Double Insurance
MALAYAN INSURANCE vs PHILIPPINE FIRST INSURANCE FACTS Wyeth contracted a contract of carriage with Republic, a common carrier for the transport of its goods and product. Wyeth insured the goods with Philippine First , while Republic insured the same goods with Malayan insurance During transit, certain goods were lost due to hijacking of 10 armed men.Philippine first paid the proceeds to Wyeth, subrogating the rights of wyeth to Philippine first which filed a claim against Republic and Malayan as a 3rd party defendant. Republic and Malayan refused the claim of Philippine first. Malayan contended that there was double insurance and that the first insurer, Philippine First, should bear all the loss. ISSUE W/N Malayan is liable? - YES W/N there is double insurance? - NO W/N Malayan is solidarily liable with Republic? – NO – NO HELD Malayan is liable because of the insurance contract it executed with Republic for the idemnity for the loss. The cause of the loss not within the purview of an excepted peril, having been determined in the lower courts is conclusive upon the SC making Malayan liable for the idemnity. There is double insurance when: 1] The person insured is the same 2] 2 or more insurers insuring separately 3] There is identity of subject matter 4] There is identity of interest insured 5] There is identity of the risk or peril insured against In the case at bar though the 2 insurance policy, one by Philippine first and one by Malayan were issued over the same subject matter covering the same peril, it was issued to 2 different persons and to 2 different interest. Philippine first insured wyeth over its own goods Malayan insured republic over the latters insurable interest over the safety of the goods which could become the basis for liability in case of loss or damage. Malayan is not solidarily liable with Republic because they have different sources from which their liability arose. Republic arose due to a contract of carriage, while Malayan is that of contract. Solidarity exist only by express stipulation of the parties or those provided by law, none of which is applicable in the present case
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 coinsurances 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 t o 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 do cuments. 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.
UNION MANUFACTURING CO., INC. VS. PHILIPPINE GUARANTY CO., INC. 47 SCRA 271 (G.R. NO. L-27932)
OCTOBER 30, 1972
Petitioner:
Republic Bank
Respondent:
Philippine Guaranty Co.. Inc.
FACTS: On January 12, 1962, the Union Manufacturing Co., Inc. obtained certain loans from the Republic Bank in the total sum of ₱ 415,000.00. To secure the payment thereof, UMC executed real and chattel mortgage on certain properties. The Republic Bank procured from the defendant Philippine Guaranty Co., Inc. an insurance coverage on loss against fire for ₱ 500,000.00 over the properties of the UMC, as described in defendant’s cover note dated September 25, 1962, with the annotation that loss or damage, if any, under said cover note is payable to Republic Bank as its interest may appear, subject however to the printed conditions of said defendant’s Fire Insurance Policy Form. On September 6, 1964, a fire occurred in the premises of UMC and on October 6, 1964, UMC filed its fire claim with the PGC Inc., thru its adjuster, H.H. Bayne Adjustment Co., which was denied by said defendant in its letter dated November 26, 1964 on the following ground: “Policy Condition No. 3 and/or the ‘Other Insurance Clause’ of the policy was violated because you did not give notice to us of the other insurance w hich you had taken from New India for ₱ 80,000.00. Sincere Insurance for ₱ 25,000.00 and Manila Insurance for ₱ 200,000.00 with the result that these insurances of which we became aware of only after the fire, were not endorsed on our policy. ISSUE:
proceeds be paid directly to them. But United refused so CKS filed against Spouses Cha and United.
Whether Republic Bank can recover.
HELD: Without deciding- whether notice of other insurance upon the same property must be given in writing, or whether a verbal notice is sufficient to render an insurance valid which requires such notice, whether oral or written, we hold that in the absolute absence of such notice when it is one of the conditions specified in the fire insurance policy, the policy is null and void. (Santa Ana vs. Commercial Union Ass. Co., 55 Phil. 128). If the insured has violated or failed to perform the conditions of the contract, and such a violation or want of performance has not been waived by the insurer, then the insured cannot recover. Courts are not permitted to make contracts for the parties. The functions and duty of the courts consist simply in enforcing and carrying out the contracts actually made.
CA: deleted exemplary damages and attorney’s fees ISSUE: W/N the CKS has insurable interest because the spouses Cha violated the stipulation
HELD: NO. CA set aside. Awarding the proceeds to spouses Cha.
Sec. 18. No contract or policy of insurance on property shall be enforceable except for the benefit of some person having an insurable interest in the property insured
A non-life insurance policy such as the fire insurance policy taken by petitioner-spouses over their merchandise is primarily a contract of indemnity. Insurable interest in the property insured must exist a t the time the insurance takes effect and at the time the loss occurs. The basis of such requirement of insurable interest in property insured is based on sound public policy: to prevent a person from taking out an insurance policy on property upon which he has no insurable interest and collecting the proceeds of said policy in case of loss of the property. In such a case, the contract of insurance is a mere wager which is void under Section 25 of the Insurance Code. SECTION 25. Every stipulation in a policy of Insurance for the payment of loss, whether the person insured has or has not any interest in the property insured, or that the policy shall be received as proof of such interest, and every policy executed by way of gaming or wagering, is void
While it is true, as a general rule, that contracts of insurance are construed most favorably to the insured, yet contracts of insurance, like other contracts, are to be construed according to the sense and meaning of the terms which the parties themselves have used. If such terms are clear and unambiguous they must be taken and understood in their plain, ordinary and popular sense.
