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CASE 1 Enriquez v. SunLife­ Insurance Policy 41 PHIL 269 Facts: On Sept. 24 1917, Herrer made an application to SunLife through its office in Manila for life annuity. 2 days later, he paid the sum of 6T to the company’s manager in its Manila office and was given a receipt. On Nov. 26, 1917, the head office gave notice of acceptance by cable to Manila. On the same date, the Manila office prepared a letter notifying Herrer that his application has been accepted and this was placed in the ordinary channels of transmission, but as far as known was never actually mailed and never received by Herrer. Herrer died on Dec. 20, 1917. The plaintiff as administrator of Herrer’s estate brought this action to recover the 6T paid by the deceased. Issue: Whether or not the insurance contract was perfected. Held: NO. The contract for life annuity was NOT perfected because it had NOT been proved satisfactorily that the acceptance of the application ever came to the knowledge of the applicant. An acceptance of an over of insurance NOT actually or constructively communicated to the proposer does NOT make a contract of insurance, as the locus poenitentiae is ended when an acceptance has passed beyond the control of the party.

CASE 2 Fortune Insurance and Surety Co., Inc. v. CA GR No. 1114278, May 23, 1995

Facts: On June 29, 1987, Producer’s Bank of the Philippines ’armored vehicle was robbed, in

transit, of seven hundred twenty­five thousand pesos (Php 725,000.00) that it was transferring

from its branch in Pasay to its main branch in Makati. To mitigate their loss, they claim the

amount from their insurer, namely Fortune Insurance and Surety Co.

Fortune Insurance, however, assails that the general exemption clause in the Casualty

Insurance coverage had a general exemption clause, to wit:

GENERAL EXCEPTIONS

The company shall not be liable under this policy in respect of

xxx xxx xxx

(b) any loss caused by any dishonest, fraudulent or criminal act of the insured or any officer,

employee, partner, director, trustee or authorized representative of the Insured whether acting

alone or in conjunction with others. . . .

And, since the driver (Magalong) and security guard (Atiga) of thearmored vehicle were charged

with three others as liable for the robbery, Fortune denies Producer’s Bank of its insurance

claim.

The trial court and the court appeals ruled in favor of recovery,hence, the case at bar.

Issue: Whether recovery is precluded under the general exemption clause.

Held: Yes, recovery is precluded under the general exemption clause.

Howsoever viewed, Producers entrusted the three with the specific duty to safely transfer the

money to its head office, with Alampay to be responsible for its custody in transit; Magalong to

drive thearmored vehicle which would carry the money; and Atiga to provide the needed

security for the money, the vehicle, and his two other companions. In short, for these particular

tasks, the three acted as agents of Producers. A "representative" is defined as one who

represents or stands in the place of another; one who represents others or another in a special

capacity, as an agent, and is interchangeable with "agent." 23

In view of the foregoing, Fortune is exempt from liability under the general exceptions clause of

the insurance policy.

CASE 3 TY VS FIRST NATIONAL SURETY AND ASSURANCE CO. INC. (G.R. NO. L­161138) Facts: Diosdado Ty was employed as operator mechanic foreman in the Broadway Cotton Factory. He insured himself in 18 local insurance companies which issued to him personal accident policies. His beneficiary was his employer Broadway Cotton Factory, which paid the insurance premiums. A fire broke out which totally destroyed the factory and injured the plaintiff on the left hand for which he underwent medical treatment. The physical injuries have caused temporary total disability of the plaintiff’s left hand that prompted him to file notices of accident and claim to recover indemnity under their insurance policy: “Partial Disability – loss of either hand xxx “the loss of a hand shall mean the loss of a hand shall mean loss by amputation through the bones of the wrist.”. The defendants rejected plaintiff’s claim on the contention that there being no severance or amputation of the left hand, the disability suffered by him was not covered by his policy. The plaintiff asserted that it is not necessary that there should be an amputation of his left hand in order for him to recover on the insurance policies and it is sufficient that the injuries prevented him from performing his work or labor necessary in the pursuance of his occupation or business. Issue: Whether Plaintiff Ty may recover on the insurance policies issued to him for the loss of his left hand. Ruling: No. The parties cannot go beyond the clear and express conditions insurance policies, all of which define partial disability as loss of either hand by amputation. There was no amputation in the case at bar. It can be noted that the disability of the plaintiff’s hand was temporary. The insurance policy is the law between the parties and the terms of the policies are clear, express, and specific that only amputation of either hand should be considered as a a loss thereof. An interpretation that would include temporary disability not covered by the policy would be unwarranted.

CASE 4

CASE 5 Cherie Palileo v. Beatriz Cosio GR No. L­7667, November 28, 1955 In 1951, Cherie Palileo obtained a loan of P12,000 from Beatriz Cosio and to secure payment of the same, executed a "conditional sale of residential building" where Palileo conveyed to Cosio a 2­story building but reserved the right to repurchase. Cosio then insured the building against fire with Associated Insurance & Surety Co. for P15,000.00 and the insurance policy was issued in the name of Cosio. The building was partly destroyed by fire and hence, Cosio collected from the insurance company P13,107 as indemnity. Palileo then demanded that she be credited with the necessary amount to pay her obligation out of the insurance proceeds but defendant refused to do so. The trial court later rendered judgment finding that the debt is fully compensated by virtue of the proceeds collected by Cosio and further held that the excess of P1,107 be refunded to Palileo. Issue: Whether the trial court is correct in considering the obligation of Palileo paid Ruling:

No. The rule is that “where a mortgagee, independently of the mortgagor, insures the

mortgaged property in his own name and for his own interest, he is entitled to the insurance proceeds in case of loss, but in such case, he is not allowed to retain his claim against the mortgagor, but is passed by subrogation to the insurer to the extent of the money paid.”

The lower court erred in declaring that the proceeds of the insurance taken out by Cosio on the property insured to the benefit of Palileo and in ordering the former to deliver to the latter, the difference between the indebtedness and the amount of insurance received by Cosio. In the light of this ruling, the correct solution would be that the proceeds of the Insurance be delivered to Cosio, but her claim against Palileo should be considered assigned to the insurance company who is deemed subrogated to the rights of Cosio to the extent of the money paid as indemnity.

CASE 6 Rizal Surety and Insurance Co vs Manila Railroad Co and Manila Port Service Facts: On Nov 29, 1960, a vessel named SS Flying Trader, loaded on board a cargo which is an offset press machine, from Italy to Manila. Upon reaching the port of destination and upon unloading it, it was dropped b the crane which resulted to damages of the machine. The plaintiff as the insurer had paid the consignee, Suter, Inc. the amount of P16.5k for the machine and P180.70 for the International Adjustment Bureau as adjuster’s fee. However, the arrastre charges in this particular shipment was paid on the weight or measurement basis whichever is higher, and not on the value thereof. Issue: Can the insurance get an amount greater than what was declared? RULING: Plaintiff Insurance Company cannot recover from defendants an amount greater than that to which the consignee could lawfully lay claim. The management contract is clear, the amount is limited to P500. If the plaintiff's property has been insured, and he has received indemnity from the insurance company for the injury or loss arising out of the wrong or breach of contract complained of, the insurance company shall be subrogated to the right of the insured against the wrong­doer or the person who has violated the contract. If the amount paid by the insurance company doer not fully cover the injury or loss, the aggrieved party shall be entitled to recover the deficiency from the person causing the loss or injury. The insurance have no greater right than the party in interest thereof.

CASE 7 Filipinas Investment, etc vs Empire Ins. Co

No. 39041­R September 28, 1972 Reyes, L.B., J: Facts: On June 21, 1963, defendant ­ appellant Empire Insurance (EI) insured for Php 7,000 under policy # 1954 (which covers loss, damage, and liability to the public), a car owned by Cesar Ledesma, Inc. (CLI). The policy had a general exceptions clause which provided that EI will not be liable for any loss while the vehicle is being driven by any person other than the insured or any person permitted by him. The car was later sold to Rodrico Samoy on installment basis and Samoy executed a promissory note secured Chattel Mortgage over the car in favor of CLI. With the conformity of Samoy, CLI assigned its rights, interests and title to the promissory note plaintiff­appellee, Filipinas Investment & Finance Corporation (FIFC). Attached to policy # 1954 was an endorsement stating that Samoy is the new owner of the insured vehicle and loss, if any, is now payable to mortgagee­assignee, FIFC. Samoy failed to pay several consecutive installments which led to a replevin case by FIFC against Samoy. To enforce the seizure warrant, the car was being taken into custody by the sheriff. The sheriff parked it near the office of FIFC and left it there for a while to attend another public auction. Upon his return, however, the car was lost. It was thereafter reported stolen. EI now denies claim of FIFC for the loss, the car being used neither by Samoy, nor any authorized person when it got lost. Thus FIFC filed a complaint against EI at the City Court of Manila. The complaint was dismissed, thus an appeal was made by FIFC to the CFI of Manila which reversed the City Court’s decision, hence this appeal before the CA. Issue: Whether Filipinas Investment & Finance Corporation can claim against Empire Insurance against the policy. Ruling: Yes. A mortgagee is a proper party to prosecute an action for loss sustained under an insurance policy where it provides that loss, if any shall be payable to such mortgagee as his interest may appear. Clauses in a car insurance policy limiting the driving of the car by certain persons and the use thereof for specified purposes should not be made to operate when the car is lost while in the possession of a sheriff under a writ of seizure issued by the court, and more so in the absence of a provision that when the insured is not using the car at the time it is lost, the insurer is not liable in respect of the loss.

CASE 8 G.R. No. 14300 January 19, 1920 SAN MIGUEL BREWERY v. LAW UNION AND ROCK INSURANCE, FILIPINAS COMPAÑIA DE SEGUROS, et.al. Key Phrases: Insurable interest of creditor­ mortgagee; change of interest in any part of the thing without the corresponding change in the insurance FACTS San Miguel Brewery, in its interest as a creditor­mortgagee, obtained an insurance policy amounting to P15, 000.00 over the property of D.P. Dunn. The mortgage­ debt amounts only to P4, 505.30. During the life of the policy, D.P. Dunn sold the property to Henry Harding without assigning the policy to the latter. The property was destroyed by fire. ISSUES 1. Up to what extent can San Miguel Brewery collect from the policy? 2. Is Harding entitled to the proceeds of the policy? HELD San Miguel Brewery can collect only to the extent of the mortgage­ debt amounting to P4, 505.30. As a creditor­ mortgagee, San Miguel’s interest over the property is co­extensive to the amount of the mortgage­debt. No. Harding has no cause of action against the insurance companies. He is not a party to the contracts of insurance and cannot directly maintain an action thereon. Section 19 (now 20) of the Insurance Code provides that “xxx…a change of interest in any part of a thing insured unaccompanied by a corresponding change of interest in the insurance, suspends the insurance to an equivalent extent, until the interest in the thing and the interest in the insurance are vested in the same person.”

CASE 9 LINCOLN NATIONAL LIFE V SAN JUAN CA­G.R. NOS. 34586­88­R, MAY 27, 1971 FACTS: Luis Parco secured 5 life insurance policies from Lincoln National Life. He insured a certain Misterioso San Juan. He FALSELY represented in the policies that: (1) Mysterioso was a proprietor and a fish merchant for 10 years; (2) That he had no employer but himself; (3) That his income exceeds P5,000.00 a year; (3) And that he had no pending applications for life insurance. Misterioso was in fact not a merchant, and that he is employed as a tenant of Luis. Also, a number of applications for insurance have been filed by Luis, several of which have been declined. Luis subsequently tries to collect from the policies. Allegedly, Misterioso was killed. A severed human head in an advanced state of decomposition found in a jeepney by its driver apparently left intentionally by 2 unidentified passengers was said to be Misterioso. Lincoln refuses to pay stating that there was false misrepresentations and concealment of material facts made by Misterioso and Luis. ISSUE: W/N Luis can collect on the insurance policies. RULING: No. There is no shred of evidence that Lincoln had previous knowledge of said false misrepresentations when it approved the life insurance. The present action is one for rescission of insurance contracts, and Luis has the burden of proving the defense that Lincoln as the insurer had previous notice of such false misrepresentations and/or concealment of material facts when they approved the applications and issued the life insurance policies. The policies are in effect wagering or highly speculative contacts which are void for reasons of public policy. They lack the element of INSURABLE INTEREST.

CASE 10 PHILIPPINE AMERICAN INSURANCE COMPANY vs. GREGORIO G. PINEDA 175 SCRA 416 FACTS: On Jan. 15 1963, Dimayuga processed an ordinary life insurance policy from Philamlife and designated his wife and children as irrevocable beneficiaries. On Feb. 22, 1980, Dimayuga filed a petition in court to amend the designation of the beneficiaries in his policy from irrevocable to revocable. Lower Court granted the petition. ISSUE: Whether or not the court erred in granting Dimayuga’s petition. RULING: YES. Under the Insurance Act, the beneficiary designated in a life insurance contract cannot be changed without the consent of the beneficiary because he has a vested interest in the policy. The policy contract states that the designation of the beneficiaries is irrevocable. Therefore, based on the said provision of the contract, not to mention the law then applicable, it is only with the consent of all the beneficiaries that any change or amendment in the policy may be legally and validly effected. The contract between the parties is the law binding on them.

CASE 11 suter vs union surety and insurance company inc 51 o.g. 1965

Facts:

Suter, the managing partner of Morcoin Co., insured two juke boxes with Union Surety for P4, 000. Subsequently, the two juke boxes were destroyed by fire. Suter now claims from Union Surety, the latter denying the claims on the grounds that: The properties were allegedly overvalued, it having been proven that the juke boxes cost only P774.00 and Suter had no insurable interest since the properties insured belong to Morcoin Co.

Issues: (1) Whether or not the juke boxes were overvalued.

(2) Whether or not Suter had insurable interest.

Ruling: 1. No. While acquisition cost is only P774.00, this does not include taxes, freight insurance, shipping cost, and other improvements made thereon. The value of the property is determine at the time it was insured and not the time it was acquired.

2.YES, Suter had insurable interest. The test for insurable interest in property is whether or not the insured will benefit in the property’s reservation or continued existence, or suffer a direct pecuniary loss in its destruction. Suter, being the managing partner will clearly benefit in the juke boxes’ preservation and would also be affected by its destruction.

CASE 12 SEAMAN V. ENTERPRISE FIRE & MARINE INS. CO. INSURANCE

Facts: In this case the property was a steam­boat, and the insured was the holder of a portion of the stock, which entitled to three­sixteenths of the corporate property. He took a policy of insurance upon that interest, valued at $4,000. Some question has been raised as to the measure of damages. It has been insisted on the part of the defendant that the corporation may be insolvent; that there may be many debts which must be paid before a stockholder can receive any dividends; and that, therefore, his interest may be nothing. Issue: WON a stockholder has such an interest in the corporate property as will authorize him to take a policy of insurance for the protection of his interest? Ruling: It is not necessary that the party who takes out the policy should have any title to the property insured; it is sufficient if he has such an interest in it as that by its destruction he would suffer pecuniary loss. It is true that the title to the property is in the corporation but the beneficial interest is in the stockholders of the corporation. The stock of a corporation represents its property, and is evidence of the right of the stockholder to receive the profits and increase of the corporate property. It is a very evident that the destruction of the corporate property may entail pecuniary loss upon the stockholder, and therefore that he has a right to insure his interest as such stockholder.

