Case Digests in Insurance

Daryll Gayle Asuncion

October 4, 2018

Constantino v. Asia Life Insurance

G.R. No. L-1669
August 31, 1950

Facts:
Asia life insurance Company (ALIC) was incorporated in
Delaware. For the sum of 175.04 as annual premium duly paid to ALIC,
it issued Policy No. 93912 whereby it insured the life of Arcadio
Constantino for 20 years for P3T with Paz Constantino as beneficiary.
First premium covered the period up to Sept. 26, 1942. No further
premiums were paid after the first premium and Arcadio died on Sept.
22, 1944.
Due to Japanese occupation, ALIC closed its branch office in
Manila from Jan. 2 1942-1945.
On Aug. 1, 1938, ALIC issued Policy no. 78145 covering the lives
of Spouses Tomas Ruiz and Agustina Peralta for the sum of P3T for
20 years. The annual premium stipulated was regularly paid from Aug.
1, 1938 up to and including Sept. 30, 1940. Effective Aug. 1, 1941, the
mode of payment was changed from annually to quarterly and such
quarterly premiums were paid until Nov. 18, 1941. Last payment
covered the period until Jan. 31, 1942. Tomas Ruiz died on Feb. 16,
1945 with Agustina Peralta as his beneficiary.
Due to Jap occupation, it became impossible and illegal for the
insured to deal with ALIC. Aside from this the insured borrowed from
the policy P234.00 such that the cash surrender value of the policy was
sufficient to maintain the policy in force only up to Sept. 7, 1942. Both
policies contained this provision: All premiums are due in advance and
any unpunctuality in making such payment shall cause this policy to
lapse unless and except as kept in force by the grace period condition.
Paz Constantino and Agustina Peralta claim as beneficiaries,
that they are entitled to receive the proceeds of the policies less all
sums due for premiums in arrears. They also allege that non-payment
of the premiums were caused by the closing of ALIC’s offices during
the war and the impossible circumstances by the war, therefore, they
should be excused and the policies should not be forfeited. The Lower
court ruled in favor of ALIC.
Issue:
May a beneficiary in a life insurance policy recover the amount
thereof although the insured died after repeatedly failing to pay the
stipulated premiums, such failure being caused by war?

Held:
NO.
Due to the express terms of the policy, non-payment of the
premium produces its avoidance. In Glaraga v. Sun Life, it was held
that a life policy was avoided because the premium had not been paid
within the time fixed; since by its express terms, non-payment of any
premium when due or within the 31 day grace period ipso fact caused
the policy to lapse.
When the life insurance policy provides that non-payment of
premiums will cause its forfeiture, war does NOT excuse non-payment
and does not avoid forfeiture. Essentially, the reason why punctual
payments are important is that the insurer calculates based on the
prompt payments.
It should be noted that the parties contracted not only as to peace
time conditions but also as to war-time conditions since the policies
contained provisions applicable expressly to wartime days. The logical
inference therefore is that the parties contemplated the uninterrupted
operation of the contract even if armed conflict should ensue.

Ty v. Filipinas Compañia de Seguros

G.R. No. L-30719
May 26, 1977

Facts:
Ty was employed as a mechanic operator by Broadway Cotton
Factory at Grace Park, Caloocan. In 1953, he took personal accident
policies from 7 insurance companies (6 defendants), on different dates,
effective for 12 mos. On Dec. 24. 1953, a fire broke out in the factory
were Ty was working. A heavy object fell on his hand when he was
trying to put out the fire. From Dec. 1953 to Feb. 6, 1954 Ty received
treatment at the Nat’l Orthopedic Hospital for six listed injuries. The
attending surgeon certified that these injuries would cause the
temporary total disability of Ty’s left hand.
 Insurance companies refused to pay Ty’s claim for compensation
under the policies because of said disability of his left hand. Ty filed a
complaint in the municipal court who decided in his favor.
CFI reversed because under the uniform terms of the policies,
partial disability due to loss of either hand of the insured, to be
compensable must be the result of amputation.

Issue:
Whether or not Ty should be indemnified under his accident
policies.

Held:
NO.
Supreme Court already ruled in the case of Ty v. FNSI that were
the insurance policies define partial disability as loss of either hand by
amputation through the bones of the wrist, the insured cannot recover
under said policies for temporary disability of his left hand caused by
the fractures of some fingers. The provision is clear enough to inform
the party entering into that contract that the loss to be considered a
disability entitled to indemnity, must be severance or amputation of the
affected member of the body of the insured.

Misamis Lumber v. Capital Insurance

G.R. No. L-21380
May 20, 1966

Facts:
Misamis lumber insured it’s motor car for P14T with Capital
Insurance. The policy stipulated that the insured may authorize the
repair of the vehicle necessitated by damage and the liability of the
insured is limited to 150.
Car met an accident and was repaired by Morosi Motors at a total
cost of P302.27. Misamis made a report of the accident to Capital who
refused to pay the cost of the repairs.

