1
1. GR NO. 82027 (ROMARICO G. VITUG v. CA)
G.R. No. 82027 March 29, 1990
ROMARICO G. VITUG, petitioner,
vs.
THE HONORABLE COURT OF APPEALS and ROWENA FAUSTINO-
CORONA, respondents.
Previous Case: Involved the probate of the two wills of the late Dolores
Luchangco Vitug, who died in New York, U. S.A., and named private
respondent Rowena Faustino-Corona as executrix. In that previous
decision, it upheld the appointment of Nenita Alonte as co-special
administrator of Mrs. Vitug's estate with her (Mrs. Vitug's) widower,
petitioner Romarico G. Vitug, pending probate.
Facts: Romarico G. Vitug filed a motion asking for authority from the
probate court to sell certain shares of stock and real properties belonging
to the estate to cover allegedly his advances to the estate in the sum of
P667,731.66, alleging that such amount was his personal funds, allegedly
obtained from a survivorship agreement executed between him, his late
wife, and the Bank of American National Trust Savings Association.The
said agreement contained the following stipulations:
(1) All money deposited and to be deposited with the Bank in their joint
savings current account shall be both their property and shall be payable
to and collectible or withdrawable by either or any of them during their
lifetime; and
(2) After the death of one of them, the same shall belong to and be the
sole property of the surviving spouse and payable to and collectible or
withdrawable by such survivor
Rowena Corona opposed the motion to sell on the ground that the same
funds withdrawn from savings account were conjugal partnership
properties and part of the estate, and hence, there was allegedly no
ground for reimbursement. She also sought his ouster for failure to include
the sums in question for inventory and for "concealment of funds belonging
to the estate."
The trial court upheld the survivorship agreement and granted the motion
to sell.
The Court of Appeals, in the petition for certiorari filed by the herein private
respondent, held that the above-quoted survivorship agreement constitutes
a conveyance mortis causa which "did not comply with the formalities of a
valid will as prescribed by Article 805 of the Civil Code”
Issue: Whether or not the amount from the survivorship agreement was
part of the petitioner Vitug and the decedent’s conjugal property?
Held: NO. The Court ruled that a Survivorship Agreement is neither a
donation mortis causa nor a donation inter vivos, because it was to take
effect after the death of one party. Secondly, it is not a donation between
the spouses because it involved no conveyance of a spouse's own
properties to the other.
It is in the nature of an aleatory contract whereby one or both of the parties
reciprocally bind themselves to give or to do something in consideration of
what the other shall give or do upon the happening of an event which is to
occur at an indeterminate time or is uncertain, such as death. Under Article
2010 of the Code:
ART. 2010. By an aleatory contract, one of the parties or both reciprocally
bind themselves to give or to do something in consideration of what the
other shall give or do upon the happening of an event which is uncertain,
or which is to occur at an indeterminate time.
Under the aforequoted provision, the fulfillment of an aleatory contract
depends on either the happening of an event which is (1) "uncertain," (2)
"which is to occur at an indeterminate time."
A survivorship agreement, the sale of a sweepstake ticket, a transaction
stipulating on the value of currency, and insurance have been held to fall
under the first category, while a contract for life annuity or pension under
Article 2021, et sequentia, has been categorized under the second. In
either case, the element of risk is present. In the case at bar, the risk was
the death of one party and survivorship of the other.
The conclusion is accordingly unavoidable that Mrs. Vitug having
predeceased her husband, the latter has acquired upon her death a vested
right over the amounts under savings account No. 35342-038 of the Bank
of America. Insofar as the respondent court ordered their inclusion in the
inventory of assets left by Mrs. Vitug, we hold that the court was in error.
Being the separate property of petitioner, it forms no more part of the
estate of the deceased.
Additional Notes:
However, the Court has warned:
But although the survivorship agreement is per se not contrary to law its
operation or effect may be violative of the law. For instance, if it be shown
in a given case that such agreement is a mere cloak to hide an inofficious
donation, to transfer property in fraud of creditors, or to defeat the legitime
of a forced heir, it may be assailed and annulled upon such grounds.
There is no demonstration here that the survivorship agreement had been
executed for such unlawful purposes, or, as held by the respondent court,
in order to frustrate our laws on wills, donations, and conjugal partnership.
2. G.R. No. 167330 (PHILIPPINE HEALTH CARE PROVIDERS, INC v.
CIR)
FACTS:
On January 27, 2000, respondent Commissioner of Internal Revenue sent
petitioner a formal demand letter and the corresponding assessment
notices demanding the payment of deficiency taxes, including surcharges
and interest, for the taxable years 1996 and 1997 in the total amount of
P224,702,641.18.
The deficiency DST (documentary stamp tax) assessment was imposed on
petitioner's health care agreement with the members of its health care
program pursuant to Section 185 of the 1997 Tax Code.
Section 185. Stamp tax on fidelity bonds and other insurance policies. - On
all policies of insurance or bonds or obligations of the nature of indemnity
for loss, damage, or liability made or renewed by any person, association
or company or corporation transacting the business of accident, fidelity,
employer's liability, plate, glass, steam boiler, burglar, elevator, automatic
sprinkler, or other branch of insurance (except life, marine, inland, and fire
insurance), and all bonds, undertakings, or recognizances, conditioned for
the performance of the duties of any office or position, for the doing or not
doing of anything therein specified, and on all obligations guaranteeing the
validity or legality of any bond or other obligations issued by any province,
city, municipality, or other public body or organization, and on all
obligations guaranteeing the title to any real estate, or guaranteeing any
mercantile credits, which may be made or renewed by any such person,
company or corporation, there shall be collected a documentary stamp tax
of fifty centavos (P0.50) on each four pesos (P4.00), or fractional part
thereof, of the premium charged. (emphasis supplied)
Petitioner protested the assessment in a letter dated February 23, 2000.
