insurance | atty. migallos st1 term, ay 2014 -2015...
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INSURANCE | ATTY. MIGALLOS 1ST Term, AY 2014 -2015 CLASS READER Married Women and Minors
Insurance Code, Section 3
Sec. 3. Any contingent or unknown event, whether past or future, which
may damnify a person having an insurable interest, or create a liability
against him, may be insured against, subject to the provisions of this
chapter.
The consent of the husband is not necessary for the validity of an insurance
policy taken out by a married woman on her life or that of her children.
Any minor of the age of eighteen years or more, may, notwithstanding such
minority, contract for life, health and accident insurance, with any insurance
company duly authorized to do business in the Philippines, provided the
insurance is taken on his own life and the beneficiary appointed is the
minor's estate or the minor's father, mother, husband, wife, child, brother or
sister.
The married woman or the minor herein allowed to take out an insurance
policy may exercise all the rights and privileges of an owner under a policy.
All rights, title and interest in the policy of insurance taken out by an
original owner on the life or health of a minor shall automatically vest in the
minor upon the death of the original owner, unless otherwise provided for in
the policy.
Article 234. (Family Code)
When there is danger that a person obliged to give support may lose his or
her fortune because of grave mismanagement or on account of riotous
living, his or her spouse, if any, and a majority of those entitled to be
supported by him or by her may petition the Court of First Instance for the
creation of the family home.
Republic Act No. 6809 December 13, 1989
AN ACT LOWERING THE AGE OF MAJORITY FROM TWENTY-
ONE TO EIGHTEEN YEARS, AMENDING FOR THE PURPOSE
EXECUTIVE ORDER NUMBERED TWO HUNDRED NINE, AND
FOR OTHER PURPOSES
Be it enacted by the Senate and House of Representatives of the Philippines
in Congress assembled::
Section 1. Article 234 of Executive Order No. 209, the Family Code of the
Philippines, is hereby amended to read as follows:
"Art. 234. Emancipation takes place by the attainment of majority. Unless
otherwise provided, majority commences at the age of eighteen years."
Section 2. Articles 235 and 237 of the same Code are hereby repealed.
Section 3. Article 236 of the same Code is also hereby amended to read as
follows:
"Art. 236. Emancipation shall terminate parental authority over the person
and property of the child who shall then be qualified and responsible for all
acts of civil life, save the exceptions established by existing laws in special
cases.
"Contracting marriage shall require parental consent until the age of twenty-
one.
"Nothing in this Code shall be construed to derogate from the duty or
responsibility of parents and guardians for children and wards below
twenty-one years of age mentioned in the second and third paragraphs of
Article 2180 of the Civil Code."
Section 4. Upon the effectivity of this Act, existing wills, bequests,
donations, grants, insurance policies and similar instruments containing
INSURANCE | ATTY. MIGALLOS 1ST Term, AY 2014 -2015 CLASS READER references and provisions favorable to minors will not retroact to their
prejudice.
Section 5. This Act shall take effect upon completion of its publication in at
least two (2) newspapers of general circulation.
Mortgagor/Mortgagee
Insurance Code
Sec. 8. Unless the policy otherwise provides, where a mortgagor of property
effects insurance in his own name providing that the loss shall be payable to
the mortgagee, or assigns a policy of insurance to a mortgagee, the
insurance is deemed to be upon the interest of the mortgagor, who does not
cease to be a party to the original contract, and any act of his, prior to the
loss, which would otherwise avoid the insurance, will have the same effect,
although the property is in the hands of the mortgagee, but any act which,
under the contract of insurance, is to be performed by the mortgagor, may
be performed by the mortgagee therein named, with the same effect as if it
had been performed by the mortgagor.
Sec. 9. If an insurer assents to the transfer of an insurance from a mortgagor
to a mortgagee, and, at the time of his assent, imposes further obligation on
the assignee, making a new contract with him, the act of the mortgagor
cannot affect the rights of said assignee.
Sec. 13. 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, is an insurable interest.
Sec. 53. The insurance proceeds shall be applied exclusively to the proper
interest of the person in whose name or for whose benefit it is made unless
otherwise specified in the policy.
Palileo v. Cosio (1955)
Lessons Applicable: Mortgagor (Insurance)
FACTS:
Cherie Palileo (debtor-mortgagor) filed a complaint against Beatriz
Cosio (creditor-mortgagee) praying that their transaction be one of
a loan with an equitable mortgage to secure the payment of the
loan. The original counsel of Cosio Atty. Guerrero being
appointed Undersecretary of Foreign Affairs so she forgot the date
of the trial and she was substituted.
it is a loan of P12,000 secured by a "Conditional Sale of
Residential Building" with right to repurchase. After the execution
of the contract, Cosio insured in her name the building
with Associated Insurance & Surety Co. against fire.
The building was partly destroyed by fire so she claimed an
indemnity of P13,107
Palileo demanded that the amount of insurance proceeds be
credited to her loan
RTC: it is a loan with equitable mortgage so the insurance
proceeds should be credited to the loan and refund the
overpayment.
ISSUE:
W/N Cosio as mortgagee is entitled to the insurance proceeds for her own
benefit
HELD:
YES. Modify. collection of insurance proceeds shall not be deemed to
have compensated the obligation of the Palileo to Cosio, but bars the Cosio
from claiming its payment from the Palileo; and Cosio shall pay to Palileo
P810 representing the overpayment made by Palileo by way of interest on
the loan.
INSURANCE | ATTY. MIGALLOS 1ST Term, AY 2014 -2015 CLASS READER
When the the mortgagee may insure his interest in the property
independently of the mortgagor , upon the destruction of the
property the insurance money paid to the mortgagee will not inure
to the benefit of the mortgagor, and the amount due under the
mortgage debt remains unchanged. The mortgagee, however, is
not allowed to retain his claim against the mortgagor, but it passes
by subrogation to the insurer, to the extent of the insurance money
paid
It is true that there are authorities which hold that "If a mortgagee
procures insurance on his separate interest at his own expense and
for his own benefit, without any agreement with the mortgagor
with respect thereto, the mortgagor has no interest in the policy,
and is not entitled to have the insurance proceeds applied in
reduction of the mortgage debt" But these authorities merely
represent the minority view.
INSURANCE | ATTY. MIGALLOS 1ST Term, AY 2014 -2015 CLASS READER SAN MlGUEL BREWERY, ETC., plaintiff and appellee, vs. LAW
UNION AND ROCK INSURANCE Co. (LTD.) ET AL., defendants
and appellees. HENRY HARDING, defendant and appellant.
No. 14300. January 19, 1920. J. Street
Doctrine: Insurer cannot recover beyond the scope of the policy. A
purchaser of insured property who does not take the precaution. to obtain
a transfer of the policy of insurance cannot, in case of loss, recover upon
such contract, as the transfer of the property has the effect of suspending
the insurance until the purchaser becomes owner of the policy as well as of
the property insured.
Facts:
1. D. P. Dunn, then the owner of the property to which the insurance relates,
mortgaged the same to the San Miguel Brewery to secure a debt of P10,000.
2. In the contract of mortgage Dunn agreed to keep the property insured at
his expense to the full amount of its value in companies to be selected by
the Brewery Company and authorized the latter in case of loss to receive the
proceeds of the insurance and to retain such part as might be necessary to
cover the mortgage debt.
3. At the same time, in order more conveniently to accomplish the end in
view, Dunn authorized and requested the Brewery Company to effect said
insurance itself.
4. Accordingly on the same date Antonio Brias, general manager of the
Brewery, made a verbal application to the Law Union and Rock Insurance
Company for insurance to the extent of P15,000 upon said property.
5. In reply to a question of the company's agent as to whether the Brewery
was the owner of the property, he stated that the company was interested
only as a mortgagee.
6. Tow insurance companies divided the risks. It therefore issued its own
policy for P7,500 and procured a policy in a like amount to beissued by the
"Filipinas" Compañía de Seguros.
7. Both policies were issued in the name of the San Miguel Brewery as the
assured, and contained no reference to any other interest in the property.
Both policies contain the usual clause requiring assignments to be approved
and noted on the policy.
8. The premiums were paid by the Brewery and charged to Dunn. A year
later the policies were renewed, without change, the renewal premiums
being paid by the Brewery, supposedly for the account of the owner.
9. In the month of March of the year 1917 Dunn sold the insured property to
the defendant Henry Harding, but no assignment of the insurance, 01" of the
insurance policies, was at any time made to him.
10. IN the complaint, Brewery prayed that judgment be entered in favor of
the plaintiff against the two companies named for the sum of P15,000, with
interest and costs, and further that upon satisfaction of the balance of
P4,505.30 due to the plaintiff upon the mortgage debt, and upon the
cancellation of the mortgage, the plaintiff be absolved from liability to the
defendants or any of them.
11. Accordingly, as was to be expected, Harding answered, admitting the
material allegations of the complaint and claiming for himself the right to
recover the difference between the plaintiff's mortgage credit and the face
value of the policies.
12. The two insurance companies also answered,' admitting in effect their
liability to the San Miguel Brewery to the extent of its mortgage- credit, but
denying liability to Harding on the ground that under the contracts of
insurance the liability of the insurance companies was limited to the
insurable interest of the plaintiff therein.
INSURANCE | ATTY. MIGALLOS 1ST Term, AY 2014 -2015 CLASS READER Issues:
1. Does Harding have cause of action against the two insurance companies?
NO
2. Does the Brewery have insurable interest? YES
3. Is the policy intended to protect not only the interest of the mortgagee but
also the residual interest of the owner? NO
Held:
1. Harding is not a party in the case.
'maintain an action thereon.
made effective, if at all, through the San Miguel Brewery in whose name
the contracts are written.
"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."
"the mere transfer of a thing
insured does not transfer the policy, but suspends it until the same person
becomes the owner of both the policy and the thing insured."
2. THE BREWERY has insurable interest but could recover on the
policy only to the extent of the credit secured by the mortgage.
company with which the insurance was placed that the Brewery was
interested only as a mortgagee. It would, therefore, be impossible for the
Brewery to recover anything beyond the amount secured by its mortgage
on the insured property.
Section 16 of the Insurance Act, it is declared that "the measure of an
insurable interest in property is the extent to which the insured might be
damnified by loss or injury thereof"
Section 50 of the insurance act: "the insurance shall be applied
exclusively to the proper interest of the person in whose name it is made
unless otherwise specified in the policy" (sec. 50).
3. Undoubtedly these policies of insurance might have been so framed as to
have been "payable to the San Miguel Brewery, mortgagee, as its interest
may appear, remainder to whomsoever, during the continuance of the risk,
may become the owner of the interest insured." Such a clause would have
proved an intention to insure the entire interest in the property, not merely
the insurable interest of the San Miguel Brewery, and would have shown
exactly to whom the money, in case of loss, should be paid. BUT
THE POLICIES ARE NOT SO WRITTEN.
If during the negotiations which resulted in the writing of this insurance,
it had been agreed between the contracting parties that the insurance
should be so written as to protect not only the interest of the mortgagee but
also the residuary interest of the owner, and the policies had been, by
inadvertence, ignorance, or mistake written in the form in which they were
issued, a court would have the power to reform the contracts and give effect
to them in the sense in which the parties intended to be bound.
i. But in order to justify this, it must be made clearly to appear that the
minds of the contracting parties did actually meet in agreement and that
they labored under some mutual error or mistake in respect to the
expression of their purpose.
INSURANCE | ATTY. MIGALLOS 1ST Term, AY 2014 -2015 CLASS READER
—and none other was
offered—that the parties intended for the policy to cover the risk of the
owner in addition to that of the mortgagee. It results that the defendant
Harding is not entitled to relief in any aspect of the case.
BREWERY
AND NOT THE INSURANCE COMPANIES:
i. Dunn in the mortgage contract agreed, at his own expense, to insure the
mortgaged property for its full value and to indorse the policies in such
manner as to authorize the Brewery Company to receive the proceeds in
case of loss and to retain such part thereof as might be necessary to satisfy
the remainder then due upon the mortgage debt. Instead, however, of
effecting the insurance himself Dunn authorized and requested the Brewery
Company to procure insurance on the property in the amount of P15,000 at
Dunn's expense.
ii. The Brewery Company undertook to carry this mandate into effect, and it
of course became its duty to procure insurance of the character
contemplated, that is, to have the policies so written as to protect not only
the insurable interest of the Brewery, but also the owner.
iii. Brias seems to have supposed that the policies as written had this effect,
but in this he was mistaken. It was certainly a hardship on the owner to be
required to pay the premiums upon P15,000 of insurance when he was
receiving no benefit whatever except in protection to the extent of his
indebtedness to the Brewery.
