Ng v Asian Crusader G.R. No.
L-30685 May 30, 1983
J. Escolin:
Facts:
Kwong Nam applied for a 20-year endowment
insurance on his life for the sum of P20,000.00, with
his wife, appellee Ng Gan Zee as beneficiary. On the
same date, Asian Crusader, upon receipt of the
required premium from the insured, approved the
application and issued the corresponding policy.
Kwong Nam died of cancer of the liver with
metastasis. All premiums had been paid at the time of
his death.
Ng Gan Zee presented a claim for payment of the face
value of the policy. On the same date, she submitted
the required proof of death of the insured. Appellant
denied the claim on the ground that the answers
given by the insured to the questions in his
application for life insurance were untrue.
Appellee brought the matter to the attention of the
Insurance Commissioner. The latter, after conducting
an investigation, wrote the appellant that he had
found no material concealment on the part of the
insured and that, therefore, appellee should be paid
the full face value of the policy. The company refused
to settle its obligation.
Appellant alleged that the insured was guilty of
misrepresentation when he answered "No" to the
following question appearing in the application for
life insurance-
Has any life insurance company ever refused your
application for insurance or for reinstatement of a
lapsed policy or offered you a policy different from
that applied for? If, so, name company and date.
The lower court ruled against the company on lack of
evidence.
Appellant further maintains that when the insured
was examined in connection with his application for
life insurance, he gave the appellant's medical
examiner false and misleading information as to his
ailment and previous operation. The company
contended that he was operated on for peptic ulcer 2
years before the policy was applied for and that he
never disclosed such an operation.
Issue: WON Asian Crusader was deceived into
entering the contract or in accepting the risk at the
rate of premium agreed upon because of insured's
representation?
Held: No. Petition dismissed.
Ratio:
Section 27 of the Insurance Law:
Sec. 27. Such party a contract of insurance must
communicate to the other, in good faith, all facts
within his knowledge which are material to the
contract, and which the other has not the means of
ascertaining, and as to which he makes no warranty.
"Concealment exists where the assured had
knowledge of a fact material to the risk, and honesty,
good faith, and fair dealing requires that he should
communicate it to the assurer, but he designedly and
intentionally withholds the same."
It has also been held "that the concealment must, in
the absence of inquiries, be not only material, but
fraudulent, or the fact must have been intentionally
withheld."
Fraudulent intent on the part of the insured must be
established to entitle the insurer to rescind the
contract. And as correctly observed by the lower
court, "misrepresentation as a defense of the insurer
to avoid liability is an 'affirmative' defense. The duty
to establish such a defense by satisfactory and
convincing evidence rests upon the defendant. The
evidence before the Court does not clearly and
satisfactorily establish that defense."
It bears emphasis that Kwong Nam had informed the
appellant's medical examiner of the tumor. His
statement that said tumor was "associated with ulcer
of the stomach" should be construed as an expression
made in good faith of his belief as to the nature of his
ailment and operation.
While the information communicated was imperfect,
the same was sufficient to have induced appellant to
make further inquiries about the ailment and
operation of the insured.
Section 32 of Insurance Law:
Section 32. The right to information of material facts
maybe waived either by the terms of insurance or by
neglect to make inquiries as to such facts where they
are distinctly implied in other facts of which
information is communicated.
Where a question appears to be not answered at all
or to be imperfectly answered, and the insurers issue
a policy without any further inquiry, they waive the
imperfection of the answer and render the omission
to answer more fully immaterial.
The company or its medical examiner did not make
any further inquiries on such matters from the
hospital before acting on the application for
insurance. The fact of the matter is that the
defendant was too eager to accept the application
and receive the insured's premium. It would be
inequitable now to allow the defendant to avoid
liability under the circumstances."
Vda. De Canilang v. CA - Concealment
223 SCRA 443 (1993)
Facts:
> Canilang consulted Dr. Claudio and was diagnosed
as suffering from "sinus tachycardia." Mr. Canilang
consulted the same doctor again on 3 August 1982
and this time was found to have "acute bronchitis."
> On the next day, 4 August 1982, Canilang applied
for a "non-medical" insurance policy with Grepalife
naming his wife, as his beneficiary. Canilang was
issued ordinary life insurance with the face value of
P19,700.
> On 5 August 1983, Canilang died of "congestive
heart failure," "anemia," and "chronic anemia." The
wife as beneficiary, filed a claim with Grepalife which
the insurer denied on the ground that the insured had
concealed material information from it.
> Vda Canilang filed a complaint with the Insurance
Commissioner against Grepalife contending that as
far as she knows her husband was not suffering from
any disorder and that he died of kidney disorder.
> Grepalife was ordered to pay the widow by the
Insurance Commissioner holding that there was no
intentional concealment on the Part of Canilang and
that Grepalife had waived its right to inquire into the
health condition of the applicant by the issuance of
the policy despite the lack of answers to "some of the
pertinent questions" in the insurance application. CA
reversed.
Issue:
Whether or not Grepalife is liable.
Held:
SC took note of the fact that Canilang failed to
disclose that hat he had twice consulted Dr. Wilfredo
B. Claudio who had found him to be suffering from
"sinus tachycardia" and "acute bronchitis. Under the
relevant provisions of the Insurance Code, the
information concealed must be information which
the concealing party knew and "ought to [have]
communicate[d]," that is to say, information which
was "material to the contract.
The information which Canilang failed to disclose was
material to the ability of Grepalife 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
Grepalife 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
Canilang from Grepalife 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.