As respondent did not act on the protest, petitioner filed a petition for
review in the Court of Tax Appeals (CTA) seeking the cancellation of the
deficiency VAT and DST assessments.
On April 5, 2002, the CTA rendered a decision partially granting the
petition for review. Respondent appealed the CTA decision to the CA
insofar as it cancelled the DST assessment. He claimed that petitioner's
health care agreement was a contract of insurance subject to DST under
Section 185 of the 1997 Tax Code.
On August 16, 2004, the CA rendered its decision. It held that petitioner's
health care agreement was in the nature of a non-life insurance contract
subject to DST. Petitioner moved for reconsideration but the CA denied it.
Hence, this petition.
Petitioner essentially argues that its health care agreement is not a
contract of insurance but a contract for the provision on a prepaid basis of
medical services, including medical check-up, that are not based on loss or
damage. Petitioner also insists that it is not engaged in the insurance
business. It is a health maintenance organization regulated by the
Department of Health, not an insurance company under the jurisdiction of
the Insurance Commission. For these reasons, petitioner asserts that the
health care agreement is not subject to DST.
ISSUE:
Is a health care agreement in the nature of an insurance contract and
therefore subject to the documentary stamp tax (DST) imposed under
Section 185 of Republic Act 8424 (Tax Code of 1997)?
HELD:
Yes. In particular, the DST under Section 185 of the 1997 Tax Code is
imposed on the privilege of making or renewing any policy of insurance
(except life, marine, inland and fire insurance), bond or obligation in the
nature of indemnity for loss, damage, or liability.
Under the law, a contract of insurance is an agreement whereby one
undertakes for a consideration to indemnify another against loss, damage
or liability arising from an unknown or contingent event. The event insured
against must be designated in the contract and must either be unknown or
contingent.
Petitioner's health care agreement is primarily a contract of indemnity. And
in the recent case of Blue Cross Healthcare, Inc. v. Olivares, this Court
ruled that a health care agreement is in the nature of a non-life insurance
policy.
Contrary to petitioner's claim, its health care agreement is not a contract
for the provision of medical services. Petitioner does not actually provide
medical or hospital services but merely arranges for the same17 and pays
for them up to the stipulated maximum amount of coverage. It is also
incorrect to say that the health care agreement is not based on loss or
damage because, under the said agreement, petitioner assumes the
liability and indemnifies its member for hospital, medical and related
expenses (such as professional fees of physicians). The term "loss or
damage" is broad enough to cover the monetary expense or liability a
member will incur in case of illness or injury.

Under the health care agreement, the rendition of hospital, medical and
professional services to the member in case of sickness, injury or
emergency or his availment of so-called "out-patient services" (including
physical examination, x-ray and laboratory tests, medical consultations,
vaccine administration and family planning counseling) is the contingent
event which gives rise to liability on the part of the member. In case of
exposure of the member to liability, he would be entitled to indemnification
by petitioner.
Furthermore, the fact that petitioner must relieve its member from liability
by paying for expenses arising from the stipulated contingencies belies its
claim that its services are prepaid. The expenses to be incurred by each
member cannot be predicted beforehand, if they can be predicted at all.
Petitioner assumes the risk of paying for the costs of the services even if
they are significantly and substantially more than what the member has
"prepaid." Petitioner does not bear the costs alone but distributes or
spreads them out among a large group of persons bearing a similar risk,
that is, among all the other members of the health care program. This is
insurance.
Petitioner's contention that it is a health maintenance organization and not
an insurance company is irrelevant. Contracts between companies like
petitioner and the beneficiaries under their plans are treated as insurance
contracts.
Moreover, DST is not a tax on the business transacted but an excise on
the privilege, opportunity, or facility offered at exchanges for the
transaction of the business. It is an excise on the facilities used in the
transaction of the business, separate and apart from the business itself.
What is Documentary Stamp Tax?
The DST is levied on the exercise by persons of certain privileges
conferred by law for the creation, revision, or termination of specific legal
relationships through the execution of specific instruments. It is an excise
upon the privilege, opportunity, or facility offered at exchanges for the
transaction of the business.
3. GR No. 67835 (MALAYAN INSURANCE CO. v. GREGORIA CRUZ
ARNALDO)
No. L-67835. October 12, 1987.*
MALAYAN INSURANCE CO., INC. (MICO), petitioner, us.GREGORIA
CRUZ ARNALDO, in her capacity as the INSURANCE
COMMISSIONER, and CORONACION PINCA, respondents.
Facts: On June 7, 1981, the petitioner Malayan Insurance Co.(MICO)
issued to the private respondent, Coronacion Pinca, Fire Insurance Policy
No. F-001-17212 on her property for the amount of P100,000.00, effective
July 22, 1981, until July 22, 1982.
On October 15, 1981, MICO allegedly cancelled the policy for non-
payment, of the premium and sent the corresponding notice to Pinca.
On December 24, 1981, payment of the premium for Pinca was received
by Domingo Adora, agent of MICO.
On January 15, 1982, Adora remitted this payment to MICO, together with
other payments.
On January 18, 1982, Pinca's property was completely burned.
On February 5, 1982, Pinca's payment was returned by MICO to Adora on
the ground that her policy had been cancelled earlier. But Adora refused to
accept it.
In due time, Pinca made the requisite demands for payment, which MICO
rejected. She then went to the Insurance Commission. It is because she
was ultimately sustained by the public respondent that the petitioner has
come to us for relief.
Issue: Whether Pinca is entitled to claim the insurance premiums
Ruling: Yes. The SC held that there was an existing insurance at the time
of the loss was sustained by Pinca. Payment was made, rendering the
policy operative as of June 22, 1981, and removing it from the provisions
of Article 77. Thereafter, the policy could be cancelled on any of the
supervening grounds enumerated in Article 64 (except "nonpayment of
premium") provided the cancellation was made in accordance therewith
and with Article 65.
