RAFAEL ENRIQUEZ, as administrator of the estate of the late Joaquin Ma. Herrer, plaintiff-appellant, vs.SUN LIFE ASSURANCE COMPANY OF CANADA, defendant-appellee.

This is an action brought by the plaintiff ad administrator of the estate of the late Joaquin Ma. Herrer to recover from the defendant life insurance company the sum of pesos 6,000 paid by the deceased for a life annuity. The trial court gave judgment for the defendant. Plaintiff appeals.

November 29, 1920Lessons Applicable: Perfection (Insurance)

FACTS: September 24, 1917: Joaquin Herrer made application to the Sun Life Assurance 

Company of Canada through its office in Manila for a life annuity 2 days later: he paid P6,000 to the manager of the company's Manila office and 

was given a receipt according to the provisional   receipt,  3  things  had to be accomplished by the 

insurance company before there was a contract:  (1) There had to be a medical examination of the applicant; -check (2)   there   had   to   be   approval   of   the   application   by   the   head   office   of   the 

company; and - check (3) this approval had in some way to be communicated by the company to the 

applicant - ? November   26,   1917:   The head   office at   Montreal,   Canada gave   notice   of 

acceptance by cable to Manila but this was not mailed December 4, 1917: policy was issued at Montreal December 18, 1917: attorney Aurelio A. Torres wrote to the Manila office of the 

company stating that Herrer desired to withdraw his application December 19, 1917: local office replied to Mr. Torres, stating that the policy had 

been issued, and called attention to the notification of November 26, 1917 December 21, 1917 morning: received by Mr. Torres December 20, 1917: Mr. Herrer died Rafael Enriquez, as administrator of the estate of the late Joaquin Ma. Herrer 

filed to recover from Sun Life Assurance Company of Canada through its office in Manila for a life annuity

RTC: favored Sun Life InsuranceISSUE:  W/N Mr.  Herrera received notice of  acceptance of  his  application thereby perfecting his life annuity

HELD: NO. Judgment is reversed, and the Enriquez shall have and recover from the Sun Life the sum of P6,000 with legal interest from November 20, 1918, until paid, without special finding as to costs in either instance. So ordered.

Civil CodeArt. 1319 (formerly Art.1262)Art. 1319. Consent is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. The offer must be certain and the acceptance absolute. A qualified acceptance constitutes a counter-offer.Acceptance made by letter or telegram does not bind the offerer except from the time it came to his knowledge. The contract, in such a case, is presumed to have been entered into in the place where the offer was made.

not perfected because it has not been proved satisfactorily that the acceptance of the application ever came to the knowledge of the applicant

In resume,   therefore,   the   law  applicable   to   the   case   is   found   to  be   the   second paragraph of article 1262 of the Civil Code providing that an acceptance made by letter shall not bind the person making the offer except from the time it came to his knowledge.  The pertinent  fact   is,   that according to the provisional  receipt,   three things   had   to   be   accomplished   by   the   insurance   company   before   there  was   a contract: (1) There had to be a medical examination of the applicant; (2) there had to be  approval  of   the  application  by   the  head  office  of   the   company;  and   (3)   this approval had in some way to be communicated by the company to the applicant. The   further   admitted   facts   are   that   the  head  office   in  Montreal  did   accept   the application, did cable the Manila office to that effect, did actually issue the policy and did, through its agent in Manila, actually write the letter of notification and place it in the usual channels for transmission to the addressee. The fact as to the letter of notification   thus   fails   to   concur  with   the  essential   elements  of   the  general   rule pertaining to the mailing and delivery of mail matter as announced by the American courts,  namely,  when a letter or other mail  matter is addressed and mailed with postage prepaid there is a rebuttable presumption of fact that it was received by the addressee as soon as it could have been transmitted to him in the ordinary course of the mails. But if any one of these elemental facts fails to appear, it is fatal to the presumption. For instance, a letter will not be presumed to have been received by the addressee unless it is shown that it was deposited in the post-office, properly addressed and stamped.

NOTE: Life annuity is the opposite of a life insurance.  In life annuity, a big amount is given to the insurance company, and if after a certain period of time the insured is stil living, he is entitled to regular smaller amounts for the rest of his life. Examples of Life annuity are pensions.  Life Insurance on the other hand, the insured during the 

period  of   the   coverage  makes   small   regular   payments   and  upon  his   death,   the insurer pays a big amount to his beneficiaries.