Issue:
Whether or not the insurer is liable for the total amount of the repair.
Held:
NO.
The insurance policy stipulated that if it is the insured who
authorized the repair, the liability of the insurer is limited to 150. The
literal meaning of the stipulation must control, it being the actual
contract, expressly and plainly provided for in the policy.

Philamlife v. Ansaldo
G.R. No. 100910
July 25, 1994

Facts:
Ramon M. Paterno sent a letter-complaint to the Insurance
Commissioner alleging certain problems encountered by agents,
supervisors, managers and public consumers of the Philamlife as a
result of certain practices by said company. Commissioner requested
petitioner Rodrigo de los Reyes, in his capacity as Philamlife's
president, to comment on respondent Paterno's letter.
The complaint prays that provisions on charges and fees stated
in the Contract of Agency executed between Philamlife and its agents,
as well as the implementing provisions as published in the agents'
handbook, agency bulletins and circulars, be declared as null and void.
He also asked that the amounts of such charges and fees already
deducted and collected by Philamlife in connection therewith be
reimbursed to the agents, with interest at the prevailing rate reckoned
from the date when they were deducted
Manuel Ortega, Philamlife's Senior Assistant Vice-President and
Executive Assistant to the President, asked that the Commissioner first
rule on the questions of the jurisdiction of the Insurance Commissioner
over the subject matter of the letters-complaint and the legal standing
of Paterno. Insurance Commissioner set the case for hearing and sent
subpoena to the officers of Philamlife. Ortega filed a motion to quash
the subpoena alleging that the Insurance company has no jurisdiction
over the subject matter of the case and that there is no complaint
sufficient in form and contents has been filed.
The motion to quash was denied.
Issue:
 Whether or not the insurance commissioner had jurisdiction over
the legality of the Contract of Agency between Philamlife and its
agents.
Held:
No, it does not have jurisdiction.
The general regulatory authority of the Insurance Commissioner
is described in Section 414 of the Insurance Code, to wit:
"The Insurance Commissioner shall have the duty to see that all
laws relating to insurance, insurance companies and other insurance
matters, mutual benefit associations and trusts for charitable uses are
faithfully executed and to perform the duties imposed upon him by this
Code, . . . ."
On the other hand, Section 415 provides:
"In addition to the administrative sanctions provided elsewhere
in this Code, the Insurance Commissioner is hereby authorized, at his
discretion, to impose upon insurance companies, their directors and/or
officers and/or agents, for any willful failure or refusal to comply with,
or violation of any provision of this Code, or any order, instruction,
regulation or ruling of the Insurance Commissioner, or any commission
of irregularities, and/or conducting business in an unsafe or unsound
manner as may be determined by the Insurance Commissioner, the
following:
a) fines not in excess of five hundred pesos a day; and
b) suspension, or after due hearing, removal of directors and/or
officers and/or agents."
A plain reading of the above-quoted provisions show that the
Insurance Commissioner has the authority to regulate the business of
insurance, which is defined as follows:
"(2) The term 'doing an insurance business' or 'transacting an
insurance business,' within the meaning of this Code, shall include (a)
making or proposing to make, as insurer, any insurance contract; (b)
making, or proposing to make, as surety, any contract of suretyship as
a vocation and not as merely incidental of the surety; (c) doing any kind
of business, including a reinsurance business, specifically recognized
as constituting the doing of an insurance business within the meaning
of this Code; (d) doing or proposing to do any business in substance
equivalent to any of the foregoing in a manner designed to evade the
provisions of this Code. (Insurance Code, Sec. 2 [2])
Since the contract of agency entered into between Philamlife and
its agents is not included within the meaning of an insurance business,
Section 2 of the Insurance Code cannot be invoked to give jurisdiction
over the same to the Insurance Commissioner. Expressio unius est
exclusio alterius.

Filipinas Cia de Seguros v. Christern Huenfeld & Co.

G.R. No. L-2294
May 25, 1951

Facts:
Oct. 1, 1941, Domestic Corp Christern, after payment of the
premium, obtained from Filipinas, fire policy no. 29333 for P100T
covering merchandise contained in a building located in Binondo. On
Feb. 27, 1942, during the Jap occupation, the building and the insured
merchandise were burned. Christern submitted to Filipinas its claim.
Salvaged goods were sold and the total loss of Christern was
P92T. Filipinas denied liability because Christern was an enemy
corporation and cannot be insured.

Issue:
Whether or not Filipinas is liable to Christern, Huenfeld & Co.