SC found it difficult to take seriously the argument
that Grepalife had waived inquiry into the
concealment by issuing the insurance policy
notwithstanding Canilang's failure to set out answers
to some of the questions in the insurance application.
Such failure precisely constituted concealment on the
part of Canilang. Petitioner's argument, if accepted,
would obviously erase Section 27 from the Insurance
Code of 1978.
Great Pacific v CA G.R. No. L-31845 April 30, 1979
J. De Castro
Facts:
Ngo Hing filed an application with the Great Pacific for
a twenty-year endowment policy in the amount of
P50,000.00 on the life of his one-year old daughter
Helen. He supplied the essential data which
petitioner Mondragon, the Branch Manager, wrote
on the form. The latter paid the annual premium the
sum of P1,077.75 going over to the Company, but he
retained the amount of P1,317.00 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 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 application. Then 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, which ruled
against him.
Issues:
1. Whether the binding deposit receipt constituted a
temporary contract of the life insurance in question
2. Whether Ngo Hing concealed the state of health
and physical condition of Helen Go, which rendered
void the policy
Held: No. Yes. Petition dismissed.
Ratio:
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 is 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. This was held in Lim v Sun.
The deposit paid by private respondent shall have to
be refunded by Pacific Life.
2. 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.
Pacific v CA G.R. No. L-41014 November 28, 1988
J. Paras
Facts:
An open fire insurance policy, was issued to
Paramount Shirt Manufacturing by Oriental
Assurance Corporation to indemnify P61,000.00,
caused by fire to the factory’s stocks, materials and
supplies.
The insured was a debtor of Pacific Banking in the
amount of (P800,000.00) and the goods described in
the policy were held in trust by the insured for Pacific
Banking under trust receipts.
The policy was endorsed to Pacific Banking as
mortgagee/ trustor of the properties insured, with
the knowledge and consent of private respondent to
the effect that "loss if any under this policy is payable
to the Pacific Banking Corporation".
A fire broke out on the premises destroying the goods
contained in the building.
The bank sent a letter of demand to Oriental for
indemnity.
The company wasn’t ready to give since it was
awaiting the adjuster’s report.
The company then made an excuse that the insured
had not filed any claim with it, nor submitted proof of
loss which is a clear violation of Policy Condition
No.11, as a result, determination of the liability of
private respondent could not be made.
Pacific Banking filed in the trial court an action for a
sum of money for P61,000.00 against Oriental
Assurance.
At the trial, petitioner presented communications of
the insurance adjuster to Asian Surety revealing
undeclared co-insurances with the following: P30,000
with Wellington Insurance; P25,000 with Empire
Surety and P250,000 with Asian Surety undertaken by
insured Paramount on the same property covered by
its policy with Oriental whereas the only co-
insurances declared in the subject policy are those of
P30,000.00 with Malayan P50,000.00 with South Sea
and P25.000.00 with Victory.
The defense of fraud, in the form of non-declaration
of co-insurances which was not pleaded in the
answer, was also not pleaded in the Motion to
Dismiss.
The trial court denied the respondent’s motion.
Oriental filed another motion to include additional
evidence of the co-insurance which could amount to
fraud.
The trial court still made Oriental liable for P 61,000.
The CA reversed the trial court decision. Pacific
Banking filed a motion for reconsideration of the said
decision of the respondent Court of Appeals, but this
was denied for lack of merit.
Issues:
1. WON unrevealed co-insurances Violated policy
conditions No. 3
2. WON the insured failed to file the required proof of
loss prior to court action.
Held: Yes. Petition dismissed.
Ratio:
1. Policy Condition No. 3 explicitly provides:
3. The Insured shall give notice to the Company of any
insurance already effected, or which may
subsequently be effected, covering any of the
property hereby insured, and unless such notice be
given and the particulars of such insurance or
insurances be stated in or endorsed on this Policy by
or on behalf of the Company before the occurrence
of any loss or damage, all benefit under this policy
shall be forfeited.
The insured failed to reveal before the loss three
other insurances. Had the insurer known that there
were many co-insurances, it could have hesitated or
plainly desisted from entering into such contract.
Hence, the insured was guilty of clear fraud.
Concrete evidence of fraud or false declaration by the
insured was furnished by the petitioner itself when
the facts alleged in the policy under clauses "Co-
Insurances Declared" and "Other Insurance Clause"
are materially different from the actual number of co-
insurances taken over the subject property.
As the insurance policy against fire expressly required
that notice should be given by the insured of other
insurance upon the same property, the total absence
of such notice nullifies the policy.
Petitioner points out that Condition No. 3 in the policy
in relation to the "other insurance clause" supposedly
to have been violated, cannot certainly defeat the
right of the petitioner to recover the insurance as
mortgagee/assignee. Hence, they claimed that the
purpose for which the endorsement or assignment
was made was to protect the mortgagee/assignee
against any untoward act or omission of the insured.
It would be absurd to hold that petitioner is barred
from recovering the insurance on account of the
alleged violation committed by the insured.
It is obvious that petitioner has missed all together
the import of subject mortgage clause which
specifically provides:
“Loss, if any, under this policy, shall be payable to the
PACIFIC BANKING CORPORATION Manila
mortgagee/trustor as its interest may appear, it being
hereby understood and agreed that this insurance as
to the interest of the mortgagee/trustor only herein,
shall not be invalidated by any act or neglect—except
fraud or misrepresentation, or arson—of the
mortgagor or owner/trustee of the property insured;
provided, that in case the mortgagor or owner/
trustee neglects or refuses to pay any premium, the
mortgagee/ trustor shall, on demand pay the same.”