NERISSA Z. PEREZ, petitioner, vs. THE COURT OF APPEALS (Ninth Division) and RAY C. PEREZ, respondents.

Perez vs. CA, GR No. 118870, March 29, 1996

(Special Proceedings – Custody: A child under seven years shall not be separated from his mother)Facts: Respondent father, a doctor of medicine and petitioner mother, a registered nurse working in the US are married couples who are separated in fact with only one child.Petitioner  filed a  petition  for  habeas  corpus  asking   respondent   to  surrender   the custody of their son. The RTC issued an Order awarding custody of the one-year old child to his mother, citing the second paragraph of Article 213 of the Family Code.

Upon appeal by the father, the Court of Appeals reversed the trial court’s order and awarded custody of the boy to him ruling that there were enough reasons to deny petitioner custody over the child even under seven years old. It held that granting custody to the boy’s father would be for the child’s best interest and welfare.

Article 213, par 2, provides in case of separation of parents that no child under 7 years of age shall be separated from the mother, unless the court finds compelling reasons to order otherwise.

Rule 99, Section 6 of the Revised Rules of Court also states that “No child under seven years of age shall be separated from the mother, unless the court finds there are compelling reasons therefore.

Issue: WON custody of the child is to be given to the father.Held:  No. The provisions of the law clearly mandate that a child under seven years of  age shall  not be separated from his  mother unless the court  finds compelling reasons to order otherwise. The use of the word “shall” in Article 213 of the Family Code   and  Rule   99,   Sec   6   of   the  Revised  Rules   of   Court   connotes   a  mandatory character.Couples who are separated in fact are covered within the term separation.

The Family Code in reverting to the provision of the Civil Code that a child below seven years old shall not be separated from the mother (Article 363), has expressly repealed the earlier Article 17, par 3 of the Child and youth Welfare Code which reduced the child’s age to 5 years.

When the parents of the child are separated, Article 213 of the Family Code is the applicable law. It provides:

ART. 213. In case of separation of the parents, parental authority shall be exercised by the parent designated by the Court. The Court shall take into account all relevant considerations, especially the choice of the child over seven years of age, unless the parent chosen is unfit.

No child under seven years of age shall be separated from the mother, unless the court finds compelling reasons to order otherwise. (Italics supplied)

Since the Code does not qualify the word separation to mean legal separation decreed by a court, couples who are separated in fact, such as petitioner and private respondent, are covered within its terms.8

The Revised Rules of Court also contains a similar provision. Rule 99, Section 6 (Adoption and Custody of Minors) provides:

SEC.   6.   Proceedings   as   to   child  whose   parents   are   separated.   Appeal.   -  When husband and wife are divorced or living separately and apart from each other, and the questions as to the care,  custody,  and control  of  a  child  or  children of their marriage is brought before a Court of First Instance by petition or as an incident to any other proceeding, the court, upon hearing the testimony as may be pertinent, shall award the care, custody, and control of each such child as will be for its best interest, permitting the child to choose which parent it prefers to live with if it be over ten years of age, unless the parent chosen be unfit to take charge of the child by reason of moral depravity, habitual drunkenness, incapacity, or poverty x x x. No child under seven years of age shall be separated from its mother, unless the court finds there are compelling reasons therefor. (Italics supplied)

The provisions of law quoted above clearly mandate that a child under seven years   of   age   shall   not   be   separated   from   his   mother   unless   the   court   finds compelling reasons to order otherwise. The use of the word shall in Article 213 of the Family Code and Rule 99, Section 6 of the Revised Rules of Court connotes a mandatory character. In the case of Lacson v. San Jose-Lacson,9 the Court declared:

Lim v Sunlife G.R. No. L-15774 November 29, 1920J. Malcolm

Facts:Luis Lim of Zamboanga applied for a Sun Life policy for Php 5,000. He designated his wife,  Pilar,  as  beneficiary.  The first  premium of  P433 was paid by Lim,   then the company issued a "provisional policy." Lim died after the issuance of the provisional policy but before approval of the application.Pilar  brought an action to recover from Sun Life the sum of P5,000,  the amount named in the provisional policy. She lost in the trial court hence this appeal.The "provisional policy" reads as follows:

The   above-mentioned   life   is   to   be   assured   in   accordance   with   the   terms   and conditions contained or inserted by the Company in the policy which may be granted by it in this particular case for four months only from the date of the application, provided that the Company shall confirm this agreement by issuing a policy on said application when the same shall be submitted to the Head Office in Montreal. Should the Company not issue such a policy, then this agreement shall be null and void ab initio, and the Company shall be held not to have been on the risk at all, but in such case the amount herein acknowledged shall be returned.