The annotation then, must be deemed to be a warranty that the property was not insured by any other policy. Violation thereof entitles the insurer to rescind. The materiality of nondisclosure of other insurance policies is not open to doubt. The insurance contract may be rather onerous, but that in itself does not justify the abrogation of its express terms, terms which the insured accepted or adhered to and which is the law between the contracting parties. SPS CHA VS CA Lessons Applicable: Effect of Lack of Insurable Interest (Insurance) Laws Applicable: Sec. 17, Sec. 18, Sec. 25 of the Insurance Code
FACTS:
Spouses Nilo Cha and Stella Uy-Cha and CKS Development Corporation entered a 1 year lease contract with a stipulation not to insure against fire the chattels, merchandise, textiles, goods and effects placed at any stall or store or space in the leased premises without first obtaining the written consent and approval of the lessor. But it insured against loss by fire their merchandise inside the leased premises for P500,000 with the United Insurance Co., Inc. without the written consent of CKS On the day the lease contract was to expire, fire broke out inside the leased premises and CKS learning that the spouses procured an insurance wrote to United to have the
RTC: United to pay CKS the amount of P335,063.11 and Spouses Cha to pay P50,000 as exemplary damages, P20,000 as attorney’s fees and costs of suit
Section 17. The measure of an insurable interest in property is the extent to which the insured might be damnified by loss of injury thereof
The automatic assignment of the policy to CKS under the provision of the lease contract previously quoted is void for being contrary to law and/or public policy. The proceeds of the fire insurance policy thus rightfully belong to the spouses. The liability of the Cha spouses to CKS for violating their lease contract in that Cha spouses obtained a fire insurance policy over their own merchandise, without the consent of CKS, is a separate and distinct issue which we do not resolve in this case.
IVOR ROBERT DAYTON GIBSON, petitioner, vs. HON. PEDRO A. REVILLA IVOR ROBERT DAYTON GIBSON, petitioner, vs. HON. PEDRO A. REVILLA, in his official capacity as Presiding Judge of Branch XIII, Court of First Instance of Rizal, and LEPANTO CONSOLIDATED MINING COMPANY, respondents. G.R. No. L-41432 July 30, 1979
FACTS: Lepanto Consolidated Mining Company filed a complaint against Malayan Insurance Company, Inc. The civil suit thus instituted by Lepanto against Malayan was founded on the fact that Malayan issued a Marine Open Policy covering all shipments of copper, gold, and silver concentrates in bulk from Poro, San Fernando, La Union to Tacoma, Washington or to other places in the United States. Thereafter, Malayan obtained reinsurance abroad through
Sedgwick, Collins & Co., Limited, a London insurance brokerage. The Memorandum of Insurance issued by Sedgwick to Malayan listed three groups of underwriters or reinsurers – Lloyds 62.808%, Companies (I.L.U.) 34.705%, Other companies 2.487%. At the top of the list of underwriting members of Lloyds is Syndicate No. 448, assuming 2.48% of the risk assumed by the reinsurer, which syndicate number petitioner Ivor Robert Dayton Gibson claims to be himself. Petitioner then filed a motion to intervene as defendant, which motion was denied by the lower court.
transit to Japan, bad weather prevailed and this caused the loss of 32 pieces of logs. WIC then asked an adjuster to investigate the loss. The adjuster submitted that the logs lost were not covered by the two policies issued on April 2, 1963 but said logs were included in the cover note earlier issued. WIC however denied the insurance claim of PTEC as it averred that the cover note became null and void when the two policies were subsequently issued. The Court of Appeals ruled that the cover note is void for lack of valuable consideration as it appeared that no premium payment therefor was made by PTEC. ISSUE: Whether or not a separate premium is needed for cover notes. HELD: No. The Cover Note was not without consideration for which the Court of Appeals held the Cover Note as null and void, and denied recovery therefrom. The fact that no separate premium was paid on the Cover Note before the loss insured against occurred, does not militate against th e validity of PTEC’s contention, for no such premium could have been paid, since by the nature of the Cover Note, it did not contain, as all Cover Notes do not contain particulars of the shipment that would serve as basis for the computation of the premiums. As a logical consequence, no separate premiums are intended or required to be paid on a Cover Note. At any rate, it is not disputed that PTEC paid in full all the premiums as called for by the statement issued by WIC after the issuance of the two regular marine insurance policies, thereby leaving no account unpaid by PTEC due on the insurance coverage, which must be deemed to include the Cover Note. If the Note is to be treated as a separate policy instead of integrating it to the regular policies subsequently issued, the purpose and function of the Cover Note would be set at naught or rendered meaningless, for it is in a real sense a contract, not a mere application for insurance which is a mere offer.