Decision: The judgment is therefore affirmed, with costs against the
appellant.
INSURANCE | ATTY. MIGALLOS 1ST Term, AY 2014 -2015 CLASS READER Gonzalez Lao v. Yek Tong Lin Fire & Marine Insurance - Insurance
Premiums
55 PHIL 386
Facts:
> Gonzales was issued 2 fire insurance policies by Yek for 100T covering
his leaf tobacco products.
> They were stored in Gonzales’ building on Soler St., which on Jan. 11,
1928, burned down.
> Art. 3 of the Insurance policies provided that: ―Any insurance in force
upon all or part of the things unsured must be declared in writing by the
insured and he (insured) should cause the company to insert or mention it
in the policy. Without such requisite, such policy will be regarded as null
and void and the insured will be deprived of all rights of indemnity in case
of loss.”
> Notwithstanding said provision, Gonzales entered into other insurance
contracts. When he sought to claim from Yek after the fire, the latter denied
any liability on the ground of violation of Art. 3 of the said policies.
> Gonzales however proved that the insurer knew of the other insurance
policies obtained by him long efore the fire, and the insurer did NOT
rescind the insurance polices in question but demanded and collected from
the insured the premiums.
Issue:
Whether or not Yek is still entitled to annul the contract.
Held:
NO. The action by the insurance company of taking the premiums of the insured
notwithstanding knowledge of violations of the provisions of the policies
amounted to waiver of the right to annul the contract of insurance..
SYLLABUS
1. FIRE INSURANCE; POLICIES MORTGAGED TO A THIRD
PARTY; REAL PARTY IN INTEREST. — The fact that the plaintiff
himself presented in evidence the policies mortgaged to the Bank of the
Philippine Islands gives rise to the presumption that the debt secured by the
mortgage has been paid, in accordance with article 1191 of the Civil Code.
On the other hand, "Insured may be regarded as the real party in interest,
although he has assigned the policy for the purpose of collection, or has
assigned as collateral security any judgment he may obtain." (33 C. J., pp.
82 et seq.)
2. ID.; INSURANCE IN VARIOUS COMPANIES. — The tobacco
insured in the other companies was different from that insured with the
defendant, since the number of bales of tobacco in the warehouse greatly
exceeded that insured with the defendant and the other companies put
together. And according to the doctrine enunciated in 26 Corpus Juris, 188,
"to be insurance of the sort prohibited the prior policy must have been
insurance upon the same subject matter, and upon the same interest therein."
3. ID.; ID.; WAIVER TO AN ACTION FOR ANNULMENT OF
CONTRACT. — If, with the knowledge of the 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 (19 Cyc., 791, 792).
D E C I S I O N
VILLAMOR, J p:
This is an action to recover of the defendant the Yek Tong Lin Fire &
Marine Insurance Co., Ltd., the amount of two insurance policies totalling
P100,000 upon leaf tobacco belonging to the plaintiff, which was damaged
by the fire that destroyed the building on Soler Street No. 188, where said
tobacco was stored, on January 11, 1928.
The defendant filed a general and specific denial of each and every
allegation of the complaint, set up three special defenses, and prayed to be
absolved from the complaint with costs against the plaintiff.
After the case was tried, the court below rendered judgment as follows:
INSURANCE | ATTY. MIGALLOS 1ST Term, AY 2014 -2015 CLASS READER "In this case and in Nos. 33458, 33868, and 33480 of this court, which, by
agreement of the interested parties, were jointly tried, the plaintiff demands
P290,000 from the defendant assurance companies, alleging that to be the
amount of the insurance on his leaf tobacco which was damaged by the fire
that destroyed the warehouse at No. 188 Soler Street, Manila, where it was
stored, on January 11,1928, the plaintiff's claim against the herein
defendant, the Yek Tong Lin Fire & Marine Insurance Co. being for
P100,000, and against the defendants in the three other cases mentioned
above, for P190,000.
"After the plaintiff had presented his evidence, the defendant companies in
cases Nos. 33458, 33868, and 33480, offered to compromise with him by
paying eighty-five per cent of his claim against them. In view of the fact
that said defendants had in their answer raised the question of warranties A
and G of the plaintiff's policies, providing that the building used for the
effects insured would not be occupied by any other lessee, nor would be
used for the deposit of other goods, without the consent of said defendants,
and inasmuch as the latter alleged in their answer that the owner of the
burnt building had leased the warehouse to several persons for the storage
of sundry articles, the plaintiff had to accept the proposed compromise, and
in consequence thereof, the three cases aforesaid were dismissed.
"The present case followed the usual course of procedure because the
plaintiff refused to accept the compromise which, in the same terms as those
made by the defendants in the three cases mentioned, was proposed to him
by the defendant the Yek Tong Lin Fire & Marine Insurance Company, the
plaintiff contending that said defendant did not, nor could, raise the question
of warranties A and G heretofore mentioned for the simple reason that it
was the defendant itself, as owner, who had leased the building which later
was destroyed by fire, to another person after having already ceded a
portion of it to said plaintiff.
"The only question to be determined, having been raised in the defendant's
answer — both parties agreeing that the plaintiff insured his leaf tobacco
with the defendant assurance company, and that said goods were damaged
by the fire which destroyed the warehouse where they were stored, on
January 11, 1928 — is whether said goods were worth what the plaintiff
claims, that is, about equal to the amount for which they were insured in the
four above-mentioned assurance companies, including the defendant in this
case.
"The plaintiff has conclusively shown by the Official Register Book
(Exhibit I) and the Official Guide (Exhibit J), furnished by the Bureau of
Internal Revenue, and kept under the supervision thereof in the usual form,
in accordance with articles 10, 34 to 38 of the Regulations of the same
promulgated under No. 17, by the Secretary of Finance; the Stock Book for
recording the quantity of tobacco, Exhibit K, kept by the plaintiff and
presented as part of the testimony of witnesses Claveria, Bonete, and
Leoncio Jose; the testimony of Estanislao Lopez, Inspector of Internal
Revenue, and the latter's report (Exhibit N), submitted to the Collector of
Internal Revenue in pursuance of article 33 of the aforementioned
Regulations; the tobacco invoices of stock damaged by the fire, Exhibits L
and L-1 to L-20; and by the testimony of Clemente Uson who went over the
plaintiff's books as auditor and public accountant, and also prepared
Exhibits T and U, attached to the record, that the plaintiff had in the
warehouse at No. 188 Soler at the time of the fire, not less, but rather more,
than 6,200 bales of leaf tobacco worth over P300,000, which is of course
more than the sum total of all the insurances taken out with the defendant
herein and the defendants in the three aforementioned cases Nos. 33458,
33868, and 33480.
"The reason why the entry showing that 258 bales of tobacco had been
removed from the warehouse, appearing in the Official Register Book,
Exhibit I, was not posted in the Stock Book, Exhibit K, has been
satisfactorily explained by the plaintiff's witnesses, who stated that it was
due to the fact that there was no time to post it in the Stock Book, because
the fire took place and the plaintiff told them not to touch, and to make no
further entries in the books. Witness White, the defendant company's
adjuster, who carefully examined the plaintiff's books not only immediately
after the fire, but also during the hearing of this case, seems not to have
found any irregularity therein; at least he said nothing on the point when he
took the witness stand. On the contrary, in his report Exhibit UU sent to the
defendant herein in his capacity as adjuster, appointed by the latter, and in
Exhibits WW and XX, admitted by the Yek Tong Lin Ins. Co., Ltd., he
admitted that the leaf tobacco belonging to the plaintiff in the warehouse
when the fire took place exceeded, in quantity and value, the amount of the
insurance.
"The defendant did not present any evidence to rebut the plaintiff's
evidence, but only presented witness Rowlands, whose testimony or opinion
INSURANCE | ATTY. MIGALLOS 1ST Term, AY 2014 -2015 CLASS READER as to the probable number of bales of tobacco in the warehouse at the date
of the fire does not deserve serious consideration, not only because of the
plaintiff's evidence, but because his opinion or estimate is based solely upon
photographs of the place taken after the fire.
"In view of the foregoing, the court hereby sentences the defendant the Yek
Tong Lin Fire and Marine Insurance Company, Ltd., to pay the plaintiff
Emilio Gonzalez La O, the amount of one hundred thousand pesos
(P100,000), for which it had accepted the insurance on the leaf tobacco
belonging to said plaintiff, damaged by fire which destroyed the warehouse
at No. 188 Soler Street, where it was stored, on January 11, 1928, and legal
interest upon said amount from June 27, 1928, when the complaint was
filed in this case, plus the costs.
"So ordered.
"Manila, P. I., this 24th day of December, 1929.
"ANACLETO DIAZ
"Judge"
The defendant duly appealed from this judgment, alleging that the trial
court erred in making reference to the settlement arrived at by the plaintiff
and other insurance companies, and in declaring that the only question
involved in the case is whether or not the tobacco damaged by the fire is
worth at least P290,000.
There is no merit in these assignments of error. Since the settlement
between the plaintiff and the other defendant companies was reached after
the plaintiff had presented his evidence, and as those three cases were tried
jointly with the instant case, there is no valid reason why the trial court
should not refer to it in deciding this case. Furthermore, the court's holding
here assigned as error, granting there were other incidental matters to be
decided by the court, does not in itself constitute a reversible error.
In the third assignment of error, the defendant contends that the plaintiff
cannot recover under the policy as he has failed to prove that the Bank of
the Philippine Islands, to whom the policy was made payable, no longer has
any rights and interests in it. It should be noted that the defendant did not in
its answer allege defect of parties plaintiff, and, besides, it does not appear
that the plaintiff ceded to the bank all his rights or interests in the insurance,
the note attached to the policies merely stating: "There shall be paid to the
Bank of the Philippine Islands an indemnity for any loss caused by fire,
according to the interest appearing in its favor." And the fact that the
plaintiff himself presented in evidence the policies mortgaged to the Bank
of the Philippine Islands gives rise to the presumption that the debt thus
secured has been paid, in accordance with article 1191 of the Civil Code.
Corpus Juris, volume 26, pages 483 et seq., states:
"Insured, being the person with whom the contract was made, is primarily
the proper person to bring suit thereon. . . . Subject to some exceptions,
insured may thus sue, although the policy is taken wholly or in part for the
benefit of another person named or unnamed, and although it is expressly
made payable to another as his interest may appear or otherwise. . . .
Although a policy issued to a mortgagor is taken out for the benefit of the
mortgagee and is made payable to him, yet the mortgagor may sue thereon
in his own name, especially where the mortgagee's interest is less than the
full amount recoverable under the policy, . . .."
And in volume 33, page 82, of the same work, we read the following:
"Insured may be regarded as the real party in interest, although he has
assigned the policy for the purpose of collection, or has assigned as
collateral security any judgment he may obtain."
It is also contended that the trial court erred in not declaring that inasmuch
as the plaintiff failed to notify the defendant corporation in writing, of other
insurance policies obtained by him, he has violated article 3 of the
conditions of the policies in question, thereby rendering these policies null
and void. Article 3 of the conditions of the policies in question prescribes:
"ART. 3. Any insurance in force upon all or part of the things
insured must be declared in writing by the insured and he should cause the
company to insert or mention it in the policy, and without such requisite
said policy will be regarded as null and void, and the assured deprived of all
rights of indemnity in case of loss."
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 appellee, constitutes
a notification that there were other insurances existing at the time.
INSURANCE | ATTY. MIGALLOS 1ST Term, AY 2014 -2015 CLASS READER In the case of Benedict vs. Ocean Insurance Co. (31 N. Y., 391-393), the
construction of the clause, "privilege for $4,500 additional insurance," was
discussed. One of the printed clauses of the policy reads as follows:
"If said assured, or his assigns, shall hereafter make any other insurance
upon the same property, and shall not, with all reasonable diligence, give
notice to this corporation, and have the same indorsed on this instrument, or
otherwise acknowledged by them, in writing, this policy shall cease and be
of no further effect."
The Supreme Court of New York held that the words "Privilege for $4,500
additional insurance" made it unnecessary for the assured to inform the
insurer of any other policy up to that amount.
In the case cited the same goods insured by the defendant company were
reinsured to the amount of $4,500 in accordance with the clause "privilege
for $4,500 additional insurance," but in the instant case it may be said that
the tobacco insured in the other companies was different from that insured
with the defendant, since the number of bales of tobacco in the warehouse
greatly exceeded that insured with the defendant and the other companies
put together. And according to the doctrine enunciated in 26 Corpus Juris,
188, "to be insurance of the sort prohibited the prior policy must have been
insurance upon the same subject matter, and upon the same interest therein."