CASE 13 Cha v. CA 277 SCRA 690 (1997) Facts: Petitioner spouses Nilo Cha and Stella Uy­Cha, as lessees, entered into a one­year lease contract with private respondent CKS Development Corporation as lessor. The lease contract provides that the Lessee is not allowed 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. If the Lessee violates such stipulation, the policy is deemed assigned and transferred to the Lessor for his own benefit. Petitioner took out a policy of fire insurance over the merchandise inside the leased premises with United Insurance for P500,000 without the consent of CKS.

On the day the lease contract was to expire, a fire broke out inside the leased premises. CKS, wrote a letter to United asking that the proceeds of the fire insurance be paid directly to CKS. United refused. Hence, the CKS filed a complaint against the spouses Cha and United.

The RTC ruled in favor of CKS. CA affirmed. Issue: WON CKS has insurable interest on the property and thus recover from the insurance policy. Ruling: No. Section 18 of the Insurance Code provides that: “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.”

CKS has no insurable interest in the goods and merchandise inside the leased premises under the provisions of Section 17 of the Insurance Code which provides that “The measure of an insurable interest in property is the extent to which the insured might be damnified by loss or injury thereof.” Therefore, CKS cannot be validly a beneficiary of the fire insurance policy taken by petitioner­spouses. The insurable interest remains with the Cha spouses.

CASE 14 HOFFMAN V. AETNA INS. CO. Facts: The insurance was on the mercantile stock of Dixon Co., a firm in Michigan, consisting of A.H. Dixon and Samuel G. Goss. Shortly afterward the firm was dissolved. Dixon succeeded, by purchase, to the interest of Goss, and continued the business on his own account down to the time of the fire. The action was brought by Wilson, to whom Dixon subsequently assigned the claim. Two defenses were interposed. The first was, that the policy was forfeited by the transfer from one partner to the other, of his interest in the property insured; the other was, that it was forfeited by Dixon's afterwards obtaining a further insurance on the goods, without the written consent of the company; though such a consent was obtained from their local agent in Michigan. The court overruled both defenses, and held that the policy was not forfeited, either by the sale made by the retiring partner, or by the subsequent insurance effected by his successor in interest, with the consent of the Michigan agent. The case was heard in this court, on appeal, in 1856. The counsel for the defendant insisted, as a principal point, that the sale by one partner to the other avoided the policy. The terms of the proviso are, that the policy shall be null and void, "if the said property shall be sold and conveyed." Issue: Whether or not the sale by one partner to the other avoided the policy. Ruling: Reading the proviso as it was read by the parties, it is easy to discern the purpose of its insertion. It was to protect the company from a continuing obligation to the assured, if the title and beneficial interest should pass to others, whom they might not be equally willing to trust. Words should not be taken in their broadest import, when they are equally appropriate in a sense limited to the object the parties had in view. The plaintiffs were parties to the contract made with the defendant. They were conducting the business contemplated by the terms of the policy. The insurance was intended to cover the mercantile stock of which the assured were proprietors, stored, from time to time, in the building in which that business was conducted. There was no substantial change material to the risk, and clearly none within the intent of the proviso. Each member of a partnership firm, as Lord HARDWICKE said, is "seized per my et per tout" of the common stock and effects. This interest of each and all, the policy in question was designed to protect; and its language, fairly construed, is in harmony with this intent. There is no reason why the full measure of agreed indemnity should be withheld from the plaintiffs, who were owners at the date of the insurance, and sole owners at the time of the loss. Judgment is affirmed.

CASE 15 GR No. L­31845 April 30, 1979 GREAT PACIFIC LIFE ASSURANCE COMPANY VS HONORABLE COURT OF APPEALS GR No. L­31878 April 30, 1979 LAPULAPU D. MONDRAGON VS HON. COURT OF APPEALS AND NGO HING FACTS: Ngo Hing filed an application with GREPALIFE for a 20­year endowment policy in the amount of P50,000.000 on the life of his one­year old daughter Helen Go. Ngo Hing supplied the essential data on a form with his own handwriting before Mondragon, the Branch Manager of Grepalife, which the latter then type­wrote. After payment of the insurance premium and issuance of the binding deposit receipt, Mondragon handwrote at the bottom of the back page of the application form his strong recommendation for the strong approval of the insurance application. However, it was disapproved by the Pacific Life on the ground that the plan is not available for minors below seven years old. The non­acceptance of the insurance plan was not communicated to Ngo Hing until then the death of Helen Go of influenza with complication of bronchopneumonia. Thereupon, Ngo Hing sought the payment of the proceeds of the insurance, but having failed in his effort, filed the action for the recovery of the same before the CFI of Cebu, which rendered the adverse decision against Grepalife. Hence, the instant petitions. ISSUES: 1) WON the binding deposit receipt constituted a temporary contract of the life insurance in question? 2) WON Ngo Hing concealed the state of health and physical condition of Helen Go, which rendered void the binding deposit receipt? RULING: 1) The Court ruled in the negative. The binding receipt is manifestly, merely conditional and does not insure outright. 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. 2) The Court held that Ngo Hing had deliberately concealed the state of health and physical condition of his daughter Helen Go. When Ngo Hing supplied the required data for the insurance application form, he was fully aware that his child is a typically a mongoloid child. Such a congenital physical defect should never be disguised. Nonetheless, Ngo Hing, in apparent bad faith, withheld the fact material to the risk to be assumed by the insurance company. Hence, rendered the contract void.

CASE 16 INSULAR LIFE vs. FELICIANO 73 Phil 201

FACTS:

Evaristo Feliciano filed an application with Insular Life upon the solicitation of one of its agents. It appears that during that time, Evaristo was already suffering from tuberculosis. Such fact appeared during the medical exam, but the examiner and the company’s agent ignored it. After that, Evaristo was made to sign an application form and thereafter the blank spaces were filled by the medical examiner and the agent making it appear that Evaristo was a fit subject of insurance. (Evaristo could not read and understand English). When Evaristo died, Insular life refused to pay the proceeds because of concealment.

ISSUE: Whether or not Insular Life was bound by their agent’s acts. HELD: Yes. RULING: The insurance business has grown so vast and lucrative within the past century. Nowadays, even people of modest means enter into insurance contracts. Agents who solicit contracts are paid large commissions on the policies secured by them. They act as general representatives of insurance companies.

IN the case at bar, the true state of health of the insured was concealed by the agents of the insurer. The insurer’s medical examiner approved the application knowing fully well that the applicant was sick. The situation is one in which of two innocent parties must bear a loss for his reliance upon a third person. In this case, it is the one who drafted and accepted the policy and consummated the contract. It seems reasonable that as between the two of them, the one who employed and gave character to the third person as its agent should be the one to bear the loss. Hence, Insular is liable to the beneficiaries.

CASE 17 Insular Life Assurance Co., Ltd. vs Feliciano 74 Phil 468

FACTS:

From the court’s decision rendered in the case of Insular Life Assurance vs Feliciano (1941), Insular Life filed a motion for reconsideration. Insular avers that Feliciano is not entitled to the claim because the insurance policy is void ab initio; that he connived with the insurance agent and the medical examiner; and that at best, Feliciano is only entitled to refund or the reimbursement of what he has paid in premium.

ISSUE: Whether or not Insular Life is correct.

HELD:

Yes. This time, the Supreme Court held that Insular Life’s contention is correct. When Evaristo Feliciano, the applicant for insurance, signed the application in blank and authorized the soliciting agent and/or medical examiner of Insular to write the answers for him, he made them his own agents for that purpose, and he was responsible for their acts in that connection. If they falsified the answers for him, he could not evade the responsibility for the falsification. He was not supposed to sign the application in blank. He knew that the answers to the questions therein contained would be “the basis of the policy,” and for that very reason he was required with his signature to vouch for truth thereof.

CASE 18 ARANILLA V. INSULAR LIFE CA GR No. 374-R, December 22, 1971 Facts: In 1959, Jose Aranilla applied for life insurance with Insular. In his application, these 2 questions appeared: o WON he has suffered from any disease of the kidney and urinary tract, to which he answered NO. oWON he has been confined in a hospital for consultation and treatment, to which he answered that in 1947, he was confined due to influenza. The truth however, was that a few months prior to his application, he was confined and treated for nephritis, a disease of the kidney and urinary tract, and he was accordingly informed of the cause. When Aranilla died of cirrhosis of the liver, Insular refused to pay the proceeds due to concealment. Issue: Whether the contract can be rescinded. Held: Yes. If an answer given by the insured to a specific question asked by the insurer in an application for life insurance turns out to be false, it is a concealment of a material fact which entitles the insurer to rescind, even if the insured died of an ailment which has NO connection with the specific questions falsely answered by him. This is because materiality is to be determined NOT by the event but ONLY 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.

CASE 19 Ng Gan Zee v. Asian Crusader Life ­ Imperfection in the Application Form Facts: > In 1962, Kwon Nam applied for a 20yr endowment insurance on his life with his wife, Ng Gan Zee as the beneficiary. > He stated in his application that he was operated on for tumor of the stomach associated with ulcer. > In 1963, Kwong died of cancer of the liver with metastasis. Asian refused to pay on the ground of alse information. > It was found that prior to his application, Kwong was diagnosed to have peptic ulcers, and that during the operation what was removed from Kwong’s body was actually a portion of the stomach and not tumor. Issue: Whether or not the contract may be rescinded on the ground of the imperfection in the application form.

Held:

NO. Kwong did not have sufficient knowledge as to distinguish between a tumor and a peptic ulcer. His statement therefore was made in good faith. Asian should have made an inquiry as to the illness and operation of Kwong when it appeared on the face of the application that a question appeared to be imperfectly answered. Asian’s failure to inquire constituted a waiver of the imperfection in the answer.

CASE 20 SUNLIFE ASSURANCE COMPANY OF CANADA vs. The Hon. COURT OF APPEALS and Spouses ROLANDO and BERNARDA BACANI FACTS: On April 15, 1986, Robert John B. Bacani procured a life insurance contract for himself from petitioner. He was issued a Policy valued at P100, 000.00, with double indemnity in case of accidental death. The designated beneficiary was his mother, respondent Bernarda Bacani. On June 26, 1987, 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 because the insured did not disclose material facts relevant to the issuance of the policy, thus rendering the contract of insurance voidable. Petitioner claimed that the insured gave false statements in his application. Petitioner discovered those 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. The trial court decided in favor of private respondents by concluding that the facts concealed by the insured were made in good faith and under a belief that they need not be disclosed. The Court of Appeals affirmed the decision of the trial court by saying that the petitioner cannot avoid its obligation by claiming concealment because the cause of death was unrelated to the facts concealed by the insured. ISSUE: Whether or not the insurer is liable to the petitioner. HELD: The Supreme Court reversed the decision of the Court of Appeals by saying that the information which the insured failed to disclose was material and relevant to the approval and issuance of the insurance policy The Court ruled that the petitioner properly exercised its right to rescind the contract of insurance by reason of the concealment employed by the insured. It must be emphasized that rescission was exercised within the two­year contestability period as recognized in Section 48 of The Insurance Code.

CASE 21 Saturnino v. Philamlife ­ False Representation 7 SCRA 316 Facts: 2 months prior to the insurance of the policy, Saturnino was operated on for cancer, involving complete removal of the right breast, including the pectoral muscles and the glands, found in the right armpit. Notwithstanding the fact of her operation, Saturnino did not make a disclosure thereof in her application for insurance.She stated therein that she did not have, nor had she ever had, among others listed in the application, cancer or other tumors; that she had not consulted any physician, undergone any operation or suffered any injury within the preceding 5 years. She also stated that she had never been treated for, nor did she ever have any illness or disease peculiar to her sex, particularly of the breast, ovaries, uterus and menstrual disorders. The application also recited that the declarations of Saturnino constituted a further basis for the issuance of the policy. Issue: Whether or not the insured made such false representation of material facts as to avoid the policy. Held: YES. There can be no dispute that the information given by her in the application for insurance was false, namely, that she never had cancer or tumors or consulted any physician or undergone any operation within the preceding period of 5 years. The question to determine is: Are the facts then falsely represented material? The Insurance Law provides that “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 proposed contract, or making his inquiries.The contention of appellants is that the facts subject of the representation were not material in view of the non­medical nature of the insurance applied for, which does away with the usual requirement of medical examination before the policy is issued. The contention is without merit. If anything, the waiver of medical examination 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. Appellants also contend that there was no fraudulent concealment of the truth inasmuch as the insured herself did not know, since her doctor never told her, that the disease for which she had been operated on was cancer. In the first place, concealment of the fact of the operation itself was fraudulent, as there could not have been any mistake about it, no matter what the ailment.

CASE 22 Henson vs. Philam Life

Facts: Celestino Henson was insured by Philamlife in 1954 upon his application or a 20­yr endowment life policy. In 1955, the policy lapsed due to non­payment of the premiums. Upon payment of the premiums due, the policy was reinstated, but in the application for reinstatement, Henson did not disclose the fact that he had been previously diagnosed for pyelonephritis, enlarged liver and hernia. He also did not disclose that he had been examined by a physician. In 1956, Henson died, and his beneficiaries’ claim was rejected by Philamlife on the ground of concealment. The company then filed for rescission. Beneficiaries’ contend that the intent to conceal must be proven to warrant rescission. Issue: Whether or not there is need to prove intent to conceal to warrant rescission. Held: NO. Sec. 26 provides that “a concealment whether intentional or unintentional entitles the injured party to rescind the contract of insurance”. And aside from this, intent, being a state of the mind is hard to prove. According to Sec. 30 of the Insurance Code: 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. In essence therefore, the insured need not have died of the very diseases he had failed to reveal to the insurance company. It is sufficient that his non­revelation had misled the insurer in forming its estimate of the disadvantages of the proposed policy reinstatement or in making its inquiries, in order to entitle the latter to rescind the contract.

