim be in any respect fraudulent, or if any false
declaration be made or used in support thereof, or if
any fraudulent means or devises are used by the
Insured or anyone acting in his behalf to obtain any
benefit under the policy". Verendia, having presented
a false declaration to support his claim for benefits in
the form of a fraudulent lease contract, he forfeited
all benefits therein by virtue of Section 13 of the
policy in the absence of proof that Fidelity waived
such provision.
Philamcare VS CA (concealment of hypertension;
right to rescind should be exercised prior
commencement of action)
Section 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. An insurance contract exists where
the following elements concur:
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 assumes 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; and
5. In consideration of the insurers promise, the
insured pays a premium.[8]
Section 3 of the Insurance Code states that any
contingent or unknown event, whether past or future,
which may damnify a person having an insurable
interest against him, may be insured against. Every
person has an insurable interest in the life and health
of himself.
In the case at bar, the 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.[9] Once
the member incurs hospital, medical or any other
expense arising from sickness, injury or

other stipulated contingent, the health.
Manila Mahogany vs CA (can Manila mahogany
claim from Insurer and SMC for Mercedes Benz?)
Although petitioners right to file a deficiency claim
against San Miguel Corporation is with legal basis,
without prejudice to the insurer's right of subrogation,
nevertheless when Manila Mahogany executed
another release claim (Exhibit K) discharging San
Miguel Corporation from "all actions, claims,
demands and rights of action that now exist or
hereafter arising out of or as a consequence of the
accident" after the insurer had paid the proceeds of
the policy- the compromise agreement of
P5,000.00 being based on the insurance policy-the
insurer is entitled to recover from the insured the
amount of insurance money paid (Metropolitan
Casualty Insurance Company of New York vs.
Badler,
229 N.Y.S. 61, 132 Misc. 132 cited in Insurance
Code and Insolvency Law with comments and
annotations, H.B. Perez 1976, p. 151). Since
petitioner by its own acts released San Miguel
Corporation, thereby defeating private respondents,
the right of subrogation, the right of action of
petitioner against the insurer was also nullified. (Sy
Keng & Co. vs. Queensland Insurance Co., Ltd., 54
O.G. 391) Otherwise stated: private respondent may
recover the sum of P5,000.00 it had earlier paid to
Petitioner
Gulf Resorts vs PCIC (does the rider cover damage
by earthquake to the whole resort or just two
swimming pools?)
In sum, there is no ambiguity in the terms of the
contract and its riders. Petitioner cannot rely on the
general rule that insurance contracts are contracts of
adhesion which should be liberally construed in favor
of the insured and strictly against the insurer
company which usually prepares it.31 A contract of
adhesion is one wherein a party, usually a
corporation, prepares the stipulations in the contract,
while the other party merely affixes his signature or
his "adhesion" thereto. Through the years, the courts
have held that in these type of contracts, the parties
do not bargain on equal footing, the weaker party's
participation being reduced to the alternative to take
it or leave it. Thus, these contracts are viewed as
2
traps for the weaker party whom the courts of justice
must protect.
Fortune Insurance vs CA (Is the driver an
“employee” of Producers Bank?)
Except with respect to compulsory motor vehicle
liability insurance, the Insurance Code contains no
other provisions applicable to casualty insurance or to
robbery insurance in particular. These contracts are,
therefore, governed by the general provisions
applicable to all types of insurance. Outside of these,
the rights and obligations of the parties must be
determined by the terms of their contract, taking into
consideration its purpose and always in accordance
with the general principles of insurance law. 9
It has been aptly observed that in burglary, robbery,
and theft insurance, "the opportunity to defraud the
insurer — the moral hazard — is so great that
insurers have found it necessary to fill up their
policies with countless
restrictions, many designed to reduce this hazard.