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 appellant company, the Yek Tong Lin Fire & Marine
Insurance Co., knew that there were other insurances, at least from the
attempt to raise the insurance premium on the warehouse and the appellee's
tobacco deposited therein to 1 per centum, and it was later reduced upon
petition of the appellant itself and other assurance companies to 0.75 per
centum presented to the association of assurance companies in the year
1927, and notwithstanding this, said appellant did not rescind the insurance
policies in question, but demanded and collected from the appellee the
increased premium.
That the defendant had knowledge of the existence of other policies
obtained by the plaintiff from other insurance companies, is specifically
shown by the defendant's answer wherein it alleges, by way of special
defense, the fact that there exist other policies issued by the companies
mentioned therein. If, with the knowledge of the 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 a waiver. . . ."
The fifth and sixth assignments of error refer to the quantity of tobacco in
the Soler warehouse at the time of the fire, which, according to the
appellant, did not exceed 4,930 bales. As may be seen, these assignments of
error by the appellant involved purely questions of fact, and it is for this
court to decide whether the findings of the trial court are supported by the
evidence. The judgment appealed from sets forth clearly the evidence
presented to the court in order to determine the quantity of tobacco in the
warehouse at the time of the fire. We have studied the evidence aforesaid,
and are fully convinced that the court's findings are well supported by the
same. Inasmuch as it has not, in our opinion, been shown that the trial judge
overlooked any fact, which, if duly considered would have changed the
result of the case, we do not feel justified in altering or modifying his
findings.
Finally, the appellant contends that the trial court erred in arriving at the
damages that plaintiff may recover under the policies in question by the cost
price of the tobacco damaged by the fire, instead of computing the same on
the market price of the said tobacco at the time of the fire; and in declaring
that the tobacco damaged was worth more than P300,000. This error is not
well taken, for it is clear that the cost price is competent evidence tending to
show the value of the article in question. And it was so held the case of
Glaser vs. Home Ins. Co. (47 Misc. Rep., 89; 93 N. Y. Supp., 524; Abbott's
Proof of Facts, 3d ed., p. 874), where it was declared that the cost of the
goods destroyed by fire is some evidence of value, in an action against the
INSURANCE | ATTY. MIGALLOS 1ST Term, AY 2014 -2015 CLASS READER insurance company. Exhibits L to L-20, which are invoices for tobacco
purchased by the appellee, and the testimony of the public accountant
Clemente Uson, who went over them and the rest of the appellee's books
after the fire, taken in connection with reports T and Z, adduced as part of
his testimony, show that the cost price of each bale of tobacco belonging to
the appellee, damaged by the fire, was P51.8544, which, multiplied by
6,264, the number of bales, yields a total of over P320,000.
The adjusters of the appellant, White & Page, in ascertaining the market
price of the plaintiff's tobacco deposited in the burnt warehouse, taking the
information furnished by the Tabacalera and by M. Pujalte, S. en C., as a
basis, thus conclude their report: "We therefore are obliged to the
conclusion that the value of the tobacco destroyed was not less than
P290,000." And, indeed, said adjusters, in behalf of the appellant, appraised
the appellee's tobacco assured and damaged by the fire at P303,052.32,
collecting from the proceeds of the sale of the tobacco saved from the fire
P3,000, the appellant's share in proportion to the insurance of P100,000
belonging to it, and P190,000 belonging to the other assurance companies,
and considered the appellee himself as his own assurer in the amount of
P13,052.32 which was the difference between the total value of the tobacco
damaged and the total amount of the insurance, P290,000, for which reason
the appellee received P129.21, as his proportionate share of the tobacco
saved, as shown by Exhibits UU, WW, and XX.
Hence the last assignment of error is without merit.
Wherefore, the judgment appealed from is in accordance with law, and must
be, as it is hereby, affirmed, with costs against the appellant. So ordered.
Johnson, Street, Malcolm, Ostrand, Johns, Romualdez and Villa- Real, JJ.,
concur.
INSURANCE | ATTY. MIGALLOS 1ST Term, AY 2014 -2015 CLASS READER Geagonia v CA
G.R. No. 114427
February 6, 1995
Facts:
Geagonia, owner of a store, obtained from Country Bankers fire insurance
policy for P100,000.00. The 1 year policy and covered thestock trading of
dry goods.
The policy noted the requirement that
"3. The insured shall give notice to the Company of any insurance or
insurances already effected, or which may subsequently be effected,
covering any of the property or properties consisting of stocks in trade,
goods in process and/or inventories only hereby insured, and unless notice
be given and the particulars of such insurance or insurances be stated
therein or endorsed in this policy pursuant to Section 50 of the Insurance
Code, by or on behalf of the Company before the occurrence of any loss or
damage, all benefits under this policy shall be deemed forfeited, provided
however, that this condition shall not apply when the total insurance or
insurances in force at the time of the loss or damage is not more than
P200,000.00."
The petitioners’ stocks were destroyed by fire. He then filed a claim which
was subsequently denied because the petitioner’s stocks were covered by
two other fire insurance policies for Php 200,000 issued by PFIC. The basis
of the private respondent's denial was the petitioner's alleged violation of
Condition 3 of the policy.
Geagonia then filed a complaint against the private respondent in the
Insurance Commission for the recovery of P100,000.00 under fire insurance
policy and damages. He claimed that he knew the existence of the other two
policies. But, he said that he had no knowledge of the provision in the
private respondent's policy requiring him to inform it of the prior policies
and this requirement was not mentioned to him by the private respondent's
agent.
The Insurance Commission found that the petitioner did not violate
Condition 3 as he had no knowledge of the existence of the two fire
insurance policies obtained from the PFIC; that it was Cebu Tesing Textiles
w/c procured the PFIC policies w/o informing him or securing his consent;
and that Cebu Tesing Textile, as his creditor, had insurable interest on the
stocks.
The Insurance Commission then ordered the respondent company to pay
complainant the sum of P100,000.00 with interest and attorney’s fees.
CA reversed the decision of the Insurance Commission because it found
that the petitioner knew of the existence of the two other policies issued by
the PFIC.
Issues:
1. WON the petitioner had not disclosed the two insurance policies when he
obtained the fire insurance and thereby violated Condition 3 of the policy.
2. WON he is prohibited from recovering
Held: Yes. No. Petition Granted
Ratio:
1. The court agreed with the CA that the petitioner knew of the prior
policies issued by the PFIC. His letter of 18 January 1991 to the private
respondent conclusively proves this knowledge. His testimony to the
contrary before the Insurance Commissioner and which the latter relied
upon cannot prevail over a written admission made ante litem motam. It
was, indeed, incredible that he did not know about the prior policies since
these policies were not new or original.
2. Stated differently, provisions, conditions or exceptions in policies which
tend to work a forfeiture of insurance policies should be construed most
strictly against those for whose benefits they are inserted, and most
favorably toward those against whom they are intended to operate.
With these principles in mind, Condition 3 of the subject policy is not
totally free from ambiguity and must be meticulously analyzed. Such
analysis leads us to conclude that (a) the prohibition applies only to double
insurance, and (b) the nullity of the policy shall only be to the extent
exceeding P200,000.00 of the total policies obtained.
INSURANCE | ATTY. MIGALLOS 1ST Term, AY 2014 -2015 CLASS READER Furthermore, by stating within Condition 3 itself that such condition shall
not apply if the total insurance in force at the time of loss does not exceed
P200,000.00, the private respondent was amenable to assume a co-insurer's
liability up to a loss not exceeding P200,000.00. What it had in mind was to
discourage over-insurance. Indeed, the rationale behind the incorporation of
"other insurance" clause in fire policies is to prevent over-insurance and
thus avert the perpetration of fraud. When a property owner obtains
insurance policies from two or more insurers in a total amount that exceeds
the property's value, the insured may have an inducement to destroy the
property for the purpose of collecting the insurance. The public as well as
the insurer is interested in preventing a situation in which a fire would be
profitable to the insured.
INSURANCE | ATTY. MIGALLOS 1ST Term, AY 2014 -2015 CLASS READER SAURA IMPORT & EXPORT CO., INC., plaintiff-appellant, vs.
PHILIPPINE INTERNATIONAL SURETY CO., INC., and
PHILIPPINE NATIONAL BANK,
defendants-appellees.
G.R. No. L-15184; May 31, 1963;
Doctrine: Actual personal notice to the insured is essential to a cancellation
under a provision for cancellation by notice. It is condition precedent to a
cancellation of the policy by the insurer, and consequently a letter
containing notice of cancellation which is mailed by the insurer but not
received by the insured, is ineffective as cancellation
FACTS:
1. December 26, 1952: the Saura Import & Export Co Inc., mortgaged to the
Phil. National Bank, a parcel of land, to secure the payment of promissory
note of P27,000.00
2. April 30, 1953: the mortgage was amended to guarantee an increased
amount, bringing the total mortgaged debt to P37,000.00
3. The provisions of the mortgaged contact, pertinent to the resolution of the
present case, provide as follows —
a. 2. . . . he shall insure the mortgaged property at all times against
fire and earthquake for an amount and with such company satisfactory to
the Mortgagee, indorsing to the latter the corresponding policies; he shall
keep the mortgaged property in good condition, making repairs and
protecting walls that may be necessary; . . .
4. Erected on the land mortgaged, was a building of strong materials owned
by the mortgagor Saura Import & Export Co., Inc., which had always been
covered by insurance, many years prior to the mortgage contract.
5. Saura insured the building and its contents with the Philippine
International Surety, an insurance firm acceptable to mortgagee Bank,
for P29,000.00 against fire for the period of one year from October 2,
1954
a. the insurance policy was endorsed to the mortgagee
PNB, in a Memo which states —
i. Loss if any, payable to the Philippine National Bank as their
interest may appear, subject to the terms, conditions and warranties of this
policy
6. On October 15, 1954, barely thirteen (13) days after the issuance of
the fire insurance policy, the insurer cancelled the same, effective as of
the date of issue
a. Notice of the cancellation was given to appellee bank in
writing
7. On April 6, 1955, the building and its contents, worth P40,685.69 were
burned.
8. Saura filed a claim with the Insurer and mortgagee Bank.
9. Upon the presentation of notice of loss with the PNB, Saura learned for
the first time that the policy had previously been cancelled on October 2,
1954, by the insurer, when Saura's folder in the Bank's filed was opened and
the notice of cancellation (original and duplicate) sent by the Insurer to the
Bank, was found.
10. Upon refusal of the Insurer Philippine International Surety to pay the
amount of the insurance, Civil Case No. 26847 was filed with the Manila
CFI against the Insurer, and the PNB was later included as party defendant,
after it had refused to prosecute the case jointly with Saura Import & Export
Co., Inc.
11. At the trial, it was established that neither the Insurer nor the mortgagee
Bank informed the plaintiff Saura of the cancellation of the policy
12. Trial court dismissed the complaint
ISSUE: 1. Whether the notice of cancellation to the bank is notice to Saura
as well? NO
INSURANCE | ATTY. MIGALLOS 1ST Term, AY 2014 -2015 CLASS READER HELD:
her contracts of insurance upon property, in
addition to the common provision for cancellation of the policy upon
request of the insured, generally provide for cancellation by the insurer by
notice to the insured for a prescribed period, which is usually 5 days, and
the return of the unearned portion of the premium paid by the insured
ions for notice to the insured, is to
prevent the cancellation of the policy, without allowing the insured ample
opportunity to negotiate for other insurance in its stead.
o The form and sufficiency of a notice of cancellation is determined by
policy provisions.
in any particular form, in the absence of
a statute or policy provision prescribing such form, and it is sufficient, so
long as it positively and unequivocally indicates to the insured, that it is the
intention of the company that the policy shall cease to be binding.
certain number of days
notice shall be given, a reasonable notice and opportunity to obtain other
insurance must be given
o the insured is essential to a cancellation under a
provision for cancellation by notice.
o condition precedent to a cancellation of the policy by the insurer, and
consequently a letter containing notice of cancellation which is mailed by
the insurer but not received by the insured, is ineffective as cancellation
ide for the notice, its form or period.
a clear and unequivocal manner,
preferably in writing, in view of the importance of an insurance contract,
should be given by the insurer to the insured, so that the latter might be
given an opportunity to obtain other insurance for his own protection.
o The notice should be personal to the insured and not to and/or through any
unauthorized person by the policy.
he defendant-appellee insurance company to notify the
insured, but it did not.