The petitioner relies heavily on Section 77 of the Insurance Code providing
that:
"SEC. 77, An insurer is entitled to payment of the premium as soon as the
thing is exposed to the peril insured against. Notwithstanding any
agreement to the contrary, no policy or contract of insurance issued by an
insurance company is valid and binding unless and until the premium
thereof has been paid, except in the case of a life or an industrial life policy
whenever the grace period provision applies."
The above provision is not applicable because payment of the premium
was in fact eventually made in this case. Notably, the premium invoice
issued to Pinca at the time of the delivery of the policy on June 7, 1981
was stamped "Payment Received" of the amount of P930.60 on "12-24-81"
by Domingo Adora.14 This is important because it suggests an
understanding between MICO and the insured that such payment could be
made later, as agent Adora had assured Pinca. In any event, it is not
denied that this payment was actually made by Pinca to Adora, who
2
remitted the same to MICO. The payment was made on December 24,
1981, and the fire occurred on January 18, 1982.
It is not disputed that the premium was actually paid by Pinca to Adora on
December 24, 1981, who received it on behalf of MICO, to which it was
remitted on January 15, 1982. What is questioned is the validity of Pinca's
payment and of Adora's authority to receive it.
MICO's acknowledgment of Adora as its agent defeats its contention that
he was not authorized to receive the premium payment on its behalf. It is
clearly provided in Section 306 of the Insurance Code that:
"SEC. 306. x x x xxx xxx
"Any insurance company which delivers to an insurance agent or
insurance broker a policy or contract of insurance shall be deemed to have
authorized such agent or broker to receive on its behalf payment of any
premium which is due on such policy or contract of insurance at the time of
its issuance or delivery or which becomes due thereon."
And it is a well-known principle under the law of agency that:
"Payment to an agent having authority to receive or collect payment is
equivalent to payment to the principal himself; such payment is complete
when the money delivered is into the agent's hands and is a discharge of
the indebtedness owing to the principal."
4. G.R. No. L-31845 April 30, 1979
GREAT PACIFIC LIFE ASSURANCE COMPANY vs. HONORABLE
COURT OF APPEALS
FACTS: It appears that on March 14, 1957, private respondent Ngo Hing
filed an application with the Great Pacific Life Assurance Company
(hereinafter referred to as Pacific Life) for a twenty-year endowment policy
in the amount of P50,000.00 on the life of his one-year old daughter Helen
Go. Said respondent supplied the essential data which petitioner Lapulapu
D. Mondragon, Branch Manager of the Pacific Life in Cebu City wrote on
the corresponding form in his own handwriting. Mondragon finally type-
wrote the data on the application form which was signed by private
respondent Ngo Hing. 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 to private respondent 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 on April 30, 1957, 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 1954 the customers, especially the
Chinese, were asking for such coverage.
It was when things were in such state that on May 28, 1957 Helen Go died
of influenza with complication of bronchopneumonia. Thereupon, private
respondent sought the payment of the proceeds of the insurance, but
having failed in his effort, he filed the action for the recovery of the same
before the Court of First Instance of Cebu, which rendered the adverse
decision as earlier referred to against both petitioners.
ISSUE: Whether or not the respondent is entitled to the insurance
HELD: No. Since petitioner Pacific Life disapproved the insurance
application of respondent Ngo Hing, the binding deposit receipt in question
had never become in force at any time.
As held by this Court, where an agreement is made between the applicant
and the agent, no liability shall attach until the principal approves the risk
and a receipt is given by the agent. The acceptance is merely conditional
and is subordinated to the act of the company in approving or rejecting the
application. Thus, in life insurance, a "binding slip" or "binding receipt"
does not insure by itself
It bears repeating that through the intra-company communication of April
30, 1957 Pacific Life disapproved the insurance application in question on
the ground that it is not offering the twenty-year endowment insurance
policy to children less than seven years of age. What it offered instead is
another plan known as the Juvenile Triple Action, which private respondent
failed to accept. In the absence of a meeting of the minds between
petitioner Pacific Life and private respondent Ngo Hing over the 20-year
endowment life insurance in the amount of P50,000.00 in favor of the
latter's one-year old daughter, and with the non-compliance of the above
quoted conditions stated in the disputed binding deposit receipt, there
could have been no insurance contract duly perfected between then
Acordingly, the deposit paid by private respondent shall have to be
refunded by Pacific Life.
The Supreme Court held that it is not impressed with private respondent's
contention that failure of petitioner Mondragon to communicate to him the
rejection of the insurance application would not have any adverse effect on
the allegedly perfected temporary contract In this first place, there was no

contract perfected between the parties who had no meeting of their minds.
Private respondent, being an authorized insurance agent of Pacific Life at
Cebu branch office, is indubitably aware that said company does not offer
the life insurance applied for. When he filed the insurance application in
dispute, private respondent was, therefore, only taking the chance that
Pacific Life will approve the recommendation of Mondragon for the
acceptance and approval of the application in question along with his
proposal that the insurance company starts to offer the 20-year
endowment insurance plan for children less than seven years.
Nonetheless, the record discloses that Pacific Life had rejected the
proposal and recommendation. Secondly, having an insurable interest on
the life of his one-year old daughter, aside from being an insurance agent
and an offense associate of petitioner Mondragon, private respondent Ngo
Hing must have known and followed the progress on the processing of
such application and could not pretend ignorance of the Company's
rejection of the 20-year endowment life insurance application.
This Court is of the firm belief that private respondent had deliberately
concealed the state of health and physical condition of his daughter Helen
Go. Where private respondent supplied the required essential data for the
insurance application form, he was fully aware that his one-year old
daughter is typically a mongoloid child. Such a congenital physical defect
could never be ensconced nor distinguished. Nonetheless, private
respondent, in apparent bad faith, withheld the fact material to the risk to
be assumed by the insurance company. As an insurance agent of Pacific
Life, he ought to know, as he surely must have known. his duty and
responsibility to such a material fact. Had he diamond said significant fact
in the insurance application form Pacific Life would have verified the same
and would have had no choice but to disapprove the application outright.