ISSUE: WON THE LOWER COURT COMMITTED, REVERSIBLE ERROR IN REFUSING THE INTERVENTION OF THE PETITIONER IN THE SUIT BETWEEN LEPANTO AND MALAYAN COMPANIES. HELD: No. The respondent Judge committed no error of law in denying petitioner’s Motion to Intervene and neither has he abused his discretion in his denial of petitioner’s Motion for Intervention. We agree with the holding of the respondent court that since movant Ivor Robert Dayton Gibson appears to be only one of several re-insurers of the risks and liabilities assumed by Malayan Insurance Company, Inc., it is highly probable that other re-insurers may likewise intervene. If petitioner is allowed to intervene, We hold that there is good and sufficient basis for the Court a quo to declare that the trial between Lepanto and Malayan would be definitely disrupted and would certainly unduly delay the proceedings between the parties especially at the stage where Lepanto had already rested its case and that the issue would also be compounded as more parties and more matters will have to be litigated. In other words, the Court’s discretion is justified and reasonable. We also hold that respondent Judge committed no reversible error in further sustaining the fourth ground of Lepanto’s Opposition to the Motion to Intervene that the rights, if any, of petitioner are not prejudiced by the present suit and will be fully protected in a separate action against him and his coinsurers by Malayan. Petitioner’s contention that he has to pay once Malayan is finally adjudged to pay Lepanto because of the very nature of a contract of reinsurance and considering that the re-insurer is obliged to pay as may be paid thereon (referring to the original policies), although this is subject to other stipulations and conditions of the reinsurance contract, is without merit. The general rule in the law of reinsurance is that the re-insurer is entitled to avail itself of every defense which the re-insured (which is Malayan) might urge in an action by the person originally insured (which is Lepanto). As to the effect of the clause “to pay as may be paid thereon” contained in petitioner’s re -insurance contract, Arnould, on the Law of Marine Insurance and Average, 13th Ed., Vol. 1, Section 327, p. 315, states the rule, this: “It has been decided that this clause does not preclude the reinsurer from insisting upon proper proof that a loss strictly within the terms of the original policy has taken place. “This clause does not enable the original underwriter to recover from his reinsurer to an extent beyond the subscription of the latter. “Wherefore, i n view of the foregoing, the petition is hereby dismissed. No costs.” Pacific Timber Export Corporation vs Court of Appeals In 1963, Pacific Timber Export Corporation (PTEC) applied for a temporary marine insurance from Workmen’s Insurance Company (WIC) in order for the latter to insure 1,250,000 board feet of logs to be exported to Japan. In March 1963, WIC issued a cover note to PTEC for the said logs. On April 2, 1963, WIC issued two policies for the logs. However, the total board feet covered this time is only 1,195,498. On April 4, 1963, while the logs were in
FIELDMEN'S INSURANCE CO., INC.,vs. ASIAN SURETY & INSURANCE, CO., INC. and CA (1970) MAKALINTAL, J.:
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On various dates the Asian Surety & Insurance and the Fieldmen's insurance entered into 7 reinsurance agreements or treaties under the general terms of which ASIAN, as the ceding company undertook to cede to FIELDMEN’S, as the reinsuring company, a specified portion of the amount of insurance underwritten by ASIAN upon payment to FIELDMEN'S of a proportionate share of the gross rate of the premium applicable with respect to each cession after deducting a commission. o agreements were take effect from certain specific dates and were to be in force until cancelled by either party upon previous notice of at least 3 months by registered mail to the other party, the cancellation to take effect as of the 31st of December of the year in which notice was given. · Sept and Dec 1961 à FIELDMEN’S sent letters to ASIAN expressing its desire to cancel all agreements between them as of DEC 31, 1961 alleging that ASIAN had already incurred numerous violations àASIAN received but did not reply · Feb 1962 à FIELDMEN’S sent another letter to ASIAn repeating the fact of cancellation and now requesting ASIAN to submit its final accounting of all cessions made to the former for the preceding months when the reinsurance agreements were in force. ·
Meanwhile one of the risks reinsured by FIELDMENS issued in favor of the GSIS became a liability when the insured property was burned on Feb 1962 à The next day ASIAN sent letter to FIELDMEN’S notifiying them of the loss and stating…
o ... we beg to reiterate that your letter of December 7, 1961, terminating said treaties by December 31, 1961, is not in accordance with the terms thereof, since there was no prior three months' notice. However, considering the attitude express (sic) in your aforesaid letter of December 7, 1961, we are willing to waive provision that said treaties may be cancelled on December 31st of any year, and will consider them cancelled at the end of three (3) months from Decemb er 7, 1961, by which time we shall be able to render the final accounting you desire. · FIELDMEN’S filed a petition for declaratory relief with CFI Manila alleging its first letter of notification on SEPT 19, 1961 was sufficient to meet the 3 month period before cancellation and to obtain an order directing ASIAN to render final accounting of the transactions between them with respect to said reinsurance treaties as of the cut-off date. · CFI DECISION à 6 of 7 agreements are cancelled as of DEC 1961 but agreed with ASIAN that FIELDMEN’S is still liable for as long the previously contracted policies are still valid. It also ordered FIELDMEN'S to make an accounting with ASIAN within 30 days. · CA à Affirmed with modification à the order for accounting was eliminated ISSUE: WON cancellation had the effect of terminating also the liability of FIELDMEN'S as reinsurer with respect to policies or cessions issued prior to the termination of the principal reinsurance contracts or treaties?
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Only the cancelled agreements are being considered here à 2 of which contain provisions, which clearly and expressly recognize the continuing effectivity of policies ceded under them for reinsurance notwithstanding the cancellation of the contracts themselves. o Article 10 of the Facultative Obligatory Reinsurance Trea ty Fire provides "that in the event of termination of this Agreement ..., the liability of the Fieldmen's under current cessions shall continue in full force and effect until their natural expiry ...;" and the 4th paragraph of Article VI of the Personal Accident Reinsurance Treaty states: o 4. On the termination of this Agreement from any cause whatever, the liability of the REINSURER (Fieldmen's) under any current cession including any amounts due to be ceded under the terms of this Agreement and which are not cancelled in the ordinary course of business shall continue in full force until their expiry unless the COMPANY (Asian) shall, prior to the thirty-first December next following such notice, elect to withdraw the existing cessions .... · It is therefore clear that FIELDMEN’S is still liable despite the cancellation àSuch cessions continued to be in force until their respective dates of expiration à GSIS policy still valid and subsisting at time of loss à FIELDMEN’S IS LIABLE · ·
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No need to go into other arguments (did not mention what they are) because the cancellation of the agreements made them moot SC NOTES à ASIAN only claims continued liability of FIELDMEN’s as to the 2 agreements that had the provision cited above (as compared to the other 4 cancelled agreements wherein FIELDMEN’S liability had terminated with the contracts) FIELDMEN'S insists on its alternative prayer that all cessions under the six reinsurance agreements be declared rescinded by reason of certain violations thereof, as stated by FIELDMEN'S in its letter of December 7, 1961 à Court reminds them that this action is for declaratory relief and not one for rescission and no grounds found by lower courts that can justify rescission anyway. Title: Avon Insurance vs CA
Topic: Reinsurance (sections 95-98) FACTS: It all started with Yupangco Cotton Mills engaged to secure with Worldwide Security and Insurance Co. Inc., several of its properties totaling P200 Million These contracts were covered by reinsurance treaties between Worldwide Surety and Insurance, and several foreign reinsurance companies including the petitioners through CJ Boatrwright acting as agent of Worldwide Surety and Insurance A Fire then razed the properties insured on December 1969 and May 2, 1981 A Deed of Assignment made by Worldwide Surety and Insurance acknowledged a remaining balance of P19,444,447.75 still due and assigned to Yupangco all reinsurance proceeds still collectible from all the foreign reinsurance companies. Yupangco then filed a collection suit on the above petitioners The service of summons were made through the office of the Insurance Commissioner but since the international reinsurers question the jurisdiction the trial court the case has not proceeded to trial on the merits The reinsurer is questioning also the service of summons through extraterritorial service under Sect 17 Rule 14 of the Rules of Court nor through the Insurance Commissioner under Sec 14 Yupangco also contends that since the reinsurers question the jurisdiction of the court they are deemed to have submitted to the jurisdiction of the court.