CASE 23 SUNLIFE ASSURANCE COMPANY OF CANADA vs. The Hon. COURT OF APPEALS and Spouses ROLANDO and BERNARDA BACANI FACTS: On April 15, 1986, Robert John B. Bacani procured a life insurance contract for himself from petitioner. He was issued a Policy valued at P100, 000.00, with double indemnity in case of accidental death. The designated beneficiary was his mother, respondent Bernarda Bacani. On June 26, 1987, 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 because the insured did not disclose material facts relevant to the issuance of the policy, thus rendering the contract of insurance voidable. Petitioner claimed that the insured gave false statements in his application. Petitioner discovered those 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. The trial court decided in favor of private respondents by concluding that the facts concealed by the insured were made in good faith and under a belief that they need not be disclosed. The Court of Appeals affirmed the decision of the trial court by saying that the petitioner cannot avoid its obligation by claiming concealment because the cause of death was unrelated to the facts concealed by the insured. ISSUE: Whether or not the insurer is liable to the petitioner. HELD: The Supreme Court reversed the decision of the Court of Appeals by saying that the information which the insured failed to disclose was material and relevant to the approval and issuance of the insurance policy The Court ruled that the petitioner properly exercised its right to rescind the contract of insurance by reason of the concealment employed by the insured. It must be emphasized that rescission was exercised within the two­year contestability period as recognized in Section 48 of The Insurance Code.

CASE24 Domingo E. Leonor vs Filipinas Compana de Seguros CA­G.R No. 3659­R January 10, 1950 Facts: Sometime in January 1946 Federal Films applied to Seguros company to insure their property, worth 65, 000 Php, Cine Marikina for 50,000 Php fire insurance coverage through its agent Efronio De leon . After inspection and appraisal Seguros Company notified, through De Leon, that the company could only insure 30,000Php. Subsequently Federal Films consented , applied and was accepted for 30, 000 fire insurance coverage good for one year. The policy contained a condition (Condition No. 3) that Federal films is mandated to inform of any previous or subsequent insurance that covers Cine Marikina, and furthermore, failure to inform Compana de Seguros would in effect void the Policy. Additionally, the policy contained a Rider stating another condition marked as “other insurance clause” inquiring and requiring the Consent of Seguros company if there will be additional insurance to be taken upon the property and failure to secure consent would also void the Policy. Federal films placed in the rider that it has no other insurance covering Cine Marikina. However , further into the Facts Federal Films, obtained another insurance policy on the same day with Rizal Surety to Cover Cine Marikina for 20,000 Php. That both of the policy were issued on the same day having the same time coverage of one year and that the agent of Compana de Seguros, De Leon was present in the transactions involving the other Rizal Surety. On February of that year Cine Marikina was completely destroyed by fire. Subsequently Federal Films assigned its insurance rights to Domingo E. Leonor. Leonor now is claiming for both of the insurance policies, but Seguros Company denied the claim contending that Condition No. 3 and “other insurance” clause was violated hence the policy is void. Issue: Whether or Not there has been a violation to the conditions of the policy. Held: No. Ruling: 1. Seguros Company had knowledge, through its agent who was present in the transaction of the other insurance by Rizal Surety. Seguros cannot discount the acts of the agent, Any information material to the transaction either possessed by the agent at the time of the transaction or acquired by him before its completion is deemed to be knowledge of the principal, at least so far as the transaction is concerned, even though in fact the knowledge is not communicated to the principal. 2. Rule on Imputed Knowledge: In fire insurance it is a well settled rule that the insurer is estopped to plead as a defense breach of conditions against other insurance without the consent of the company, if it appears that the agent who delivered the policy in question had knowledge of the existence of the other insurance. De Leon, the agent, in this case being present in the transaction of the other insurance by Rizal surety had knowledge of such undertaking.

3. As regards to condition No. 3 there is no violation, as insurance contracts are not strictly construed but liberally in favour of the insured. The main purpose of such a condition is to prevent over insurance, being that the property is worth 65, 000 Php and only insured up to 50,000 Php (both policies) there is no violation of over insurance, together with the fact that Seguros company had knowledge of the other insurance, therefore there is no violation of such condition. CASE 25 25. BUELL v. CONNECTICUT MUT. LIFE INS. CO. Facts: This suit is founded upon a policy of insurance upon the life of Jeptha C. Buell, for the benefit of his wife, the plaintiff. The defendant avers that the answer of Buell in the application were not in all respects true and correctly stated, but was incorrect and untrue in this, the father of said Jeptha C. did not die at the age of 58, but he died before he was of the age of 30 years. Wherefore the defendant says said policy was and is void and of no effect. Issue: WON the age of the father at death is a warranty or representation Ruling: Statements in the application for insurance in the declaration, or answers to the questions are either warranties or representations. If warranties then materiality, or want of materiality as to the risk has nothing to do with the contract. The only question is, were they untrue, and if so the policy is void. But if representations, then to avoid the policy they must be substantially and materially untrue, or made for the purpose of fraud. Where the answers are responsive to direct questions asked by the insurance company, they are to be regarded as warranties, and where they are not so responsive, but volunteered without being called for, they should be construed to be mere representations. In this case the age of the father was not called for, and is only voluntarily given by the plaintiff, thus, it is considered as a mere representation and does not constitute a defense unless it appears to have been material as well as false.

CASE 26 SEGUNDINA MUSÑGI, ET AL., vs. WEST COAST LIFE INSURANCE CO. [G.R. No. L­41794 | August 30, 1935] Facts: The plaintiffs, as beneficiaries, brought suit against the defendant to recover the value of two life insurance policies. Arsenio T. Garcia was insured by the defendant company in the sum of P5, 000. Arsenio T. Garcia was again insured by the defendant company in the sum of P10,000. Subsequently, Arsenio died. Even with the demand made by the plaintiffs to the defendant company to pay the two policies, defendant refused to pay

It is to be noted that in both applications, the insured had to answer inquiries as to his state of health and that of his family, which he did voluntarily. In each of the said applications the following question was asked: "1. What physician or practitioner or any other person not named above have you consulted or been treated by, and for what illness, or ailment? (If none, so state.)" In the first application, the insured answered "None", and in the second, "No". These answers of the insured as well as his other statements contained in his applications were one of the causes or considerations for the issuance of the policies, and they so positively appear therein. After the death of the insured and as a result of the demand made by the beneficiaries upon the defendant to pay the value of the policies, the latter discovered that the aforementioned answers were false and fraudulent, because the truth was that the insured, before answering and signing the applications and before the issuance of the policies, had been treated in the General Hospital by a lady physician for different ailments.

The defendant contends that the two policies did not create any valid obligation because they were fraudulently obtained by the insured. Issue: Whether the two answers given by the insured in his applications are false, and if they were the cause, or one of the causes, which induced the defendant to issue the policies? Ruling: The concealment and the false statements constituted fraud because the defendant by reason thereof accepted the risk which it would otherwise have flatly refused. When not otherwise specially provided for by the Insurance Law, the contract of life insurance is governed by the general rules of the civil law regarding contracts. Article 1261 of the Civil Code provides that there is no contract unless there should be, in addition to consent and a definite object, a consideration for the obligation established. And article 1276 provides that the statement of a false consideration shall render the contract void. The two answers being one of the considerations of the policies, and it appearing that they are false and fraudulent, it is evident that the insurance contracts were null and void and did not give rise to any right to recover their value or amount.

A similar case was already decided by this court in Argente vs. West Coast Life Insurance Co. (51 Phil., 725). In discussing the legal phase of the case, this court said:

One ground for the rescission of a contract of insurance under the Insurance Act is a "concealment", which in section 25 is defined as "A neglect to communicate that which a party knows and ought to communicate".

CASE 27 Tan Chay Heng vs. The West Coast Life Insurance Facts: Tan Chay Heng, as beneficiary of Tan Ceang, filed an action for insurance claim against West Coast on January 4, 1926. On February 27, 1926, defendant made its original Answer consisting of general and specific denial and was amended on August 31, 1926. In such general and specific denial, defendant raises the defense of vitiation of consent through fraud; therefore, it alleges that there was no contract between Tan Ceang and itself to begin with. Tan Chay Heng filed a demurrer to the special defense of defendant contending that according to Section 47 of the Insurance Act, “whenever a right to rescind a contract of insurance is given to the insurer, such right must be exercised previous to the commencement of an action on the contract.” The trial court granted the demurrer and rendered a decision in favor of Tan Chay Heng. Issue: Whether or not Section 47 of the Insurance Act applies in the case at bar Ruling: No. In the instant case, it will be noted that even in its prayer, the defendant does not seek to have the alleged insurance contract rescinded. It denies that it ever made any contract of insurance on the life of Tan Ceang or that any such a contract ever existed, and that is the question which it seeks to have litigated by its special defense. In the very nature of things, if the defendant never made or entered into the contract in question, there is no contract to rescind, and, hence, section 47 upon which the lower court based its decision in sustaining the demurrer does not apply.

CASE 28 EMILIO GONZALES LA O v. THE YEK TONG LIN FIRE AND MARINE INSURANCE CO., LTD. 55 Phil. 386, December 13, 1930 Facts: This case involved an action to recover from defendant, The Yek Tong Lin Fire and Marine Insurance Co., Ltd., the two insurance policies totaling P100,000 upon leaf tobacco. On January 11, 1928, a fire destroyed a building on Soler Street No. 188 damaging the leaf tobacco stored inside. Plaintiff Emilio Gonzales La O, the owner of the leaf tobacco, filed insurance claims against three insurance companies including the P100,000 from defendant. The lower court sentenced the defendant to pay the plaintiff the amount P100,000 and legal interest plus costs. The case reached the Supreme Court where the defendant made several assignments of error which included the plaintiff’s failure to notify the defendant corporation in writing of the other insurance policies thereby violating Article 3 of the condition of the policies in question. Thus, according to the defendant, the policies are null and void. Issue: Whether or not the insurance policies should be rendered null and void for violating Article 3 of the said policies because of the plaintiff failed to notify the defendant company in writing of the other insurance policies. Ruling: No. The defendant’s answer showed that it had knowledge of the existence of other policies obtained by the plaintiff from other insurance companies. By way of special defense, the fact that there exist other policies issued by the companies was mentioned therein. If, with the knowledge of existence of other insurances which the defendant deemed violations of the contract, it has preferred to continue the policy, its action amounts to a waiver of the annulment of the contract, in accordance with the following doctrine in 19 Cyc., 791, 792:.

FAILURE TO ASSERT FORFEITURE — IN GENERAL. — While the weight of authority is that a policy conditioned to become void upon a breach of a warranty is void ipso facto upon such a breach without formal proceedings on the part of the insurer, yet it is true that such conditions are inserted for the benefit of the insurer and may be waived, and that the insurer may elect to continue the policy despite the breach. If it does the policy is revived and restored. Its failure to assert a forfeiture therefore is at least evidence tending to show a waiver thereof. Many authorities go further, however, and hold that the failure to assert a forfeiture after knowledge of a ground thereof will amount of itself to waiver.

The following clause has been inserted with a typewriter in the policies: "Subject to clauses G and A and other insurances with a special short period attached to this policy." And attached to said policies issued by the defendant there is a sheet of "Other insurances" with the amount and the assurance companies in blank, which, according to the plaintiff, constitutes a notification that there were other insurances existing at the time. Furthermore, the appellant cannot invoke the violation of article 3 of the conditions of the insurance policies for the first time on appeal, having failed to do so in its answer; besides, as the appellee correctly contends in his brief, Guillermo Cu Unjieng, who was then president and majority shareholder of the defendant company, the Yek Tong Lin Fire & Marine Insurance Co., knew that there were other insurances.

CASE 29 Pacific v CA G.R. No. L­41014 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 co­insurances 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 non­declaration of co­insurances 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 co­insurance 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 co­insurances 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 co­insurances, 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 "Co­Insurances Declared" and "Other

Insurance Clause" are materially different from the actual number of co­insurances 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 insuranceon account of the alleged violation committed by the insured.

It is obvious that petitioner has missed all together the import of subject mortgage clause which

specifically provides:

“Loss, if any, under this policy, shall be payable to the PACIFIC BANKING CORPORATION

Manila mortgagee/trustor as its interest may appear, it being hereby understood and agreed that

this insurance as to the interest of the mortgagee/trustor only herein, shall not be invalidated by

any act or neglect—except fraud or misrepresentation, or arson—of the mortgagor or

owner/trustee of the property insured; provided, that in case the mortgagor or owner/ trustee

neglects or refuses to pay any premium, the mortgagee/ trustor shall, on demand pay the

same.”

The paragraph clearly states the exceptions to the general rule that insurance as to the interest

of the mortgagee, cannot be invalidated; namely: fraud, or misrepresentation or arson.

Concealment of the aforecited co­insurances 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 impliedconsent 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.

Twenty­four days after the fire did petitioner merely wrote letters to private respondent to serve

as a notice of loss. It didn’t even furnish other documents. Instead, petitioner shifted upon

private respondent the burden of fishing out the necessary information to ascertain the particular

account of the articles destroyed by fire as well as the amount of loss. Since the required claim

by insured, together with the preliminary submittal of relevant documents had not been complied

with, it follows that private respondent could not be deemed to have finally rejected petitioner's

claim and therefore there was no cause of action.

It appearing that insured has violated or failed to perform the conditions under No. 3 and 11 of

the contract, and such violation or want of performance has not been waived by the insurer, the

insured cannot recover, much less the herein petitioner.

CASE 30 EMILIO TAN vs. COURT OF APPEALS G.R. No. 48049, 29 June 1989 FACTS: Tan Lee Siong, father of herein petitioners, applied for life insurance in the amount of P80,000.00 with respondent company Philippine American Life Insurance Company. Said application was approved and a corresponding policy was issued effective November 5, 1973, with petitioners as the beneficiaries. On April 26, 1975, Tan Lee Siong died of hepatoma. Hence, petitioners filed with respondent company their claim for the proceeds of the life insurance policy. However, the insurance company denied the said claim and rescinded the policy by reason of the alleged misrepresentation and concealment of material facts made by the deceased Tan Lee Siong in his application for insurance. The premiums paid on the policy were thereupon refunded. The petitioners contend that the respondent company no longer had the right to rescind the contract of insurance as rescission must allegedly be done during the lifetime of the insured within two years and prior to the commencement of action. ISSUE: Whether or not the insurance company has the right to rescind the contract of insurance despite the presence of an incontestability clause HELD: YES. The so­called “incontestability clause” precludes the insurer from raising the defenses of false representations or concealment of material 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 of the Insurance Law 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”. The policy was issued on November 6, 1973 and the insured died on April 26, 1975. The policy was thus in force for a period of only one year and five months. Considering that the insured died before the two­year period has lapsed, respondent company is not, therefore, barred from proving that the policy is void ab initio by reason of the insured’s fraudulent concealment or misrepresentation. Moreover, respondent company rescinded the contract of insurance and refunded the premiums paid on November 11, 1975, previous to the commencement of this action on November 27, 1975. WHEREFORE, the petition is hereby DENIED for lack of merit. The questioned decision of the Court of Appeals is AFFIRMED.

CASE 31 Tang v. CA 90 SCRA 236,May 25, 1979

FACTS:Lee Su Guat, 61 years old, was a widow. She was illiterate and spoke only Chinese. On September 25, 1965, she applied for life insurance for P60,000.00 with Philamlife. The application was in two parts, both in English language.

The second part dealt with her state of health. Her answers having shown that she was healthy, Philamlife issued her a policy which is effective on October 23, 1965 with her nephew Vicente Tang as beneficiary.