Whether intentional or unintentional the concealment entitles the insurer to
rescind the contract of insurance. Private respondent appears guilty
thereof.
SC was constrained to hold that no insurance contract was perfected
between the parties with the noncompliance of the conditions provided in
the binding receipt, and concealment, as legally defined, having been
combated by herein private respondent.
5. G.R. No. L-24833 (FIELDMEN'S INSURANCE CO., INC. v.
MERCEDES VARGAS VDA. DE SONGCO, ET AL. and CA)
FIELDMEN'S INSURANCE CO., INC., vs. MERCEDES VARGAS VDA.
DE SONGCO, ET AL. and COURT OF APPEALS
G.R. No. L-24833 September 23, 1968
FERNANDO, J.:
Facts:
Federico Songco, a man of scant education [first grader], owned a private
jeepney. He was induced by Fieldmen's Insurance Company (FIC) agent
Benjamin Sambat to apply for a Common Carrier's Liability Insurance
Policy covering his motor vehicle. As testified by Songco’s son Amor later,
he said that their vehicle is an ‘owner’ private vehicle and not for
passengers, but agent Sambat said that they can insure whatever kind of
vehicle because their company is not owned by the government, so they
could do what they please whenever they believe a vehicle is insurable.
FIC Inc. issued a Common Carriers Accident Insurance Policy with a
duration of 1 year. Upon expiration, FIC Inc, the policy was renewed.
During the effectivity of the renewed policy, the insured vehicle while being
driven by Rodolfo Songco, a duly licensed driver and son of Federico (the
vehicle owner) collided with a car where Federico and Rodolfo died, while
Carlos Songco and his wife Angelita, and a family friend sustained physical
injuries.
Issue:
Whether Fieldmen’s Insurance Company (FIC) is estopped from enforcing
forfeitures in its favor- YES
Whether FIC can escape liability under a common carrier insurance policy
on the pretext that what was insured was a private vehicle and not a
common carrier, the policy being issued upon the agent’s insistence.- NO
Ruling:
FIC is "estopped from enforcing forfeitures in its favor, in order to forestall
fraud or imposition on the insured.
In Qua Chee Gan v. Law Union and Rock Insurance Co., Ltd., It was held
that where inequitable conduct is shown by an insurance firm, it is
"estopped from enforcing forfeitures in its favor, in order to forestall fraud
or imposition on the insured.”
After petitioner Fieldmen's Insurance Co., Inc. had led the insured
Federico Songco to believe that he could qualify under the common carrier
liability insurance policy, and to enter into contract of insurance paying the
premiums due, it could not, thereafter, in any litigation arising out of such
representation, be permitted to change its stand to the detriment of the
heirs of the insured. As estoppel is primarily based on the doctrine of good
faith and the avoidance of harm that will befall the innocent party due to its
injurious reliance, the failure to apply it in this case would result in a gross
travesty of justice
… . lt would now rely on the fact that the insured owned a private vehicle,
not a common carrier, something which it knew all along when not once
but twice its agent, no doubt without any objection in its part, exerted the
utmost pressure on the insured, a man of scant education, to enter into
such a contract.
3
2. Fieldmen’s Insurance incurred legal liability under the policy.
Since some of the conditions contained in the policy issued by the
defendant-appellant were impossible to comply with under the existing
conditions at the time and 'inconsistent with the known facts,' the insurer 'is
estopped from asserting breach of such conditions.’ Except for the fact,
that they were not fare paying passengers, their status as beneficiaries
under the policy is recognized therein.
Even if it be assumed that there was an ambiguity, ambiguities or
obscurities must be strictly interpreted against the party that caused them (
Qua Chee Gan v. Law Union and Rock Insurance Co., Ltd.)
The contract of insurance is one of perfect good faith (uberima fides) not
for the insured alone, but equally so for the insurer; in fact, it is more so for
the latter, since its dominant bargaining position carries with it stricter
responsibility."
6.
G.R. No. 154514. July 28, 2005
WHITE GOLD MARINE SERVICES, INC., Petitioners, vs. PIONEER
INSURANCE AND SURETY CORPORATION AND THE STEAMSHIP
MUTUAL UNDERWRITING ASSOCIATION (BERMUDA) LTD.,
Respondents.
FACTS: White Gold Marine Services, Inc. procured a
protection and indemnity coverage for its vessels from The Steamship
Mutual Underwriting Association (Bermuda) Limited (Steamship Mutual)
through Pioneer Insurance and Surety Corporation. Subsequently, White
Gold was issued a Certificate of Entry and Acceptance. Pioneer also
issued receipts evidencing payments for the coverage. When White Gold
failed to fully pay its accounts, Steamship Mutual refused to renew the
coverage.
Steamship Mutual thereafter filed a case against White Gold for collection
of sum of money to recover the latter’s unpaid balance. White Gold on the
other hand, filed a complaint before the Insurance Commission claiming
that Steamship Mutual violated Sections 186 and 187 of the Insurance
Code, while Pioneer violated Sections 299, 300 and 301 in relation to
Sections 302 and 303, thereof.
The Insurance Commission dismissed the complaint. It said that there was
no need for Steamship Mutual to secure a license because it was not
engaged in the insurance business. It explained that Steamship Mutual
was a Protection and Indemnity Club (P & I Club). Likewise, Pioneer need
not obtain another license as insurance agent and/or a broker for
Steamship Mutual because Steamship Mutual was not engaged in the
insurance business. Moreover, Pioneer was already licensed, hence, a
separate license solely as agent/broker of Steamship Mutual was already
superfluous.
The Court of Appeals affirmed the decision of the Insurance
Commissioner. In its decision, the appellate court distinguished between P
& I Clubs vis-à-vis conventional insurance. The appellate court also held
that Pioneer merely acted as a collection agent of Steamship Mutual.