April 6, 1955, at the time when the policy was enforced (October 2, 1954 to
October 2, 1955); and that under the facts, as found by the trial court, to
which We are bound, it is evident that both the insurance company and the
appellee bank failed, wittingly or unwittingly, to notify the insured
appellant Saura of the cancellation made.
to the bank, as far appellant herein is concerned, is not effective
notice
t 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 lienholder alone is ineffective as a cancellation of the
policy to the owner of the property.
DISPOSITION: WHEREFORE, the decision appealed from is hereby
reversed, and another is entered, condemning the defendant-appellee
Philippine International Surety Co., Inc., to pay Saura Import & Export Co.,
Inc., appellant herein, the sum of P29,000.00, the amount involved in Policy
No. 429, subject-matter of the instant case. Without costs.
INSURANCE | ATTY. MIGALLOS 1ST Term, AY 2014 -2015 CLASS READER [G.R. No. L-43766. February 26, 1988.]
PHILIPPINE NATIONAL BANK, petitioner, vs. THE HON. COURT OF
APPEALS (SPECIAL THIRD DIVISION), IGNACIO DESIDERIO AND
VICTORIA F. DESIDERIO, respondents.
SYLLABUS
1. REMEDIAL LAW; EVIDENCE; FINDINGS OF FACT OF THE
COURT OF APPEALS, BINDING ON APPEAL. — We find no cogent
reasons to disturb the ruling of the Court of Appeals. Indeed, and as found
by the lower courts, the petitioner could have collected the insurance
proceeds if only it were not negligent. It had ample time and enough legal
remedies, not to mention resources, to collect the insurance proceeds where
the same became due, yet, it merely sent demand letters to the insurance
company. And when the company did not act on the letters, the petitioner
did not pursue other remedies to press its claim. It did not even file a suit for
the recovery of the insurance proceeds against the insurance company
before and even during the liquidation of the company. It allowed seven
long years to pass before finally deciding to file a collection case. Realizing
that it could no longer collect from the insurance company because the
same had already folded up, the petitioner directed the collection suit
against the private respondents whose obligation with the petitioner had
long been extinguished. For, indeed, under the facts obtaining, the private
respondents cannot have been expected to initiate moves for the collection
of the insurance proceeds. It was the petitioner which was duty bound to
enforce the claim for the insurance proceeds, being, as earlier mentioned,
the attorney-in-fact of the private respondents and the beneficiary of the
insurance policy.
2. MERCANTILE LAW; INSURANCE; ATTORNEY-IN-FACT
DESIGNATED AS BENEFICIARY OF AN INSURANCE POLICY HAS
THE OBLIGATION TO COLLECT THE PROCEEDS THEREOF. — The
petitioner as the attorney-in-fact of the private respondents and as the
beneficiary of the insurance policy had the obligation to collect the proceeds
of the policy. For "under the chattel mortgage covering the goods offered as
security for payment of the loan, the private respondents as mortgagors
constituted and appointed the petitioner as mortgagee their attorney-in-fact
with full power and authority to collect and receive any interest, income or
benefits produced by the mortgaged property and apply such amount
collected and received in payment of the interest accruing and of the
principal obligation. The petitioner was itself the beneficiary of the
insurance policy to which it was duly indorsed and made payable, and was
in possession thereof."
D E C I S I O N
SARMIENTO, J p:
In its resolve to recover the trifling sum of P3,855.60, petitioner Philippine
National Bank (PNB), a premier banking institution, incredulous of the
adverse decisions of three lower courts, to wit: the City Court of
Zamboanga City which rendered a decision the dispositive portion of which
reads:
WHEREFORE, this Court hereby renders judgment in the following tenor:
That the complaint for the unpaid balance of the contractual loan of the
Defendant Ignacio Desiderio and Victoria F. Desiderio filed by the
Philippine National Bank, is hereby ordered dismissed and that the amount
of P1,089.60 which the Defendants paid as partial payment to the Plaintiff
Bank on account of the loss contracted, is here by declared unrecoverable
and the same shall inure to the benefit of the Philippine National Bank.
That no pronouncement as to damages, costs and attorney's fees is hereby
made, as the loss of the things mortgaged were presumed to be caused by
accident, no evidence having been presented to prove the contrary; 1
the then CFI of Zamboanga City which affirmed the above in a decision the
dispositive portion of which reads:
IN VIEW OF THE FOREGOING, the appealed judgment of the City Court
is affirmed insofar as it dismisses the complaint as well as the counter-claim
filed in the above entitled case; 2
and the Court of Appeals which likewise affirmed the above in a decision
the dispositive portion of which reads:
WHEREFORE, the appealed judgment, being in accordance with law and
the evidence, is hereby affirmed in toto, with costs against the petitioner; 3
has elevated this case to the highest court of the land with the following
errors assigned:
INSURANCE | ATTY. MIGALLOS 1ST Term, AY 2014 -2015 CLASS READER I
THE COURT OF APPEALS ERRED IN HOLDING THAT PETITIONER,
AS ATTORNEY-IN-FACT OF PRIVATE RESPONDENTS IS BOUND
TO SUCCESSFULLY COLLECT THE INSURANCE PROCEEDS OF
THE MORTGAGED PROPERTY OF THE LATTER
.
II
THE COURT OF APPEALS ERRED IN EXONERATING PRIVATE
RESPONDENTS, BY WAY OF IMPLIED OFF-SETTING, FROM ITS
LOAN ACCOUNT WITH PETITIONER, THERE BEING NO
COUNTERCLAIM FOR DAMAGES FILED BASED ON BREACH OF
DUTY.
The facts of the case are as follows:
More than a quarter century ago, on January 10, 1963, the private
respondents-spouses applied for a retailers' loan with the petitioner. The
loan which was subsequently approved was secured by a chattel mortgage
consisting of the verified inventory of stocks in the store of the private
respondents, located at Marahui Street, Zamboanga City. In addition to this,
the goods and merchandise, subject matter of the mortgage, were insured
with the Cosmopolitan Insurance Co. in the amount of P4,000.00 with the
petitioner as the beneficiary pursuant to the requirements of the latter.
On August 1, 1964, while the insurance and the chattel mortgage were still
in force, and after the private respondents had paid the petitioner the amount
of P1,089.60 as partial payment of the loan in accordance with the loan
agreement, the insured building and merchandise of the private respondents
were totally destroyed by fire.
The petitioner sent several letters to the insurance company for the purpose
of recovering the proceeds of the insurance but to no avail. Sometime in
1966, the said insurance company became the subject of liquidation. Seven
years after the insured chattels mortgaged were burned, the petitioner filed a
complaint for collection against the private respondents.
We find no cogent reasons to disturb the ruling of the Court of Appeals.
The petitioner as the attorney-in-fact of the private respondents and as the
beneficiary of the insurance policy had the obligation to collect the proceeds
of the policy. The argument of the petitioner to the effect that there is no
express provision in the Chattel Mortgage Contract which compels the
petitioner to collect the proceeds of the insurance in case of loss is a mere
rationalization of one trying hard to put the blame on another for its own
fault or negligence. For "under the chattel mortgage covering the goods
offered as security for payment of the loan, the private respondents as
mortgagors constituted and appointed the petitioner as mortgagee their
attorney-in-fact with full power and authority to collect and receive any
interest, income or benefits produced by the mortgaged property and apply
such amount collected and received in payment of the interest accruing and
of the principal obligation. The petitioner was itself the beneficiary of the
insurance policy to which it was duly indorsed and made payable, and was
in possession thereof." 5
Indeed, and as found by the lower courts, the petitioner could have collected
the insurance proceeds if only it were not negligent. It had ample time and
enough legal remedies, not to mention resources, to collect the insurance
proceeds where the same became due, yet, it merely sent demand letters to
the insurance company. And when the company did not act on the letters,
the petitioner did not pursue other remedies to press its claim. It did not
even file a suit for the recovery of the insurance proceeds against the
insurance company before and even during the liquidation of the company.
It allowed seven long years to pass before finally deciding to file a
collection case. Realizing that it could no longer collect from the insurance
company because the same had already folded up, the petitioner directed the
collection suit against the private respondents whose obligation with the
petitioner had long been extinguished.
For, indeed, under the facts obtaining, the private respondents cannot have
been expected to initiate moves for the collection of the insurance proceeds.
It was the petitioner which was duty bound to enforce the claim for the
insurance proceeds, being, as earlier mentioned, the attorney-in-fact of the
private respondents and the beneficiary of the insurance policy.
It is sad that the private respondents, small time sari-sari store keepers, had
to be dragged into this suit if only because of the petitioner's resoluteness to
recover what, to our minds, is too measly an amount, not really worth
litigating upon, in fact, not even worth wasting the time of this Court.
WHEREFORE, the petition is hereby DISMISSED and the appealed
judgment AFFIRMED, in toto, with triple costs against the petitioner.
SO ORDERED.
INSURANCE | ATTY. MIGALLOS 1ST Term, AY 2014 -2015 CLASS READER Insurable Interest
Insurance Code
Sec. 18. No contract or policy of insurance on property shall be enforceable
except for the benefit of some person having an insurable interest in the
property insured.
Sec. 25. Every stipulation in a policy of insurance for the payment of loss
whether the person insured has or has not any interest in the property
insured, or that the policy shall be received as proof of such interest, and
every policy executed by way of gaming or wagering, is void.
Violeta R. Lalican v. Insular Life Assurance Co. Ltd.
Facts:
Eulogio Lalican applied for an insurance policy with the Insular
Life amounting to Php 1,500,000. Under the terms of the policy, Eulogio
was to pay the premiums on a quarterly basis, having a grace period of 31
days, for the payment of each premium subsequent to the first. If any
premium was not paid on or before the due date, the policy would be in
default and if the premium remained unpaid until the end of the grace
period, the policy would automatically lapse and become void.
Eulogio paid the premiums due on the first two succeeding
payment dates but failed to pay subsequent premiums even after the lapse of
the grace period thereby rendering the policy void. He submitted an
application for reinstatement of policy through Josephine Malaluan, an
agent of Insular Life, together with the payment of the unpaid premiums.
However, the Insular Life notified him that his application could not be
processed because he failed to pay the overdue interest of the unpaid
premiums.
On Sept. 17, 1998, Eulogio submitted to Malaluan’s house a
second application for reinstatement including the payment for the overdue
interest as well as for the premiums due for April and July of that year,
which was received by Malaluan’s husband on her behalf and was thereby
issued a receipt for the amount Eulogio deposited. However, on that same
day, Eulogio died of cardio-respiratory arrest secondary to electrocution.
Violeta, Eulogio’s widow filed with the Insular Life a claim for
payment of the full proceeds of the policy but the latter informed her that
the claim could not be granted since at the time of Eulogio’s death, his
policy has already lapsed and he failed to reinstate the same. Violeta
requested a reconsideration of her claim but the same was also rejected.
Therefore, she filed a complaint for death claim benefits with the RTC
alleging the unfair claim settlement practice of Insular Life and its
deliberate failure to act with reasonable promptness on her insurance claim.
The trial court rendered a decision in favour of Insular Life and after the
former denied her motion for reconsideration, she directly elevated her case
to the Supreme Court via the petition for review on Certiorari.
Issue:
Whether or not the policy of Eulogio was reinstated before his death.
Ruling:
To reinstate a policy means to restore the same to preium-paying
status after it has been permitted to lapse. Both the policy contract and
application for reinstatement provide for specific conditions for the
reinstatement of a lapsed policy.
According to the Application for Reinstatement, the policy would
only be considered reinstated upon the approval of the application by
Insular Life during the applicant’s ―lifetime and good health‖ and whatever
amount the application paid in connection was considered to be a deposit
only until approval of said application.
INSURANCE | ATTY. MIGALLOS 1ST Term, AY 2014 -2015 CLASS READER Eulogio’s death rendered impossible full compliance with the
conditions for reinstatement of policy even though, before his death, he
managed to file his application for reinstatement and deposit the amount for
payment of his overdue premiums and interest thereon with Malaluan. As
expressly provided on the policy contract, agents of Insular Life have no
authority to approve any application for reinstatement. They still had to turn
over to Insular Life the application for reinstatement and accompanying
deposit, for processing and approval of the latter.