Issue: WON there was a perfected contract of insurance

Held: No. Petition dismissed.

Ratio:The policy for four months is expressly made subjected to the affirmative condition that   "the   company   shall   confirm   this   agreement   by   issuing   a   policy   on   said application when the same shall be submitted to the head office in Montreal."  Should the company not issue such a policy, then this agreement shall be null and void ab initio, and the company shall be held not to have been on the risk." This means that the agreement should not go into effect until the home office of the company should confirm it by  issuing a policy.  The provisional policy amounts to nothing but an acknowledgment on behalf of the company, that it has received from the   person   named   therein   the   sum   of  money   agreed   upon   as   the   first   year's premium  upon   a   policy   to   be   issued  upon   the   application,   if   the   application   is accepted by the company.There can be no contract of insurance unless the minds of the parties have met in agreement.   In  this  case,  the contract  of   insurance was not consummated by the parties.

The  general   rule  concerning   the agent's   receipt  pending  approval  or   issuance  of policy is in several points, according to Joyce:2. Where an agreement is made between the applicant and the agent whether by signing an application containing such condition, or otherwise, that no liability shall attach until the principal approves the risk and a receipt is given buy the agent, such acceptance is merely conditional, and it subordinated to the act of the company in approving or rejecting; so in life insurance a "binding slip" or "binding receipt" does not insure of itself.The court held that this second point applied to the case.American jurisprudence tells us of such examples.Steinle vs. New York Life Insurance Co.-  the amount of the first premium had been paid to an insurance agent and a receipt was given. The paper declared that if the application was accepted by the company, the insurance shall take effect from the date of the application but that if the application was not accepted, the money shall be returned. The court held that there was no perfection of the contract.Cooksey vs. Mutual Life Insurance Co.- the person applying for the life insurance paid and amount equal to the first premium, but the application and the receipt for the 

money paid, stipulated that the insurance was to become effective only when the application was approved and the policy issued. There was also no perfection.A binding receipt is a custom where temporary insurance pending the consideration of the application was given until the policy be issued or the application rejected, and such contracts  are upheld and enforced when the applicant  dies  before the issuance of a policy or final rejection of the application.However, there was no perfected contract because of the clause in the application and the receipt stipulate expressly that the insurance shall become effective only when the "application shall be approved and the policy duly signed by the secretary at   the  head  office  of   the   company   and   issued."   The   premium  of   433  must   be returned.

Musngi v. West Coast Life Assurance Co.- False Representation

61 PHIL 864

Facts:

The plaintiffs,  as  beneficiaries,  brought suit  against  the defendant to recover the value   of   two   life   insurance   policies.   The   defendant   appealed   from   a   judgment sentencing it to pay the plaintiffs the amount of said policies, and the costs.

The principal   facts  of   the case are embodied  in   the  following written stipulation entered into by the parties:

1. That Arsenio T. Garcia was insured by the defendant company in the sum of P5,000 as evidenced by Policy No. 129454 effective as of July 25, 1931, hereby attached and marked as Exhibit A;

2.   That   the   said   Arsenio   T.   Garcia  was   again   insured   by   the   defendant company   in   the   sum   of   P10,000   effective   as   of   October   20,   1931,   as evidenced by Policy No. 130381 hereby attached and marked as Exhibit B;

3. That the two policies aforementioned were valid and subsisting at the time of the death of the insured on December 30, 1932; the fact of said death is evidenced by the accompanying death certificate issued by the Civil Register of Pasay, Rizal, which is marked as Exhibit C;

4. That the plaintiffs herein are the beneficiaries in said policies, Segundina Musñgi of Policy No. 129454, and Buenaventura Garcia of Policy No. 130381;

5. That demand was made upon the defendant company for the payment of the two policies above referred to, but the defendant company refused to pay on the grounds stated in the answer.