CONTENTIONS: The parties admit that Steamship Mutual is
a P & I Club. Steamship Mutual admits it does not have a license to do
business in the Philippines although Pioneer is its resident agent. This
relationship is reflected in the certifications issued by the Insurance
Commission.
Petitioner insists that Steamship Mutual as a P & I Club is engaged in the
insurance business. To buttress its assertion, it cites the definition of a P &
I Club in Hyopsung Maritime Co., Ltd. v. Court of Appeals as "an
association composed of shipowners in general who band together for the
specific purpose of providing insurance cover on a mutual basis against
liabilities incidental to shipowning that the members incur in favor of third
parties." It stresses that as a P & I Club, Steamship Mutual’s primary
purpose is to solicit and provide protection and indemnity coverage and for
this purpose, it has engaged the services of Pioneer to act as its agent.
Respondents contend that although Steamship Mutual is a P & I Club, it is
not engaged in the insurance business in the Philippines. It is merely an
association of vessel owners who have come together to provide mutual
protection against liabilities incidental to shipowning. Respondents aver
Hyopsung is inapplicable in this case because the issue in Hyopsung was
the jurisdiction of the court over Hyopsung.
ISSUES: (1) Is Steamship Mutual, a P & I Club, engaged in the
insurance business in the Philippines? - YES
(2) Does Pioneer need a license as an insurance agent/broker for
Steamship Mutual? - YES
RULING:
1.) 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.
The same provision also provides, the fact that no profit is derived from the
making of insurance contracts, agreements or transactions, or that no
separate or direct consideration is received therefor, shall not preclude the
existence of an insurance business.
The test to determine if a contract is an insurance contract or not, depends
on the nature of the promise, the act required to be performed, and the
exact nature of the agreement in the light of the occurrence, contingency,
or circumstances under which the performance becomes requisite. It is not
by what it is called.
Basically, an insurance contract is a contract of indemnity. In it, one
undertakes for a consideration to indemnify another against loss, damage
or liability arising from an unknown or contingent event.
In particular, a marine insurance undertakes to indemnify the assured
against marine losses, such as the losses incident to a marine adventure.
Section 99 of the Insurance Code enumerates the coverage of marine
insurance.
Relatedly, a mutual insurance company is a cooperative enterprise where
the members are both the insurer and insured. In it, the members all
contribute, by a system of premiums or assessments, to the creation of a
fund from which all losses and liabilities are paid, and where the profits are
divided among themselves, in proportion to their interest. Additionally,
mutual insurance associations, or clubs, provide three types of coverage,
namely, protection and indemnity, war risks, and defense costs.
A P & I Club is "a form of insurance against third party liability, where the
third party is anyone other than the P & I Club and the members." By
definition then, Steamship Mutual as a P & I Club is a mutual insurance
association engaged in the marine insurance business.
The records reveal Steamship Mutual is doing business in the country
albeit without the requisite certificate of authority mandated by Section 187
of the Insurance Code. It maintains a resident agent in the Philippines to
solicit insurance and to collect payments in its behalf. We note that
Steamship Mutual even renewed its P & I Club cover until it was cancelled
due to non-payment of the calls. Thus, to continue doing business here,
Steamship Mutual or through its agent Pioneer, must secure a license from
the Insurance Commission.
Since a contract of insurance involves public interest, regulation by the
State is necessary. Thus, no insurer or insurance company is allowed to
engage in the insurance business without a license or a certificate of
authority from the Insurance Commission.
2.) Pioneer is the resident agent of Steamship Mutual as evidenced
by the certificate of registration issued by the Insurance Commission. It
has been licensed to do or transact insurance business by virtue of the
certificate of authority issued by the same agency. However, a Certification
from the Commission states that Pioneer does not have a separate license
to be an agent/broker of Steamship Mutual.
Although Pioneer is already licensed as an insurance company, it needs a
separate license to act as insurance agent for Steamship Mutual. Section
299 of the Insurance Code clearly states:
SEC. 299 . . .
No person shall act as an insurance agent or as an insurance broker in the
solicitation or procurement of applications for insurance, or receive for
services in obtaining insurance, any commission or other compensation
from any insurance company doing business in the Philippines or any
agent thereof, without first procuring a license so to act from the
Commissioner, which must be renewed annually on the first day of
January, or within six months thereafter. . .
7. G.R. No. 125678 March 18, 2002
PHILAMCARE HEALTH SYSTEMS, INC., petitioner,
Vs. COURT OF APPEALS and JULITA TRINOS, respondents.
YNARES-SANTIAGO, J.:
INTERNET DIGEST ONLY
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
4
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.
ISSUE 1: Whether or not the health care agreement is not an insurance
contract
HELD 1: YES. 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.
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 the life
and health (1) of himself, of his spouse and of his children.
The insurable interest of respondent’s husband in obtaining the health care
agreement was his own health. The health care agreement was in the
nature of non-life insurance, which is primarily a contract of indemnity.
Once the member incurs hospital, medical or any other expense arising
from sickness, injury or other stipulated contingent, the health care
provider must pay for the same to the extent agreed upon under the
contract.
ISSUE 2: Whether or not there is concealment of material fact made by
Ernani
HELD 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 insurance company over
the terms and phraseology of the insurance contract, ambiguity must be
strictly interpreted against the insurer and liberally in favor of the insured,
especially to avoid forfeiture. This is equally applicable to Health Care
Agreements.