On November 15, 1965, Lee again applied for additional insurance of her life for P40,000. 00. Since it was only recent from the time she first applied, no further medical exam was made but she accomplished Part 1 (which certified the truthfulness of statements made in Part. 2)

The policy was again approved. On April, 20 1966, Lee Su Guat died of Lung cancer.

Tang claimed the amount of P100,000.00 but Philamlife refused to pay on the ground that the insured was guilty of concealment and misrepresentation.

Both the trial court and the CA ruled that Lee was guilty of concealment. There is no doubt that she deliberately concealed material facts about her physical condition and history.

However, Tang’s position is that Lee was illiterate and spoke only Chinese and the application for insurance was in English so she could not be held guilty of concealment of her health history. Furthermore, the insurer has not proven that the terms thereof had been fully explained to her as provided by Art. 1332 of CC. The said article provides :

When one of the parties is unable to read, or if the contract is in a language not understood by him, and mistake/fraud is alleged, the person enforcing the contract must show that the terms of thereof have been fully explained to the former.

ISSUE: Whether or not Art. 1332 of CC is applicable to this case

RULING: No, Art. 1332 is NOT applicable here. The insurance company is NOT seeking to enforce the contract; on the contrary, it is seeking to avoid its performance.

It is petitioner who is seeking to enforce it, even as fraud or mistake is NOT alleged. Accordingly, Philamlife was under no obligation to prove that the terms of the insurance contract were fully explained to the other party. Even if we were to say that the insurer is the one seeking the performance of the contracts by avoiding paying the claim, it has to be noted as above stated that there has been NO imputation of mistake of fraud by the illiterate insured whose personality is represented by her beneficiary. In sum, Art. 1332 is inapplicable, and considering the findings of both the trial court and the CA as to the Concealment of Lee, the SC affirms their decisions.

CASE 32 Insurance Case Digest: Bonifacio Bros., Inc. V. Mora (1967) FACTS: Enrique Mora, owner of Oldsmobile sedan model 1956, mortgaged it to H.S. Reyes, Inc., with the condition that they would be the beneficiary of its insurance. On June 23, 1959, the sedan was insured with State Bonding & Insurance Co., Inc. During the period of effectivity, the sedan met an accident and it was appraised by Bayne Adjustment Co. and repaired it with Bonifacio Bros. and the parts were supplied by Ayala Auto Parts Co. This was all done without the knowledge of H.S. Reyes. Enrique was billed P2,102.73 through Bayne. The insurance company drew a check deducting P100 for franchise and entrusted it to Bayne payable to Enrique or H.S. Reyes. Still unpaid, the sedan was delivered to Enrique without the Knowledge of H.S. Reyes. Bonifacio Bros and Ayala Auto filed in the MTC on the theory that the insuranceproceeds should be paid directly to them. CFI affirmed MTC: H.S. Reyes, Inc. as having a better right ISSUE: W/N there is privity between Bonifacio Bro and Ayala Auto against the insurance company HELD: NO. Judgment affirmed. General rule is that contracts take effect only between the parties thereto. However, the exceptions are some specific instances provided by law where the contract contains some stipulation in favor of a third person ­ stipulation pour autrui. Provision in favor of a third person not a party to the contract. The third person is allowed to avail himself of a benefit granted to him by the terms of the contract, provided that the contracting parties have clearly and deliberately conferred a favor upon such person. Stipulation pour autrui must be clearly expressed ­ none here. "Loss payable" clause of the insurance policy stipulates that "Loss, if any, is payable to H.S. Reyes, Inc." indicating that it was only the H.S. Reyes, Inc. which they intended to benefit. Stipulation merely establishes the procedure that the insured has to follow in order to be entitled to indemnity for repair. A policy of insurance is a distinct and independent contract between the insured and insurer, and third persons have no right either in a court of equity, or in acourt of law, to the proceeds of it, unless there be some contract of trust, expressed or implied between the insured and third person. "Loss" in insurance law embraces injury or damage. The injury or damage sustained by the insured in consequence of the happening of one or more of the accidents or misfortune against which the insurer, in consideration of the premium, has undertaken to indemnify the insured

CASE 33 Guingon vs Del Monte FACTS: Julio Aguilar owned and operated several jeepneys. He entered into a contract with the Capital Insurance & Surety Co., Inc. insuring the operation of his jeepneys against accidents with third­party liability. Iluminado del Monte, one of the drivers of the jeepneys operated by Aguilar, bumped with the jeepney abovementioned one Gervacio Guingon who had just alighted from another jeepney and as a consequence the latter died some days thereafter. The heirs of Gervacio Guingon filed an action for damages praying that the sum of P82,771.80 be paid to them jointly and severally by the defendants, driver Iluminado delMonte, owner and operator Julio Aguilar, and the Capital Insurance & Surety Co., Inc. for failure to answer the complaint, Del Monte and Aguilar were declared in default. Capital Insurance & Surety Co., Inc. answered, alleging that the plaintiff has no cause of action against it. Capital Insurance & Surety Co. contends that the "no action" clause in the policy closes the avenue to any third party which may be injured in an accident wherein the jeepney of the insured might have been the cause of the injury of third persons, alleging the freedom of contracts. Issue: WON the heirs of Guingon have a cause of action against Capital Insurance RULING: Yes. Clearly, therefore, it is one for indemnity against liability; from the fact then that the insured is liable to the third person; such third person is entitled to sue the insurer. The right of the person injured to sue the insurer of the party at fault (insured), depends on whether the contract of insurance is intended to benefit third persons also or only the insured. And the test applied has been this: Where the contract provides for indemnity against liability to third persons, then third persons to whom the insured is liable, can sue the insurer. The policy requires, as afore­stated, that suit and final judgment be first obtained against the insured; that only "thereafter" can the person injured recover on the policy; it expressly disallows suing the insurer as a co­defendant of the insured in a suit to determine the latter's liability. The "no action" clause in the policy of insurance cannot prevail over the Rules of Court provision aimed at avoiding multiplicity of suits. Similarly, in the instant suit, Sec. 5 of Rule 2 on "Joinder of causes of action" and Sec. 6 of Rule 3 on "Permissive joinder of parties" cannot be superseded, at least with respect to third persons not a party to the contract, as herein, by a "no action" clause in the contract of insurance.

CASE 34 G.R. No. L­23276 November 29, 1968 MELECIO COQUIA, MARIA ESPANUEVA and MANILA YELLOW TAXICAB CO., INC., plaintiffs­appellees, vs. FIELDMEN'S INSURANCE CO., INC., defendant­appellant. FACTS: On December 1, 1961, appellant Company issued, in favor of the Manila Yellow Taxicab Co., Inc. — the Insured — a common carrier accident insurance policy, covering the period from December 1, 1961 to December 1, 1962. While the policy was in force, or on February 10, 1962, a taxicab of the Insured, driven by Carlito Coquia, met a vehicular accident, in consequence of which Carlito died. The Insured filed therefor a claim for P5,000.00 to which the Company replied with an offer to pay P2,000.00, by way of compromise. The Insured rejected the same and made a counter­offer for P4,000.00, but the Company did not accept it. Hence, on September 18, 1962, the Insured and Carlito's parents, namely, Melecio Coquia and Maria Espanueva filed a complaint against the Company to collect the proceeds of the policy. The trial court rendered a decision sentencing the Company to pay P4,000.00. Hence, this appeal by the Company. ISSUE: Whether the parents of Carlito Coquia has cause of action against the Company. RULING: Yes.It should be noted that, although, in general, only parties to a contract may bring an action based thereon, this rule is subject to exceptions, if a contract should contain some stipulation pour autrui. The enforcement of which may be demanded by a third party for whose benefit it was made, although not a party to the contract, before the stipulation in his favor has been revoked by the contracting parties. Pursuant to the contract, the Company will indemnify any authorized Driver who is driving the Motor Vehicle of the Insured and, in the event of death of said driver, the Company shall, likewise, indemnify his personal representatives. In fact, the Company may, at its option, make indemnity payable directly to the claimants or heirs. Thus, the policy under consideration is typical of contracts pour autrui, this character being made more manifest by the fact that the deceased driver paid fifty percent (50%) of the corresponding premiums, which were deducted from his weekly commissions. Under these conditions, it is clear that the parents of Carlito Coquia —the sole heirs of the deceased — have a direct cause of action against the Company.

CASE 35 PAULO ANG and SALLY C. ANG vs. FULTON FIRE INSURANCE CO., ET AL., G.R. No. L­15862 July 31, 1961 FACTS: On September 9, 1953, Fulton issued a Fire policy in favor of P. & S Department Store (Sally C. Ang) over stocks of general merchandise, which were contained in a building occupied by the Sps. at Laoag, Ilocos Norte. The premium is P500.00 annually. The insurance was issued for one year, but the same was renewed for another year on September 31, 1954. 3 months after, the store containing the goods insured was destroyed by fire. The Sps. then first claim was denied on April 6, 1956. It should also be noted that on January 13, 1955, Paulo Ang and 10 others were charged for arson but was acquitted. Fulton alleged that the loss by the fire was not accidental and was occasioned by the willful act of the plaintiff Paulo Ang himself. It claims that under paragraph 13 of the policy, if the loss or damage is occasioned by the willful act of the insured, or if the claim is made and rejected but no action is commenced within 12months after such rejection, all benefits under the policy would be forfeited, and that since the claim of the plaintiffs was denied and plaintiffs received notice of denial on April 18, 1956, and they brought the action only on May 5, 1958, all the benefits under the policy have been forfeited. Issue: WON the filing of the previous suit tolled or suspended the running of the prescriptive period Held: The condition contained in the insurance policy that claims must be presented within one year after rejection is not merely a procedural requirement. The condition is an important matter, essential to a prompt settlement of claims against insurance companies. It is in the nature of a condition precedent to the liability of the insurer, or in other terms, a resolutory cause, the purpose of which is to terminate all liabilities in case the action is not filed by the insured within the period stipulated. The bringing of the action against the Paramount Surety & Insurance Company, the agent of the defendant Company cannot have any legal effect except that of notifying the agent of the claim. Beyond such notification, the filing of the action can serve no other purpose. There is no law giving any effect to such action upon the principal. Besides, there is no condition in the policy that the action must be filed against the agent, and this Court cannot by interpretation, extend the clear scope of the agreement beyond what is agreed upon by the parties.

CASE 36

Summit Guaranty and Insurance Company v. Hon. Jose C. De Guzman, in his capacity as presiding judge of Branch 3, CFI Tarlac, Geronima Pulmano and Ariel Pulmano Facts:

This is a consolidated case involving three cases wherein different insurance claims were filed against the petitioner Summit. In all claims, the petitioner merely gave an assurance that it will pay but it never took any steps to settle said claims. This prompted the respondents to file a complaint in court which the petitioner moved to dismiss on the ground of prescription. The petitioner contends that the law prscribes a six­month period for filing a notice of claim and a one­year period for bringing an action, both of which must concur. It is therefore submitted that even if a notice of claim was timely filed as in these cases, the action or suit that follows, if filed beyond the one­year period must be dismissed for prescription. Issue:

Whether the action has already prescribed. Ruling:

No, it has not yet prescribed and the petition must be dismissed. The court once laid down the rule that the one­year requirement after rejection of the claim is not merely a procedural requirement but an important matter essential to the prompt settlement of claims against insurance companies, as it demands that insurance suits be brought by the insured while evidence as to the cause and origin of destruction have not yet disappeared.

The aforementioned principle, however, has no application in this case because there was no rejection of the claims in these cases. The one­year period shouls be counted from the date of rejection by the insurer as this is the time when the cause of action accrues. In this case, the respondents were merely made to believe that the claims will be settled. Therefore, the petition is dismissed.

CASE 37 MAYER STEEL PIPE CORP. vs CA FACTS: Petitioner Hongkong Government Supplies Department (Hongkong) contracted petitioner Mayer Steel Pipe Corporation (Mayer) to manufacture and supply various steel pipes and fittings. Prior to the shipping, petitioner Mayer insured the pipes and fittings against all risks with private respondents South Sea Surety and Insurance Co., Inc. (South Sea) and Charter Insurance Corp. (Charter). When the goods reached Hongkong, it was discovered that a substantial portion thereof was damaged. Petitioners filed a claim against private respondents for indemnity under the insurance contract. Respondent Charter paid petitioner Hongkong the amount of HK$64,904.75. Petitioners demanded payment of the balance of HK$299,345.30 representing the cost of repair of the damaged pipes. Private respondents refused to pay because the insurance surveyor's report allegedly showed that the damage is a factory defect. Petitioners filed an action against private respondents. The trial court ruled in favor of petitioners. It found that the damage to the goods is not due to manufacturing defects. It also noted that the insurance contracts executed by petitioner Mayer and private respondents are "all risks" policies which insure against all causes of conceivable loss or damage. CA affirmed the findings of the trial court but set aside its decision and dismissed the complaint on the ground of prescription. ISSUE: WON petitioner's right of action has prescribed RULING: NO. Under Section 3(6) of the Carriage of Goods by Sea Act, only the carrier's liability is extinguished if no suit is brought within one year. But the liability of the insurer is not extinguished because the insurer's liability is based not on the contract of carriage but on the contract of insurance. Carriage of Goods by Sea Act does not affect the relationship between the shipper and the insurer. The latter case is governed by the Insurance Code. The ruling in the Filipino Merchants case cited by respondents should apply only to suits against the carrier filed either by the shipper, the consignee or the insurer. When the court said in Filipino Merchants that Section 3(6) of the Carriage of Goods by Sea Act applies to the insurer, it meant that the insurer, like the shipper, may no longer file a claim against the carrier beyond the one­year period provided in the law. But it does not mean that the shipper may no longer file a claim against the insurer because the basis of the insurer's liability is the insurance contract. When private respondents issued the "all risks" policies to petitioner Mayer, they bound themselves to indemnify the latter in case of loss or damage to the goods insured. Such obligation prescribes in ten years, in accordance with Article 1144 of the New Civil Code.