The two policies were issued upon applications filed by the insured on July 20, 1931 and October 15, of the same year, respectively. 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. 

> May 13 and 19, 1929, the insured had entered the General Hospital in Manila, and was   treated   by   Doctor   Pilar   V.   Cruz   for   peptic   ulcer   and   chronic   catarrhal nasopharyngitis; on August 5, 1930, he entered the same hospital and was treated by   the   same   physician   for   chronic   pyelocystitis   and   for   incipient   pulmonary tuberculosis; on the 13th of the same month he returned to the hospital and was treated by the same physician for chronic suppurative pyelocystitis and for chronic bronchitis; on the 20th of the same month he again entered the hospital and was treated by the same doctor  for acute tracheo-bronchitis  and chronic  suppurative pyelocystitis; on the 27th of the same month he again entered the same hospital and was treated for the same ailments; on December 11, 1930, he again entered the hospital and was treated for the same ailments; on the 18th of the same month, he again entered the hospital and was treated for the same ailments; on the 28th of the same month he again entered the hospital and was treated for the same ailments, and, finally, on January 11, 1931, he again entered the hospital and was treated by the same doctor for the same ailments.

>  Arsenio Garcia was insured by West Coast twice in 1931.  In both policies, he was asked to answer the question: “what physician or practitioners have you consulted or been treated by, and for what illness or ailment?

>   In both policies, he answered in the negative.   It turned out that from 1929 to 1939, he went to see several physicians for a number of ailments.  So when he died in 1942, the company refused to pay the proceeds of the insurance.

 

Issue:

Whether or not the answer given by Arsenio in the policies justifies the company’s refusal to pay?

 

Held:

YES.

Aresenio knew that he was suffering from a number of ailments, yet, he concealed this.   Such  concealment  and  his   false   statements   constituted   fraud,  because   the insurance company by reasons of such statement accepted the risk which it would otherwise have rejected.

Insurance Case Digest: Gulf Resorts Inc. V. Philippine Charter Insurance

Corp. (2005)

G.R. No. 156167  May 16, 2005Lessons Applicable: Stipulations Cannot Be Segregated (Insurance)

FACTS: Gulf Resorts, Inc at Agoo, La Union was insured with American

Home Assurance Company which includes loss or damage to shock to any of the property insured by this Policy occasioned by or through or in consequence of earthquake 

July 16, 1990: an earthquake struck Central Luzon and Northern Luzon so the properties and 2 swimming pools in its Agoo Playa Resort were damaged

August 23, 1990: Gulf's claim was denied on the ground that its insurance policy only afforded earthquake shock coverage to the two swimming pools of the resort

Petitioner contends that pursuant to this rider, no qualifications were placed on the scope of the earthquake shock coverage.  Thus, the policy extended earthquake shock coverage to all of the insured properties.

RTC: Favored American Home - endorsement rider means that only the two swimming pools were insured against earthquake shock 

CA: affirmed RTCISSUE: W/N Gulf can claim for its properties aside from the 2 swimming pools

HELD: YES. Affirmed. It is basic that all the provisions of the insurance policy should be

examined and interpreted in consonance with each other.

All its parts are reflective of the true intent of the parties.Insurance CodeSection 2(1)contract of insurance as an agreement whereby one undertakes for a consideration to indemnify another against loss, damage or liability arising from an unknown or contingent event

An insurance premium is the consideration paid an insurer for undertaking to indemnify the insured against a specified peril.

In the subject policy, no premium payments were made with regard to earthquake shock coverage, except on the two swimming pools.  