ISSUE: WON the international reinsurers are “doing business in the Philippines”. WON the Philippine court has jurisdiction over these international reinsurers who are not doing business in the Philippines RULING: NO, international reinsurers are not “doing business in the Philippines” and the Philippine court has not acquired jurisdiction over them. The reinsurance treaties between the petitioners and Worldwide Surety and Insurance were made through an international insurance broker and NOT through any entity or means remotely connected with the Philippines Reinsurance company is not doing business in a certain state even if the property or lives which are insured by the original insurer company are located in that state. Reinsurance Contract is generally separate and distinct arrangement from the original contract of insurance. Doing business in the Philippines – must be judged in the light of its peculiar circumstances upon its peculiar facts and upon the language of the statute applicable. o True test: whether the foreign corporation is continuing the body or substance of the business or enterprise for which it was organized If there exist a domestic agent of the foreign corporation it can be served with summons through that agent without proving that such corporation is doing business in the phils or not. o NO allegation or demonstration of the existence of petitioners’ domestic agent but avers simply that they are doing business not only abroad but in the Phils
Petitioners had not performed any act which would give the general public the impression that it had been engaging or intends to engage in its ordinary and usual business undertaking in the country. The purpose of the law in requiring that foreign corporations doing business in the country be licensed to do so, is to subject the foreign corporations doing business in the Philippines to the jurisdiction of the courts, 19 otherwise, a foreign corporation illegally doing business here because of its refusal or neglect to obtain the required license and authority to do business may successfully though unfairly plead such neglect or illegal act so as to avoid service and thereby impugn the jurisdiction of the local courts. Voluntary appearance before the lower court to question the jurisdiction is not equivalent to submission to jurisdiction o
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The SC disposed the case in fa vor of the international insurers (petitioners’) declaring that the lower court has not acquired and cannot acquire jurisdiction over them and was ordered to desist from maintaining further proceeding against them. G.R. No. 186983 February 22, 2012 MA. LOURDES S. FLORENDO, Petitioner,vs. PHILAM PLANS, INC., PERLA ABCEDE MA. CELESTE ABCEDE, Respondents. FACTS: Manuel Florendo filed an application for comprehensive pension plan with respondent PhilamPlans, Inc. (Philam Plans) Manuel signed the application and left to Perla the task of supplying the information needed in the application. Respondent Ma. Celeste Abcede, Perla’s daughter, signed the application as sales counselor. Philam Plans issued Pension Plan Agreement toManuel, with petitioner Ma. Lourdes S. Florendo, his wife, as beneficiary. In time, Manuel paidhis quarterly premiums. Eleven months later, Manuel died of blood poisoning. Subsequently,Lourdes filed a claim with Philam Plans for th e payment of the benef its under her husband’s plan but Philam Plans declined her claim prompting her to file the present action against thepension plan company before the Regional Trial Court (RTC) of Quezon City and ruled in favor of Ma. Lourdes. However, the Court of Appeals then reversed the RTC decision. Hence thisappeal. ISSUE: Whether or not Ma. Lourdes could claim benefits as the beneficiary of her husband under theinsurance plan despite consideration that her husband Manuel concealed the true condition of his health. RULING: The Supreme Court answers this to the negative and the AFFIRMED in its entirety the decisionof the Court of Appeals.The comprehensive pension plan that Philam Plans issued contains a one-year incontestabilityperiod. It states: VIII. INCONTESTABILITY
After this Agreement has remained in force for one (1) year, we can no longer contest for health reasons any claim for insurance under this Agreement, except for the reason thatinstallment has not been paid (lapsed), or that you are not insurable at the time you bought thispension program by reason of age. If this Agreement lapses but is reinstated afterwards, theone (1) year contestability period shall start again on the date of approval of your request for reinstatement.The above incontestability clause precludes the insurer from disowning liability under thepolicy it issued on the ground of concealment or misrepresentation regarding the health of theinsured after a year of its issuance.Since Manuel died on the eleventh month following the issuance of his plan, the one year incontestability period has not yet set in. Consequently, Philam Plans was not barred from questioning Lourdes’ entitlement to the benefits of her husband’s pension plan Insurance Case #048 Malayan Insurance Co. Inc. vs. PAP Ltd. Co. (Phil. Br.) G.R. No. 200784, 7 August 2013 Topic: Concealment, Rescission of Insurance Contract, Alteration in the use of the thing insured Ponente: Mendoza, J. Doctrine: Under the Insurance Code of the Philippines: “Sec. 26. A
neglect to communicate that which a party knows and ought to communicate, is called a concealment. Sec. 27. A concealment whether intentional or unintentional entitles the injured party to rescind a contract of insurance. (As amended by Batasang Pambansa Blg. 874) Sec. 168. An alteration in the use or condition of a thing insured from that to which it is limited by the policy made without the consent of the insurer, by means within the control of the insured, and increasing the risks, entitles an insurer to rescind a contract of fire insurance.”