CASE 38 MALAYAN INSURANCE CO. INC v. CRUZ ARNALDO 154 SCRA 672 Facts: On June 7, 1981 Malayan Insurance Co. Inc. (MICO) issued a Fire Insurance Policy to Coronacion Pinca over her property in the amount of P100,000.00 effective July 22, 1981 to July 22, 1982. On October 15, 1981, MICO cancelled the said policy for Pinca’s failure to pay the premium. But on December 24, 1981 Pinca made payment to Domingo Adora, a MICO agent, which was received and accepted by him. This payment, together with other payments received by him, was remitted to MICO on January 15, 1982. 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 the returned payment. Insurance Commission ruled in favor of Pinca. (Although, this petition was denied by the Supreme Court for having filed beyond the reglementary period, it also ruled on the merit of the case.) Issue: Whether or not MICO is liable to indemnify Pinca. Ruling: Yes. MICO cannot deny the claim as payment was received by Domingo Adora, MICO’s agent even if it was done 6 months later. MICO acknowledged that Adora is one of their agents. The receipt of such payment by Adora suggests an understanding between MICO and the insured that such payment could be made later. Reliance of the petitioner of Sec.77 of the Insurance Code will not hold water as there was actually payment made. It is a well­known principle in agency that payment to its authorized agent is payment to the principal. Had the payment was not accepted by reason of cancellation, Pinca was willing to apply for a new policy. MICO was not able to prove that indeed there was due notice of cancellation to the insured, as required under Sec. 64 of the Insurance Code. The witness presented by the petitioner only pointed out that it was mailed “through the mailing section”. No other proof was shown. Pinca flatly denied receipt of such notice. MICO has the burden of proof that indeed prior notice was sent and received by the insured as requirement of the law. In this case, there is an obvious design to evade or at least delay the discharge of just obligation through efforts bordering on bad faith if not plain duplicity. The fact that Pinca’s payment was remitted by its agent to MICO on January 15, 1982, MICO only sought to return said payment on February 5, 1982 after learning the occurrence of the loss insured against.

CASE 39Young­vs.­Midland­Textile­Insurance­Company.docx G.R. No. L­9370 March 31, 1915 K. S. YOUNG, plaintiff­appellee, vs. THE MIDLAND TEXTILE INSURANCE COMPANY, defendant­appellant Facts: The plaintiff owns a candy and fruit store in the city of Manila. He occupied a building as a residence and bodega (storehouse). On May 1912, he entered into a contract of insurance with the defendant by the terms of which the latter, upon certain conditions, promised to pay the plaintiff the sum of P3,000 in case said residence and bodega and contends should be destroyed by fire. “Warranty B” in the contract of insurance provides that they agreed that no hazardous goods stored or kept for sale and no hazardous trade or process be carried on in the building to which the insurance applies or in any building connected therewith. On February 1913, the plaintiff placed in said residence and bodega three boxes which were filled with fireworks. Such fireworks was given by the former owner of the Candy Store to use it in the celebration for Chinese new year but the authorities of the city of Manila prohibited the use of fireworks on the said occasion. On March, 1913, said residence and bodega and the contents thereof were partially destroyed by fire. Both of the parties agree that said fireworks come within the phrase “hazardous goods” mentioned in “warranty B” of the policy. The fireworks were found in a part of the building not destroyed by the fire and that they in no way contributed to the fire or to the loss occasioned thereby. The plaintiff filed a case to recover the sum of P3,000 upon the insurance company. The lower court rendered a judgment in favor of the plaintiff stating that “Warranty B” in the insurance contract provides that “no hazardous goods be stored” in the building insured. Both of the parties agreed that if there were “hazardous goods” and if they were “stored,” then the act of the plaintiff was a violation of the terms of the contract of insurance and the defendant was justified in repudiating its liability thereunder. Nearly all cases decided by lower courts are cases where the article was being put to some reasonable and actual use which might easily have been permitted by the terms of the policy, and within the intention of the parties, are exempted from the operation of the warranty, like the present. Said decisions are upon cases like: 1. Where merchants have had or kept the “hazardous” articles in small quantities, and for

actual daily use, for safe, such as gasoline, gunpowder, etc.; 2. Where such articles have been brought on the premises for actual use thereon, and in small quantities, such as oil, paints, etc.; and 3. Where such articles or goods were used for lightning purpose, and in small quantities. The word “store” is defined as a deposit in a store or warehouse for preservation or safekeeping. It does not include a deposit in a store, in small quantities for daily use. “Daily use” precludes the idea of a deposit for preservation or safe keeping, as well as a deposit for future consumption or safe keeping. The lower court contends that no claim is made that the “hazardous goods” were placed in the bodega for present or daily use. It is admitted that they were placed in the bodega “for future use” or for future consumption or for safekeeping. From this judgment, the defendant appealed to the Supreme Court. Issue: Whether or not the placing of the said fireworks in the building insured is a violation of the terms of the contract of insurance, especially of “warranty B” which provides that no hazardous goods be stored. Ruling: Contract of insurance are contracts of indemnity upon the terms and conditions specified in the policy. The parties have a right to impose such reasonable conditions at the time of the making of the contract as they may deem wise and necessary. The rate of the premium is measured by the character of the risk assumed. The terms of the policy constitute the measure of the insurer’s liability, and in order to recover the insured, he must show himself within those terms, and if it appears that the contract has been terminated in violation, on the part of the insured, of its condition, then there can be no right of recovery. The compliance of the insured with the terms of the contract is a condition precedent to the right of recovery. The violation of the terms of the contract, by virtue of the provisions of the policy itself, terminated, at the election of either party, the contractual relations. The plaintiff plaid a premium based upon the risk at the time the policy was issued. Certainly, it cannot be denied that the placing of the fireworks in the building insured increased the risk. An increase of the risk which is substantial and which is continued for a considerable period of time, is a direct and certain injury to the insurer, and changes the basis upon which the contract of the insurance rests.

Therefore, the judgment of the lower court is revoked and the defendant is relieved from responsibility.

CASE 40

CASE 41 Makati Tuscany Condominium Corporation vs. Court of Appeals [GR 95546, 6 November 1992] Facts: Sometime in early 1982, American Home Assurance Co. (AHAC) issued in favor of Makati Tuscany Condominium Corporation (Tuscany) Insurance Policy on the latter's building and premises, for a period beginning March 1, 1982 and ending March 1, 1983, with a total premium of 466,103.05. The initial insurance contract entered into in 1982 was renewed in 1983, then in 1984. On 20 January 1984, on the renewed policy, Tuscany made two installment payments, both accepted by AHAC, the first on 6 February 1984 for P52,000.00 and the second, on 6 June 1984 for P100,000.00. Thereafter, Tuscany refused to pay the balance of the premium. AHAC filed an action to recover the unpaid balance of P314,103.05. In its counterclaim, Tuscany explained that it discontinued the payment of premiums because the policy did not contain a credit clause in its favor and the receipts for the installment payments covering the policy for 1984­85, as well as the two (2) previous policies, stated the following reservations: (2) Acceptance of this payment shall not waive any of the company rights to deny liability on any claim under the policy arising before such payments or after the expiration of the credit clause of the policy; and (3) Subject to no loss prior to premium payment. If there be any loss such is not covered. Tuscany claimed that the policy was never binding and valid, and no risk attached to the policy. It then pleaded a counterclaim for P152,000.00 for the premiums already paid for 1984­85, sought the refund of 924,206.10 representing the premium payments for 1982­85. The trial court dismissed the complaint and the counterclaim. The Court of Appeals rendered a decision modifying that of the trial court by ordering Tuscany to pay the balance of the premium. Issue: Whether payment by installment of the premiums due on an insurance policy invalidates the contract of insurance. Ruling: NO. The subject policies are valid even if the premiums were paid on installments. The records show that Tuscany and AHAC intended the insurance policies to be binding and effective notwithstanding the staggered payment of the premiums. In those 3 years, the insurer accepted all the installment payments. Such acceptance of payments signified the insurer's intention to honor the policies issued. Thus, while the import of Section 77 is that prepayment of premiums is strictly required as a condition to the validity of the contract, the Court was not prepared to rule that the request to make installment payments duly approved by the insurer, would prevent the entire contract of insurance from going into effect despite payment and acceptance of the initial premium or first installment. Section 78 of the Insurance Code in effect allows waiver by the insurer of the condition of prepayment by making an acknowledgment in the insurance policy of receipt of premium as conclusive evidence of payment so far as to make the policy binding despite the fact that premium is actually unpaid. Section 77 merely precludes the parties from stipulating that the policy is valid even if premiums are not paid, but does not expressly prohibit an agreement granting credit extension, and such an agreement is not

contrary to morals, good customs, public order or public policy. So is an understanding to allow insured to pay premiums in installments not so proscribed. Tuscany may not be allowed to renege on its obligation to pay the balance of the premium after the expiration of the whole term of the third in March 1985. Moreover, where the risk is entire and the contract is indivisible, the insured is not entitled to a refund of the premiums paid if the insurer was exposed to the risk insured for any period, however brief or momentary.

CASE 42 Philippine Pryce Assurance Corp. v. CA G.R. No. 107062 February 21, 1994

FACTS: Gegroco, Inc filed for a collection of the issued surety bond for P500K and P1M by

Interworld Assurance Corporation (now Philippine Pryce Assurance Corporation) in behalf of its

principal Sagum General Merchandise. RTC favored Gegroco, Inc; CAaffirmed the ruling of

RTC.Interworld: checks issued by its principal which were supposed to pay for thepremiums

bounced and it was not yet authorized by the Insurance Commissionto issue surety bonds.

ISSUE: W/N Interworld Assurance Corp. should be liable for the surety bond that it issued as payment for the premium

HELD: YES.

Interworld did not and never attempted to pay the requisite docket fee and was not present during the scheduled pre­trial so it is as if third­party complaint was never filed

Sec. 177. The surety is entitled to payment of the premium as soon as the contract of suretyship or bond is perfected and delivered to the obligor. No contract of suretyship or bonding shall be valid and binding unless and until the premium therefor has been paid, except where the obligee has accepted the bond, in which case the bond becomes valid and enforceable irrespective of whether or not the premium has been paid by the obligor to the surety

Interworld's defense that it did not have authority to issue a Surety Bond when it did is an admission of fraud committed against Gegroco. No person can claim benefit from the wrong he himself committed. A representation made is rendered conclusive upon the person making it and cannot be denied or disproved as against the person relying thereon.

CASE 43 G.R. No. L­4197 March 20, 1952 FIDELA SALES DE GONZAGA v. CROWN LIFE INSURANCE COMPANY Key phrases: Non­payment of premiums by reason of war; Insurer (an enemy corporation) however maintained secret offices to collect premiums from policy holders FACTS On September 26, 1939, Ramon Gonzaga obtained a 20­year endowment policy from Crown Life Insurance of Canada for P15, 000.00. Gonzaga paid in due time the agreed annual premium for 3 consecutive years. However, the payments were stopped on account of the outbreak of war (WWII). Insurer however maintained clandestine offices during the whole duration of the war. Gonzaga died on June 27, 1947. Surviving spouse now wants to claim from the policy. ISSUE Can the surviving spouse claim the proceeds of the policy? HELD No. Non­payment of premiums by reason of war puts an end to the contract of insurance. Time is material and of the essence of the contract. Non­payment at the day involves absoute forfeiture if such be the terms of the contract. Courts cannot with safety vary the stipulation of the parties by introducing equities for the relief of the insured against their own negligence. Where the offices of the insurer, being an enemy corporation, were ordered closed by the Japanese, but were opened clandestinely for the purposes of collecting the premiums from policy holders, the failure of insurer to advise the insured of the new address did not work as a forfeiture of its right to have the premiums satisfied promptly.

CASE 44 Insurance Case Digest: Philippine Phoenix Surety & Insurance Co. V. Woodworks Inc (1979) FACTS: On July 21, 1960, Woodworks, Inc. was issued a fire policy for its building machinery and equipment by Philippine Phoenix Surety & Insurance Co. for P500K covering July 21, 1960 to July 21, 1961. Woodworks did not pay the premium totalling to P10,593.36. It was alleged that Woodworks notified Philippine Phoenix the cancellation of the Policy so Philippine Phoenix credited P3,110.25 for the unexpired period of 94 days and demanded in writing the payment of P7,483.11. Woodworks refused stating that it need not pay premium "because the Insurer did not stand liable for any indemnity during the period the premiums were not paid." Philippine Phoenix filed with the CFI to recover its earned premium of P7,483.11. CFI: favored Philippine Phoenix ISSUE: W/N there was a valid insurance contract despite no premium payment was paid RULING: NO. Reversed Policy provides for pre­payment of premium. To constitute an extension of credit there must be a clear and express agreement therefore and there must be acceptance of the extension­ there is none in the case at bar. Since the premium had not been paid, the policy must be deemed to have lapsed. Failure to make a payment of a premium or assessment at the time provided for, the policy shall become void or forfeited, or the obligation of the insurer shall cease, or words to like effect, because the contract so prescribes and because such a stipulation is a material and essential part of the contract. This is true, for instance, in the case of life, health and accident, fire and hail insurance policies Explicit in the Policy itself is plaintiff's agreement to indemnify defendant for loss by fire only "after payment of premium" Compliance by the insured with the terms of the contract is a condition precedent to the right of recovery. The burden is on an insured to keep a policy in force by the payment of premiums, rather than on the insurer to exert every effort to prevent the insured from allowing a policy to elapse through a failure to make premium payments.

CASE 45 FLOREA ET AL. V. IOWA STATE INS. CO FACTS: The policy was issued by defendant to one Elliott, insuring the property described therein against loss by fire or windstorm. Among the several clauses of the policy was the provision that the entire policy should be void if the interest of the insured be other than an unconditional and sole ownership; or if the building therein described should be or become vacant or unoccupied, and so remain for ten days. Thereafter the property was sold by Elliott to one Klote by whom it was in turn conveyed by general warranty deed to plaintiff Florea. The building was totally destroyed by fire. Florea has sued as the insured and owner of the property described in the petition at the time of the loss, Two defenses were interposed and relied upon by defendant in its answer, the first of which was that the policy was void, in that Florea, before the loss was sustained, had executed a contract of purchase and sale with one Murphy. The second defense was that the property became and remained vacant and unoccupied for more than ten days prior to the fire, on account of which fact the policy became null and void. ISSUE: W/N Florea can claim from the insurance policy. RULING: Yes. On the first defense, such contract with Murphy was not completed. Plaintiffs' evidence showed that the contract was subsequently abandoned by mutual consent. On the second defense, if the words used are of doubtful meaning, or if an ambiguity exists which is fairly susceptible of different interpretations, then that construction will be adopted which is most favorable to the policyholder. The house was not vacant within the meaning of the policy, for the evidence shows that a substantial portion of the tenant's household goods were yet in it at the time of the fire, and were destroyed along with it.