ISSUE 3: W/N the spouse being "not" legal wife can claim - YES
HELD 3: Sec. 10. Every person has an insurable interest in the life and
health:
(1) of himself, of his spouse and of his children;
(2) of any person on whom he depends wholly or in part for education or
support, or in whom he has a pecuniary interest;
(3) of any person under a legal obligation to him for the payment of money,
respecting property or service, of which death or illness might delay or
prevent the performance; and
(4) of any person upon whose life any estate or interest vested in him
depends.
not the legal wife (deceased was previously married to another woman
who was still alive)
health care agreement is in the nature of a contract of indemnity.
payment should be made to the party who incurred the expenses

8. G.R. No. 169737 February 12, 2008 CORONA, J.:
BLUE CROSS HEALTH CARE, INC., vs. NEOMI* and DANILO
OLIVARES
QUICK FACTS: Neomi Olivares applied for a health care program with
Blue Cross. A month after she applied, she suffered from a stroke.
Ailments due to “pre-existing conditions” were excluded from the coverage.
She was confined in Medical City and discharged with a bill of P34,217.20.
Blue Cross refused to pay unless she had her physician’s certification that
she was suffering from a pre-existing condition. When Blue Cross still
refused to pay, she filed suit in the MTC. The health care company
rebutted by saying that the physician didn’t disclose the condition due to
the patient’s invocation of the doctor-client privilege.
FACTS: Respondent Neomi T. Olivares applied for a health care program
with petitioner Blue Cross Health Care, Inc., a health maintenance firm.
From October 16, 2002 to October 15, 2003, she paid the amount of
P11,117. She also availed of the additional service of limitless
consultations for an additional amount of P1,000. The application was
approved on October 22, 2002. In the health care agreement, ailments due
to "pre-existing conditions" were excluded from the coverage.
On November 30, 2002, or barely 38 days from the effectivity of her health
insurance, respondent Neomi suffered a stroke and was admitted at the
Medical City which was one of the hospitals accredited by petitioner. On
December 2, 2002, she was informed that she could be discharged from
the hospital. She incurred hospital expenses amounting to P34,217.20.
Consequently, she requested from the representative of petitioner at
Medical City a letter of authorization in order to settle her medical bills. But
petitioner refused to issue the letter and suspended payment pending the
submission of a certification from her attending physician that the stroke
she suffered was not caused by a pre-existing condition.
She was discharged from the hospital on December 3, 2002. On
December 5, 2002, she demanded that petitioner pay her medical bill.
When petitioner still refused, she and her husband, respondent Danilo
Olivares, were constrained to settle the bill. They thereafter filed a
complaint for collection of sum of money against petitioner in the MeTC on
January 8, 2003.11 In its answer dated January 24, 2003, petitioner
maintained that it had not yet denied respondents' claim as it was still
awaiting Dr. Saniel's report.
Dr. Saniel stated that there was patient-physician confidentiality and as a
doctor, she should not release any medical information concerning her
neurologic status to anyone without her approval.
MeTC: dismissed the complaint for lack of cause of action. It held that the
best person to determine whether or not the stroke she suffered was not
caused by "pre-existing conditions" is her attending physician Dr. Saniel
who treated her and conducted the test during her confinement.
RTC: reversed MeTC and ordered petitioner to pay respondents.The RTC
held that it was the burden of petitioner to prove that the stroke of
respondent Neomi was excluded from the coverage of the health care
program for being caused by a pre-existing condition. It was not able to
discharge that burden.
CA: affirmed the decision of the RTC
Petitioner argues that respondents prevented Dr. Saniel from submitting
his report regarding the medical condition of Neomi. Hence, it contends
that the presumption that evidence willfully suppressed would be adverse if
produced should apply in its favor.
Respondents counter that the burden was on petitioner to prove that
Neomi's stroke was excluded from the coverage of their agreement
because it was due to a pre-existing condition. It failed to prove this.
ISSUE #1: Whether or not petitioner was able to prove that respondent
Neomi's stroke was caused by a pre-existing condition and therefore was
excluded from the coverage of the health care agreement.
HELD #1: No. We agree with respondents.
In Philamcare Health Systems, Inc. v. CA, we ruled that a health care
agreement is in the nature of a non-life insurance. It is an established rule
in insurance contracts that when their terms contain limitations on liability,
they should be construed strictly against the insurer. These are contracts
of adhesion the terms of which must be interpreted and enforced
stringently against the insurer which prepared the contract. This doctrine is
equally applicable to health care agreements.
Petitioner never presented any evidence to prove that respondent Neomi's
stroke was due to a pre-existing condition. It merely speculated that Dr.
Saniel's report would be adverse to Neomi, based on her invocation of the
doctor-patient privilege. This was a disputable presumption at best.
Section 3 (e), Rule 131 of the Rules of Court states:
Sec. 3. Disputable presumptions. ― The following presumptions are
satisfactory if uncontradicted, but may be contradicted and overcome by
other evidence:
xxx xxx xxx
(e) That evidence willfully suppressed would be adverse if produced.
Suffice it to say that this presumption does not apply if (a) the evidence is
at the disposal of both parties; (b) the suppression was not willful; (c) it is
merely corroborative or cumulative and (d) the suppression is an exercise
of a privilege. Here, respondents' refusal to present or allow the
presentation of Dr. Saniel's report was justified. It was privileged
communication between physician and patient.
5
Furthermore, as already stated, limitations of liability on the part of the
insurer or health care provider must be construed in such a way as to
preclude it from evading its obligations. Accordingly, they should be
scrutinized by the courts with "extreme jealousy" and "care" and with a
"jaundiced eye." Since petitioner had the burden of proving exception to
liability, it should have made its own assessment of whether respondent
Neomi had a pre-existing condition when it failed to obtain the attending
physician's report. It could not just passively wait for Dr. Saniel's report to
bail it out. The mere reliance on a disputable presumption does not meet
the strict standard required under our jurisprudence.
ISSUE #2: Whether or not petitioner was liable for moral and exemplary
damages and attorney's fees
HELD #2: The RTC and CA found that there was a factual basis for the
damages adjudged against petitioner. They found that it was guilty of bad
faith in denying a claim based merely on its own perception that there was
a pre-existing condition.