Seldom does the insurer assume the risk of all losses
due to the hazards insured against." 10 Persons
frequently excluded under such provisions are those
in the insured's service and employment. 11 The
purpose of the exception is to guard against liability
should the theft be committed by one having
unrestricted access to the property. 12 In such cases,
the terms specifying the excluded classes are to be
given their meaning as understood in common
speech. 13 The terms "service" and "employment"
are generally associated with the idea of selection,
control, and compensation
But even granting for the sake of argument that these
contracts were not "labor-only" contracts, and PRC
Management Systems and Unicorn Security Services
were truly independent contractors, we are satisfied
that
Magalong and Atiga were, in respect of the transfer
of Producer's money from its Pasay City branch to its
head
office in Makati, its "authorized representatives" who
served as such with its teller Maribeth Alampay.
Howsoever viewed, Producers entrusted the three
with the specific duty to safely transfer the money to
its head office, with Alampay to be responsible for its
custody in transit; Magalong to drive the armored
vehicle which would carry the money; and Atiga to
provide the needed security for the money, the
vehicle, and his two other companions. In short, for
these particular tasks, the three acted as agents of
Producers. 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." 23
Eternal Gardens vs Philam (when is an insurance
contract perfected?)
Clearly, the vague contractual provision, in Creditor
Group Life Policy No. P-1920 dated December 10,
1980, must be construed in favour of the insured and
in favor of the effectivity of the insurance contract.
On the other hand, the seemingly conflicting
provisions must be harmonized to mean that upon a
partys purchase of a memorial lot on installment from
Eternal, an insurance contract covering the lot
purchaser
is created and the same is effective, valid, and
binding until terminated by Philamlife by
disapproving the insurance application. The second
sentence of Creditor Group Life Policy No. P-1920
on the Effective Date
of Benefit is in the nature of a resolutory condition
which would lead to the cessation of the insurance
contract. Moreover, the mere inaction of the insurer
on the insurance application must not work to
prejudice the
insured; it cannot be interpreted as a termination of
the insurance contract. The termination of the
insurance contract by the insurer must be explicit and
unambiguous.
Fedex vs AHAC (who is the proper payee of the
insurance secured by the carrier, the consignee
SMITHKLINE or the one who secured the
insurance?)
The Certificate specifies that loss of or damage to the
insured cargo is "payable to order x x x upon
surrender of this Certificate." Such wording conveys
the right of collecting on any such damage or loss, as
fully as if the property were covered by a special
policy in the name of the holder itself. At the back of
the Certificate appears the signature of the
representative of Burlington. This document has thus
been duly indorsed in blank and is deemed a bearer
instrument.
Since the Certificate was in the possession
of Smithkline, the latter had the right of collecting or
of being indemnified for loss of or damage to the
insured shipment, as fully as if the property were
covered by a special policy in the name of the holder.
Hence, being the holder of the Certificate and having
an insurable interest in the goods, Smithkline was the
proper payee of the insurance proceeds.
3
However, the claim has prescribed and
AHAC cannot collect on Fedex because they did not
file a claim, a condition precedent.
CHAPTER 2
RAFAEL ENRIQUEZ, as administrator of the
estate of the late
Joaquin 'Ma. Herrer, plaintiff-appellant, vs . SUN
LIFE ASSURANCE
COMPANY OF CANADA, defendant-
appellee
An acceptance of an offer of insurance not actually or
constructively communicated to the proposer does
not make a contract. Only the mailing of acceptance
completes the contract of insurance, as the locus
poenitentiae is ended when the acceptance has passed
beyond the control of the party.
DEVELOPMENT BANK OF THE
PHILIPPINES, petitioner, vs. COURT OF
APPEALS and the ESTATE OF THE LATE
JUAN B. DANS, represented
by CANDIDA G. DANS, and the DBP
MORTGAGE REDEMPTION
INSURANCE POOL, respondents
Undisputably, the power to approve MRI applications
is lodged with the DBP MRI Pool. The pool,
however, did not approve the application of Dans.
There is also no showing that it accepted the sum of
P1,476.00, which DBP credited to its account with
full knowledge that it was payment for Dan's
premium. There was, as a result, no perfected
contract of insurance; hence, the DBP MRI Pool
cannot be held liable on a contract that does not exist.