The paragraph clearly states the exceptions to the
general rule that insurance as to the interest of the
mortgagee, cannot be invalidated; namely: fraud, or
misrepresentation or arson. Concealment of the
aforecited co-insurances can easily be fraud, or in the
very least, misrepresentation.
Undoubtedly, it is but fair and just that where the
insured who is primarily entitled to receive the
proceeds of the policy has by its fraud and/or
misrepresentation, forfeited said right.
Petitioner further stressed that fraud which was not
pleaded as a defense in private respondent's answer
or motion to dismiss, should be deemed to have been
waived. It will be noted that the fact of fraud was tried
by express or at least implied consent of the parties.
Petitioner did not only object to the introduction of
evidence but on the contrary, presented the very
evidence that proved its existence.
2. Generally, the cause of action on the policy accrues
when the loss occurs, But when the policy provides
that no action shall be brought unless the claim is first
presented extrajudicially in the manner provided in
the policy, the cause of action will accrue from the
time the insurer finally rejects the claim for payment
In the case at bar, policy condition No. 11 specifically
provides that the insured shall on the happening of
any loss or damage give notice to the company and
shall within fifteen (15) days after such loss or damage
deliver to the private respondent (a) a claim in writing
giving particular account as to the articles or goods
destroyed and the amount of the loss or damage and
(b) particulars of all other insurances, if any.
Twenty-four days after the fire did petitioner merely
wrote letters to private respondent to serve as a
notice of loss. It didn’t even furnish other documents.
Instead, petitioner shifted upon private respondent
the burden of fishing out the necessary information
to ascertain the particular account of the articles
destroyed by fire as well as the amount of loss. Since
the required claim by insured, together with the
preliminary submittal of relevant documents had not
been complied with, it follows that private
respondent could not be deemed to have finally
rejected petitioner's claim and therefore there was
no cause of action.
It appearing that insured has violated or failed to
perform the conditions under No. 3 and 11 of the
contract, and such violation or want of performance
has not been waived by the insurer, the insured
cannot recover, much less the herein petitioner.
Pacific v CA G.R. No. L-41014 November 28, 1988
J. Paras
Facts:
An open fire insurance policy, was issued to
Paramount Shirt Manufacturing by Oriental
Assurance Corporation to indemnify P61,000.00,
caused by fire to the factory’s stocks, materials and
supplies.
The insured was a debtor of Pacific Banking in the
amount of (P800,000.00) and the goods described in
the policy were held in trust by the insured for Pacific
Banking under trust receipts.
The policy was endorsed to Pacific Banking as
mortgagee/ trustor of the properties insured, with
the knowledge and consent of private respondent to
the effect that "loss if any under this policy is payable
to the Pacific Banking Corporation".
A fire broke out on the premises destroying the goods
contained in the building.
The bank sent a letter of demand to Oriental for
indemnity.
The company wasn’t ready to give since it was
awaiting the adjuster’s report.
The company then made an excuse that the insured
had not filed any claim with it, nor submitted proof of
loss which is a clear violation of Policy Condition
No.11, as a result, determination of the liability of
private respondent could not be made.
Pacific Banking filed in the trial court an action for a
sum of money for P61,000.00 against Oriental
Assurance.
At the trial, petitioner presented communications of
the insurance adjuster to Asian Surety revealing
undeclared co-insurances with the following: P30,000
with Wellington Insurance; P25,000 with Empire
Surety and P250,000 with Asian Surety undertaken by
insured Paramount on the same property covered by
its policy with Oriental whereas the only co-
insurances declared in the subject policy are those of
P30,000.00 with Malayan P50,000.00 with South Sea
and P25.000.00 with Victory.
The defense of fraud, in the form of non-declaration
of co-insurances which was not pleaded in the
answer, was also not pleaded in the Motion to
Dismiss.
The trial court denied the respondent’s motion.
Oriental filed another motion to include additional
evidence of the co-insurance which could amount to
fraud.
The trial court still made Oriental liable for P 61,000.
The CA reversed the trial court decision. Pacific
Banking filed a motion for reconsideration of the said
decision of the respondent Court of Appeals, but this
was denied for lack of merit.
Issues:
1. WON unrevealed co-insurances Violated policy
conditions No. 3
2. WON the insured failed to file the required proof of
loss prior to court action.
Held: Yes. Petition dismissed.
Ratio:
1. Policy Condition No. 3 explicitly provides:
3. The Insured shall give notice to the Company of any
insurance already effected, or which may
subsequently be effected, covering any of the
property hereby insured, and unless such notice be
given and the particulars of such insurance or
insurances be stated in or endorsed on this Policy by
or on behalf of the Company before the occurrence
of any loss or damage, all benefit under this policy
shall be forfeited.
The insured failed to reveal before the loss three
other insurances. Had the insurer known that there
were many co-insurances, it could have hesitated or
plainly desisted from entering into such contract.
Hence, the insured was guilty of clear fraud.
Concrete evidence of fraud or false declaration by the
insured was furnished by the petitioner itself when
the facts alleged in the policy under clauses "Co-
Insurances Declared" and "Other Insurance Clause"
are materially different from the actual number of co-
insurances taken over the subject property.
As the insurance policy against fire expressly required
that notice should be given by the insured of other
insurance upon the same property, the total absence
of such notice nullifies the policy.