*Please see full text for the List of Disabilities considered pre-existing
conditions. *
9. G.R. No. 167330 (PHILIPPINE HEALTH CARE PROVIDERS, INC. v.
CIR)
PHILIPPINE HEALTH CARE PROVIDERS, INC., v. COMMISSIONER OF
INTERNAL REVENUE
G.R. No. 167330
June 12, 2008
Corona, J.
Note: Contention of Petitioner: its health care agreement is not a contract
of insurance but a contract for the provision on a prepaid basis of medical
services, including medical check-up, that are not based on loss or
damage. Petitioner also insists that it is not engaged in the insurance
business. It is a health maintenance organization regulated by the
Department of Health, not an insurance company under the jurisdiction of
the Insurance Commission. For these reasons, petitioner asserts that the
health care agreement is not subject to DST.
Provision Involved: Section 185 of the 1997 Tax Code which provides:
Section 185. Stamp tax on fidelity bonds and other insurance
policies. - On all policies of insurance or bonds or obligations of the nature
of indemnity for loss, damage, or liability made or renewed by any person,
association or company or corporation transacting the business of
accident, fidelity, employer's liability, plate, glass, steam boiler, burglar,
elevator, automatic sprinkler, or other branch of insurance (except life,
marine, inland, and fire insurance), and all bonds, undertakings, or
recognizances, conditioned for the performance of the duties of any office
or position, for the doing or not doing of anything therein specified, and on
all obligations guaranteeing the validity or legality of any bond or other
obligations issued by any province, city, municipality, or other public body
or organization, and on all obligations guaranteeing the title to any real
estate, or guaranteeing any mercantile credits, which may be made or
renewed by any such person, company or corporation, there shall be
collected a documentary stamp tax of fifty centavos (P0.50) on each four
pesos (P4.00), or fractional part thereof, of the premium charged.
Facts: Petitioner is a domestic corporation whose primary purpose is "to
establish, maintain, conduct and operate a prepaid group practice health
care delivery system or a health maintenance organization to take care of
the sick and disabled persons enrolled in the health care plan and to
provide for the administrative, legal, and financial responsibilities of the
organization." Individuals enrolled in its health care programs pay an
annual membership fee and are entitled to various preventive, diagnostic
and curative medical services.
The deficiency DST assessment was imposed on petitioner's health care
agreement with the members of its health care program pursuant to
Section 185 of the 1997 Tax Code.
Petitioner protested the assessment in a letter. As respondent did not act
on the protest, petitioner filed a petition for review in the Court of Tax
Appeals seeking the cancellation of the deficiency VAT and DST
assessments.
The CTA rendered a decision, where the Petition is Partially Granted.
Respondent appealed the CTA decision to the CA. He claimed that
petitioner's health care agreement was a contract of insurance subject to
DST under Section 185 of the 1997 Tax Code.
The CA rendered its decision. It held that petitioner's health care
agreement was in the nature of a non-life insurance contract subject to
DST.
Petitioner moved for reconsideration but the CA denied it. Hence, this
petition.
Issue: Whether the contract is a health care agreement in the nature of an
insurance contract and therefore subject to the documentary stamp tax
(DST) imposed under Section 185 of Republic Act 8424 Tax Code of
1997?
Held: Yes, the DST is levied on the exercise by persons of certain
privileges conferred by law for the creation, revision, or termination of
specific legal relationships through the execution of specific instruments. In
particular, the DST under Section 185 of the 1997 Tax Code is imposed on

the privilege of making or renewing any policy of insurance (except life,
marine, inland and fire insurance), bond or obligation in the nature of
indemnity for loss, damage, or liability.
Under the law, a contract of insurance is an agreement whereby one
undertakes for a consideration to indemnify another against loss, damage
or liability arising from an unknown or contingent event. The event insured
against must be designated in the contract and must either be unknown or
contingent.
Petitioner's health care agreement is primarily a contract of indemnity. And
in the recent case of Blue Cross Healthcare, Inc. v. Olivares, this Court
ruled that a health care agreement is in the nature of a non-life insurance
policy.
Contrary to petitioner's claim, its health care agreement is not a contract
for the provision of medical services. Petitioner does not actually provide
medical or hospital services but merely arranges for the same and pays for
them up to the stipulated maximum amount of coverage. It is also incorrect
to say that the health care agreement is not based on loss or damage
because, under the said agreement, petitioner assumes the liability and
indemnifies its member for hospital, medical and related expenses.
Furthermore, the fact that petitioner must relieve its member from liability
by paying for expenses arising from the stipulated contingencies belies its
claim that its services are prepaid. The expenses to be incurred by each
member cannot be predicted beforehand, if they can be predicted at all.
Petitioner assumes the risk of paying for the costs of the services even if
they are significantly and substantially more than what the member has
"prepaid." This is insurance.
Petitioner's health care agreement is substantially similar to that involved
in Philamcare Health Systems, Inc. v. CA. This Court ruled in Philamcare
Health Systems, Inc.:
The insurable interest of the subscriber in obtaining the health care
agreement was his own health. The health care agreement was in the
nature of non-life insurance, which is primarily a contract of indemnity.
Once the member incurs hospital, medical or any other expense arising
from sickness, injury or other stipulated contingency, the health care
provider must pay for the same to the extent agreed upon under the
contract.
Similarly, the insurable interest of every member of petitioner's health care
program in obtaining the health care agreement is his own health. Under
the agreement, petitioner is bound to indemnify any member who incurs
hospital, medical or any other expense arising from sickness, injury or
other stipulated contingency to the extent agreed upon under the contract.
Petitioner's contention that it is a health maintenance organization and not
an insurance company is irrelevant. Contracts between companies like
petitioner and the beneficiaries under their plans are treated as insurance
contracts.