GREAT PACIFIC LIFE ASSURANCE
COMPANY, petitioner, vs.
HONORABLE COURT OF APPEALS,
respondents.
PERFECTION OF CONTRACT. — A binding
deposit receipt which is merely conditional does not
insure outright. Thus, where an agreement is made
between the applicant and the agent, no liability will
attach until the principal approves the risk and a
receipt is given by the agent. The acceptance is
merely condition.
CASE AT BAR. — The failure of the father who
applied for a life insurance policy on the life of his
daughter to divulge the fact that his daughter is a
mongoloid, a congenital physical defect that could
never be disguised, constitutes such concealment as
to render the policy void. And where the applicant

himself is an insurance agent, he ought to know, as
he surely must have known, his duty and
responsibility to supply such a
material fact, and his failure to divulge such
significant fact is deemed to have been done in bad
faith.
CHAPTER 3 INSURABLE INTEREST
SPOUSES NILO CHA and STELLA UY CHA,
and UNITED INSURANCE
CO., INC., petitioners, vs . COURT OF APPEALS
and CKS
DEVELOPMENT CORPORATION,
respondents.
In the present case, it cannot be denied that CKS has
no insurable interest in the goods and merchandise
inside the leased premises under the provisions of
Section 17 of the Insurance Code. . . . Therefore,
respondent CKS cannot, under the Insurance Code —
a special law — be validly a beneficiary of the fire
insurance policy taken by the petitioner-spouses over
their merchandise. This insurable interest over said
merchandise remains with the insured, the Cha
spouses.
ARMANDO GEAGONIA, petitioner, v s .
COURT OF APPEALS and
COUNTRY BANKERS INSURANCE
CORPORATION, respondents.
DOUBLE INSURANCE; DOES NOT EXIST
WHEN TWO (2) POLICIES DO NOT COVER THE
SAME INTEREST; CASE AT BAR. — We are of
the opinion that Condition 3 of the subject policy is
not totally free from ambiguity and must, perforce, be
meticulously analyzed. Such analysis leads us to
conclude that (a) the prohibition applies only to
double insurance, and (b) the nullity of the policy
shall only be to the extent exceeding P200,000.00 of
the total policies obtained. The first conclusion is
supported by the portion of the condition referring to
other insurance "covering any of the property or
properties consisting of stocks in trade, goods in
process and/or inventories only hereby insured," and
the portion regarding the insured's declaration on the
subheading COINSURANCE that the co-insurer is
Mercantile Insurance Co., Inc. in the sum of
P50,000.00. A double insurance exists where the
same person is insured by several insurers separately
in respect of the same subject and interest. As earlier
stated, the insurable interests of a mortgagor and a
mortgagee on the mortgaged property are distinct and
separate. Since the two policies of the PFIC do not
4
cover the same interest as that covered by the policy
of the private respondent, no double insurance exists.
RIZAL COMMERCIAL BANKING
CORPORATION, UY CHUN BING AND
ELI D. LAO, petitioner, vs . COURT OF
APPEALS AND GOYU & SONS,
INC., respondent
COMMERCIAL LAW; INSURANCE;
MORTGAGOR AND MORTGAGEE, WITH
SEPARATE AND DISTINCT INSURABLE
INTEREST. — It is settled that a mortgagor and a
mortgagee have separate and distinct insurable
interests in the same mortgaged property, such that
each one of them may insure the same property for
his own sole benefit. There is no question that GOYU
could insure the mortgaged property for its own
exclusive benefit. In the present case, although it
appears that GOYU obtained the subject insurance
policies naming itself as the sole payee, the intentions
of the parties as shown by their contemporaneous
acts, must be given due consideration in order to
better serve the interest of justice and equity.
CDcaSA
2. REMEDIAL LAW; ACTIONS; ESTOPPEL;
MORTGAGOR ESTOPPED FROM ASSAILING
ENDORSEMENT OF INSURANCE POLICIES
WHERE THE SAME WAS PROCURED
PURSUANT TO A MORTGAGE CONTRACT
AND OBTAINED FROM A SISTER COMPANY
OF MORTGAGEE; CASE AT BAR.