CASE 46 GR NO 81025 APRIL 3, 1990 PAN MALAYAN INSURANCE CORPORATION, petitioner v CA, Erlinda Fabie and her unknown driver, respondents Facts: Petitioner PANMALAY was an insurer of the car of CANLUBANG AUTOMOTIVE RESOURCE CORP. which was hit and suffered damages in the amount of P42,052 by the private respondent throught its negligent driver. Petitioner PANAMALAY paid the amount of insurance and subrogated on the rights of CANLUBANG against the driver of the pick­up and his employer, Erlinda Fabie. Thereafter, petitioner repeatedly demanded payment from the private respondent who failed and refused to pay the claim of the petitioner. Thus, PANMALAY filed a complaint for damages with RTC of Makati against private respondents Erlinda Fabie and her driver. Private respondent filed a motion to dismiss arguing that payment under the “own damage” clause of the insurance policy precluded subrogation under Art 2207 of the Civil code, since indemnification thereunder was made on the assumption that there was no wrongdoer or no third party at fault. The RTC dismissed the complaint as well as the motion for reconsideration. On appeal, the CA upheld the ruling of the trial court. Thus the matter was appealed to the SC. Issue: WON the petitioner is allowed to recover the amount of insurance it had paid to the insured Ruling: Petitioner is correct. Art 2207 of the Civil Code is founded on the well­settled principle of subrogation. If the insured property is destroyed or damaged through the fault or negligence of a party other than the assured, then the insurer, upon payment to the assured, will be subrogated to the rights of the assured to recover from the wrongdoer to the extent that the insurer has been obligated to pay. Payment by the insurer to the assured operates as an equitable assignment to the former of all remedies which the latter may have against the third party whose negligence or wrongful act caused the loss. The right of subrogation is not dependent upon, nor does it grow out of any privity of contract or upon written assignment of claim. It accrues simply upon payment of the insurance claim by the insurer. In conlusion, it must be reiterated that PANMALAY as subrogee merely prays that it be allowed to institute an action to recover from third parties who allegedly caused damage to the insured vehicle, the amount which it had paid its assured under the insurance policy. Respondent Court of Appeals therefore committed reversible error in sustaining the lower court’s order which dismissed PANMALAY’s complaint. Petition is granted. Case is remanded to the lower court for trial on the merits.

CASE 47 Vda. de Gabriel vs. Court of Appeals [GR 103883, 14 November 1996] Facts: Marcelino Gabriel, the insured, was employed by Emerald Construction & Development Corporation (ECDC) at its construction project in Iraq. He was covered by a personal accident insurance in the amount of P100,000.00 under a group policy procured from Fortune Insurance & Surety Company Inc. by ECDC for its overseas workers. The insured risk was for "bodily injury caused by violent accidental external and visible means which injury would solely and independently of any other cause" result in death or disability. On 22 May 1982, within the life of the policy, Gabriel died in Iraq. A year later, or on 12 July 1983, ECDC reported Gabriel's death to Fortune by telephone. Among the documents thereafter submitted to Fortune were a copy of the death certificate 5 issued by the Ministry of Health of the Republic of Iraq — which stated "REASON OF DEATH: UNDER EXAMINATION NOW — NOT YET KNOWN " and an autopsy report of the (NBI) to the effect that "due to advanced state of postmortem decomposition, cause of death could not be determined." on 22 September 1983, Fortune ultimately denied the claim of ECDC on the ground of prescription. Vda. De Gabriel went to the RTC of Manila. In her complaint against ECDC and Fortune, she averred that her husband died of electrocution while in the performance of his work and prayed for the recovery of P100,000.00 for insurance indemnification . Fortune filed its answer, which was not verified, admitting the genuineness and due execution of the insurance policy; it alleged, however, that since both the death certificate issued by the Iraqi Ministry of Health and the autopsy report of the NBI failed to disclose the cause of Gabriel's death, it denied liability under the policy. In addition, Fortune raised the defense of "prescription," invoking Section 384 10 of the Insurance Code. Issue [1]: Whether prescription was properly invoked by Fortune in this case. Held [1]: YES. On the issue of "prescription," Fortune correctly invoked Section 384 of the Insurance Code which provides that "Any person having any claim upon the policy issued pursuant to this chapter shall, without any unnecessary delay, present to the insurance company concerned a written notice of claim setting forth the nature, extent and duration of the injuries sustained as certified by a duly licensed physician. Notice of claim must be filed within six months from date of the accident, otherwise, the claim shall be deemed waived. Action or suit for recovery of damage due to loss or injury must be brought, in proper cases, with the Commissioner or the Courts within one year from denial of the claim, otherwise, the claimant's right of action shall prescribe." The notice of death was given to Fortune, concededly, more than a year after the death of Vda. de Gabriel's husband. Fortune, in invoking prescription, was not referring to the one­year period from the denial of the claim within which to file an action against an insurer but obviously to the written notice of claim that had to be submitted within six

months from the time of the accident. Issue [2]: Whether Vda. De Gabriel is required to present proof that the insured’s demise was from an accidental death, unlike in ordinary life insurance where the insured's death, regardless of the cause thereof, would normally be compensable. Held [2]: YES. The insurance policy expressly provided that to be compensable, the injury or death should be caused by "violent accidental external and visible means." In attempting to prove the cause of her husband's death, all that Vda. de Gabriel could submit were a letter sent to her by her husband's co­worker, stating that Gabriel died when he tried to haul water out of a tank while its submerged motor was still functioning, and Vda. de Gabriel's sinumpaang salaysay which merely confirmed the receipt and stated contents of the letter. The said affidavit however suffers from procedural infirmity as it was not even testified to or identified by the affiant (Vda. De Gabriel) herself. This self­serving affidavit therefore is a mere hearsay under the rules. Not one of the other documents submitted, to wit, the POEA decision, dated 06 June 1984, the death certificate issued by the Ministry of Health of Iraq and the NBI autopsy report, could give any probative value to Vda. de Gabriel's claim. The POEA decision did not make any categorical holding on the specific cause of Gabriel's death. Neither did the death certificate issued by the health authorities in Iraq nor the NBI autopsy report provide any clue on the cause of death. All that appeared to be clear was the fact of Gabriel's demise on 22 May 1982 in Iraq. Evidence, in fine, is utterly wanting to establish that the insured suffered from an accidental death, the risk covered by the policy. In an accident insurance, the insured "s beneficiary has the burden of proof in demonstrating that the cause of death is due to the covered peril. Once the fact is established, the burden then shifts to the insurer to show any excepted peril that may have been stipulated by the parties. An "accident insurance" is not thus to be likened to an ordinary life insurance where the insured's death, regardless of the cause thereof, would normally be compensable. The latter is akin in property insurance to an "all risk" coverage where the insured, on the aspect of burden of proof, has merely to show the condition of the property insured when the policy attaches and the fact of loss or damage during the period of the policy and where, thereafter, the burden would be on the insurer to show any "excluded peril." When, however, the insured risk is specified, it lies with the claimant of the insurance proceeds to initially prove that the loss is caused by the covered peril.

CASE 48 Fireman’s Fund Insurance and Firestone Tire and Rubber Co vs. Jamilla & Co. and First Quezon City Insurance Facts: Jamilla (or the Veterans Philippine Scouts Security Agency) contracted to supply security guards to Firestone. First Quezon City Insurance guaranteed Jamilla’s performance through a P20,000 bond. Properties of Firestone valued at P11,925 were subsequently lost allegedly due to acts of its employee in connivance with Jamilla’s security guard. Fireman’s Fund, as insurer, paid Firestone indemnity for the loss and filed an action for collection against Jamilla and First Quezon. The lower court dismissed the action on the ground that Jamilla did not consented to the subrogation of Fireman in the stead of Firestone. Issue/s: Whether or not Fireman’s Fund is subrogated to the rights of Firestone Ruling: Yes. The trial court erred in applying to this case the rules on novation. The subrogation claimed was not based on novation by change of creditors as contemplated in articles 1291 and 1300 to 1303 of the Civil Code (which requires consent) but rather on article 2207. Thus, when the insurance company pays for the loss, such payment operates as an equitable assignment to the insurer of the property and all remedies which the insured may have for the recovery thereof.

CASE 49 Insurance Case Digest: Saura Import & Export Co., Inc. V. Philippine International Surety Co., Inc. (1963) FACTS: Saura Import & Export Co Inc., mortgaged to the Phil. National Bank, a parcel of land. The mortgage was amended to guarantee an increased amount, bringing the total mortgaged debt to P37,000. On the land mortgage is a building owned by Saura Import & Export Co Inc. which was insured with Philippine International Surety (Insurer) even before the mortgage contract so it was required to endorse to mortgagee PNB. On October 15, 1954: Barely 13 days after the issuance of the fire insurance policy, the insurer cancelled it. Notice of the cancellation was given to PNB (mortgagee). But Saura (insured) was not informed. On April 6, 1955: The building and all its contents worth P40,685.69 were burned so Saura filed a claim with the Insurer and mortgagee Bank. The RTC dismissed the case. ISSUE: W/N Philippine International Surety should be held liable for the claim because notice to only the mortgagee is not substantial. HELD: YES. Appealed from is hereby reversed. Philippine International Surety Co., Inc., to pay Saura Import & Export Co., Inc., P29,000. It was the primary duty of Philippine International Surety to notify the insured, but it did not.If a mortgage or lien exists against the property insured, and the policy contains a clause stating that loss, if any, shall be payable to such mortgagee or the holder of such lien as interest may appear, notice of cancellation to the mortgagee or lien holder alone is ineffective as a cancellation of the policy to the owner of the property. Liability attached principally the insurance company, for its failure to give notice of the cancellation of the policy to Saura.

CASE 50 MANILA MAHOGANY MANUFACTURING CORPORATION VS. COURT OF APPEALS AND ZENITH INSURANCE CORPORATION (G.R. NO. L­52756) Facts: Petitioner Manila Mahogany Manufacturing Corporation insured its Mercedes Benz 4­door sedan with respondent Zenith Insurance Corporation. The insured vehicle was bumped and damaged by a truck owned by San Miguel Corporation. For the damage caused, respondent company paid petitioner 5,000 pesos in amicable settlement. Petitioner’s general manager executed a release claim, subrogating respondent company to all its right to action against San Miguel Corporation. Thereafter, respondent company wrote Insurance Adjusters, Inc. top demand reimbursement from San Miguel Corporation of the amount it had paid the petitioner. Insurance Adjusters, Inc. refused reimbursement, alleging that San Miguel Corporation had already paid petitioner 4,500 pesos for damages to petitioner’s motor vehicle, as evidenced by a cash voucher and Release of Claim executed by the General Manager of petitioner discharging San Miguel Corporation from “all actions, claims, demands, and rights of action that now exist or thereafter develop arising out of or as a consequence of the accident.” Respondent insurance company thus demanded from petitioner reimbursement of the sum of 4,500 paid by San Miguel Corporation. Petitioner refused; hence the instance case. Issue: Whether the respondent insurance company is subrogated to the rights of the petitioner against San Miguel Corporation. Ruling: Yes. The Supreme Court held that if a property is insured and the owner and the owner receives indemnity from the insurer, it is provided in article 2207 of the New Civil Code that the insurer is deemed subrogated to the rights of the insured against the wrongdoer and if the amount paid by the insurer does not fully cover the loss, then the aggrieved party is the one entitled to recover the deficiency. Under this legal provision, the real party in interest with regard to the portion of the indemnity paid is the insurer and not the insured. Hence the petitioner is entitled to keep the sum of 4,500 pesos paid by San Miguel Corporation under its clear right to file a deficiency claim for the damages incurred, against the wrongdoer, should the insurance company not fully pay for the

injury caused. However, when the petitioner released San Miguel Corporation from any liability, petitioner’s right to retain the sum of 5,000 pesos no longer exist thereby entitling private respondent to recover the same. The right of subrogation can only exist after the insurer has paid the insured otherwise the insured will be deprived of his right to indemnity. If the insurance proceeds are not sufficient to cover the damages suffered by the insured, then he may sue the party responsible for the damage for the remainder. To the extent of the amount already received from, the insurer enjoys the right of subrogation. Since the insurer can be subrogated to only such right as the insured may have, should the insured, after receiving payment from the insurer, release the wrongdoer who caused the loss, the insurer loses his rights against the latter. But in such a case, the insurer will be entitled to recover from the insured whatever it has paid to the latter, unless the release was made with the consent of the insurer. CASE 51 PIONEER INSURANCE CORPORATION VS. YAP 61 SCRA 426 (G.R. NO. L­36232) DECEMBER 19, 1974 J. Fernandez: FACTS: Respondent Oliva Yap owns a store in a two­story building located in Manila. On April 19, 1962, respondent Yap took out a fire policy from Pioneer Insurance for ₱25,000.00 covering her stocks, officer furniture, fixtures and fittings of every kind and description among the conditions in the policy was: “The insured shall give notice to the company of any insurance or 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 be stated in or indorsed on this policy by or on behalf of the company before the

occurrence of any loss or damage, all benefits under this policy shall be forfeited.” At the time of the insurance, an insurance for ₱ 20,000.00 issued by the Great American Insurance Company covering the same properties was noted on said policy as co­insurance. On September 26, 1962, Yap took out another Fire Policy for ₱20,000.00 covering the same properties, from the Federal Insurance Company, Inc. which new policy was however procured without notice to and without the written consent of Pioneer Ins. and therefore, was not noted as a co­insurance in Policy No. 4219. On December 19, 1962, a fire broke out in the building housing Yap’s above­mentioned store, and the said store was burned. Yap filed an insurance claim, but the same was denied on the ground of “breach and/or violative of any/or all terms and conditions of Policy No. 4219. ISSUE: Whether or not petitioner should be absolved from liability on the policy. HELD: By the plain terms of the policy, other insurance without the consent of petitioner would ipso facto avoid the contract. It required no affirmative act of election on the part of the company to make operative the clause avoiding the contract, wherever the specified conditions should occur. Its obligations ceased, unless, being informed of the fact, it consented to the additional insurance. The obvious purpose of the aforesaid requirement in the policy is to prevent over­insurance and thus avert the perpetration of fraud. The public, as well as the insurer, is

interested in preventing the situation in which a fire would be profitable to the insured.

CASE 52 Pacific Banking Corporation vs. CA & Oriental Assurance Corporation GR. No. L­41014, November 28,1988

FACTS:

An open Fire Policy issued to Paramount Shirt Manufacturing for Php61,000 on the following: stocks, materils, supplies, furniture, fixture, machinery, equipment contained on the 1st to 3rd floors. Insurance is for a year starting October 21,1964.

Paramount Shirt is a debtor of Pacific Banking amounting to Php800,000. Goods in policy were held in trust by Paramount for Pacific under thrust receipts. Fire broke out on January 4, 1964.

Pacific sent letter of demand to Oriental. Insurance Adjuster of Oriental notified Pacific to submit proof of loss pursuant to Policy Condition 11. Pacific did not accede but asked Insurance Adjuster to verify records form Bureau of Customs.

Pacific filed for sum of money against Oriental. Oriental alleged that Pacific prematurely filed a suit, for neither filing a formal claim over loss pursuant to policy nor submitting any proof of loss.

Trial court rule in favor of Pacific. The defense of lack of proof of loss and defects were raised for the 1st time. On presentation of evidences by Pacific, it was revealed there was violation of Condition No.3, there were undeclared co­insurances under same property –Wellington, Empire, Asian. The only declared co­insurances were Malayan, South Sea, and Victory.

The CA reversed RTC's decision. Concealment of other co­insurances is a misrepresentation and can easily be fraud.

ISSUES: (1) Whether or not unrevealed co­insurances is a violation of Policy Condition No.3 (2) Whether or not there was premature filing of action

RULING: (1) Yes. Policy Condition 3 provides that the insured must give notice of any insurance already in effect or subsequently be in effect covering same property being insured. Failure to do so, the policy shall be forfeited.