Petitioner points out that Condition No. 3 in the policy
in relation to the "other insurance clause" supposedly
to have been violated, cannot certainly defeat the
right of the petitioner to recover the insurance as
mortgagee/assignee. Hence, they claimed that the
purpose for which the endorsement or assignment
was made was to protect the mortgagee/assignee
against any untoward act or omission of the insured.
It would be absurd to hold that petitioner is barred
from recovering the insurance on account of the
alleged violation committed by the insured.
It is obvious that petitioner has missed all together
the import of subject mortgage clause which
specifically provides:
“Loss, if any, under this policy, shall be payable to the
PACIFIC BANKING CORPORATION Manila
mortgagee/trustor as its interest may appear, it being
hereby understood and agreed that this insurance as
to the interest of the mortgagee/trustor only herein,
shall not be invalidated by any act or neglect—except
fraud or misrepresentation, or arson—of the
mortgagor or owner/trustee of the property insured;
provided, that in case the mortgagor or owner/
trustee neglects or refuses to pay any premium, the
mortgagee/ trustor shall, on demand pay the same.”
The paragraph clearly states the exceptions to the
general rule that insurance as to the interest of the
mortgagee, cannot be invalidated; namely: fraud, or
misrepresentation or arson. Concealment of the
aforecited co-insurances can easily be fraud, or in the
very least, misrepresentation.
Undoubtedly, it is but fair and just that where the
insured who is primarily entitled to receive the
proceeds of the policy has by its fraud and/or
misrepresentation, forfeited said right.
Petitioner further stressed that fraud which was not
pleaded as a defense in private respondent's answer
or motion to dismiss, should be deemed to have been
waived. It will be noted that the fact of fraud was tried
by express or at least implied consent of the parties.
Petitioner did not only object to the introduction of
evidence but on the contrary, presented the very
evidence that proved its existence.
2. Generally, the cause of action on the policy accrues
when the loss occurs, But when the policy provides
that no action shall be brought unless the claim is first
presented extrajudicially in the manner provided in
the policy, the cause of action will accrue from the
time the insurer finally rejects the claim for payment
In the case at bar, policy condition No. 11 specifically
provides that the insured shall on the happening of
any loss or damage give notice to the company and
shall within fifteen (15) days after such loss or damage
deliver to the private respondent (a) a claim in writing
giving particular account as to the articles or goods
destroyed and the amount of the loss or damage and
(b) particulars of all other insurances, if any.
Twenty-four days after the fire did petitioner merely
wrote letters to private respondent to serve as a
notice of loss. It didn’t even furnish other documents.
Instead, petitioner shifted upon private respondent
the burden of fishing out the necessary information
to ascertain the particular account of the articles
destroyed by fire as well as the amount of loss. Since
the required claim by insured, together with the
preliminary submittal of relevant documents had not
been complied with, it follows that private
respondent could not be deemed to have finally
rejected petitioner's claim and therefore there was
no cause of action.
It appearing that insured has violated or failed to
perform the conditions under No. 3 and 11 of the
contract, and such violation or want of performance
has not been waived by the insurer, the insured
cannot recover, much less the herein petitioner.
Digested by: Roxanne A. Huyo
Subject: Insurance
Title: Eguaras v. Great Eastern Life Ass. Co.
Topic: Misrepresentation, effect (Section 45)
Facts:
On April 14, 1913, counsel for Francisca
Eguaras filed a written complaint in the said Laguna
court, alleging as a cause of action that about October
14, 1912, her son-in-law Dominador Albay had
applied in writing to the defendant insurance
company to insure his life for the sum of P5,000,
naming as the beneficiary in case of his death the
plaintiff Francisca Eguaras; that after compliance with
the requisites and the investigation carried on by the
defendant company, and it had been satisfied
concerning the physical condition of the applicant, it
accepted the application for insurance and on
November 6, 1912, issued policy No. 5592, Exhibit A,
which has been made a part of the complaint,
whereby the said insurance company insured the life
of the said Dominador Albay in the sum of P5,000,
payable in the event of his death to Francisca Eguaras;
that on December 6, 1912, said policy No. 5592 being
in force, the insured Dominador Albay, died in the
municipality of Santa Cruz, Laguna, and despite the
fact that the beneficiary submitted satisfactory proofs
of his death and that the defendant company
investigated the event, still it refused and continues
to refuse to pay to the plaintiff the value of the policy,
Exhibit A, thereby causing damages estimated at
P1,000. The court was therefore asked to render
judgment against the Great Eastern Life Assurance
Company, Ltd., and its general agent, West G. Smith,
by sentencing them to pay to the plaintiff the sum of
P5,000, the value of policy No. 5592, plus the sum of
P1,000 for damages inflicted upon them, in addition
to the costs of the suit.
The demurrer filed to the foregoing complaint having
been overruled, counsel for the insurance company
and for West G. Smith replied thereto, admitting the
allegations of the complaint with respect to the legal
status of the parties by denying all the rest, and
setting forth in special defense that the insurance
policy issued in the name of Dominador [Albay] had
been obtained through fraud and deceit known and
consented to by the interested parties and is
therefore completely illegal, void, and ineffective;
wherefore he prayed that the defendants be absolved
from the complaint, with the costs against the
plaintiff.
Issue: WON the life insurance obtained is legal and
valid or whether on the contrary it was issued through
fraud and deceit, and in such case, whether the
defendant, The Great Eastern Life Assurance
Company, Ltd., is still under obligation to pay the
value thereof to the plaintiff.