INSURANCE | ATTY. MIGALLOS 1ST Term, AY 2014 -2015 CLASS READER El Oriente Fabrica de Tabacos, Inc. vs. Juan Posadas, Collector of
Internal Revenue
[G.R. No. 34774, September 21, 1931]
Facts:
Insurer: Manufacturers Life Insurance Co., of Toronto, Canada, thru its
local agent E.E. Elser
Insured: A. Velhagen (manager of El Oriente)
Beneficiary: El Oriente Fabrica de Tabacos, Inc.
El Oriente, in order to protect itself against the loss that it might
suffer by reason of the death of its manager, whose death would be a serious
loss to El Oriente procured from the Insurer an insurance policy on the life
of the said manager for the sum of 50,000 USD with El Oriente as the
designated sole beneficiary. The insured has no interest or participation in
the proceeds of said life insurance policy.
El Oriente charged as expenses of its business all the said
premiums and deducted the same from its gross incomes as reported in its
annual income tax returns, which deductions were allowed by Posadas
(Collector of Internal Revenue) upon showing by El Oriente that such
premiums were legitimate expenses of the business.
Upon the death of the manager, El Oriente received all the
proceeds of the life insurance policy together with the interest and the
dividends accruing thereon, aggregating P104,957.88. Posadas assessed
and levied the sum of P3,148.74 as income tax on the proceeds of the
insurance policy, which was paid by El Oriente under protest. El Oriente
claiming exemption under Section 4 of the Income Tax Law.
Issue:
Whether or not the proceeds of insurance taken by a corporation on the life
of an important official to indemnify it against loss in case of his death, are
taxable as income under the Philippine Income Tax Law?
Ruling:
The Income Tax Law for the Philippines is Act No. 2833, as
amended. In chapter I On Individuals, is to be found section 4 which
provides that, "The following incomes shall be exempt from the provisions
of this law: (a) The proceeds of life insurance policies paid to beneficiaries
upon the death of the insured ... ." The Chapter on Corporations does not
provide as above. It is certain that the proceeds of life insurance policies
are exempt. It is not so certain that the proceeds of life insurance policies
paid to corporate beneficiaries upon the death of the insured are likewise
exempt.
The situation will be better elucidated by a brief reference to laws
on the same subject in the United States. The Income Tax Law of 1916
extended to the Philippine Legislature, when it came to enact Act No. 2833,
to copy the American statute. Subsequently, the Congress of the United
States enacted its Income Tax Law of 1919, in which certain doubtful
subjects were clarified. Thus, as to the point before us, it was made clear,
when not only in the part of the law concerning individuals were
exemptions provided for beneficiaries, but also in the part concerning
corporations, specific reference was made to the exemptions in favor of
individuals, thereby making the same applicable to corporations. This was
authoritatively pointed out and decided by the United States Supreme Court
in the case of United States vs. Supplee-Biddle Hardware Co. ( [1924], 265
U.S., 189), which involved facts quite similar to those before us.
INSURANCE | ATTY. MIGALLOS 1ST Term, AY 2014 -2015 CLASS READER
To quote the exact words in the cited case of Chief Justice Taft
delivering the opinion of the court:
It is earnestly pressed upon us that proceeds of life insurance paid
on the death of the insured are in fact capital, and cannot be taxed as income
… that proceeds of a life insurance policy paid on the death of the insured
are not usually classed as income.
Considering, therefore, the purport of the stipulated facts,
considering the uncertainty of Philippine law, and considering the lack of
express legislative intention to tax the proceeds of life insurance policies
paid to corporate beneficiaries, particularly when in the exemption in favor
of individual beneficiaries in the chapter on this subject, the clause is
inserted "exempt from the provisions of this law," we deem it reasonable to
hold the proceeds of the life insurance policy in question as representing an
indemnity and not taxable income.
The foregoing pronouncement will result in the judgment being
reversed and in another judgment being rendered in favor of El Oriente.
INSURANCE | ATTY. MIGALLOS 1ST Term, AY 2014 -2015 CLASS READER Beneficiaries
New Civil Code
Article 2012. Any person who is forbidden from receiving any donation
under article 739 cannot be named beneficiary of a life insurance policy by
the person who cannot make any donation to him, according to said article
Article 739. The following donations shall be void:
(1) Those made between persons who were guilty of adultery or
concubinage at the time of the donation;
(2) Those made between persons found guilty of the same criminal offense,
in consideration thereof;
(3) Those made to a public officer or his wife, descendants and ascendants,
by reason of his office.
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 guilt of the donor and
donee may be proved by preponderance of evidence in the same action.
Insurance Code:
Sec. 11. The insured shall have the right to change the beneficiary he
designated in the policy, unless he has expressly waived this right in said
policy.
Sec. 12. The interest of a beneficiary in a life insurance policy shall be
forfeited when the beneficiary is the principal, accomplice, or accessory in
willfully bringing about the death of the insured; in which event, the nearest
relative of the insured shall receive the proceeds of said insurance if not
otherwise disqualified.
THE INSULAR LIFE ASSURANCE COMPANY, LTD. vs.
CARPONIA T. EBRADO and PASCUALA VDA. DE EBRADO
[G.R. No. L-44059 October 28, 1977]
Facts of the Case:
On September 1, 1968, Buenaventura Cristor Ebrado was issued by The
Life Assurance Co., Ltd., Policy No. 009929 on a whole-life for P5,882.00
with a, rider for Accidental Death for the same amount Buenaventura C.
Ebrado designated Carpponia T. Ebrado as the revocable beneficiary in his
policy. He to her as his wife.
On October 21, 1969, Buenaventura C. Ebrado died when he was hit by a
failing branch of a tree. As the policy was in force, The Insular Life
Assurance Co., Ltd. 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 also in the
amount of P5,882.00 and the refund of P18.00 paid for the premium due
November, 1969, minus the unpaid premiums and interest thereon due for
January and February, 1969, in the sum of P36.27.
Carponia T. Ebrado filed with the insurer a claim for the proceeds of the
Policy as the designated beneficiary therein, although she admits that she
and the insured Buenaventura C. Ebrado 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,
not the common-law wife, Carponia T. Ebrado.
In doubt as to whom the insurance proceeds shall be paid, the insurer, The
Insular Life Assurance Co., Ltd. commenced an action for Interpleader
before the Court of First Instance of Rizal on April 29, 1970.
INSURANCE | ATTY. MIGALLOS 1ST Term, AY 2014 -2015 CLASS READER After the issues have been joined, a pre-trial conference was held. In the
pre-trial conference the parties submits evidence and make admissions.xxx;
8) that the beneficiary designated by the insured in the policy is Carponia
Ebrado and the insured made reservation to change the beneficiary but
although the insured made the option to change the beneficiary, same was
never changed up to the time of his death and the wife did not have any
opportunity to write the company that there was reservation to change the
designation of the parties it agreed that a decision be rendered based on and
stipulation of facts as to who among the two claimants is entitled to the
policy.
On September 25, 1972, the trial court rendered judgment declaring among
others, Carponia T. Ebrado disqualified from becoming beneficiary of the
insured Buenaventura Cristor Ebrado and directing the payment of the
insurance proceeds to the estate of the deceased insured. The trial court held
that.It is patent from the last paragraph of Art. 739 of the Civil Code that a
criminal conviction for adultery or concubinage is not essential in order to
establish the disqualification mentioned therein. Neither is it also necessary
that a finding of such guilt or commission of those acts be made in a
separate independent action brought for the purpose. The guilt of the donee
(beneficiary) may be proved by preponderance of evidence in the same
proceeding (the action brought to declare the nullity of the donation).
Since it is agreed in their stipulation during the pre-trial that the deceased
insured and defendant Carponia T. Ebrado were living together as husband
and wife without being legally married and that the marriage of the insured
with the other defendant Pascuala Vda. de Ebrado was valid and still
existing at the time the insurance in question was purchased there is no
question that defendant Carponia T. Ebrado is disqualified from becoming
the beneficiary of the policy in question and as such she is not entitled to the
proceeds of the insurance upon the death of the insured.
Issue of the Case:
Can a common-law wife named as beneficiary in the life insurance policy of
a legally married man claim the proceeds thereof in case of death of the
latter?
Ruling:
The SC affirmed the decision of the trial court.
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, definitely, barred from receiving donations from
each other. Article 739 of the new Civil Code provides: The following
donations shall be void:
1. Those made between persons who were guilty of adultery or concubinage
at the time of donation;
2. Those made between persons found guilty of the same criminal offense,
in consideration thereof;
3. Those made to a public officer or his wife, descendants or ascendants by
reason of his office.
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 guilt 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. In fact, it cannot even be from the
aforequoted provision that a prosecution is needed. On the contrary, 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 upon the guilt of the consort for the offense indicated. The
quantum of proof in criminal cases is not demanded.
INSURANCE | ATTY. MIGALLOS 1ST Term, AY 2014 -2015 CLASS READER In the caw before Us, the requisite proof of common-law relationship
between the insured and the beneficiary has been conveniently supplied by
the stipulations between the parties in the pre-trial conference of the case. It
case agreed upon and stipulated therein that the deceased insured
Buenaventura C. Ebrado was married to Pascuala Ebrado with whom she
has six legitimate children; that during his lifetime, the deceased insured
was living with his common-law wife, Carponia Ebrado, with whom he has
two children. These stipulations are nothing less than judicial admissions
which, as a consequence, no longer require proof and cannot be
contradicted. A fortiori, on the basis of these admissions, a judgment may
be validly rendered without going through the rigors of a trial for the sole
purpose of proving the illicit liaison between the insured and the
beneficiary. In fact, in that pretrial, the parties even agreed "that a decision
be rendered based on this agreement and stipulation of facts as to who
among the two claimants is entitled to the policy."
ACCORDINGLY, the appealed judgment of the lower court is hereby
affirmed. Carponia T. Ebrado is hereby declared disqualified to be the
beneficiary of the late Buenaventura C. Ebrado in his life insurance policy.
As a consequence, the proceeds of the policy are hereby held payable to the
estate of the deceased insured. Costs against Carponia T. Ebrado.
SO ORDERED.
INSURANCE | ATTY. MIGALLOS 1ST Term, AY 2014 -2015 CLASS READER Vda. De Consuegra v. GSIS
Facts:
Appeal on purely questions of law from the decision of the Court of First
Instance of Surigao del Norte, dated March 7, 1967, in its Special
Proceeding No. 1720.
The late Jose Consuegra was employed as a shop foreman in the province of
Surigao del Norte. He contracted two marriages, the first with Rosario Diaz
and the second, which was contracted in good faith while the first marriage
was subsisting, with Basilia Berdin.
Consuegra died, while the proceeds of his GSIS life insurance were paid to
petitioner Basilia Berdin and her children who were the beneficiaries named
in the policy. They received Php 6,000.
Consuegra did not designate any beneficiary who would receive the
retirement insurance benefits due to him. Respondent Rosario Diaz, the
widow by the first marriage, filed a claim with the GSIS asking that the
retirement insurance benefits be paid to her as the only legal heir of
Consuegra, considering that the deceased did not designate any beneficiary
with respect to his retirement insurance benefits.
Petitioner Berdin and her children, likewise, filed a similar claim with the
GSIS, asserting that being the beneficiaries named in the life insurance
policy of Consuegra, they are the only ones entitled to receive the
retirement insurance benefits due the deceased Consuegra.
The GSIS ruled that the legal heirs of the late Jose Consuegra were Rosario
Diaz, his widow by his first marriage who is entitled to one-half, or 8/16, of
the retirement insurance benefits, on the one hand; and Basilia Berdin, his
widow by the second marriage and their seven children, on the other hand,
who are entitled to the remaining one-half, or 8/16.
Basilia Berdin didn’t agree. She filed a petition declaring her and her
children to be the legal heirs and exclusive beneficiaries of the retirement
insurance.
The trial court affirmed stating that: "when two women innocently and in
good faith are legally united in holy matrimony to the same man, they and
their children, born of said wedlock, will be regarded as legitimate children
and each family be entitled to one half of the estate.‖
Hence the present appeal by Basilia Berdin and her children.
Issue: To whom should this retirement insurance benefits of Jose
Consuegra be paid, because he did not designate the beneficiary of his
retirement insurance?
Held: Both
Ratio:
Berdin averred that because the deceased Jose Consuegra failed to designate
the beneficiaries in his retirement insurance, the appellants who were the
beneficiaries named in the life insurance should automatically be considered
the beneficiaries to receive the retirement insurance benefits.
The GSIS offers two separate and distinct systems of benefits to its
members — one is the life insurance and the other is the retirement
insurance. These two distinct systems of benefits are paid out from two
distinct and separate funds that are maintained by the GSIS.