Gulf Resorts Inc. vs. Philippine Charter Insurance Corporation [G.R. No. 156167 May 16, 2005]

Facts: Gulf Resorts is the owner of the Plaza Resort situated at Agoo, La Union and had   its   properties   in   said   resort   insured   originally   with   the   American   Home Assurance  Company   (AHAC).   In   the  first  4  policies   issued,   the   risks  of   loss   from earthquake shock was extended only to petitioner’s two swimming pools. Gulf Resorts agreed to insure with Phil Charter the properties covered by the AHAC policy provided that the policy wording and rates in said policy be copied in the policy to be issued by Phil Charter. Phil Charter issued Policy No. 31944 to Gulf Resorts covering the  period  of  March  14,   1990   to  March  14,  1991   forP10,700,600.00   for   a   total premium of P45,159.92. the break-down of premiums shows that Gulf Resorts paid only P393.00 as premium against earthquake shock(ES). In Policy No. 31944 issued by   defendant,   the   shock  endorsement   provided   that   “In   consideration   of   the payment by the insured to the company of the sum included additional premium the Company agrees, notwithstanding what is stated in the printed conditions of this policy due to the contrary, that this insurance covers loss or damage to shock to any of the property insured by this Policy occasioned by or through or inconsequence of earthquake (Exhs. "1-D", "2-D", "3-A","4-B", "5-A", "6-D" and "7-C"). In Exhibit "7-C" the word" included" above the underlined portion was deleted. On July 16, 1990 an earthquake   struck   Central   Luzon  and   Northern   Luzon   and   plaintiff’s   properties covered by Policy No. 31944 issued by defendant, including the two swimming pools in its Agoo Playa Resort were damaged. Petitioner advised respondent that it would be making a claim under its Insurance Policy 31944 for damages onits properties. Respondent denied petitioner’s claim onthe ground that   its   insurance policy  only  afforded earthquake shock coverage to the two swimming pools of the resort. The trial court ruled in favor of respondent. In its ruling, the schedule clearly shows that petitioner paid only a premium of P393.00 against   the   peril   of   earthquake   shock,   the   same   premium   it   had   paid   against earthquake shock only on the two swimming pools in all the policies issued by AHAC.

Issue: Whether or not the policy covers only the two swimming pools owned by Gulf Resorts and does not extend to all properties damaged therein

Held: YES. All the provisions and riders taken and interpreted together, indubitably show the intention of the parties to extend earthquake shock coverage to the two swimming pools only. An insurance premium is the consideration paid an insurer for undertaking to indemnify the insured against a specified peril. In fire, casualty and marine insurance, the premium becomes a debt as soon as the risk attaches. In the subject policy, no premium payments were made with regard to earthquake shock coverage except on the two swimming pools. There is no mention of any premium payable   for   the other  resort  properties  with   regard  to  earthquake shock.  This   is consistent with the history of petitioner’s insurance policies with AHAC.

Philamcare v CA G.R. No. 125678. March 18, 2002J. Ynares-Santiago

Facts:Ernani Trinos applied for a health care coverage with Philam. He answered no to a question asking if he or his family members were treated to heart trouble, asthma, diabetes, etc.The application was approved for 1 year. He was also given hospitalization benefits and   out-patient   benefits.   After   the   period   expired,   he  was   given   an   expanded coverage for Php 75,000. During the period, he suffered from heart attack and was confined at MMC. The wife tried to claim the benefits but the petitioner denied it saying that he concealed his medical history by answering no to the aforementioned question. She had to pay for the hospital bills amounting to 76,000. Her husband subsequently passed away. She filed a case in the trial court for the collection of the amount   plus   damages.   She   was   awarded   76,000   for   the   bills   and   40,000   for damages. The CA affirmed but deleted awards for damages. Hence, this appeal.

Issue:  WON   a   health   care   agreement   is   not   an   insurance   contract;   hence   the “incontestability clause” under the Insurance Code does not apply.

Held: No. Petition dismissed.

Ratio: Petitioner claimed that it granted benefits only when the insured is alive during the one-year   duration.   It   contended   that   there   was   no   indemnification   unlike   in insurance contracts. It supported this claim by saying that it is a health maintenance organization   covered   by   the  DOH   and   not   the   Insurance   Commission.   Lastly,   it claimed that the Incontestability clause didn’t apply because two-year and not one-year effectivity periods were required.  Section 2 (1) of the Insurance Code defines a contract of insurance as “an agreement whereby  one  undertakes   for   a   consideration   to   indemnify   another   against   loss, damage or liability arising from an unknown or contingent event.”Section 3 states: every person has an insurable interest in the life and health:(1)     of himself, of his spouse and of his children.