Facts: 1.
2. 3. 4. 5.
13 May 1996- Malayan Insurance Company (Malayan) issued Fire Insurance Policy to PAP Co., Ltd. (PAP Co) for the latter’s machineries and equipment located at Sanyo Precision Phils, Bldg., Phase III, Lot 4, Block 15, PEZA, Rosario, Cavite (Sanyo Building). Insurance was worth P15M and effective for 1 year. It was procured by PAP Co for RCBC, the mortgagee of the insured machineries and equipment. Prior to expiration of the insurance coverage, PAP Co. renewed policy on an “as is” basis. This was for 13 May 1997 to 13 May 1998. 12 October 1997 and during the subsistence of the renewal policy, the insured machineries and equipment were totally lost by fir. PAP Co. filed a fire insurance claim with Malayan in the amount insured.
6.
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15 December 1997- Malayan denied since at the time of loss, the insured machineries and equipment were transferred by PAP Co. to a location different from that indicated in the policy. PAP Co. argued that Malayan cannot avoid liability since it was informed of the transfer by RCBC, the mortgage and the party duty-bound to relay such information. 17 September 2009- RTC ordered Malayan to pay PAP an indemnity for the loss. 27 October 2011- CA affirmed RTC decision. Hence this case.
Issue: Is Malayan liable under the insurance contract? Ruling: No. Under the policy and when it was renewed, it forbade the removal of the insured properties unless sanctioned/consented by Malayan. PAP failed to notify and to obtain consent of Malayan regarding the removal. The transfer also increased the risk. With the transfer of location of the subject properties, without notice to and consent of Malayan, PAP committed concealment, misrepresentation and breach of a material warranty. Under the Insurance Code, Malayan can rescind the insurance contract. 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 tha t the answers given by the ins ured t o the questionsin 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 insuranceHas any life insur ance compa ny ever refused your application for insur ance 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 ma intains that when the insured was e xamined in connection w ith 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." HILAMCARE HEALTH SYSTEMS, INC. vs. COURT OF APPEALS
July 2, 2014 § Leave a comment
G.R. No. 125678, March 18, 2002 (YNARES-SANTIAGO, J.)
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, canc er, liver disease, asthma or peptic ulcer?’, Ernani answered ‘No’. Under the agreement, Ernani is entitled to avail of hospitalization benefits and out-patient benefits. The coverage was approved for a period of one year from March 1, 1988 to March 1, 1989. The agreement was however extended yearly until June 1, 1990 which increased the amount of coverage to a maximum sum of P75,000 per disability.
During the period of said coverage, Ernani suffered a heart attack and was confined at the Manila Medical Center (MMC) for one month. While in the hospital, his wife Julita tried to claim the benefits under the health care agreement. However, the Philamcare denied her claim alleging that the agreement was void because Ernani concealed his medical history. Doctors at the MMC allegedly discovered at the time of Ernani’s confinement that he was hypertensive, diabetic and asthmatic, contrary to his answer in the application form. Thus, Julita paid for all the hospitalization expenses.
After Ernani was discharged from the MMC, he was attended by a physical therapist at home. Later, he was admitted at the Chinese General Hospital. Due to financial difficulties, however, respondent brought her husband home again. In the morning of April 13, 1990, Ernani had fever and was feeling very weak. Respondent was constrained to bring him back to the Chinese General Hospital where he died on the same day.
Julita filed an action for damages and reimbursement of her expenses plus moral damages attorney’s fees against Philamcare and its president, Dr. Benito Reverente. The Regional Trial court or Manila rendered judgment in favor of Julita. On appeal, the decision of the trial court was affirmed but deleted all awards for damages and absolved petitioner Reverente. Hence, this petition for review raising the primary argument that a health care agreement is not an insurance contract; hence the “incontestability clause” under the Insurance Code does not apply.
ISSUES:
(1)YES. Section2 (1)of the Insurance Code defines a contract of insurance as an agreement whereby one undertakes for a consideration to indemnify another against loss, damage, or liability arising from an unknown or contingent event.
Section 3 of the Insurance Code states that any contingent or unknown event, whether past or future, which my damnify a person having an insurable against him, may be insured against. Every person has an insurable interest in the life and health of himself.
Section 10 provides that every person has an insurable interest in 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.
(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.
(1) Whether or not the health care agreement is not an insurance contract
(2) Whether or not there is concealment of material fact made by Ernani
HELD:
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.