In the case of the proceeds of a life insurance, the same are paid to whoever
is named the beneficiary in the life insurance policy. As in the case of a life
insurance provided for in the Insurance Act, the beneficiary in a life
insurance under the GSIS may not necessarily be a heir of the insured. The
insured in a life insurance may designate any person as beneficiary unless
disqualified to be so under the provisions of the Civil Code. And in the
absence of any beneficiary named in the life insurance policy, the proceeds
of the insurance will go to the estate of the insured.
INSURANCE | ATTY. MIGALLOS 1ST Term, AY 2014 -2015 CLASS READER Retirement insurance is primarily intended for the benefit of the employee,
to provide for his old age, or incapacity, after rendering service in the
government for a required number of years. If the employee reaches the age
of retirement, he gets the retirement benefits even to the exclusion of the
beneficiary or beneficiaries named in his application for retirement
insurance. The beneficiary of the retirement insurance can only claim the
proceeds of the retirement insurance if the employee dies before retirement.
If the employee failed or overlooked to state the beneficiary of his
retirement insurance, the retirement benefits will accrue to his estate and
will be given to his legal heirs in accordance with law, as in the case of a
life insurance if no beneficiary is named in the insurance policy.
GSIS had correctly acted when it ruled that the proceeds should be divided
equally between his first living wife and his second. The lower court has
correctly applied the ruling of this Court in the case of Lao v Dee.
Gomez vs. Lipana- in construing the rights of two women who were married
to the same man, held "that since the defendant's first marriage has not been
dissolved or declared void the conjugal partnership established by that
marriage has not ceased. Nor has the first wife lost or relinquished her
status as putative heir of her husband under the new Civil Code, entitled to
share in his estate upon his death should she survive him. Consequently,
whether as conjugal partner in a still subsisting marriage or as such putative
heir she has an interest in the husband's share in the property here in
dispute....
With respect to the right of the second wife, although the second marriage
can be presumed to be void ab initio as it was celebrated while the first
marriage was still subsisting, still there is need for judicial declaration of
such nullity. And inasmuch as the conjugal partnership formed by the
second marriage was dissolved before judicial declaration of its nullity, "the
only lust and equitable solution in this case would be to recognize the right
of the second wife to her share of one-half in the property acquired by her
and her husband and consider the other half as pertaining to the conjugal
partnership of the first marriage."
INSURANCE | ATTY. MIGALLOS 1ST Term, AY 2014 -2015 CLASS READER SOUTHERN LUZON EMPLOYEE’S ASSN. V. GOLPEO
Note:
A common law wife of the insured who has a legal wife is disqualified as
beneficiary. It is not required that there be a previous conviction for
adultery or concubinage for the prohibition to apply. However, in an earlier
case (such as the present case), the common-law wife designated prevailed
over the legal wife because the case took place while the Old Civil Code
was still applicable, under which there was no provision similar to
Art.2012.
FACTS:
Southern Luzon Employees' Association is composed of laborers and
employees of Laguna tayabas Bus Co., and Batangas Transportation
Company, and one of its purposes is mutual aid of its members and their
defendants in case of death.
Roman A. Concepcion was a member until his death on December 13,
1950. In the form required by the association to be accomplished by its
members, with reference to the death benefit, Roman A. Concepcion listed
as his beneficiaries Aquilina Maloles, Roman M. Concepcion, Jr., Estela M.
Concepcion, Rolando M. Concepcion and Robin M. Concepcion.
After the death of Roman A. Concepcion, the association was able to collect
voluntary contributions from its members amounting to P2,505. Three sets
of claimants presented themselves, namely, (1) Juanita Golpeo, legal wife
of Roman A. Concepcion, and her children; (2) Aquilina Maloles, common
law wife of Roman A. Concepcion, and her children, named beneficiaries
by the deceased; and (3) Elsie Hicban, another common law wife of Roman
A. Concepcion, and her child.
The court rendered a decision, declaring the defendants Aquiliana Malolos
and her children the sole beneficiaries of the sum of P2,505.00 and ordering
the plaintiff to deliver said amount to them.
ISSUE:
WHETHER OR NOT THE COURT COMMITED ERROR IN
DESIGNATING A COMMON LAW WIFE OF AN INSURED AS THE
BENEFICIARY INSTEAD OF THE LEGAL WIFE.
Remember: This case took place while the Old Civil Code was still
applicable.
HELD: Judgment affirmed.
The decision is based mainly on the theory that the contract between the
plaintiff and the deceased Roman A. Concepcion partook of the nature of an
insurance and that, therefore, the amount in question belonged exclusively
to the beneficiaries, invoking the following pronouncements of this Court in
the case of Del Val vs. Del Val, 29 Phil., 534:
With the finding of the trial court that the proceeds of the life-insurance
policy belongs exclusively to the defendant as his individual and separate
property, we agree. That the proceeds of an insurance policy belong
exclusively to the beneficiary and not to the estate of the person whose life
was insured, and that such proceeds are the separate and individual property
of the beneficiary, and not of the heirs of the person whose life was insured,
is the doctrine in America. We believe that the same doctrine obtains in
these Islands by virtue of section 428 of the Code of Commerce, which
reads:
"The amounts which the underwriter must deliver to the person insured, in
fulfillment of the contract, shall be the property creditors of any kind
whatsoever of the person who effected the insurance in favor of the
formers."
INSURANCE | ATTY. MIGALLOS 1ST Term, AY 2014 -2015 CLASS READER AS TO THE CONTENTION OF THE COUNSEL’S PLAINTIFF THAT
THE PROCEEDS OF THE INSURANCE POLICY WERE DONATION
OR GIFT MADE BY THE FATHER DURING HIS LIFETIME, SUCH
THAT UNDER THE CIVIL CODE ARE NOT BETTERMENTS AND
SHALL BE CONSIDERED AS PART OF THE LEGAL PORTION.
The court disagrees with this contention. The contract of life insurance is a
special contract and the destination of the proceeds thereof is determined by
special laws which deal exclusively with that subject. The Civil Code has
no provisions which relate directly and specifically to life-insurance
contract or to the destination of life-insurance proceeds. That subject is
regulate exclusively by the Code of Commerce which provides for the terms
of the contract, the relations of the parties and the destination of the
proceeds of the policy.
INSURANCE | ATTY. MIGALLOS 1ST Term, AY 2014 -2015 CLASS READER HEIRS OF LORETO C. MARAMAG, represented by surviving spouse
VICENTA PANGILINAN MARAMAG, petitioners, vs. EVA VERNA DE
GUZMAN MARAMAG, ODESSA DE GUZMAN MARAMAG, KARL
BRIAN DE GUZMAN MARAMAG, TRISHA ANGELIE MARAMAG,
THE INSULAR LIFE ASSURANCE COMPANY, LTD., and GREAT
PACIFIC LIFE ASSURANCE CORPORATION, respondents.
G.R. No. 181132. June 5, 2009. J.Nachura
Doctrine: The only persons entitled to claim the insurance proceeds are
either the insured, if still alive or the beneficiary if the insured is already
deceased upon the maturation of the policy; Exception is where the
insurance contract was intended to benefit third persons who are not
parties to the same in the form of favorable stipulations or indemnity
Tickler: The petition alleged that petitioners being the legitimate wife and
children of Loreto Maramag (Loreto) should receive the insurance proceeds
of the deceased. It was said that the named beneficiaries, Eva de Guzman
Maramag, was a concubine of Loreto and a suspect in the killing of the
latter, thus, she is disqualified to receive any proceeds from his insurance
policies from Insular Life Assurance Company, Ltd. (Insular)4 and Great
Pacific Life Assurance Corporation (Grepalife). It was noted that other
beneficiaries named were the the illegitimate children of Loreto. The Court
held that the revocation of Eva as a beneficiary in one policy and her
disqualification as such in another are of no moment considering that the
designation of the illegitimate children as beneficiaries in Loreto’s
insurance policies remains valid. Likewise, it is obvious that the only
persons entitled to claim the insurance proceeds are either the insured, if
still alive; or the beneficiary, if the insured is already deceased, upon the
maturation of the policy. The exception to this rule is a situation where the
insurance contract was intended to benefit third persons who are not parties
to the same in the form of favorable stipulations or indemnity. In such a
case, third parties may directly sue and claim from the insurer.
Petitioners are third parties to the insurance contracts with Insular and
Grepalife and, thus, are not entitled to the proceeds thereof. Accordingly,
respondents Insular and Grepalife have no legal obligation to turn over the
insurance proceeds to petitioners.
Facts:
1. The petition alleged that:
a) petitioners were the legitimate wife and children of Loreto
Maramag (Loreto), while respondents were Loreto’s illegitimate family;
b) Eva de Guzman Maramag (Eva) was a concubine of Loreto and
a suspect in the killing of the latter, thus, she is disqualified to receive any
proceeds from his insurance policies from Insular Life Assurance Company,
Ltd. (Insular) and Great Pacific Life Assurance Corporation (Grepalife);
c) the illegitimate children of Loreto—Odessa, Karl Brian, and
Trisha Angelie—were entitled only to one-half of the legitime of the
legitimate children, thus, the proceeds released to Odessa and those to be
released to Karl Brian and Trisha Angelie were inofficious and should be
reduced; and
d) petitioners could not be deprived of their legitimes, which
should be satisfied first.
2. In support of the prayer for TRO and writ of preliminary injunction,
petitioners alleged, among others, that part of the insurance proceeds had
already been released in favor of Odessa, while the rest of the proceeds are
to be released in favor of Karl Brian and Trisha Angelie, both minors, upon
the appointment of their legal guardian.
INSURANCE | ATTY. MIGALLOS 1ST Term, AY 2014 -2015 CLASS READER 3. In answer, Insular admitted that
a) Loreto misrepresented Eva as his legitimate wife and Odessa,
Karl Brian, and Trisha Angelie as his legitimate children, and
b) that they filed their claims for the insurance proceeds of the
insurance policies;
c) that when it ascertained that Eva was not the legal wife of
Loreto, it disqualified her as a beneficiary and divided the proceeds among
Odessa, Karl Brian, and Trisha Angelie, as the remaining designated
beneficiaries; and
d) that it released Odessa’s share as she was of age, but withheld
the release of the shares of minors Karl Brian and Trisha Angelie pending
submission of letters of guardianship.
4. Insular alleged that
a) the complaint or petition failed to state a cause of action insofar
as it sought to declare as void the designation of Eva as beneficiary, because
Loreto revoked her designation as such in Policy No. A001544070 and it
disqualified her in Policy No. A001693029; and
b) insofar as it sought to declare as inofficious the shares of
Odessa, Karl Brian, and Trisha Angelie, considering that no settlement of
Loreto’s estate had been filed nor had the respective shares of the heirs been
determined.
5. Insular further claimed that it was bound to honor the insurance policies
designating the children of Loreto with Eva as beneficiaries pursuant to
Section 53 of the Insurance Code.
6. The trial court’s finding is that the petition failed to state a cause of
action, as provided in Rule 16, Section 1(g), of the Rules of Court
Issue:
Can the petitioners claim the insurance policy given that Eva was revoked
as beneficiary?
Held:
NO.Petitioners are not the named beneficiaries.
- In this case, it is clear from the petition filed before the trial court
that, although petitioners are the legitimate heirs of Loreto, they were
not named as beneficiaries in the insurance policies issued by Insular
and Grepalife.
o The basis of petitioners’ claim is that Eva, being a concubine of Loreto
and a suspect in his murder, is disqualified from being designated as
beneficiary of the insurance policies, and that Eva’s children with Loreto,
being illegitimate children, are entitled to a lesser share of the proceeds of
the policies.
o They also argued that pursuant to Section 12 of the Insurance Code, Eva’s
share in the proceeds should be forfeited in their favor, the former having
brought about the death of Loreto. Thus, they prayed that the share of Eva
and portions of the shares of Loreto’s illegitimate children should be
awarded to them, being the legitimate heirs of Loreto entitled to their
respective legitimes.
- UNDER THE INSURANCE CODE:
o It is obvious that the only persons entitled to claim the insurance
proceeds are either the insured, if still alive; or the beneficiary, if the
insured is already deceased, upon the maturation of the policy.
o The exception to this rule is a situation where the insurance contract was
intended to benefit third persons who are not parties to the same in the form
of favorable stipulations or indemnity. In such a case, third parties may
directly sue and claim from the insurer.