Ruling:
It appears from the record that the insured had
knowledge of the false replied contained in the two
applications for insurance and knowing permitted
fraud to be practised upon the insurance company,
for in his acknowledgment and consent his mother-
in-law was designated as the beneficiary of the
insurance, despite the fact that he had children and
his mother was still living. In the present case the
fraud consisted in the fact that a healthy and robust
person was substituted in place of insured invalid
when Dr. Vidal made the physical examination of the
one who seeking to be insured, for the real person
who desired to be insured and who ought to have
been examined was in bad health on and before the
date of executing the insurance contract of which
facts the insured Dominador Albay and the insurance
agent Ponciano Remigio had full knowledge.
It is therefore proven that the signatures on
the insurance applications reading "Dominador
Albay" are false and forged; that the person who
presented himself to Dr. Vidal to be examined was
not the real Dominador Albay, but another different
person; that at the time of the application for
insurance and the issuance of the policy which is the
subject matter of this suit the real Dominador Albay
was informed of all those machinations, wherefore it
is plain that the insurance contract between the
defendant and Dominador Albay is null and void
because it is false, fraudulent and illegal.
Article 1269 of the Civil Code states:
There is deceit when by words or insidious
machinations on the part of one of the contracting
parties the other is induced to execute a contract
which without them he would not have made.
It is essential to the nature of the deceit, to which the
foregoing article refers, that said deceit be prior to or
contemporaneous with the consent that is a
necessary requisite for perfecting the contract, but
not that it may have occurred or happened
thereafter. A contract is therefore deceitful, for the
execution whereof the consent of one of the parties
has been secured by means of fraud, because he was
persuaded by words or insidious machinations,
statements or false promises, and a defective consent
wrung from him, even though such do not constitute
estafa or any other criminal subject to the penal law.
With this array of circumstantial evidence
derived from facts duly proven as a result of the
present suit, we get, if not a moral certainly, at least
a full conviction that when Castor Garcia presented
himself to be examined by the physician Vidal in place
of Dominador Albay, serious deceit occurred in
perfecting the insurance contract, for had the agent
of the company not been deceived it would not have
granted the insurance applied for by Albay, nor would
it have executed the contract by virtue of whereof
payment is claimed of the value of policy obtained
through fraud; and consequently on such
assumptions it is improper, nor is it permitted by the
law, to order collection of the amount claimed.
In a contract executed with the requisites fixed in
article 1261, one of the contracting parties may have
given his consent through error, violence,
intimidation, or deceit, and in any of such cases the
contract is void, even though, despite this nullity, no
crime was committed. (Article 1265, Civil Code.)
There may not have been estafa in the case at bar, but
it was conclusively demonstrated by the trial that
deceit entered into the insurance contract, fulfillment
whereof is claimed, and therefore the conclusions
reached by the court in the judgment it rendered in
the criminal proceedings for estafa do not affect this
suit, nor do they influence the decision proper herein,
nor can they produce in the present suit, over the
exception of the defendant, the force of res
adjudicata.
Qua Chee Gan v. Law Union Rock - Breach of Warranty
98 PHIL 85
Facts:
> Qua Chee Gan, a merchant, owned 4 warehouses
in Albay which were used for the storage or copra and
hemp in which the appelle deals with exclusively.
> The warehouses together with the contents were
insured with Law Union since 1937 and the loss made
payable to PNB as mortgagee of the hemp and copra.
> A fire of undetermined cause broke out in July 21,
1940 and lasted for almost 1 whole week.
> Bodegas 1, 3, and 4 including the merchandise
stored were destroyed completely.
> Insured then informed insurer of the unfortunate
event and submitted the corresponding fire claims,
which were later reduced to P370T.
> Insurer refused to pay claiming violations of the
warranties and conditions, filing of fraudulent claims
and that the fire had been deliberately caused by the
insured.
> Insured filed an action before CFI which rendered a
decision in favor of the insured.
Issues and Resolutions:
(1) Whether or not the policies should be avoided for
the reason that there was a breach of warranty.
Under the Memorandum of Warranty, there should
be no less than 1 hydrant for each 150 feet of external
wall measurements of the compound, and since
bodegas insured had an external wall per meter of
1640 feet, the insured should have 11 hydrants in the
compound. But he only had 2.
Even so, the insurer is barred by estoppel to claim
violation of the fire hydrants warranty, because
knowing that the number of hydrants it demanded
never existed from the very beginning, appellant
nevertheless issued the policies subject to such
warranty and received the corresponding
premiums. The insurance company was aware, even
before the policies were issued, that in the premises
there were only 2 hydrants and 2 others were owned
by the Municipality, contrary to the requirements of
the warranties in question.
It should be close to conniving at fraud upon the
insured to allow the insurer to claim now as void the
policies it issued to the insured, without warning him
of the fatal defect, of which the insurer was informed,
and after it had misled the insured into believing that
the policies were effective.
Accdg to American Jurisprudence: It is a well-settled
rule that the insurer at the time of the issuance of
a policy has the knowledge of existing facts, which if
insisted on, would invalidate the contract from its
very inception, such knowledge constitutes a waiver
of conditions in the contract inconsistent with known
facts, and the insurer is stopped thereafter from
asserting the breach of such conditions. The reason
for the rule is: To allow a company to accept one’s
money for a policy of insurance which it knows to be
void and of no effect, though it knows as it must that
the insured believes it to be valid and binding is so
contrary to the dictates of honesty and fair dealing, as
so closely related to positive fraud, as to be abhorrent
to fair-minded men. It would be to allow the
company to treat the policy as valid long enough to
get the premium on it, and leave it at liberty to
repudiate it the next moment.