Insurance Case Digest: Malayan Insurance Co., Inc. V. Arnaldo (1987)
G.R. No. L-67835 October 12, 1987 Lessons Applicable: Authority to Receive Payment/Effect of Payment (Insurance) Laws Applicable: Article 64, Article 65, Section 77, Section 306 of the Insurance Code
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. SEC. 64. No policy of insurance other than life shall be cancelled by the insurer except upon prior notice thereof to the insured, and no notice of cancellation shall be effective unless it is based on the occurrence, after the effective date of the policy, of one or more of the following: (a)
non-payment of premium;
FACTS: (b) conviction of a crime arising out of acts increasing the hazard insured against; June 7, 1981: Malayan insurance co., inc. (MICO) issued to Coronacion Pinca, Fire Insurance Policy for her property effective July 22, 1981, until July 22, 1982 October 15,1981: MICO allegedly cancelled the policy for non-payment, of the premium and sent the corresponding notice to Pinca December 24, 1981: payment of the premium for Pinca was received by Domingo Adora, agent of MICO January 15, 1982: Adora remitted this payment to MICO,together with other payments January 18, 1982: Pinca's property was completely burned 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 and instead demanded for payment Under Section 416 of the Insurance Code, the period for appeal is thirty days from notice of the decision of the Insurance Commission. The petitioner filed its motion for reconsideration on April 25, 1981, or fifteen days such notice, and the reglementary period began to run again after June 13, 1981, date of its receipt of notice of the denial of the said motion for reconsideration. As the herein petition was filed on July 2, 1981, or nineteen days later, there is no question that it is tardy by four days. Insurance Commission: favored Pinca MICO appealed ISSUE: W/N MICO should be liable because its agent Adora was authorized to receive it
(c) discovery of fraud or material misrepresentation; (d) discovery of willful, or reckless acts or commissions increasing the hazard insured against; (e) physical changes in the property insured which result in the property becoming uninsurable;or (f) a determination by the Commissioner that the continuation of the policy would violate or would place the insurer in violation of this Code. As for the method of cancellation, Section 65 provides as follows: SEC. 65. All notices of cancellation mentioned in the preceding section shall be in writing, mailed or delivered to the named insured at the address shown in the policy, and shall state (a) which of the grounds set forth in section sixty-four is relied upon and (b) that, upon written request of the named insured, the insurer will furnish the facts on which the cancellation is based. A valid cancellation must, therefore, require concurrence of the following conditions:
HELD: YES. petition is DENIED
(1) There must be prior notice of cancellation to the insured;
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. SEC. 306. xxx xxx xxx
(2) The notice must be based on the occurrence, after the effective date of the policy, of one or more of the grounds mentioned;
Any insurance company which delivers to an insurance agant or insurance broker a policy or contract of insurance shall be demmed 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.
(3) The notice must be (a) in writing, (b) mailed, or delivered to the named insured, (c) at the address shown in the policy; (4) It must state (a) which of the grounds mentioned in Section 64 is relied upon and (b) that upon written request of the insured, the insurer will furnish the facts on which the cancellation is based. All MICO's offers to show that the cancellation was communicated to the insured is its employee's testimony that the said cancellation was sent "by mail through our mailing section." without more
It stands to reason that if Pinca had really received the said notice, she would not have made payment on the original policy on December 24, 1981. Instead, she would have asked for a new insurance, effective on that date and until one year later, and so taken advantage of the extended period. Incidentally, Adora had not been informed of the cancellation either and saw no reason not to accept the said payment Although Pinca's payment was remitted to MICO's by its agent on January 15, 1982, MICO sought to return it to Adora only on February 5, 1982, after it presumably had learned of the occurrence of the loss insured against on January 18, 1982 make the motives of MICO highly suspicious SATURNINO VS PHILAMLIFE In September 1957, Estefania Saturnino was operated for cancer in which her right breast was removed. She was advised by her surgeon that she’s not totally cured because her cancer was malignant. In November 1957, she applied for an insurance policy under Philamlife (Philippine American Life Insurance Company). She did not disclose the fact that she was operated nor did she disclose any medical histories. Philamlife, upon seeing the clean bill of health from Estefania waived its right to have Estefania undergo a medical checkup. In September 1958, Estefania died of pneumonia secondary to influenza. Her heirs now seek to enforce the insurance claim. ISSUE: Whether or not Saturnino is entitled to the insurance claim. HELD: No. The concealment of the fact of the operation is fraudulent. Even if, as argued by the heirs, Estefania never knew she was operated for cancer, there is still fraud in the concealment no matter what the ailment she was operated for. Note also that in order to avoid a policy, it is not necessary that actual fraud be established otherwise insurance companies will be at the mercy of any one seeking insurance.
In this jurisdiction a concealment, whether intentional or unintentional, entitles the insurer to rescind the contract of insurance, concealment being defined as “negligence to communicate that which a party knows and ought to communicate.” Also, the fact that Philamlife waived its right to have Estefania undergo a medical examination is not negligence. Because of Estefania’s concealment, Philamlife considered medical checkup to be no longer necessary. Had Philamlife been informed of her operation, she would have been made to undergo medical checkup to determine her insurability Sunlife v CA G.R. No. 105135 June 22, 1995 J. Quiason
Facts: Robert John B. Bacani procured a life insurance contract for himself from Sunlife. He was issued a policy for P100,000.00, with double indemnity in case of accidental death. The designated beneficiary was his mother, Bernarda Bacani. The insured died in a plane crash. Respondent Bernarda Bacani filed a claim with petitioner, seeking the benefits of the insurance policy taken by her son. Petitioner conducted an investigation and its findings prompted it to reject the claim.