INSURANCE | ATTY. MIGALLOS 1ST Term, AY 2014 -2015 CLASS READER o Petitioners are third parties to the insurance contracts with Insular
and Grepalife and, thus, are not entitled to the proceeds thereof.
Accordingly, respondents Insular and Grepalife have no legal
obligation to turn over the insurance proceeds to petitioners.
- EFFECT OF REVOCATION:
o The revocation of Eva as a beneficiary in one policy and her
disqualification as such in another are of no moment considering that the
designation of the illegitimate children as beneficiaries in Loreto’s
insurance policies remains valid.
o Because no legal proscription exists in naming as beneficiaries the
children of illicit relationships by the insured, the shares of Eva in the
insurance proceeds, whether forfeited by the court in view of the prohibition
on donations under Article 739 of the Civil Code or by the insurers
themselves for reasons based on the insurance contracts, must be awarded
to the said illegitimate children, the designated beneficiaries, to the
exclusion of petitioners.
o It is only in cases where the insured has not designated any
beneficiary, or when the designated beneficiary is disqualified by law to
receive the proceeds, that the insurance policy proceeds shall redound
to the benefit of the estate of the insured.
Decision: WHEREFORE, the petition is DENIED for lack of merit. Costs
against petitioners.
INSURANCE | ATTY. MIGALLOS 1ST Term, AY 2014 -2015 CLASS READER PHILAMCARE HEALTH SYSTEMS, INC., vs. COURT OF
APPEALS and JULITA TRINOS
G.R. No. 125678 March 18, 2002
Facts:
ErnaniTrinos, deceased husband of JulitaTrinos, applied for a health care
coverage withPhilamcare Health Systems, Inc. In the standard application
form, he answered ―NO‖ to the following question:
Have you or any of your family members ever consulted or been treated for
high blood pressure, heart trouble, diabetes, cancer, liver disease, asthma
or peptic ulcer? (If Yes, give details).
Coverage of the health care agreement (HCA):
approved for a period of one year, Renewed 3 times yearly: March
1, 1988 - March 1, 1990; March 1, 1990 – June 1, 1990. The
amount of coverage was increased to a maximum sum of
P75,000.00 per disability.
Ernani’s entitlement under HCA:
hospitalization benefits, whether ordinary or emergency, listed
therein
out-patient benefits" such as annual physical examinations,
preventive health care and other out-patient services.
Ernaniwas subsequently confined. HISTORY (everything happened within
the period of coverage):
1. Ernani suffered a heart attack and was confined at the Manila
Medical Center (MMC) for one month beginning March 9, 1990.
2. Julita tried to claim the benefits under the health care agreement.
3. Philamdenied her claim saying that the Health Care Agreement
was void. there was a concealment regarding Ernani’s medical
history. Doctors at the MMC allegedly discovered at the time of
Ernani’s confinement that he was hypertensive, diabetic and
asthmatic, contrary to his answer in the application form.
4. Julita paid the hospitalization expenses herself, amounting to about
P76,000.00
5. Ernani was discharged at MMC
6. He was attended by a physical therapist at home.
7. Again he was admitted at the Chinese General Hospital.
8. Julita brought her husband home again due to financial difficulties.
9. In the morning of April 13, 1990, Ernani had fever and was feeling
very weak.
10. Julita was constrained to bring him back to the Chinese General
Hospital where he died on the same day.
On July 24, 1990, respondent instituted with the Regional Trial Court of
Manila, Branch 44, an action for damages against Philam and its president,
Dr. Benito Reverente, She asked for reimbursement of her expenses plus
moral damages and attorney’s fees. After trial, the lower court ruled against
Philam, ordered:
1. Defendants to pay and reimburse the medical and hospital coverage of
the late ErnaniTrinos in the amount of P76,000.00 plus interest, until the
amount is fully paid to plaintiff who paid the same;
2. Defendants to pay the reduced amount of moral damages of P10,000.00
to plaintiff;
INSURANCE | ATTY. MIGALLOS 1ST Term, AY 2014 -2015 CLASS READER 3. Defendants to pay the reduced amount ofP10,000.00 as exemplary
damages to plaintiff;
4. Defendants to pay attorney’s fees of P20,000.00, plus costs of suit.
CA: affirmed the decision of the trial court but deleted all awards for
damages and absolved petitioner Reverente.Denied MR.
Issues:
1. Whether health care agreements are considered insurance
contracts.
2. Whether there was concealment of material facts on the part of
Ernani that rendered the HCA void by virtue of the "Invalidation of
agreement" contained in the contract.
3. Suppose there was concealment, what are the steps Philam should
have done?
Ruling:
1. YES, it is an insurance contract.
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. An insurance contract exists where the following elements concur:
(1) The insured has an insurable interest;
(2) The insured is subject to a risk of loss by the happening of the
designated peril;
(3) The insurer assumes the risk;
(4) Such assumption of risk is part of a general scheme to distribute actual
losses among a large group of persons bearing a similar risk; and
(5) In consideration of the insurer’s promise, the insured pays a premium.
Section 3 of the Insurance Code states that any contingent or unknown
event, whether past or future, which may damnify a person having an
insurable interest against him, may be insured against. Every person has an
insurable interest in the life and health of himself. Section 10 provides:
Every person has an insurable interest in the life and health:
(1) of himself, of his spouse and of his children;
(2) of any person on whom he depends wholly or in part for education or
support, or in whom he has a pecuniary interest;
(3) of any person under a legal obligation to him for the payment of money,
respecting property or service, of which death or illness might delay or
prevent the performance; and
(4) of any person upon whose life any estate or interest vested in him
depends.
In the case at bar, the insurable interest of respondent’s husband in
obtaining the health care agreement was his own health. The health care
agreement was in the nature of non-life insurance, which is primarily a
contract of indemnity. Once the member incurs hospital, medical or any
other expense arising from sickness, injury or other stipulated contingent,
the health care provider must pay for the same to the extent agreed upon
under the contract.
2. NONE, there was no concealment of material facts.
Petitioner cannot rely on the stipulation regarding "Invalidation of
agreement" which reads:
Failure to disclose or misrepresentation of any material information by the
member in the application or medical examination, whether intentional or
unintentional, shall automatically invalidate the Agreement from the very
INSURANCE | ATTY. MIGALLOS 1ST Term, AY 2014 -2015 CLASS READER beginning and liability of Philamcare shall be limited to return of all
Membership Fees paid. An undisclosed or misrepresented information is
deemed material if its revelation would have resulted in the declination of
the applicant by Philamcare or the assessment of a higher Membership Fee
for the benefit or benefits applied for.
The answer assailed by petitioner was in response to the question relating to
the medical history of the applicant. This largely depends on opinion rather
than fact, especially coming from respondent’s husband who was not a
medical doctor. Where matters of opinion or judgment are called for,
answers made in good faith and without intent to deceive will not avoid a
policy even though they are untrue. Thus,
(A)lthough false, a representation of the expectation, intention, belief,
opinion, or judgment of the insured will not avoid the policy if there is no
actual fraud in inducing the acceptance of the risk, or its acceptance at a
lower rate of premium, and this is likewise the rule although the statement
is material to the risk, if the statement is obviously of the foregoing
character, since in such case the insurer is not justified in relying upon such
statement, but is obligated to make further inquiry. There is a clear
distinction between such a case and one in which the insured is fraudulently
and intentionally states to be true, as a matter of expectation or belief, that
which he then knows, to be actually untrue, or the impossibility of which is
shown by the facts within his knowledge, since in such case the intent to
deceive the insurer is obvious and amounts to actual fraud. (Underscoring
ours)
The fraudulent intent on the part of the insured must be established to
warrant rescission of the insurance contract. Concealment as a defense for
the health care provider or insurer to avoid liability is an affirmative defense
and the duty to establish such defense by satisfactory and convincing
evidence rests upon the provider or insurer. In any case, with or without the
authority to investigate, petitioner is liable for claims made under the
contract. Having assumed a responsibility under the agreement, petitioner is
bound to answer 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.
3. Philamshloud have followed Section 27 of the Insurance Code:
"a concealment entitles the injured party to rescind a contract of insurance."
The right to rescind should be exercised previous to the commencement of
an action on the contract.In this case, no rescission was made. Besides, the
cancellation of health care agreements as in insurance policies require the
concurrence of the following conditions:
a. Prior notice of cancellation to insured;
b. Notice must be based on the occurrence after effective date of the
policy of one or more of the grounds mentioned;
c. Must be in writing, mailed or delivered to the insured at the
address shown in the policy;
d. 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 based.
None of the above pre-conditions was fulfilled in this case.
Anent the incontestability of the membership of respondent’s husband, we
quote with approval the following findings of the trial court:
(U)nder 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.
INSURANCE | ATTY. MIGALLOS 1ST Term, AY 2014 -2015 CLASS READER Nario v. Philamlife Insurance Company
FACTS:
Mrs. Nario applied for and was issued a life Insurance policy (no. 503617)
by PHILAMLIFE under a 20-yr endowment plant, with a face value of
5T. Her husband Delfin and their unemancipated son Ernesto were her
revocable beneficiaries.
Mrs. Nario then applied for a loan on the above policy with PHILAMLIFE
w/c she is entitled to as policy holder, after the policy has been in force for
3 years. The purpose of such loan was for the school expenses of Ernesto.
The application bore the written signature and consent of Delfin in 2
capacities
o As one of the irrevocable beneficiaries of the policy
o As father-guardian of Ernesto and also the legal administrator of the
minor’s properties pursuant to Art. 320 of the CC.
PHILAMLIFE denied the loan application contending that written consent
of the minor son must not only be given by his father as legal guardian but
it must also be authorized by the court in a competent guardianship
proceeding.
Mrs. Nario then signified her decision to surrender her policy and demand
its cash value which then amounted to P 520.
PHILAMLIFE also denied the surrender of the policy on the same ground
as that given in disapproving the loan application.
Mrs. Nario sued PHILAMLIFE praying that the latter grant their loan
application and/or accept the surrender of said policy in exchange for its
cash value.
PHILAMLIFE contends that the loan application and the surrender of the
policy involved acts of disposition and alienation of the property rights of
the minor, said acts are not within the power of administrator granted under
Art. 320 in relation to art. 326 CC, hence court authority is required.
Issue:
Whether or not PHILAMLIFE was justified in refusing to grant the loan
application and the surrender of the policy.
Held:
YES.
SC agreed with the trial court that the vested interest or right of the
beneficiaries in the policy should be measured on its full face value and not
on its cash surrender value, for in case of death of the insured, said
beneficiaries are paid on the basis of its face value and in case the insured
should discontinue paying premiums, the beneficiaries may continue paying
it and are entitled to automatic extended term or paid-up insurance options
and that said vested right under the policy cannot be divisible at any given
time.
SC also agreed with TC that the said acts (loan app and surrender)
constitute acts of disposition or alienation of property rights and not merely
management or administration because they involve the incurring or
termination of contractual obligations.
Under the laws (CC and rules of Court) The father is constituted as the
minor’s legal administrator of the propty, and when the propty of the child
is worth more than P2T (as in the case at bar, the minor’s propty was worth
2,500 his ½ share as beneficiary), the father a must file a petition for
guardianship and post a guardianship bond. In the case at bar, the father did
not file any petition for guardianship nor post a guardianship bond, and as
such cannot possibly exercise the powers vested on him as legal
administrator of the minor’s property. The consent give for and in behalf of
INSURANCE | ATTY. MIGALLOS 1ST Term, AY 2014 -2015 CLASS READER the son without prior court authorization to the loan application and the
surrender was insufficient and ineffective and PHILAMLIFE was justified
in disapproving the said applications.
Assuming that the propty of the ward was less than 2T, the effect would be
the same, since the parents would only be exempted from filing a bond and
judicial authorization, but their acts as legal administrators are only limited
to acts of management or administration and not to acts of encumbrance or
disposition.
INSURANCE | ATTY. MIGALLOS 1ST Term, AY 2014 -2015 CLASS READER Philamlife v. 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: WON the court erred in granting Dimayuga’s petition.
Held: 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 poicy may be legally and validly effected. The contract
between the parties is the law binding on them. (This case rule is no longer
controlling under the Insurance Code.)
[G.R. No. 54216. July 19, 1989.]
THE PHILIPPINE AMERICAN LIFE INSURANCE COMPANY,
petitioner, vs. HONORABLE GREGORIO G. PINEDA, in his capacity as
Judge of the Court of First Instance of Rizal, and RODOLFO C.
DIMAYUGA, respondents.