In   this   case,   the   husband’s   health  was   the   insurable   interest.   The   health   care agreement was in the nature of non-life insurance, which is primarily a contract of indemnity. The provider must pay for the medical expenses resulting from sickness or injury. While petitioner contended that the husband concealed materialfact of his sickness, the contract stated that:“that any physician  is, by these presents,  expressly authorized to disclose or give testimony at anytime relative to any information acquired by him in his professional capacity upon any question affecting the eligibility for health care coverage of the Proposed Members.”This meant that the petitioners required him to sign authorization to furnish reports about his medical condition. The contract also authorized Philam to inquire directly to his medical history.Hence, the contention of concealment isn’t valid.They can’t also invoke the “Invalidation of agreement” clause where failure of the insured to disclose  information was a grounds for revocation simply because the answer  assailed by the company was the heart  condition question based on the insured’s  opinion.  He  wasn’t  a  medical  doctor,   so  he   can’t  accurately  gauge  his condition.Henrick   v   Fire-   “in   such   case   the   insurer   is   not   justified   in   relying   upon   such statement, but is obligated to make further inquiry.”Fraudulent intent must be proven to rescind the contract. This was incumbent upon the provider.“Having   assumed   a   responsibility   under   the   agreement,   petitioner   is   bound   to answer the same to the extent agreed upon.   In the end, the liability of the health care provider  attaches once the member  is  hospitalized for  the disease or  injury covered by the agreement or whenever he avails of the covered benefits which he has prepaid.”Section  27  of   the   Insurance  Code-   “a   concealment  entitles   the   injured  party   to rescind a contract of insurance.”As to cancellation procedure- Cancellation requires certain conditions:1.       Prior notice of cancellation to insured;2.       Notice must be based on the occurrence after effective date of the policy of one or more of the grounds mentioned;3.       Must be in writing, mailed or delivered to the insured at the address shown in the policy;4.       Must state the grounds relied upon provided in Section 64 of the Insurance Code and upon request of insured, to furnish facts on which cancellation is basedNone were fulfilled by the provider.As to incontestability- The trial court said that “under the title Claim procedures of expenses, the defendant Philamcare Health Systems Inc. had twelve months from the date of issuance of the Agreement within which to contest the membership of the patient if he had previous ailment of asthma, and six months from the issuance of the agreement if the patient was sick of diabetes or hypertension. The periods having expired, the defense of concealment or misrepresentation no longer lie.”

Insular v Ebrado G.R. No. L-44059 October 28, 1977Facts:J. Martin:Cristor Ebrado was issued by The Life Assurance Co., Ltd., a policy for P5,882.00 with a rider for Accidental Death. He designated Carponia T. Ebrado as the revocable beneficiary in his policy. He referred to her as his wife.Cristor was killed when he was hit by a failing branch of a tree. Insular Life was made liable to pay the coverage in the total amount of P11,745.73, representing the face value of the policy in the amount of P5,882.00 plus the additional benefits for accidental death.Carponia T. Ebrado filed with the insurer a claim for the proceeds as the designated beneficiary therein, although she admited that she and the insured were merely living as husband and wife without the benefit of marriage.Pascuala Vda. de Ebrado also filed her claim as the widow of the deceased insured. She asserts that she is the one entitled to the insurance proceeds.Insular commenced an action for Interpleader before the trial court as to who should be given the proceeds. The court declared Carponia as disqualified.

Issue: WON a common-law wife named as beneficiary in the life insurance policy of a legally married man can claim the proceeds in case of death of the latter?

Held: No. Petition

Ratio:Section 50 of the Insurance Act which provides that "the insurance shall be applied exclusively to the proper interest of the person in whose name it is made"The word "interest" highly suggests that the provision refers only to the "insured" and not to the beneficiary, since a contract of insurance is personal in character. Otherwise, the prohibitory laws against illicit relationships especially on property and descent will be rendered nugatory, as the same could easily be circumvented by modes of insurance.When not otherwise specifically provided for by the Insurance Law, the contract of life insurance is governed by the general rules of the civil law regulating contracts. And under Article 2012 of the same Code, any person who is forbidden from receiving any donation under Article 739 cannot be named beneficiary of a fife insurance policy by the person who cannot make a donation to him. Common-law spouses are barred from receiving donations from each other.Article 739 provides that void donations are those made between persons who were guilty of adultery or concubinage at the time of donation.There is every reason to hold that the bar in donations between legitimate spouses and those between illegitimate ones should be enforced in life insurance policies since the same are based on similar consideration. So long as marriage remains the threshold of family laws, reason and morality dictate