It is not disputed that the insured failed to reveal before the loss three other insurances. As found by the Court of Appeals, by reason of said unrevealed insurances, the insured had been guilty of a false declaration; a clear misrepresentation and a vital one because where the insured had been asked to reveal but did not, that was deception. Otherwise stated, had the

insurer known that there were many co­insurances, it could have hesitated or plainly desisted from entering into such contract. Hence, the insured was guilty of clear fraud.

Representations of facts are the foundations of the contract and if the foundation does not exist, the superstructure does not arise. Falsehood in such representations shows that no contract has ever existed. Pacific itself provided for the evidences in trial court that proved existence of misrepresentation. A void or inexistent contract is one which has no force and effect from the very beginning, as if it had never been entered into, and which cannot be validated either by time or by ratification.

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.

(2) Yes. Policy Condition 11 is a sine qua non requirement for maintaining action. It requires that documents necessary to prove and estimate the loss should be included with notice of loss. Pacific failed to submit formal claim of loss with supporting documents but shifted the burden to the insurance company. Failing to submit claim is failure for insurance company to reject claim. Thus, a lack of cause of action to file suit.

Furthermore, the mortgage clause in the policy specifically provides that the policy is invalidated by reasons of FRAUD, MISREPRESENTATION and FRAUD. Concealment can easily be fraud or misrepresentation.

The insured – PARAMOUNT is not entitled to proceeds. More so, Pacific as indorsee of policy. Both will not receive the proceeds

CASE 53

CASE 54 LA RAZON SOCIAL "GO TIAOCO Y HERMANOS" vs. UNION INSURANCE SOCIETY OF CANTON LTD. 40 Phil 40 FACTS: A cargo of rice belonging to the Go Tiaoco Brothers was transported in the early days of May, 1915, on the steamship Hondagua from the port of Saigon to Cebu. On discharging the rice from one of the compartments in the after hold, upon arrival at Cebu, it was discovered that 1,473 sacks had been damaged by sea water. The loss so resulting to the owners of rice, after proper deduction had been made for the portion saved, was P3,875. The policy of insurance, covering the shipment, was signed upon a form long in use among companies engaged in maritime insurance. It purports to insure the cargo from the following among other risks: "Perils . . . of the seas, men, of war, fire, enemies, pirates, rovers, thieves, .jettisons, . . . barratry of the master and mariners, and of all other perils, losses, and misfortunes that have or shall come to the hurt, detriment, or damage of the said goods and merchandise or any part thereof." It was found out that the drain pipe which served as a discharge from the water closet passed down through the compartment where the rice in question was stowed and thence out to sea through the wall of the compartment, which was a part of the wall of the ship. The joint or elbow where the pipe changed its direction was of cast iron; and in course of time it had become corroded and abraded until a longitudinal opening had appeared in the pipe about one inch in length. This hole had been in existence before the voyage was begun, and an attempt had been made to repair it by filling with cement and bolting over it a strip of iron. The effect of loading the boat was to submerge the vent, or orifice, of the pipe until it was about 18 inches or 2 feet below the level of the sea. As a consequence the sea water rose in the pipe. Navigation under these conditions resulted in the washing out of the cement­filling from the action of the sea water, thus permitting the continued flow of the salt water into the compartment of rice. An action on a policy of marine insurance issued by the Union Insurance Society of Canton, Ltd., upon the cargo of rice belonging to the Go Tiaoco Brothers was filed. The trial court found that the inflow of the sea water during the voyage was due to a defect in one of the drain pipes of the ship and concluded that the loss was not covered by the policy of insurance. Judgment was accordingly entered in favor of Union Insurance and Go Tiaoco Brothers appealed. ISSUE [1]: Whether perils of the sea includes “entrance of water into the ship’s hold through a defective pipe.” HELD [1]: NO. It is determined that the words "all other perils, losses, and misfortunes" are to be interpreted as covering risks which are of like kind (ejusdem generis) with the particular risks which are enumerated in the preceding part of the same clause of the contract. According to the ordinary rules of construction these words must be interpreted with reference to the words which immediately precede them. They were no doubt inserted in order to prevent disputes founded on nice distinctions. Their office is to cover in terms whatever may be within the spirit of the

cases previously enumerated, and so they have a greater or less effect as a narrower or broader view is taken of those cases. For example, if the expression "perils of the seas" is given its widest sense the general words have little or no effect as applied to that case. If on the other hand that expression is to receive a limited construction and loss by perils of the seas is to be confined to loss ex marine tempestatis discrimine, the general words become most important. But still, when they first became the subject of judicial construction, they have always been held or assumed to be restricted to cases "akin to" or "resembling" or "of the same kind as" those specially mentioned. I see no reason for departing from this settled rule. In marine insurance it is above all things necessary to abide by settled rules and to avoid anything like novel refinements or a new departure. It must be considered to be settled, furthermore, that a loss which, in the ordinary course of events, results from the natural and inevitable action of the sea, from the ordinary wear and tear of the ship, or from the negligent failure of the ship's owner to provide the vessel with proper equipment to convey the cargo under ordinary conditions, is not a peril of the sea. Such a loss is rather due to what has been aptly called the "peril of the ship." The insurer undertakes to insure against perils of the sea and similar perils, not against perils of the ship. There must, in order to make the insurer liable, be "some casualty, something which could not be foreseen as one of the necessary incidents of the adventure. The purpose of the policy is to secure an indemnity against accidents which may happen, not against events which must happen." Herein, the entrance of the sea water into the ship's hold through the defective pipe already described was not due to any accident which happened during the voyage, but to the failure of the ship's owner properly to repair a defect of the existence of which he was apprised. The loss was therefore more analogous to that which directly results from simple unseaworthiness than to that which results from perils of the sea. ISSUE [2]: Whether there is an implied warranty on the seaworthy of the vessel in every marine insurance contract. HELD [2]: YES. It is universally accepted that in every contract of insurance upon anything which is the subject of marine insurance, a warranty is implied that the ship shall be seaworthy at the time of the inception of the voyage. This rule is accepted in our own Insurance Law (Act No. 2427, sec. 106). It is also well settled that a ship which is seaworthy for the purpose of insurance upon the ship may yet be unseaworthy for the purpose of insurance upon the cargo (Act No. 2427, sec. 106).

CASE 55 Cathay Insurance company vs ca 151 scra 710 Facts: A complaint was filed by Remington Industrial Sales Corporation against Cathay Insurance Co. seeking collection of the sum of P868,339.15 representing Remington's losses and damages incurred in a shipment of seamless steel pipes under an insurance contract in favor of Remington as the insured, consignee or importer of aforesaid merchandise. Remington claims implied coverage from the phrase "perils of the sea" the rusting of the seamless steel pipes. Issue: Whether the rusting of steel pipes in the course of a voyage is a "peril of the sea," and whether rusting is a risk insured against. Held: Yes. There is no question that the rusting of steel pipes in the course of a voyage is a "peril of the sea" in view of the toll on the cargo of wind, water, and salt conditions. At any rate if the insurer cannot be held accountable therefor, the Court would fail to observe a cardinal rule in the interpretation of contracts, namely, that any ambiguity therein should be construed against the maker/issuer/drafter thereof, namely, the insurer. Besides the precise purpose of insuring cargo during a voyage would be rendered fruitless.

CASE 56 Roque v. Intermediate Appellate Court G.R. No. L­66935 Nov. 11, 1985 Justice Gutierrez, Jr. Facts: Isabela Roque (Roque of Isabela Roque Timber Enterprises) hired the Manila Bay Lighterage Corp. (Manila Bay) to load and carry its logs from Palawan to North Harbor, Manila. The logs were insured with Pioneer Insurance and Surety Corp. (Pioneer). The logs never reached Manila due to certain circumstances (as alleged by Roque and found by the appellate court), such as the fact that the barge was not seaworthy that it developed a leak, that one of the hatches were left open causing water to enter, and the absence of the necessary cover of tarpaulin causing more water to enter the barge. When Roque demanded payment from Pioneer, but the latter refused on the ground that its liability depended upon the “Total Loss by Total Loss of Vessel Only.” The trial court ruled in favor of Roque in the civil complaint filed by the latter against Pioneer, but the decision was reversed by the appellate court. Issue: WON in cases of marine insurance, there is a warranty of seaworthiness by the cargo owner; WON the loss of the cargo was due to perils of the sea, not perils of the ship. Held: Yes, there is. The liability of the insurance company is governed by law. Section 113 of the Insurance Code

provides that “In every marine insurance upon a ship or freight, or freightage, or upon anything which is the subject

of marine insurance, a warranty is implied that the ship is seaworthy.” Hence,there can be no mistaking the fact that

the term "cargo" can be the subject of marine insurance and that once it is so made, the implied warranty of

seaworthiness immediately attaches to whoever is insuring the cargo whether he be the shipowner or not. Moreover,

the fact that the unseaworthiness of the ship was unknown to the insured is immaterial in ordinary marine insurance

and may not be used by him as a defense in order to recover on the marine insurance policy.

As to the second issue, by applying Sec. 113 of the Insurance Code, there is no doubt that the term 'perils of

the sea' extends only to losses caused by sea damage, or by the violence of the elements, and does not embrace all

losses happening at sea; it is said to include only such losses as are of extraordinary nature, or arise from some

overwhelming power, which cannot be guarded against by the ordinary exertion of human skill and prudence. t is also

the general rule that everything which happens thru the inherent vice of the thing, or by the act of the owners,

master or shipper, shall not be reputed a peril, if not otherwise borne in the policy. It must be considered to be

settled, furthermore, that a loss which, in the ordinary course of events, results from the natural and inevitable action

of the sea, from the ordinary wear and tear of the ship, or from the negligent failure of the ship's owner to provide

the vessel with proper equipment to convey the cargo under ordinary conditions, is not a peril of the sea. Such a loss

is rather due to what has been aptly called the "peril of the ship." The insurer undertakes to insure against perils of

the sea and similar perils, not against perils of the ship. Neither barratry can be used as a ground by Roque.Barratry

as defined in American Insurance Law is "any willful misconduct on the part of master or crew in pursuance of some

unlawful or fraudulent purpose without the consent of the owners, and to the prejudice of the owner's interest."

Barratry necessarily requires a willful and intentional act in its commission. No honest error of judgment or mere

negligence, unless criminally gross, can be barratry. In the case at bar, there is no finding that the loss was occasioned

by the willful or fraudulent acts of the vessel's crew. There was only simple negligence or lack of skill.

CASE 57 Filipino Merchants Insurance Co. Inc. vs. Court of Appeals [GR 85141, 28 November 1989] Facts: In December 1976, Choa Tiek Seng insured said shipment with Filipino Merchants Insurance Company (FMICI) for the sum of P267,653.59 for the goods described as 600 metric tons of fishmeal in new gunny bags of 90 kilos each from Bangkok, Thailand to Manila against all risks under warehouse to warehouse terms. Actually, what was imported was 59.940 metric tons not 600 tons at $395.42 a ton CNF Manila. The fishmeal in 666 new gunny bags were unloaded from the ship on 11 December 1976 at Manila unto the arrastre contractor E. Razon, Inc. and FMICI's surveyor ascertained and certified that in such discharge 105 bags were in bad order condition as jointly surveyed by the ship's agent and the arrastre contractor. The cargo was also surveyed by the arrastre contractor before delivery of the cargo to the consignee and the condition of the cargo on such delivery was reflected in E. Razon's Bad Order Certificates covering a total of 227 bags in bad order condition. FMICI's surveyor has conducted a final and detailed survey of the cargo in the warehouse for which he prepared a survey report with the findings on the extent of shortage or loss on the bad order bags totalling 227 bags amounting to 12,148 kilos. An action was brought by the consignee against FMICI seeking to recover the amount of P51,568.62 representing damages to said shipment. FMICI brought a third party complaint against third party defendants Compagnie Maritime Des Chargeurs Reunis and/or E. Razon, Inc. seeking judgment against the third party defendants in case judgment is rendered against FMICI. The court rendered judgment in favor of Choa, ordering FMICI to pay; and, on the third party complaint, the third party defendants are ordered to pay FMICI jointly and severally reimbursement of the amounts paid by FMICI. On appeal, the Court of Appeals affirmed the decision of the lower court. Issue: [1] Whether an "all risks" marine policy has a technical meaning in insurance in that before a claim can be compensable it is essential that there must be "some fortuity," "casualty" or "accidental cause" to which the alleged loss is attributable. [2] Whether the failure of Choa to adduce evidence, showing that the alleged loss to the cargo in question was due to a fortuitous event, precludes his right to recover from the insurance policy. [3] Whether the insurer is liable. [4] Whether the consignee has an insurable interest in said goods. Ruling: [1]: NO. The "all risks clause" of the Institute Cargo Clauses read as follows "5. This insurance is against all risks of logs or damage to the subject­matter insured but shall in no case be deemed to extend to cover loss, damage, or expense proximately caused by delay or inherent vice or nature of the subject­matter insured. Claims recoverable hereunder shall be payable irrespective of percentage." An "all risks policy" should be read literally as meaning all risks whatsoever and covering all losses by an accidental cause of any kind. The terms "accident" and "accidental", as used in insurance contracts, are construed by the courts in their ordinary and common acceptance. The terms have been taken to mean that which happens by chance or fortuitously, without intention and design, and which is unexpected, unusual and unforeseen. The nature of the term "all risks" must be given a broad and comprehensive

meaning as covering any loss other than a willful and fraudulent act of the insured. The term "all risks" means to the effect that it extends to all damages/losses suffered by the insured cargo except (a) loss or damage or expense approximately caused by delay, and (b) loss or damage or expense proximately caused by the inherent vice or nature of the subject matter insured. [2]: NO. The insured under an "all risks insurance policy" has the initial burden of proving that the cargo was in good condition when the policy attached and that the goods he transported have been lost, destroyed or deteriorated; thereafter, the burden is shifted to the insurer to prove that the loss was due to excepted perils. The basic rule is that the insurance company has the burden of proving that the loss is caused by the risks excepted and for want of such proof, the company is liable. Coverage under an "all risks" provision of a marine insurance policy creates a special type of insurance which extends coverage to risks not usually contemplated and avoids putting upon the insured the burden of establishing that the loss was due to the peril falling within the policy's coverage; the insurer can avoid coverage upon demonstrating that a specific provision expressly excludes the loss from coverage. [3]: Yes. There being no showing that the loss was caused by any of the excepted perils, the insurer is liable under the policy. There is no evidence presented to show that the condition of the gunny bags in which the fishmeal was packed was such that they could not hold their contents in the course of the necessary transit, much less any evidence that the bags of cargo had burst as the result of the weakness of the bags themselves. Had there been such a showing that spillage would have been a certainty, there may have been good reason to plead that there was no risk covered by the policy. Under an “all risks” policy, it was sufficient to show that there was damage occasioned by some accidental cause of any kind, and there is no necessity to point to any particular cause. [4]: Yes. Choa has insurable interest in said goods. Section 13 of the Insurance Code defines insurable interest in property as every interest in property, whether real or personal, or any relation thereto, or liability in respect thereof, of such nature that a contemplated peril might directly damnify the insured. In principle, anyone has an insurable interest in property who derives a benefit from its existence or would suffer loss from its destruction whether he has or has not any title in, or lien upon or possession of the property. Insurable interest in property may consist in (a) an existing interest; (b) an inchoate interest founded on an existing interest; or (c) an expectancy, coupled with an existing interest in that out of which the expectancy arises. A vendee/consignee of the goods in transit has such existing interest because his interest over the goods is based on the perfected contract of sale even without delivery. The sale vests in the vendee an equitable title, an existing interest over the goods sufficient to be the subject of insurance. The Court has ruled that the delivery of the goods on board the carrying vessels partake of the nature of actual delivery since, from that time, the foreign buyers assumed the risks of loss of the goods and paid the insurance premium covering them.