Moreover, taking into account the well-known rule
that ambiguities or obscurities must strictly be
interpreted against the party that cause them, the
memorandum of warranty invoked by the insurer
bars the latter from questioning the existence of the
appliances called for, since its initial expression “the
undernoted appliances for the extinction of fire being
kept on the premises insured hereby..” admits of the
interpretation as an admission of the existence of
such appliances which insurer cannot now contradict,
should the parole evidence apply.
(2) Whether or not the insured violated the hemp
warranty provision against the storage of gasoline
since insured admitted there were 36 cans of gasoline
in Bodega 2 which was a separate structure and not
affected by the fire.
It is well to note that gasoline is not specifically
mentioned among the prohibited articles listed in the
so-called hemp warranty. The clause relied upon by
the insurer speaks of “oils”. Ordinarily, oils mean
lubricants and not gasoline or kerosene. Here again,
by reason of the exclusive control of the insurance
company over the terms of the contract, the
ambiguity must be held strictly against the insurer
and liberally in favor of the insured, specially to avoid
a forfeiture.
Furthermore, the gasoline kept was only incidental to
the insured’s business. It is a well settled rule that
keeping of inflammable oils in the premises though
prohibited by the policy does NOT void it if such
keeping is incidental to the business. Also, the hemp
warranty forbade the storage only in the building to
which the insurance applies, and/or in any building
communicating therewith; and it is undisputed that
no gasoline was stored in the burnt bodegas and that
Bodega No. 2 which was where the gasoline was
found stood isolated from the other bodegas.
Qua v Law Union. G.R. No. L-4611 December 17, 1955
J. Reyes
Facts:
Qua owned 4 warehouses used for the storage of
copra and hemp. They were insured with the Law
Union.
Fire broke out and completely destroyed 3 bodegas.
The plaintiff submitted claims totalling P398,562.81.
The Insurance Company resisted payment on the
grounds that the fire had been deliberately caused by
the insured or by other persons in connivance with
him.
Que Chee Gan and his brother were tried for arson,
but were acquitted by the trial court. As regards the
insurance claim, the trial court ruled in favor of Qua
and entitled him to recover more than Php 300,000
for indemnities from the insurance company. Hence,
the company appealed to the SC.
In its first assignment of error, the insurance company
alleged that the trial Court should have held that the
policies were avoided for breach of warranty. The
contract noted that fire hydrants were required in a
particular measurement of space (every 150
feet). Hence, they argued that since the bodegas
insured had an external wall perimeter of 500 meters,
the appellee should have 11 fire hydrants in the
compound, and that he actually had only 2, with a
further pair.
Issues:
1. WON the insurance company can void the policies
it had issued
2. WON the insured violated the "Hemp Warranty"
provisions of the policy against the storage of gasoline
3. WON the insured planned the destruction of the
bodega
Held: No. No. No.
Ratio:
1. The insurer, who at the time of issuance, has
knowledge of existing facts which would invalidate
the contract from the beginning, such constitutes a
waiver of conditions in the contract inconsistent with
the facts, and the insurer is stopped thereafter from
asserting the breach of such conditions. Also, an
insurance company intends to executed a valid
contract in return for the premium received; and
when the policy contains a condition which renders it
voidable at its inception, and this result is known to
the insurer, it will be presumed to have intended to
waive the conditions and to execute a binding
contract, rather than to have deceived the insured
into thinking he is insured when in fact he is not.
The appellant is barred estoppel to claim violation of
the so-called fire hydrants warranty, because it
knew the number of hydrants demanded therein
never existed from the very beginning and issued the
policies.
To allow a company to accept one's money for a
policy of insurance which it then knows to be void and
of no effect, though it knows as it must, that the
assured believes it to be valid and binding, is so
contrary to the dictates of honesty and fair dealing,
and so closely related to positive fraud, as to the
abhorrent to fair-minded men.
The appellant company so worded the policies that
while exacting the greater number of fire hydrants
and appliances, it kept the premium discount at the
minimum of 2 1/2%, thereby giving the insurance
company a double benefit. Such abnormal treatment
of the insured strongly points at an abuse of the
insurance company's selection of the words and
terms of the contract, over which it had absolute
control.
Receipt of Premiums or Assessments after Cause for
Forfeiture Other than Nonpayment. — It is a well
settled rule of law that an insurer which with
knowledge of facts entitling it to treat a policy as no
longer in force, receives and accepts a premium on
the policy, estopped to take advantage of the
forfeiture. It cannot treat the policy as void for the
purpose of defense to an action to recover for a loss
thereafter occurring and at the same time treat it as
valid for the purpose of earning and collecting further
premiums.
Moreover, taking into account the well known rule
that ambiguities or obscurities must be strictly
interpreted against the party that caused them, the
"memo of warranty" invoked by appellant bars the
latter from questioning the existence of the
appliances called for in the insured premises
2. The ambiguity must be held strictly against the
insurer and liberally in favor of the insured, specially
to avoid a forfeiture. So long as insurance companies
insist upon the use of ambiguous, intricate and
technical provisions, which conceal rather than
frankly disclose, their own intentions, the courts
must, in fairness to those who purchase insurance,
construe every ambiguity in favor of the insured.