that the impediments imposed upon married couple should likewise be imposed upon extra-marital relationship.A conviction for adultery or concubinage isn’t required exacted before the disabilities mentioned in Article 739 may effectuate. The article says that in the case referred to in No. 1, the action for declaration of nullity may be brought by the spouse of the donor or donee; and the guilty of the donee may be proved by preponderance of evidence in the same action.The underscored clause neatly conveys that no criminal conviction for the offense is a condition precedent. The law plainly states that the guilt of the party may be proved “in the same acting for declaration of nullity of donation.” And, it would be sufficient if evidence preponderates.The insured was married to Pascuala Ebrado with whom she has six legitimate children. He was also living in with his common-law wife with whom he has two children. 

Zenith Insurance Corporation v. The Insurance Commission- Insurable Interest

87 OG 6249

Facts:

>  Zenith entered into an insurance contract, denominated as Equipment Floater Policy covering a Kato Bachoe including its accessories and appurtenances thereof, from loss of damage.  Complainant paid the stipulated premiums therefore.

>  Within the period of effectivity of the policy, the two pieces of hydraulic wheel gear pumps, which are considered appurtenances and/or parts attached to and/or installed in the Kato BAchoe were lost, stolen and/or illegally detached by unknown thieves or malefactors

>  Despite repeated assurances by Zenith’s soliciting agent, it refused and failed to settle and pay complainant’s insurance claim.

>  Complainant seeks not only the payment of said insurance claim of 70T plus legal interest, atty’s fees, and litigation expenses, but also the revocation or cancellation of the license of Zenith to do insurance business.

>  Zenith on the other hand contends that:

o    Complainant is not the real party in interest since the policy carries with it a designated loss payee, the BA Finance Corp

o    The policy insures against loss or damage caused by fire and lightning, etc, while theft or robbery is NOT insured against in the policy, it not having been expressly mentioned

o    Loss nevertheless is excluded under the exception of “infidelity exclusion” by the operator who left it unguarded, unattended and deserted while entrusted to him, and for failure to give timely notice of loss

o    Complainant and/or BA Finance is guilty of concealment and misrepresentation at the time they secured the policy, because at the time it became operative, the complainant was NOT yet the owner of the property insured, the property still hot having been delivered to him, and BA finance had no insurable interest yet, henceforth, the contract of insurance was VOID AB INITIO for lack of insurable interest at the time the insurance took effect.

Issues and Resolutions:

(1) Whether or not the loss through theft or robbery claimed is within the coverage of the policy.

The Insurance Commissioner, as reiterated by the SC, found for the complainant in this wise:  While the policy enumerated the risks covered, it does NOT, however, in its express terms, limit compensability to that stated in the enumeration.  The enumerated risks excluded did not include theft or robbery committed or perpetrated by an unidentified culprit, hence the complainant’s claim for damages is compensable.

The foregoing policy is supported by the long time honored doctrine of “contra proferentem: which provides that: “any ambiguity in the policy shall be resolved in favor of the insured and against the insurer”.  This is true because insurance contracts are essentially contracts of adhesion and applicants for insurance have no choice but to accept the terms and conditions in the policy even if they are not in full accord therewith.

(2) Whether or not the complainant was with insurable interest therein when the said policy contract was procured.

The complainant has insurable interest in the insured property at the time of the procurement of the insurance policy.  As the CC provides, “the contract of sale is perfected at the moment there is a

meeting of minds upon the thing which is the object of the contract and upon the price,” and Sec. 15 of the IC allows the insurance of a mere contingent or expectant interest in anything if the same is founded on an actual right to the thing, or upon any valid contract.

As this is the case, mere possession of an equitable title, like that pertaining to the buyer, gives rise to insurable interest in the property in which such title inheres.  Furthermore, considering that Zenith’s agent had been fully apprised of the circumstances prior to the actual issuance of the policy and the endorsement, it cannot now allege that complainant has no insurable interest on the property insured.  Zenith is now precluded by the equitable principle of estoppel from impugning and dishonoring the very insurance policy contract it issued and the endorsement and increase in the coverage made through its duly authorized agent.