Sunlife informed Bacani that the insured did not disclose material facts relevant to the issuance of the policy, thus rendering the contract of insurance voidable. A check representing the total premiums paid in the amount of P10,172.00 was attached to said letter. Petitioner claimed that the insured gave false statements in his application. The deceased answered claimed that he consulted a Dr. Raymundo of the Chinese General Hospital for cough and flu complications. The other questions were answered in the negative. Petitioner discovered that two weeks prior to his application for insurance, the insured was examined and confined at the Lung Center of the Philippines, where he was diagnosed for renal failure. During his confinement, the deceased was subjected to urinalysis tests. Bernarda Bacani and her husband filed an action for specific performance against petitioner with the RTC. The court ruled in favor of the spouses and ordered Sunlife to pay P100,000.00. In ruling for private respondents, the trial court concluded that the facts concealed by the insured were made in good faith and under a belief that they need not be disclosed. The court also held that the medial history was irrelevant because it wasn’t medical insurance. The Court of Appeals affirmed the decision of the trial court. The appellate court ruled that petitioner cannot avoid its obligation by claiming concealment because the cause of death was unrelated to the facts concealed by the insured. Petitioner's motion for reconsideration was denied. Hence, this petition. Issue: WON the insured was guilty of misrepresentation which made the contract void. Held: Yes. Petition dismissed. Ratio: Section 26 of The Insurance Code required a party to a contract of insurance to communicate to the other, in good faith, all facts within his knowledge which are material to the contract and as to which he makes no warranty, and which the other has no means of ascertaining. “A neglect to communicate that which a party knows and ought to communicate, is c alled concealment.” “Materiality is to be determined not by the event, but solely by the probable and reasonable influence of the facts upon the party to whom communication is due, in forming his estimate of the disadvantages of the proposed contract or in making his inquiries.” The terms of the contract are clear. The insured is specifically required to disclose to the insurer matters relating to his health. The information which the insured failed to disclose were material and relevant to the approval and issuance of the insurance policy. The matters concealed would have definitely affected petitioner's action on his application, either by a pproving it wi th the corresponding adjustment for a higher premium or rejecting the same. Moreover, a disclosure may have warranted a medical examination of the insured by petitioner in order for it to reasonably assess the risk involved in accepting the application. Vda. de Canilang v. Court of Appeals- m ateriality of the inf ormation withheld does not depend on the state of mind of the insured. Neither does it depend on the actual or physical events which ensue. “Good faith" is no defense in concealment. The insured's failure to disclose the fact that he was hospitalized raises grave doubts about his eligibility. Such concealment was deliberate on his part.
The argument, that petitioner's waiver of the medical examination of the insured debunks the materiality of the facts concealed, is untenable. Saturnino v. Philippine American Life Insurance " . . . the waiver of a medical examination [in a non-medical insurance contract] renders even more material the information required of the applicant concerning previous condition of health and diseases suffered, for such information necessarily constitutes an important factor which the insurer takes into consideration in deciding whether to issue the policy or not . . . " Anent the finding that the facts concealed had no bearing to the cause of death of the insured, it is well settled that the insured need not die of the disease he had failed to disclose to the insurer. It is sufficient that his non-disclosure misled the insurer in forming his estimates of the risks of the proposed insurance policy or in making inquiries as held in Henson. Vda Canilang v CA G.R. No. 92492 June 1 7, 1993 J. Feliciano
Facts: Canilang was found to have suffered from sinus tachycardia then bronchitis after a check-up from his doctor. The next day, he applied for a "non-medical" insurance policy with respondent Grepalife naming his wife, Thelma Canilang, as his beneficiary. This was to the value of P19,700. He died of "congestive heart failure," "anem ia," and "chronic anemia." The widow filed a claim with Great Pacific which the insurer denied on the ground that the insured had concealed material information from it. Petitioner then filed a complaint against Great Pacific for recovery of the insurance proceeds. Petitioner testified that she was not aware of any serious illness suffered by her late husband and her husband had died because of a kidney disorder. The doctor who gave the check up stated that he treated the deceased for “sinus tachycardia” and "acute bronchitis." Great Pacific presented a physician who testified that the deceased's insurance application had been approved on the basis of his medical declaration. She explained that as a rule, medical examinations are required only in cases where the applicant has indicated in his application for insurance coverage that he has previously undergone medical consultation and hospitalization. The Insurance Commissioner ordered Great Pacific to pay P19,700 plus legal interest and P2,000.00 as attorney's fees. On appeal by Great Pacific, the Court of Appeals reversed. It found that the failure of Jaime Canilang to disclose previous medical consultation and treatment constituted material information which should have been communicated to Great Pacific to enable the latter to make proper inquiries. Hence this petition by the widow.
Apart from certifying that he didn’t suffer from such a condition, Canilang also failed to disclose in the that he had twice consulted a doctor who had found him to be suffering from "sinus tachycardia" and "acute bronchitis." Under the Insurance Code: Sec. 26. A neglect to communicate that which a party knows and ought to communicate, is called a concealment. Sec. 28. Each party to a contract of insurance must communicate to the other, in good faith, all factors within his knowledge which are material to the contract and as to which he makes no warranty, and which the other has not the means of ascertaining. The information concealed must be information which the concealing party knew and should have communicated. The test of materiality of such information is contained in Section 31: Sec. 31. Materiality is to be determined not by the event, but solely by the probable and reasonable influence of the facts upon the party to whom the communication is due, in forming his estimate of the disadvantages of the proposed contract, or in making his inquiries. The information which Jaime Canilang failed to disclose was material to the ability of Great Pacific to estimate the probable risk he presented as a subject of life insurance. Had he disclosed his visits to his doctor, the diagnosis made and medicines prescribed by such doctor, in the insurance application, it may be reasonably assumed that Great Pacific would have made further inquiries and would have probably refused to issue a non-medical insurance policy. 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. The Insurance Commissioner had also ruled that the failure of Great Pacific to convey certain information to the insurer was not "intentional" in nature, for the reason that Canilang believed that he was suffering from minor ailment like a common cold. Section 27 stated that: Sec. 27. A concealment whether intentional or unintentional entitles the injured party to rescind a contract of insurance. The failure to communicate must have been intentional rather than inadvertent. Canilang could not have been unaware that his heart beat would at times rise to high and alarming levels and that he had consulted a doctor twice in the two (2) months before applying for non-medical insurance. Indeed, the last medical consultation took place just the day before the insurance application was filed. In all probability, Jaime Canilang went to visit his doctor precisely because of the ailment. Canilang's failure to set out answers to some of the questions in the insurance application constituted concealment.
