INSURANCE LAW GR. No.

L-34583 October 22, 1931 THE BANK OF THE PHILIPPINE ISLANDS, plaintiff-appellant,
vs. JUAN POSADAS, JR., Collector of Internal Revenue, defendant-appellee. VILLA REAL, J.
Life insurance
FACTS: Adolphe Oscar Schuetze, a German citizen, while in Germany, executed a will, in
DEL VAL VS DEL VAL accordance with its law, wherein Rosario GelanoVda. deSchuetze, a native of Manilawas
named his universal heir therein. Petitioner Bank by order of the CFI of Manila, was appointed
administrator of the estate of the deceased Adolphe Oscar Schuetze;According to the
FACTS: Gregorio Nacianceno del Val died intestate. an administrator was appointed for testamentary proceedings instituted in the CFI of Manila, the deceased at the time of his
the estate of the deceased, and, after a partial administration, it was closed and the death was possessed of not only real property situated in the Philippine Islands, but also
personal property consisting of shares of stock in nineteen (19) domestic corporations;. That
administrator discharged by order of the CFI; that during the lifetime of the deceased
in the insurance policy the estate of the said Adolphe Oscar Schuetze was named the
he took out insurance on his life for the sum of P40,000 and made it payable to the beneficiary without any qualification whatsoever; Thereafter, petitioner Bank as administrator
defendant as sole beneficiary; that after his death the defendant collected the face of of the decedent's estate received from the Sun Life Assurance Company of Canada, Manila
the policy; that of said policy he paid the sum of P18,365.20 to redeem certain real branch, the sum of P20,150 representing the proceeds of the insurance policy, as shown in
estate which the decedent had sold to third persons with a right to repurchase. Plaintiffs the statement of income and expenses of the estate of the deceased, and was delivered to
(brother and sisters of the deceased) contend that they are the only heirs at law and the surviving spouse of the decedent accordingly. That the herein defendant imposed an
next of kin of contend that the amount of the insurance policy belonged to the estate inheritance tax upon the transmission of the proceeds of the policy in question in the sum of
P20,150 from the estate of the late Adolphe Oscar Schuetze to the sole heir of the deceased,
of the deceased and not to the defendant personally; that, therefore, they are entitled
or the surviving spouse, which inheritance tax amounted to the sum of P1,209, of which was
to a partition not only of the real and personal property, but also of the P40,000 life paid under protest That notwithstanding the various demands made by plaintiff to the
insurance. The trial court refused to give relief to either party and dismissed the action, defendant, said defendant has refused and refuses to refund to plaintiff the above
stating that the complaint, however, fails to comply with Code Civ., Pro. that it does not mentioned sum of P1,209; ISSUE: WON the whole proceedsof the insurance policy on said
'contain an adequate description of the real property of which partition is Adolphe Oscar Schuetze's life was, by reason of its ownership, subject to the inheritance tax,
demanded.Hence, this petition.
RULING: No. The proceeds of a life-insurance policy payable to the insured person's estate,
ISSUE: WON the insurance policy must be included in the settlement of the estate of the on which the premiums were paid by the conjugal partnership, constitute community
property, and belong one-half to the husband exclusively, and the other half to the wife. By
decedent.
virtue of the foregoing, we are of opinion and so hold: (1) That the proceeds of a life-
insurance policy payable to the insured's estate, on which the premiums were paid by the
RULING: conjugal partnership, constitute community property, and belong one-half to the husband
and the other half to the wife, exclusively; (2) that if the premiums were paid partly with
No. Where a life-insurance policy is made payable to one of the heirs of the person paraphernal and partly conjugal funds, the proceeds are likewise in like proportion
whose life is insured, the proceeds of the policy on the death of the insured belong paraphernal in part and conjugal in part; and (3) that the proceeds of a life-insurance policy
exclusively to the beneficiary and not to the estate of the person whose life was insured; payable to the insured's estate as the beneficiary, if delivered to the testamentary
administrator of the former as part of the assets of said estate under probate administration,
and such proceeds are his individual property and not the property of the heirs of the
are subject to the inheritance tax according to the law on the matter, if they belong to the
person whose life was insured. The contract of life insurance is a special contract and
assured exclusively, and it is immaterial that the insured was domiciled in these Islands or
the destination of the proceeds thereof is determined by special laws which deal
outside. Wherefore, the judgment appealed from is reversed, and the defendant is ordered
exclusively with that subject. The Civil Code has no provisions which relate directly and to return to the plaintiff the one-half of the tax collected upon the amount of P20,150, being
specifically to life-insurance contracts or to the destination of life-insurance proceeds. the proceeds of the insurance policy on the life of the late Adolphe Oscar Schuetze, after
That subject is regulated exclusively by the Code of Commerce, which provides for the deducting the proportional part corresponding to the first premium, without special
terms of the contract, the relations of the parties and the destination of the proceeds of pronouncement of costs. So ordered.
the policy.