Held:
NO.
Majority of the stockholders of Christern were German subjects.
This being so, SC ruled that said corporation became an enemy
corporation upon the war between the US and Germany. The Phil
Insurance Law in Sec. 8 provides that anyone except a public enemy
may be insured. It stands to reason that an insurance policy ceases to
be allowable as soon as an insured becomes a public enemy.
The purpose of the war is to cripple the power ad exhaust the
resources of the enemy, and it is inconsistent that one country should
destroy its enemy property and repay in insurance the value of what
has been so destroyed, or that it should in such manner increase the
resources of the enemy or render it aid.
All individuals who compose the belligerent powers, exist as to
each other, in a state of utter exclusion and are public enemies.
Christern having become an enemy corporation on Dec. 10. 1941, the
insurance policy issued in his favor on Oct. 1, 1941 by Filipinas had
ceased to be valid and enforceable, and since the insured goods were
burned after Dec. 10, 1941, and during the war, Christern was NOT
entitled to any indemnity under said policy from Filipinas.
Elementary rules of justice require that the premium paid by
Christern for the period covered by the policy from Dec. 10, 1941
should be returned by Filipinas.

Saura Import Export Co. v. Philippine International Surety

G.R. No. L-15184
May 31, 1963

Facts:
On Dec. 26, 1952, Saura mortgaged to PNB its registered parcel
of land in Davao to secure the payment of a promissory note of P27T.
A building of strong materials which was also owned by Saura, was
erected on the parcel of land and the building had always been
covered by insurance even before the execution of the mortgage
contract. Pursuant to the mortgage agreement which required Saura
to insure the building and its contents, it obtained a fire insurance for
P29T from PISC for a period of 1 year starting Oct. 2, 1954.
The mortgage also required Saura to endorse the insurance
policy to PNB. The memo stated: Loss if any, payable to PNG as their
interest may appear, subject to the terms, conditions and warranties of
this policy. The policy was delivered to PNB by Saura.
On Oct. 15, 1954, barely 13 days after the issuance of the fire
insurance, PISC canceled the same, effective as of the date of issue.
Notice of the cancellation was sent to PNB in writing and was received
by the bank on Nov. 8, 1954. On Apr. 6, 1955, the building and its
contents worth P4,685 were burned. On April 11, 1985, Saura filed a
claim with PISC and mortgagee bank.
Upon presentation of notice of loss with PNB, Saura learned for
the first time that the policy had been previously canceled by PISC,
when Saura’s folder in the bank’s file was opened and the notice of the
cancellation by PISC was found.
Issue:
Whether or not there was proper cancellation of the policy?

Held:
NO.
 The policy in question does NOT provide for the notice of
cancellation, its form or period. The Insurance Law does not likewise
provide for such notice. This being the case, it devolves upon the Court
to apply the generally accepted principles of insurance, regarding
cancellation of the insurance policy by the insurer.
Actual notice of cancellation in a clear and unequivocal manner,
preferably in writing 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. The notice should be personal to the insurer
and not to and/or through any unauthorized person by the policy. Both
the PSIC and the PNB failed, wittingly or unwittingly to notify Saura of
the cancellation made.
The insurer contends that it gave notice to PNB as mortgagee of
the property and that was already substantial compliance with its duty
to notify the insured of the cancellation of the policy. But notice to the
bank, as far as Saura herein is concerned, is not effective notice. PISC
is then ordered to pay Saura P29T, the amount involved in the policy
subject matter of this case.

Palilieo v. Cosio
G.R. No. L-18452
May 20, 1966

Facts:
On Dec. 18, 1951, Palileo obtained from Cosio a loan of P12T.
To secure payment, Cosio required Palileo to sign a document known
as “conditional sale of residential building”, purporting to convey to
Cosio, with a right to repurchase (on the part of Palileo), a two-story
building of strong materials belonging to Palileo.
After execution of the document, Cosio insured the building
against fire with Associated Insurance & Surety Co. (Associated) for
15T. The insurance policy was issued in the name of Cosio. The
building was partly destroyed by fire and after proper demand, Cosio
was able to collect from the insurance company an indemnity of
P13,107.
Palileo demanded from Cosio that she be credited with the
necessary amount to pay her obligation out of the insurance proceeds,
but Cosio refused to do so. Trial Court found that the debt had an
unpaid balance of P12T. It declared the obligation of Palileo to Cosio
fully compensated by virtue of the proceeds collected by Cosio and
further held that the excess of P1,107 (13,107 – 12,000) be refunded
to Palileo
Issue:
Whether or notthe trial court was justified in considering the
obligation of Palileo fully compensated by the insurance amount that
Cosio was able to collect from Associated, and WON the trial court was
correct in requiring Cosio to refund the excess of P1,107 to Palileo.
Held:
NO.
The rule is that “where a mortgagee, independently of the
mortgagor, insures the mortgaged property in his own name and for
his own interest, he is entitled to the insurance proceeds in case of
loss, but in such case, he is not allowed to retain his claim against the
mortgagor, but is passed by subrogation to the insurer to the extent of
the money paid.”

The lower court erred in declaring that the proceeds of the

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