Issue: Won Canilang was guilty of misrepresentation Held: Yes. Petition denied. Ratio: There was a right of the insurance company to rescind the contract if it was proven that the insured committed fraud in not affirming that he was treated for heart condition and other ailments stipulated.
G.R. No. 175666, July 29, 2013 MANILA BANKERS LIFE INSURANCE CORPORATION, Petitioner, v. CRESENCIA P. ABAN,Respondent . Facts:
On July 3, 1993, Delia Sotero (Sotero) took out a life insurance policy from Manila Bankers Life Insurance Corporation (Bankers Life), designating respondent Cresencia P. Aban (Aban), her niece, 5as her beneficiary.
Petitioner issued Insurance Policy No. 747411 (the policy), with a face value of P100,000.00, in Sotero's favor on August 30, 1993, after the requisite medical examination and payment of the insurance premium. 6cralaw virtualaw library On April 10, 1996, 7 when the insurance policy had been in force for more than two years and seven months, Sotero died. Respondent filed a claim for the insurance proceeds on July 9, 1996. Petitioner conducted an investigation into the claim, 8 and came out with the following findings: 1. Sotero did not personally apply for insurance coverage, as she was illiterate;
The RTC granted respondent's Motion to Dismiss: In dismissing the case, the trial court found that Sotero, and not respondent, was the one who procured the insurance; thus, Sotero could legally take out insurance on her own life and validly designate - as she did — respondent as the beneficiary. It held further that under Section 48, petitioner had only two years from the effectivity of the policy to question the same; since the policy had been in force for more than two years, petitioner is now barred from contesting the same or seeking a rescission or annulment thereof.
Ruling of CA:
2.
Sotero was sickly since 1990
3.
Sotero did not have the financial capability to pay the insurance premiums on Insurance Policy No. 747411
4.
Sotero did not sign the July 3, 1993 application for insurance; 9 [and]
5.
Respondent was the one .who filed the insurance application, and x x x designated herself as the beneficiary.
The CA sustained the trial court. Applying Section 48 to petitioner's case, the CA held that petitioner may no longer prove that the subject policy was void ab initio or rescindible by reason of fraudulent concealment or misrepresentation after the lapse of more than two years from its issuance. It ratiocinated that petitioner was equipped with ample means to determine, within the first two years of the policy, whether fraud, concealment or misrepresentation was present when the insurance coverage was obtained. If it failed to do so within the statutory two-year period, then the insured must be protected and allowed to claim upon the policy.
For the above reasons, petitioner denied respondent's claim on April 16, 1997 and refunded the premiums paid on the policy. On April 24, 1997, petitioner filed a civil case for rescission and/or annulment of the policy, which was docketed as Civil Case No. 97-867 and assigned to Branch 134 of the Makati Regional Trial Court. The main thesis of the Complaint was that the policy was obtained by fraud, concealment and/or misrepresentation under the Insurance Code, 12 which thus renders it voidable under Article 1390 13 of the Civil Code.
Issue:
WON THE COURT OF APPEALS ERRED IN SUSTAINING THE APPLICATION OF THE INCONTESTABILITY PROVISION IN THE INSURANCE CODE BY THE TRIAL COURT. Ruling:
Respondent filed a Motion to Dismiss 14 claiming that petitioner's cause of action was barred by prescription pursuant to Section 48 of the Insurance Code, which provides as follows: Whenever a right to rescind a contract of insurance is given to the insurer by any provision of this chapter, such right must be exercised previous to the commencement of an action on the contract. After a policy of life insurance made payable on the death of the insured shall have been in force during the lifetime of the insured for a period of two years from the date of its issue or of its last reinstatement, the insurer cannot prove that the policy is void ab initio or is rescindible by reason of the fraudulent concealment or misrepresentation of the insured or his agent. During the proceedings on the Motion to Dismiss, petitioner's investigator testified in court, stating among others that the insurance underwriter who solicited the insurance is a cousin of respondent's husband, Dindo Aban, 15 and that it was the respondent who paid the annual premiums on the policy.
The Court denied the Petition. The Court will not depart from the trial and appellate courts' finding that it was Sotero who obtained the insurance for herself, designating respondent as her beneficiary. Both courts are in accord in this respect, and the Court is loath to disturb this. While petitioner insists that its independent investigation on the claim reveals that it was respondent, posing as Sotero, who obtained the insurance, this claim is no longer feasible in the wake of the courts' finding that it was Sotero who obtained the insurance for herself. This finding of fact binds the Court. The so-called "incontestability clause" precludes the insurer from raising the defenses of false representations or concealment of m aterial facts insofar as health and previous diseases are concerned if the insurance has been in force for at least two years during the insured’s lifetime. The phrase "during the lifetime" found in Section 48 simply means that the policy is no longer considered in force after the insured has died. The key phrase in the second paragraph of Section 48 is "for a period of two years."
Ruling of RTC:
As borne by the records, the policy was issued on August 30. 1993, the insured died on April
10, 1996, and the claim was denied on April 16, 1997. The insurance policy was thus in force for a period of 3 years, 7 months, and 24 days. Considering that the insured died after the two-year period, the plaintiff-appellant is, therefore, barred from proving that the policy is void ab initio by reason of the insured fraudulent concealment or misrepresentation or want of insurable interest on the part of the beneficiary, herein defendant-appellee. The "Incontestability Clause" under Section 48 of the Insurance Code provides that an insurer is given two years – from the effectivity of a life insurance contract and while the insured is
alive – to discover or prove that the policy is void ab initio or is rescindible by reason of the fraudulent concealment or misrepresentation of the insured or his agent. After the two-year period lapses, or when the insured dies within the period, the insurer must make good on the policy, even though the policy was obtained by fraud, concealment, or misrepresentation.