Appellee admitted that there were 36 cans of
gasoline in the building designed. It However,
gasoline is not specifically mentioned among the
prohibited articles listed in the so-called "hemp
warranty." The cause relied upon by the insurer
speaks of "oils", and is uncertain because, "Oils"
usually mean "lubricants" and not gasoline or
kerosene.
If the company intended to rely upon a condition of
that character, it ought to have been plainly
expressed in the policy.
The contract of insurance is one of perfect good faith
not for the insured alone, but equally so for the
insurer; in fact, it is mere so for the latter, since its
dominant bargaining position carries with it stricter
responsibility.
Also, the gasoline kept in Bodega No. 2 was only
incidental to his business, being no more than a
customary 2 day's supply for the five or six motor
vehicles used for transporting of the stored
merchandise. "It is well settled that the keeping of
inflammable oils on the premises though prohibited
by the policy does not void it if such keeping is
incidental to the business."
3. It was unlikely that Qua burned the warehouse to
defraud the company because he had the resources
to pay off the National Bank in a short time. Also, no
motive appears for attempt to defraud the insurer.
While the acquittal of the insured in the arson case is
not res judicata on the present civil action, the
insurer's evidence, to judge from the decision in the
criminal case, is practically identical in both cases and
must lead to the same result, since the proof to
establish the defense of connivance at the fire in
order to defraud the insurer "cannot be materially
less convincing than that required in order to convict
the insured of the crime of arson."
As to the defense that the burned bodegas could not
possibly have contained the quantities of copra and
hemp stated in the fire claims, the insurer relied on
its adjuster investigator who examined the premises
during and after the fire. His testimony, however, was
based on inferences from the photographs and traces
found after the fire, and must yield to the
contradictory testimony of those who actually saw
the contents of the bodegas shortly before the fire,
while inspecting them for the mortgagee Bank.
Argente v. West Coast Life Insurance Co.-
Misrepresentation
51 PHIL 725
Facts:
> A joint life insurance policy was issued to Bernardo
Argente and his wife Vicenta upon payment of
premium, by West Coast.
> On Nov. 18, 1925, during the effectivity of the
policy, Vicenta died of cerebral apoplexy. Thereafter,
Bernardo claimed payment but was refused.
> It is admitted that in the Medical Examiner’s report,
Vicenta, in response to the question asked by the
medical examiner, her replies were as follows:
o “How frequently do you use beer, wine, spirits and
other intoxicants?” she answered “beer only in small
quantities”.
o “What physician have you consulted or been
treated by within the last 5 years and for what illness
or ailment?” she answered “none”
> It is however, not disputed that in 1924, Vicenta
was taken to a hospital for what was first diagnosed
as alcoholism and later changed to manic-depressive
psychosis and then again changed to pscyhonuerosis.
Issue:
Whether or not on the basis of the
misrepresentations of Vicenta, Bernardo is barred
from recovery.
Held:
YES.
The court found that the representations made by
Vicenta in his application for life insurance were false
with respect to her state of health and that she knew
and was aware that the representations so made by
her were false. In an action on a life insurance policy
where the evidence conclusively shows that the
answers to questions concerning diseases were
untrue, the truth or falsity of the answer becomes the
determining factor.
If the policy was procured by fraudulent
misrepresentations, the contract of insurance
apparently set forth therein was never legally
existent. It can be fairly assumed that had the true
facts been disclosed by the insured, the insurance
would never have been granted.
Great Pacific v CA G.R. No. 113899. October 13, 1999
J. Quisimbing
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.
Ratio:
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.
Edillon v Manila Bankers Life G.R. No. L-34200
September 30, 1982
J. Vasquez
Facts:
Carmen O, Lapuz applied with Manila Bankers for
insurance coverage against accident and injuries. She
gave the date of her birth as July 11, 1904. She paid
the sum of P20.00 representing the premium for
which she was issued the corresponding receipt. The
policy was to be effective for 90 days.
During the effectivity, Carmen O. Lapuz died in a
vehicular accident in the North Diversion Road.
Petitioner Regina L. Edillon, a sister of the insured and
the beneficiary in the policy, filed her claim for the
proceeds of the insurance. Her claim having been
denied, Regina L. Edillon instituted this action in the
trial court.
The insurance corporation relies on a provision
contained in the contract excluding its liability to pay
claims under the policy in behalf of "persons who are
under the age of sixteen (16) years of age or over the
age of sixty (60) years" They pointed out that the
insured was over sixty (60) years of age when she
applied for the insurance coverage, hence the policy
became void.
The trial court dismissed the complaint and ordered
edillon to pay P1000. The reason was that a policy of
insurance being a contract of adhesion, it was the
duty of the insured to know the terms of the contract
he or she is entering into.
The insured could not have been qualified under the
conditions stated in said contract and should have
asked for a refund of the premium.
Issue:
Whether or not the acceptance by the insurance
corporation of the premium and the issuance of the
corresponding certificate of insurance should be
deemed a waiver of the exclusionary condition of
coverage stated in the policy.
Held: Yes. Petition granted.

Ratio:
The age of Lapuz was not concealed to the insurance
company. Her application clearly indicated her age of
the time of filing the same to be almost 65 years of
age. Despite such information which could hardly be
overlooked, the insurance corporation received her
payment of premium and issued the corresponding
certificate of insurance without question.