D E C I S I O N
PARAS, J p:
Challenged before Us in this petition for review on certiorari are the Orders
of the respondent Judge dated March 19, 1980 and June 10, 1980 granting
the prayer in the petition in Sp. Proc. No. 9210 and denying petitioner's
Motion for Reconsideration, respectively.
The undisputed facts are as follows:
On January 15, 1968, private respondent procured an ordinary life insurance
policy from the petitioner company and designated his wife and children as
irrevocable beneficiaries of said policy.
Under date February 22, 1980 private respondent filed a petition which was
docketed as Civil Case No. 9210 of the then Court of First Instance of Rizal
to amend the designation of the beneficiaries in his life policy from
irrevocable to revocable.
Petitioner, on March 10, 1980 filed an Urgent Motion to Reset Hearing.
Also on the same date, petitioner filed its Comment and/or Opposition to
Petition.
When the petition was called for hearing on March 19, 1980, the respondent
Judge Gregorio G. Pineda, presiding Judge of the then Court of First
Instance of Rizal, Pasig Branch XXI, denied petitioner's Urgent Motion,
thus allowing the private respondent to adduce evidence, the consequence
of which was the issuance of the questioned Order granting the petition.
INSURANCE | ATTY. MIGALLOS 1ST Term, AY 2014 -2015 CLASS READER Petitioner promptly filed a Motion for Reconsideration but the same was
denied in an Order June 10, 1980. Hence, this petition raising the following
issues for resolution:
I
WHETHER OR NOT THE DESIGNATION OF THE IRREVOCABLE
BENEFICIARIES COULD BE CHANGED OR AMENDED WITHOUT
THE CONSENT OF ALL THE IRREVOCABLE BENEFICIARIES.
II
WHETHER OR NOT THE IRREVOCABLE BENEFICIARIES HEREIN,
ONE OF WHOM IS ALREADY DECEASED WHILE THE OTHERS
ARE ALL MINORS, COULD VALIDLY GIVE CONSENT TO THE
CHANGE OR AMENDMENT IN THE DESIGNATION OF THE
IRREVOCABLE BENEFICIARIES.
We are of the opinion that his Honor, the respondent Judge, was in error in
issuing the questioned Orders.
Needless to say, the applicable law in the instant case is the Insurance Act,
otherwise known as Act No. 2427 as amended, the policy having been
procured in 1968. Under the said law, 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 (Gercio v. Sun Life Ins. Co. of
Canada, 48 Phil. 53; Go v. Redfern and the International Assurance Co.,
Ltd., 72 Phil. 71).
In this regard, it is worth noting that the Beneficiary Designation
Indorsement in the policy which forms part of Policy Number 0794461 in
the name of Rodolfo Cailles Dimayuga states that the designation of the
beneficiaries is irrevocable (Annex "A" of Petition in Sp. Proc. No. 9210,
Annex "C" of the Petition for Review on Certiorari), to wit:
It is hereby understood and agreed that, notwithstanding the provisions of
this policy to the contrary, inasmuch as the designation of the
primary/contingent beneficiary/beneficiaries in this Policy has been made
without reserving the right to change said beneficiary/beneficiaries, such
designation may not be surrendered to the Company, released or assigned;
and no right or privilege under the Policy may be exercised, or agreement
made with the Company to any change in or amendment to the Policy,
without the consent of the said beneficiary/beneficiaries. (Petitioner's
Memorandum, p. 72, Rollo)
Be it noted that the foregoing is a fact which the private respondent did not
bother to disprove.
Inevitably therefore, based on the aforequoted 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 concerning the
irrevocable beneficiaries may be legally and validly effected. Both the law
and the policy do not provide for any other exception, thus, abrogating the
contention of the private respondent that said designation can be amended if
the Court finds a just, reasonable ground to do so.
Similarly, the alleged acquiescence of the six (6) children beneficiaries of
the policy (the beneficiary-wife predeceased the insured) cannot be
considered an effective ratification to the change of the beneficiaries from
irrevocable to revocable. Indubitable is the fact that all the six (6) children
named as beneficiaries were minors at the time, * for which reason, they
could not validly give their consent. Neither could they act through their
father-insured since their interests are quite divergent from one another. In
point is an excerpt from the Notes and Cases on Insurance Law by Campos
and Campos, 1960, reading —
"The insured . . . can do nothing to divest the beneficiary of his rights
without his consent. He cannot assign his policy, nor even take its cash
surrender value without the consent of the beneficiary. Neither can the
insured's creditors seize the policy or any right thereunder. The insured may
not even add another beneficiary because by doing so, he diminishes the
amount which the beneficiary may recover and this he cannot do without
the beneficiary's consent."
INSURANCE | ATTY. MIGALLOS 1ST Term, AY 2014 -2015 CLASS READER Therefore, the parent-insured cannot exercise rights and/or privileges
pertaining to the insurance contract, for otherwise, the vested rights of the
irrevocable beneficiaries would be rendered inconsequential.
Of equal importance is the well-settled rule that the contract between the
parties is the law binding on both of them and for so many times, this court
has consistently issued pronouncements upholding the validity and
effectivity of contracts. Where there is nothing in the contract which is
contrary to law, good morals, good customs, public policy or public order
the validity of the contract must be sustained. Likewise, contracts which are
the private laws of the contracting parties should be fulfilled according to
the literal sense of their stipulations, if their terms are clear and leave no
room for doubt as to the intention of the contracting parties, for contracts
are obligatory, no matter in what form they may be, whenever the essential
requisites for their validity are present (Phoenix Assurance Co., Ltd. vs.
United States Lines, 22 SCRA 675, Phil. American General Insurance Co.,
Inc. vs. Mutuc, 61 SCRA 22.)
In the recent case of Francisco Herrera vs. Petrophil Corporation, 146
SCRA 385, this Court ruled that:
". . . it is settled that the parties may establish such stipulations, clauses,
terms, and conditions as they may want to include; and as long as such
agreements are not contrary to law, good morals, good customs, public
policy or public order, they shall have the force of law between them."
Undeniably, the contract in the case at bar, contains the indispensable
elements for its validity and does not in any way violate the law, morals,
customs, orders, etc. leaving no reason for Us to deny sanction thereto.
Finally, the fact that the contract of insurance does not contain a
contingency when the change in the designation of beneficiaries could be
validly effected means that it was never within the contemplation of the
parties. The lower court, in gratuitously providing for such contingency,
made a new contract for them, a proceeding which we cannot tolerate. Ergo,
We cannot help but conclude that the lower court acted in excess of its
authority when it issued the Order dated March 19, 1980 amending the
designation of the beneficiaries from "irrevocable" to "revocable" over the
disapprobation of the petitioner insurance company.
WHEREFORE, premises considered, the questioned Orders of the
respondent Judge are hereby nullified and set aside.
SO ORDERED.
Melencio-Herrera, Sarmiento and Regalado, JJ., concur.
Padilla, J., took no part in the deliberations.
INSURANCE | ATTY. MIGALLOS 1ST Term, AY 2014 -2015 CLASS READER [G.R. No. L-2227. August 31, 1948.]
Intestate estate of the late Esperanza J. Villanueva. PABLO ORO,
administrator; MARIANO J. VILLANUEVA, claimant-appellant.
SYLLABUS
INSURANCE; LIFE; BENEFICIARY; PROCEEDS, TO WHOM
PAYABLE WHEN INSURED OUTLIVES POLICY. — Where the insurer
obligates itself, under the life insurance policy, to pay the proceeds to the
insured if the latter lives on the date of maturity or to the designated
beneficiary if the insured dies during the continuance of the policy, and
where the insured outlives the policy, the proceeds shall be payable
exclusively to the insured or his assignee, the benefit of the policy inuring
to the beneficiary only in case the insured dies during its continuance.
D E C I S I O N
PARAS, J p:
The West Coast Life Insurance Company issued two policies of insurance
on the life of Esperanza J. Villanueva, one for two thousand pesos and
maturing on April 1, 1943, and the other for three thousand pesos and
maturing on March 31, 1943. In both policies (with corresponding variation
in amount and date of maturity) the insurer agreed "to pay two thousand
pesos, at the home office of the Company, in San Francisco, California, to
the insured hereunder, if living, on the 1st day of April 1943, or to the
beneficiary Bartolome Villanueva, father of the insured, immediately upon
receipt of due proof of the prior death of the insured, Esperanza J.
Villanueva, of La Paz, Philippine Islands, during the continuance of this
policy, with right on the part of the insured to change the beneficiary."
After the death of Bartolome Villanueva in 1940, the latter was duly
substituted as beneficiary under the policies by Mariano J. Villanueva, a
brother of the insured. Esperanza J. Villanueva survived the insurance
period, for she died only on October 15, 1944, without, however, collecting
the insurance proceeds. Adverse claims for said proceeds were presented by
the estate of Esperanza J. Villanueva on the one hand and by Mariano J.
Villanueva on the other, which conflict was squarely submitted in the
intestate proceedings of Esperanza J. Villanueva pending in the Court of
First Instance of Iloilo. From an order, dated February 26, 1947, holding
that the estate of the insured is entitled to the insurance proceeds, to the
exclusion of the beneficiary, Mariano J. Villanueva, the latter has interposed
the present appeal.
The lower court committed no error. Under the policies, the insurer
obligated itself to pay the insurance proceeds (1) to the insured if the latter
lived on the dates of maturity or (2) to the beneficiary if the insured died
during the continuance of the policies. The first contingency of course
excludes the second, and vice versa. In other words, as the insured
Esperanza J. Villanueva was living on April 1, and March 31, 1943, the
proceeds are payable exclusively to her or to her estate unless she had
before her death otherwise assigned the matured policies. (It is not here
pretended and much less proven, that there was such assignment.) The
beneficiary, Mariano J. Villanueva, could be entitled to said proceeds only
in default of the first contingency. To sustain the beneficiary's claim would
be to altogether eliminate from the policies the condition that the insurer
"agrees to pay . . . to the insured hereunder, if living".
There is nothing in the Insurance Law (Act No. 2427) that militates against
the construction placed by the lower court on the disputed condition
appearing in the two policies now under advisement. On the contrary, said
law provides that "an insurance upon life may be made payable on the death
of the person, or on his surviving a specified period, or otherwise
contingently on the continuance or cessation of life" (section 165), and that
"a policy of insurance upon life or health may pass by transfer, will, or
succession, to any person, whether he has an insurable interest or not, and
such person may recover upon it whatever the insured might have
recovered" (section 166).
INSURANCE | ATTY. MIGALLOS 1ST Term, AY 2014 -2015 CLASS READER Counsel for the beneficiary invokes the decision in Del Val vs. Del Val, 29
Phil., 534, 540, in which it was held that "the proceeds of an insurance
policy belong exclusively to the beneficiary and not to the estate of the
person whose life was insured, and that such proceeds are the separate and
individual property of the beneficiary, and not of the heirs of the person
whose life was insured." This citation is clearly not controlling, first,
because it does not appear therein that the insurance contract contained the
stipulation appearing in the policies issued on the life of Esperanza J.
Villanueva and on which the appealed order in the case at bar is based; and,
secondly, because the Del Val doctrine was made upon the authority of the
provisions of the Code of Commerce relating to insurance (particularly
section 428) which had been expressly repealed by the present Insurance
Act No. 2427.
Our pronouncement is not novel, since it tallies with the following typical
American authorities: "If a policy of insurance provides that the proceeds
shall be payable to the assured, if he lives to a certain date, and, in case of
his death before that date, then they shall be payable to the beneficiary
designated, the interest of the beneficiary is a contingent one, and the
benefit of the policy will only inure to such beneficiary in case the assured
dies before the end of the period designated in the policy." (Couch,
Cyclopedia of Insurance Law, Vol. 2, sec. 343, p. 1023.) "Under
endowment or tontine policies payable to the insured at the expiration of a
certain period, if alive, but providing for the payment of a stated sum to a
designated beneficiary in case of the insured's death during the period
mentioned, the insured and the beneficiary take contingent interests. The
interest of the insured in the proceeds of the insurance depends upon his
survival of the expiration of endowment period. Upon the insured's death,
within the period, the beneficiary will take, as against the personal
representative or the assignee of the insured. Upon the other hand, if the
insured survives the endowment period, the benefits are payable to him or
to his assignee, notwithstanding a beneficiary is designated in the policy."
(29 Am. Jur., section 1277, pp. 952, 953.)
The appealed order is, therefore, hereby affirmed, and it is so ordered with
costs against the appellant.
Feria, Pablo, Perfecto, Bengzon, Briones, Padilla, and Tuason, JJ., concur.