10. G.R. No. 112329 (VIRGINIA A. PEREZ v. COURT OF APPEALS and
BF LIFEMAN INSURANCE CORPORATION)
FACTS: Primitivo B. Perez had been insured with the BF Lifeman
Insurance Corporation since 1980 for P20,000.00. Sometime in October
1987, an agent of the insurance corporation, Rodolfo Lalog, visited Perez
in Guinayangan, Quezon and convinced him to apply for additional
insurance coverage of P50,000.00, to avail of the ongoing promotional
discount of P400.00 if the premium were paid annually.
On October 20, 1987, Primitivo B. Perez accomplished an application form
for the additional insurance coverage of P50,000.00. On the same day,
petitioner Virginia A. Perez, Primitivos wife, paid P2,075.00 to Lalog. The
receipt issued by Lalog indicated the amount received was a "deposit.”]
Unfortunately, Lalog lost the application form accomplished by Perez and
so on October 28, 1987, he asked the latter to fill up another application
form. On November 1, 1987, Perez was made to undergo the required
medical examination, which he passed.
Pursuant to the established procedure of the company, Lalog forwarded
the application for additional insurance of Perez, together with all its
supporting papers, to the office of BF Lifeman Insurance Corporation at
Gumaca, Quezon which office was supposed to forward the papers to the
Manila office.
On November 25, 1987, Perez died in an accident. He was riding in a
banca which capsized during a storm. At the time of his death, his
application papers for the additional insurance of P50,000.00 were still with
the Gumaca office. Lalog testified that when he went to follow up the
papers, he found them still in the Gumaca office and so he personally
brought the papers to the Manila office of BF Lifeman Insurance
Corporation. It was only on November 27, 1987 that said papers were
received in Manila. Without knowing that Perez died on November 25,
1987, BF Lifeman Insurance Corporation approved the application and
issued the corresponding policy for the P50,000.00 on December 2, 1987.
Virginia went to Manila to claim the benefits and was given 40,000.00 php.
Then she claimed additional for the coverage under the 50,000.00 plan.
The partial payment made was refunded and the contract was rescinded
by BF Lifeman Insurance Corp. The lower court ruled in favor of Perez but
the CA reversed the decision.
ISSUE: Was there a perfected insurance contract?
6
RULING: None. The contract was not perfected. As a contract, consent,
object, cause must be complied with.
The assent of private respondent BF Lifeman Insurance Corporation
therefore was not given when it merely received the application form and
all the requisite supporting papers of the applicant. Its assent was given
when it issues a corresponding policy to the applicant. Under the
abovementioned provision, it is only when the applicant pays the premium
and receives and accepts the policy while he is in good health that the
contract of insurance is deemed to have been perfected.
It is not disputed, however, that when Primitivo died on November 25,
1987, his application papers for additional insurance coverage were still
with the branch office of respondent corporation in Gumaca and it was only
two days later, or on November 27, 1987, when Lalog personally delivered
the application papers to the head office in Manila.
Consequently, there was absolutely no way the acceptance of the
application could have been communicated to the applicant for the latter to
accept inasmuch as the applicant at the time was already dead. In the
case of Enriquez vs. Sun Life Assurance Co. of Canada, recovery on the
life insurance of the deceased was disallowed on the ground that the
contract for annuity was not perfected since it had not been proved
satisfactorily that the acceptance of the application ever reached the
knowledge of the applicant.
11. G. R. No. L-2294 (FILIPINAS COMPANIA DE SEGUROS v.
CHRISTERN, HUENEFELD & CO., INC.)
G.R. No. L-2294 May 25, 1951
FILIPINAS COMPAÑIA DE SEGUROS, petitioner, vs. CHRISTERN,
HUENEFELD and CO., INC., respondent.
Facts: Respondent Christern obtained from Filipinas a fire insurance policy
of P1000,000, covering merchandise contained in a building located at
Binondo. During the Japanese military occupation, the building and insured
merchandise were burned. The respondent its claim under the policy. The
total loss suffered by the respondent was fixed at P92,650.
The petitioner refused to pay the claim on the ground that the policy in
favor of the respondent had ceased to be in force on the date the U.S.
declared war on Germany with the respondent Corporation being
controlled by German subjects and the petitioner being a company under
American jurisdiction (though organized by Philippine laws) when the
policy was issued on October 1, 1941. The petitioner, however, paid to the
respondent the sum of P92,650 on April 19, 1943 under orders from the
military government.
The insurer filed for a suit to recover the sum. The contention was that the
policy ceased to be effective because of the outbreak of the war and that
the payment made by the petitioner to the respondent corporation during
the Japanese military occupation was under pressure.
The trial and the appellate courts dismissed the action.
The Court of Appeals overruled the contention of the petitioner that the
respondent corporation became an enemy when the United States
declared war against Germany, relying on English and American cases
which held that a corporation is a citizen of the country or state by and
under the laws of which it was created or organized. It rejected the theory
that nationality of private corporation is determine by the character or
citizenship of its controlling stockholders.
Issue: Whether or not the insurance policy became ineffective upon the
declaration of the war?
Held: YES. The Philippine Insurance Law (Act No. 2427, as amended,) in
section 8, provides that "anyone except a public enemy may be insured." It
stands to reason that an insurance policy ceases to be allowable as soon
as an insured becomes a public enemy.
There is no question that majority of the stockholders of the respondent
corporation were German subjects. This being so, said respondent
became an enemy corporation upon the outbreak of the war between the
United States and Germany.
The respondent having become an enemy corporation on December 10,
1941, the insurance policy issued in its favor on October 1, 1941, by the
petitioner (a Philippine corporation) had ceased to be valid and enforcible,
and since the insured goods were burned after December 10, 1941, and
during the war, the respondent was not entitled to any indemnity under
said policy from the petitioner.
However, elementary rules of justice (in the absence of specific provision
in the Insurance Law) require that the premium paid by the respondent for
the period covered by its policy from December 11, 1941, should be
returned by the petitioner.