There was sufficient time for the private respondent
to process the application and to notice that the
applicant was over 60 years of age and cancel the
policy.
Under the circumstances, the insurance corporation
is already deemed in estoppel. It inaction to revoke
the policy despite a departure from the exclusionary
condition contained in the said policy constituted a
waiver of such condition, similar to Que Chee Gan vs.
Law Union Insurance.
The insurance company was aware, even before the
policies were issued, that in the premises insured
there were only two fire hydrants contrary to the
requirements of the warranty in question.
It is usually held that where the insurer, at the time of
the issuance of a policy of insurance, has knowledge
of existing facts which, if insisted on, would invalidate
the contract from its very inception, such knowledge
constitutes a waiver of conditions in the contract
inconsistent with the known facts, and the insurer is
stopped thereafter from asserting the breach of such
conditions.
To allow a company to accept one's money for a
policy of insurance which it then knows to be void and
of no effect, though it knows as it must, that the
assured believes it to be valid and binding, is so
contrary to the dictates of honesty and fair dealing.
Capital Insurance & Surety Co., Inc. vs. - involved a
violation of the provision of the policy requiring the
payment of premiums before the insurance shall
become effective. The company issued the policy
upon the execution of a promissory note for the
payment of the premium. A check given subsequent
by the insured as partial payment of the premium was
dishonored for lack of funds. Despite such deviation
from the terms of the policy, the insurer was held
liable.
“... is that although one of conditions of an insurance
policy is that "it shall not be valid or binding until the
first premium is paid", if it is silent as to the mode of
payment, promissory notes received by the company
must be deemed to have been accepted in payment
of the premium. In other words, a requirement for
the payment of the first or initial premium in advance
or actual cash may be waived by acceptance of a
promissory note...”
Harding v. Commercial Union Assurance
Company- Willful Misstatement
38 PHIL 464
Facts:
> Henry Harding bought a car for 2T in 1915. He then
gave the car to his wife Mrs. Harding.
> While Mrs. Harding was having the car repaired at
the Luneta Garage (Luneta was an agent of Smith Bell
and Co., which in turn is Commercial Union’s agent),
the latter induced Mrs. Harding to insure the care
with Commercial.
> Mrs. Harding agreed, and Smith Bell sent an agent
to Luneta Garage, who together with the manager of
LUneta, appraised the car and declared that its
present value was P3T. This amt was written in the
proposal form which Mrs. Harding signed.
> Subsequently, the car was damaged by
fire. Commercial refused to pay because the car’s
present value was only 2.8T and not 3T.
Issue:
Whether or not Commercial is liable.
Held:
Commercial is liable.
Where it appears that the proposal form, while signed
by the insured was made out by the person
authorized to solicit the insurance (Luneta and Smith
Bell) the facts stated in the proposal, even if incorrect,
will not be regarded as warranted by the insured, in
the absence of willful misstatement. Under such
circumstances, the proposal is to be regarded as the
act of the insurer.
EN BANC
MRS. HENRY E. HARDING vs. COMMERCIAL UNION
ASSURANCE COMPANY
G.R. No. L-12707, August 10, 1918
Procedural History
This was an action by plaintiffs to recover from
defendant the sum of P3,000 and interest, alleged to
be due under the terms of a policy of insurance. The
trial court gave plaintiffs judgment for the amount
demanded, with interest and costs, and from that
decision the defendant appeals.
authorized to solicit the insurance (Luneta and Smith
Bell) the facts stated in the proposal, even if incorrect,
will not be regarded as warranted by the insured, in
the absence of willful misstatement. Under such
circumstances, the proposal is to be regarded as the
act of the insurer.
Reason
Section 163 of the Insurance Law (Act No. 2427)
provides that “the effect of a valuation in a policy of
fire insurance is the same as in a policy of marine
insurance.”
By the terms of section 149 of the Act cited, the
valuation in a policy of marine insurance is conclusive
if the insured had an insurable interest and was not
guilty of fraud.

Statement of Facts Holding

In February 1916, Mrs. Harding applied for car The court, therefore, of the opinion and hold that
insurance for a Studebaker she received as a gift from plaintiff was the owner of the automobile in question
her husband. She was assisted by Smith, Bell and Co and had an insurable interest therein; that there was
which was the duly authorized representative no fraud on her part in procuring the insurance; that
(insurance agent) of Commercial Union in the the valuation of the automobile, for the purposes of
Philippines. The car’s value was estimated with the the insurance, is binding upon the defendant
help of an experienced mechanic (Mr. Server) of the corporation, and that the judgment of the court
Luneta Garage. The car was bought by Mr. Harding for below is, therefore, correct and must be affirmed,
P2,800.00. The mechanic, considering some repairs with interest, the costs of this appeal to be paid by the
done, estimated the value to be at P3,000.00. This appellant.
estimated value was the value disclosed by Mrs.
Harding to Smith, Bell and Co. She also disclosed that
the value was an estimate made by Luneta Garage
(which also acts as an agent for Smith, Bell and Co).
In March 1916, a fire destroyed the Studebaker. Mrs.
Harding filed an insurance claim but Commercial
Union denied it as it insisted that the representations
and averments made as to the cost of the car were
false; and that said statement is a warranty.
Commercial Union also stated that the car does not
belong to Mrs. Harding because such a gift [from her
husband] is void under the Civil Code.
Issue
Whether or not Commercial is liable.
Answer
Yes. Commercial is liable.
Where it appears that the proposal form, while signed
by the insured was made out by the person