CASE 58 Choa Tiek Seng v. Hon. Court of Appeals, Filipino Merchants' Insurance Company, Inc., Ben Lines Container Ltd., and E. Razon Inc. Facts:

On Nov. 4, 1976, the petitioner imported some lactose crystals from Holland amounting to 600 bags, the goods were loaded the vessel MS Benalder as the mother vessel, and thereafter aboard the Wesser Broker V­25 of respondent Ben Lines Container Ltd. The goods were insured by respondent Filipino Merchants' Insurance Company agaisnt all risks under the terms of the insurance cargo policy. Upon its arrival, the goods were unloaded by arrastre operator, E. Razon Inc. However, of the 600 bags, 403 were in bad order. The surveys showed that the bags suffered spillage.

Petitioner filed an insurance claim against respondent insurer but it was rejected on the ground that the petitioner failed to minimize the losses due from spillage. This prompted petitioner to file a complaint in the RTC which was dismissed on the ground that the “all risks” policy covered only losses resulting from fortuitous event. The CA affirmed the decision. Issue:

Whether the respndent court erred in holding that All Risks policy covers only losses occasioned by fortuitous event. Ruling:

The court erred in its ruling. An all risk insurance policy insures against all causes of conceivable losses or damage except otherwise excluded in the policy or due to fraud or intentional misconduct on the part of the insured. In this case, the policy excludes losses caused by delay or inherent vice or nature of the cargo insured.

An all risk provision of marine insurance policy creates a special type of insurance which extends coverage to risks not usually contemplated and avoids putting upon the insured the burden of establishing that the loss was due to a peril outside the policy's coverage. In this case, the loss was not due to any of the exceptions. Therefore, the decision appealed is reversed and set aside.

CASE 59 Malayan Insurance Corp. vs. CA 270 SCRA 242 FACTS: TKC Marketing Corp was the owner/ consignee of some 3,189.171 metric tons of soya bean meal which was loaded on board the ship MV Al Kazeimah for carriage from the port of Rio del Grande, Brazil, to the part of Manila. Said cargo was insured against the risk of loss by petitioner Malayan Insurance Corporation for which it issued two (2) Marine Cargo Policies. While the vessel was docketed in Durban South Africa the civil authorities arrested and detained it because of lawsuit on a question of ownership and possession. TKC Marketing notified Malayan of the arrest of the vessel and made a formal claim for the dollar equivalent on the policies for non delivery of the cargo. Malayan replied that the arrest of the vessel by civil authority was not a peril covered by the policies. TKC advised Malayan that it might transship the cargo and requested an extension of the insurance coverage until actual transshipment, which extension was approved upon payment of additional premium. The insurance coverage was extended under the same terms and conditions embodied in the original policies while in the process of making arrangements for the transshipment of the cargo from Durban to Manila. However the cargo was sold in Durban, South Africa due to its perishable nature which could no longer stand a voyage of twenty days to Manila and another 20 days for the discharge thereof. It reduces its claim representing its loss after the proceeds of the sale were deducted from the original claim. Malayan maintained its position that the arrest if the vessel by civil authorities on a question of ownership was an excepted risk under the marine insurance. ISSUES: 1. Whether the arrest of the vessel was a risk covered under the subject insurance policies. 2. Whether insurance policies should be strictly construed against the insurer. HELD:

1. YES. With the incorporation of subsection1.1 of Section 1 of Institute War Clause, “arrest” cause by ordinary judicial process is deemed included among the covered risks. This interpretation becomes inevitable when the same also provided that “this insurance covers the risk excluded from the Standard Form of English Marine Policy by the clause “Warranted free of capture, seizure, arrest, etc. x x x” or the F.C. & S Clause. Jurisprudentially, “arrest” caused by ordinary judicial process is also a risk excluded. Petitioner cannot adopt the argument that “arrest” caused by ordinary judicial process is not included in the covered risk simply because the F.C. & S Clause under the Institute War Clauses can only be operative in case of hostilities or warlike operations on account of its heading “Institute War Clause” 2. YES. Insurance Policies should be construed liberally in favor of the insured and strictly against the insurer. An insurance contract should be so interpreted as to carry out the purpose for which the parties entered into the contract which is, to insure against risks of loss or damage. Such interpretation should result from the natural and reasonable meaning of language in the policy. Where restrictive provisions are open to two interpretations, that which is most favorable to the insured is adopted. Indemnity and liability insurance policies are construed in accordance with the general rule of resolving any

ambiguity therein in favor of the insured, where the contract or polic is prepared by the insurer. A contract of insurance, being a contract of adhesion, any ambiguity therein should be resolved against the insurer.

CASE 60 G.R. No. 116940. June 11, 1997] THE PHILIPPINE AMERICAN GENERAL INSURANCE COMPANY, INC., petitioner, vs. COURT OF APPEALS and FELMAN SHIPPING LINES, respondent On 6 July 1983 Coca­Cola Bottlers Philippines, Inc., loaded on board MV Asilda, a vessel owned and operated by respondent Felman Shipping Lines (FELMAN for brevity), 7,500 cases of 1­liter Coca­Cola softdrink bottles to be transported from Zamboanga Cityto Cebu City for consignee Coca­Cola Bottlers Philippines, Inc., Cebu. The shipment was insured with petitioner Philippine American General Insurance Co., Inc. (PHILAMGEN. on 7 July 1983, the vessel sank in the waters of Zamboanga del Norte bringing down her entire cargo with her including the subject 7,500 cases of 1­liter Coca­Cola softdrink bottles. the consignee Coca­Cola Bottlers Philippines, Inc., Cebu plant, filed a claim with respondent FELMAN for recovery of damages it sustained Respondent denied the claim thus prompting the consignee to file an insurance claim with PHILAMGEN which paid its claim of P755,250.00. Claiming its right of subrogation PHILAMGEN sought recourse against respondent FELMAN which disclaimed any liability for the loss. Consequently,PHILAMGEN sued the shipowner for sum of money and damages. In its complaint PHILAMGEN alleged that the sinking and total loss of MV Asilda and its cargo were due to the vessels unseaworthiness as she was put to sea in an unstable condition. It further alleged that the vessel was improperly manned and that its officers were grossly negligent in failing to take appropriate measures to proceed to a nearby port or beach after the vessel started to list The trial court rendered judgment in favor of FELMAN. It ruled that MV Asilda was seaworthy when it left the port of Zamboanga as confirmed by certificates issued by the Philippine Coast Guard and the shipowners surveyor attesting to its seaworthiness. Thus the loss of the vessel and its entire shipment could only be attributed to either a fortuitous event, in which case, no liability should attach unless there was a stipulation to the contrary, or to the negligence of the captain and his crew, in which case, Art. 587 of the Code of Commerce should apply. respondent appellate court rendered judgment finding MV Asilda unseaworthy for being top­ heavy as 2,500 cases of Coca­Cola softdrink bottles were improperly stowed on deck. In other words, while the vessel possessed the necessary Coast Guard certification indicating its seaworthiness with respect to the structure of the ship itself, it was not seaworthy with respect to the cargo. respondent court also held that the filing of notice of abandonment had absolved the shipowner/agent from liability under the limited liability rule. issues: a) whether MV Asilda was seaworthy when it left the port of Zamboanga; (b) whether the limited liability under Art. 587 of the Code of Commerce should apply; and, (c) whether PHILAMGEN was properly subrogated to the rights and legal actions which the shipper had against FELMAN, the shipowner. ruling: A. MV Asilda was unseaworthy when it left the port of Zamboanga. the proximate cause of the sinking of the M/V Asilda was her condition of unseaworthiness arising from her having been top­heavy when she departed from the Port of Zamboanga. Her having capsized and eventually sunk was bound to happen and was therefore in the category of an inevitable occurrence. It was established that MV Asilda was not designed to carry substantial amount of cargo on deck. The inordinate loading of cargo deck resulted in the decrease of the vessels metacentric height

thus making it unstable. The strong winds and waves encountered by the vessel are but the ordinary vicissitudes of a sea voyage and as such merely contributed to its already unstable and unseaworthy condition. B. Art. 587 of the Code of Commerce is not applicable to the case at bar. Simply put, the ship agent is liable for the negligent acts of the captain in the care of goods loaded on the vessel. This liability however can be limited through abandonment of the vessel, its equipment and freightage as provided in Art. 587. It was already established at the outset that the sinking of MV Asilda was due to its unseaworthiness even at the time of its departure from the port of Zamboanga. It was top­heavy as an excessive amount of cargo was loaded on deck. Closer supervision on the part of the shipowner could have prevented this fatal miscalculation. As such, FELMAN was equally negligent. It cannot therefore escape liability through the expedient of filing a notice of abandonment of the vessel by virtue of Art. 587 of the Code of Commerce. C. In relation to the question of subrogation, respondent appellate court found MV Asilda unseaworthy with reference to the cargo and therefore ruled that there was breach of warranty of seaworthiness that rendered the assured not entitled to the payment of is claim under the policy. Hence, when PHILAMGEN paid the claim of the bottling firm there was in effect a voluntary payment and no right of subrogation accrued in its favor. In other words, when PHILAMGEN paid it did so at its own risk. the petition is GRANTED. Respondent FELMAN SHIPPING LINES is ordered to pay petitioner PHILIPPINE AMERICAN GENERAL INSURANCE CO., INC., Seven Hundred Fifty­five Thousand Two Hundred and Fifty Pesos (P755,250.00) plus legal interest thereon

CASE 61 HERMINIA Q. KANAPI v. THE INSULAR LIFE ASSURANCE CO., LTD. 94 Phil. 397, February 25, 1954 Facts: On August 1, 1848, the defendant insurance company issued a policy on the life of plaintiff's husband, Henry G. Kanapi. The defendant undertook to pay to plaintiff as beneficiary, upon the death of the insured, the sum of P5,000 if the death be due to natural causes and an additional P5,000 if the death be due to accidental means. The payment of the additional sum being provided for in the "Accidental Death Benefit Policy Clause" appended to and forming part of the policy but expressly made subject to the exception that the clause would not apply where death resulted from injury "intentionally inflicted by a third party." During the life of the policy, the insured died from a bullet wound inflicted, without provocation, by one Conrado Quemosing, who was found guilty of murder and sentenced to prison. Upon receiving proof of the insured's death, defendant paid plaintiff P5,000, but refused to pay the additional P5,000 claimed upon the accidental death benefit clause on the ground that, as the injured died from an injury intentionally inflicted by a third party, the clause did not apply. Thus, the action for the recovery of the additional sum was filed by plaintiff Kanapi. The lower court dismissed the action, whereupon plaintiff appealed to the Supreme Court. Issue: Whether or not the plaintiff is entitled to the additional P5,000 claimed under the accident benefit clause of the policy. Ruling: No, because the insured’s death resulted from an injury “intentionally inflicted by a third party” which is one of the exceptions to the accident benefit clause. The insured was murdered, thus making it indisputable that his death resulted from injury "intentionally inflicted by a third party"; which is one of the exceptions to the accident benefit clause, according to which the benefit shall not apply to death resulting from "(5) Any injury received . . . (e) that has been inflicted intentionally by a third party, either with or without provocation on the part of the Insured, and whether or not the attack or the defense by the third party was caused by a violation of the law by the Insured. . . ." There is nothing to the suggestion that the case comes under exception 5 (d) or that portion of it which excepts from the benefit any injury received "in any assault provoked by the Insured", it being argued that by express mention of provoked assault an unprovoked one is inferentially excluded. The inference is not admissible because where the injury is inflicted without provocation the case comes within the terms of exception 5 (e), which, is, therefore, the one that should be applied. Thus, the Supreme Court affirmed the decision of the lower court.

CASE 62 BIAGTAN VS. THE INSULAR LIFE ASSURANCE COMPANY LTD. FACT: Juan S. Biagtan was insured with defendant Insular Life Assurance Company Ltd. for the sum of ₱5,000.00 and under a supplementary contract denominated “Accidental Death Benefit Clause, for an additional sum of ₱5,000.00 if the death of the insured resulted directly from bodily injury effected solely through external and violent means sustained in an accident… and independently of all other causes.” The clause, however, expressly provided that it would not apply where death resulted from an injury “intentionally inflicted by another party.”

On the night of May 20, 1964 or during the first hours of the following day a band of robbers entered the house of the insured Juan Biagtan, and that in committing the robbery, the robbers, on reaching the staircase landing on the second floor, rushed towards the door of the second floor room, where they suddenly met a person… who turned to be insured who received nine wounds (five mortal wounds and four non­mortal wounds) from their sharp pointed instruments resulting in Mr. Biagtan’s death. Beneficiaries of the insured then filed a claim under the policy the insurance company paid the basic amount of ₱5,000.00 but refused to pay additional sum of ₱5,000.00 under the accidental benefit clause, on the ground that the insured’s death resulted from injuries intentionally inflicted by third parties and therefore was not covered. (Respondent) Beneficiaries then filed suit to recover in the CFI of Pangasinan who rendered a decision in their favor. Hence the present appeal by the petitioner. ISSUE: Whether under the facts stipulated and found by the trial court the wounds received by the insured at the hands of the robbers were inflicted intentionally, hence the benefit clause cannot apply. HELD: Under an “Accidental Death Benefit Clause” providing for an additional sum of P5,000.00 if “the death of the Insured resulted directly from bodily injury effected solely through external and violent means sustained in an accident and independently of all other causes” but expressly excepting therefrom a case where death resulted from an injury “intentionally inflicted by a third party”, the insured who died under the following circumstances is not entitled to the said additional sum, to wit: That on the night… while the said life policy and supplementary contract were in full force and effect the house of the insured . . . was robbed by a band of robbers who­were charged in and convicted by the Court of First Instance of Pangasinan for robbery with homicide; that in committing the robbery, the robbers, on reaching the staircase landing of the second floor, rushed towards the doors of the second floor room, where they suddenly met a person near the door of one of the rooms who turned out to be the insured . . . who received thrusts from their sharp­pointed instruments, causing wounds on the body . . . resulting in his death…”