GOYU cannot seek relief under Section 53 of the
Insurance Code which provides that the proceeds of
insurance shall exclusively apply to the interest of the
person in whose name or for whose bene􀁏t it is
made. The peculiarity of the circumstances obtaining
in the instant case presents a justi􀁏cation to take
exception to the strict application of said provision, it
having been suf􀁏ciently established that it was the
intention of the parties to designate RCBC as the
party for whose bene􀁏t the insurance policies were
taken out.
GAISANO CAGAYAN, INC., petitioner, vs .
INSURANCE COMPANY OF
NORTH AMERICA, respondent.
IMC and LSPI did not lose complete interest over the
goods. They have an insurable interest until full
payment of the value of the delivered goods. Unlike
the civil law concept of res perit domino, where
ownership is the basis for consideration of who bears
the risk of loss, in property insurance, one's interest is
not determined by concept of title, but whether
insured has substantial economic interest in the
property.

Therefore, an insurable interest in property does not
necessarily imply a property interest in, or a lien
upon, or possession of, the subject matter of the
insurance, and neither the title nor a beneficial
interest is requisite to the existence of such an
interest, it is sufficient that the insured is so situated
with reference to the property that he would be liable
to loss should it be injured or destroyed by the peril
against which it is insured. 29 Anyone has an
insurable interest in property who derives a benefit
from its existence or would suffer loss from its
destruction.
CHAPTER 4 Devices for Ascertaining and
Controlling Risks
GREAT PACIFIC LIFE ASSURANCE CORP.,
petitioner, vs . COURT OF
APPEALS AND MEDARDA V. LEUTERIO,
respondents.
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. In the case at bar, the
petitioner failed to clearly and satisfactorily establish
its defense, and is therefore liable to pay the proceeds
of the insurance.
SUNLIFE ASSURANCE COMPANY OF
CANADA, petitioner, vs. The Hon.
COURT OF APPEALS and Spouses ROLANDO
and BERNARDA
BACANI, respondents.
Anent the finding that the facts concealed had no
bearing to the cause of death of the insured, it is well
settled that the insured need not die of the disease he
had failed to disclose to the insurer. It is sufficient
that his nondisclosure misled the insurer in forming
his estimates of the risks of the proposed
insurance policy or in making inquiries.
PHILAMCARE HEALTH SYSTEMS, INC.,
petitioner, vs . COURT OF
APPEALS and JULITA TRINOS, respondents.
ELEMENTS. — An insurance contract exists where
the following elements concur: 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 assumes the risk; 4. Such assumption of
risk is part of a general scheme to distribute actual
5
losses among a large group of persons bearing a
similar risk; and 5. In consideration of the insurer's
promise,
the insured pays a premium.
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 in good faith and without intent to
deceive will not avoid a policy even though they are
untrue.
THELMA VDA. DE CANILANG, petitioner, vs.
HON. COURT OF APPEALS and GREAT
PACIFIC LIFE INSURANCE CORPORATION,
respondents.
We agree with the Court of Appeals that the
information which Jaime Canilang failed to disclose
was material to the ability of Great Pacific to estimate
the probable risk he presented as a subject of life
insurance. Had Canilang disclosed his visits to his
doctor, the diagnosis made and the medicines
prescribed by such doctor, in the insurance
application, it may be reasonably assumed that Great
Pacific would have made further inquiries and would
have probably refused to issue a non-medical
insurance policy or, at the very least, required a
higher premium for the same coverage. The
materiality of the information withheld by Great
Pacific did not
depend upon the state of mind of Jaime Canilang. A
man's state of mind or subjective belief is not capable
of proof in our judicial process, except through proof
of external acts or failure to act from which
inferences as to his subjective belief may be
reasonably drawn. Neither does materiality depend
upon the actual or physical events which ensue.
Materiality relates rather to the "probable and
reasonable influence of the facts" upon the
party to whom the communication should have been
made, in assessing the risk involved in making or
omitting to make further inquiries and in accepting
the application for insurance; that "probable and
reasonable influence of the facts" concealed must, of
course, be determined objectively, by the judge
ultimately
EMILIO TAN, JUANITO TAN, ALBERTO TAN
and ARTURO TAN,
petitioners, vs. THE COURT OF APPEALS and
THE PHILIPPINE

AMERICAN LIFE INSURANCE COMPANY,
respondents.
DEFENSE OF CONCEALMENT STILL LIES
WITHIN THE TWO YEAR PERIOD FROM
ISSUANCE OF CONTRACT OR LAST
REINSTATEMENT. — The insurer has two years
from the date of issuance of the insurance contract or
of its last reinstatement within which to contest the
policy, whether or not, the insured still lives within
such period. After two years, the defenses of
concealment or misrepresentation, no matter how
patent or well founded, no longer lie.
PRUDENTIAL GUARANTEE and ASSURANCE
INC., petitioner, vs .
TRANS-ASIA SHIPPING LINES, INC.,
respondent.
At the outset, it must be emphasized that the party
which alleges a fact as a matter of defense has the
burden of proving it. PRUDENTIAL, as the party
which asserted the claim that TRANS-ASIA
breached the warranty in the policy, has the burden of
evidence to establish the same. Hence, on the part of
PRUDENTIAL lies the initiative to show proof in
support of its defense; otherwise, failing to establish
the same, it remains self-serving.
Clearly, if no evidence on the alleged breach of
TRANS-ASIA of the subject warranty is shown, a
fortiori, TRANS-ASIA would be successful in
claiming on the policy. It follows that
PRUDENTIAL bears the burden of evidence to
establish the fact of breach.
MA. LOURDES S. FLORENDO, petitioner, vs .
PHILAM PLANS, INC.,
PERLA ABCEDE and MA. CELESTE ABCEDE,
respondents.
Lourdes insists that Manuel had concealed nothing
since Perla, the soliciting agent, knew that Manuel
had a pacemaker implanted on his chest in the 70s or
about 20 years before he signed up for the pension
plan. 23 But by its tenor, the responsibility for
preparing the application belonged to Manuel.
Nothing in it implies that someone else may provide
the information that Philam Plans needed. Manuel
cannot sign the application and disown the
responsibility for having it 􀁏lled up. If he furnished
Perla the needed information and delegated to her the
􀁏lling up of the application, then she acted on his
instruction, not on Philam Plans' instruction.
6
CHAPTER 5 POLICY OF INSURANCE
PACIFIC TIMBER EXPORT CORPORATION,
petitioner, vs. THE
HONORABLE COURT OF APPEALS and
WORKMEN'S INSURANCE
COMPANY, INC., respondents.
NO SEPARATE PREMIUMS ARE REQUIRED TO
BE PAID THEREON. — 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 petitioner's contention that the Cover Note is not
without a consideration, 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.
GREAT PACIFIC LIFE ASSURANCE
COMPANY, petitioner, vs.
HONORABLE COURT OF APPEALS,
respondents.
INSURANCE CONTRACT; "BINDING DEPOSIT
RECEIPT." — Where the binding deposit receipt is
intended to be merely a provisional or temporary
insurance contract, and that the receipt merely
acknowledged, on behalf of the insurance company,
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, such binding deposit receipt does
not become in force until the application is approved.
ASIAN TERMINALS, INC., petitioner, vs .
FIRST LEPANTO-TAISHO
INSURANCE CORPORATION, respondent.
At any rate, the non-presentation of the insurance
contract is not fatal to FIRST LEPANTO's right to
collect reimbursement as the subrogee of GASI.
"Subrogation is the substitution of one person in the
place of another with reference to a lawful claim or
right, so that he who is substituted succeeds to the
rights of the other in relation to a debt or claim,
including its remedies or securities."