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 Suretyship G.R. No. L-109937 March 21, 1994 DEVELOPMENT BANK OF THE
THE INSULAR LIFE ASSURANCE COMPANY, LTD., PHILIPPINES, petitioner, vs. COURT OF APPEALS and the ESTATE OF THE LATE JUAN B. DANS,
plaintiff-appellee, vs. CARPONIA T. EBRADO and PASCUALA VDA. DE EBRADO, represented by CANDIDA G. DANS, and the DBP MORTGAGE REDEMPTION INSURANCE
defendants-appellants. No. L-44059. October 28, 1977.* MARTIN, J.: POOL, respondents. QUIASON, J.:

Facts: Facts: Juan B. Dans, with his wife Candida, his son and daughter-in-law, applied for a
loan of P500,000.00 with the Development Bank of the Philippines (DBP), Basilan Branch.
Buenaventura Cristor Ebrado was issued by The Insular Life Assurance Co., Ltd., Policy a As the principal mortgagor, Dans, then 76 years of age, was advised by DBP to obtain
whole-life plan with a rider for Accidental Death Benefits for the same amount. a mortgage redemption insurance (MRI) with the DBP Mortgage Redemption Insurance
Buenaventura C. Ebrado designated Carponia T. Ebrado as the revocable beneficiary Pool (DBP MRI Pool).A loan, in the reduced amount of P300,000.00, was approved by
in his policy. He referred to her as his wife. Ebrado died as a result of an accident when DBP. From the proceeds of the loan, DBP deducted the amount of P1,476.00 as payment
he was hit by a falling branch of a tree. As the insurance policy was in force, The Insular for the MRI premium. Dans accomplished and submitted the "MRI Application for
Life Assurance Co., Ltd. stands liable to pay the coverage. Carponia T. Ebrado filed with Insurance" and the "Health Statement for DBP MRI Pool." After some time, Dans died of
the insurer a claim for the proceeds of the policy as the designated beneficiary therein, cardiac arrest. The DBP, upon notice, relayed this information to the DBP MRI Pool. the
although she admits that she and the insured
DBP MRI Pool notified DBP that Dans was not eligible for MRI coverage, being over the
Buenaventura C. Ebrado were merely living as husband and wife without the benefit of
acceptance age limit of 60 years. DBP apprised Candida Dans of the disapproval 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 her late husband's MRI application. The DBP offered to refund the premium of P1,476.00,
common-law wife. The RTC ruled in favor of the legal wife. On appeal, the CA affirmed. but Candida Dans refused to accept. respondent Estate filed a complaint with the
Regional Trial Court against DBP and the insurance pool for "Collection of Sum of Money
Issue: WON a commonlaw wife named as beneficiary in the life insurance policy may with Damages." the trial court rendered a decision in favor of respondent Estate and
claim the proceeds of the insurance against DBP. The DBP MRI Pool, however, was absolved from liability, after the trial court
found no privity of contract between it and the deceased. The trial court declared DBP
Ruling: No. The SC ruled that allowing the common law wife to get the proceeds of in estoppel for having led Dans into applying for MRI and actually collecting the
insurance will circumvent the prohibitions observed In contract of donation. In essence, premium and the service fee, despite knowledge of his age ineligibility.The DBP
a life insurance policy is no different from a civil donation insofar as the beneficiary is appealed to the Court of Appeals but the CA affirmed in toto the decision of the trial
concerned. Both are founded upon the same consideration: liberality. A beneficiary is court. The DBP's motion for reconsideration was denied. Hence, this recourse.
like a donee, because from the premiums of the policy which the insured pays out of
liberality, the beneficiary will receive the proceeds or profits of said insurance. As a Issue: 1. WON there has been a perfected contract of Insurance between BBP MRI and
consequence, the proscription in Article 739 of the new Civil Code should equally the deceased dans. .. 2. WON DBP should be held liable
operate in life insurance contracts. The mandate of Article 2012 cannot be laid aside:
any person who cannot receive a donation cannot be named as beneficiary in the life
insurance policy of the person who cannot make thedonation. Policy considerations Ruling:
and dictates of morality rightly justify the institution of a barrier between common-law
spouses in regard to property relations since such relationship ultimately encroaches 1. No. The Supreme Court ruled that the MRI coverage shall take effect: (1) when
upon the nuptial and filial rights of the legitimate family. The SC dismissed the petition. the application shall be approved by the insurance pool; and (2) when the full
premium is paid during the continued good health of the applicant. These two
** conditions, being joined conjunctively, must concur. Undisputably, the power
to approve MRI applications is lodged with the DBP MRI Pool. The pool,
however, did not approve the application of Dans. There is also no showing that
it accepted the sum of P1,476.00, which DBP credited to its account with full

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 knowledge that it was payment for Dan's premium. There was, as a result, no PHILIPPINE PRYCE ASSURANCE CORPORATION, petitioner, vs. THE COURT OF
perfected contract of insurance; hence, the DBP MRI Pool cannot be held APPEALS, (Fourteenth Division) and GEGROCO, INC., respondents. G.R. No.
liable on a contract that does not exist. 107062 February 21, 1994 NOCON, J.:
2. Yes. It was DBP, as a matter of policy and practice, that required Dans to secure
MRI coverage. Instead of allowing Dans to look for his own insurance carrier or Facts: Petitioner was the butt of the complaint for collection of sum of money,
some other form of insurance policy, DBP compelled him to apply with the DBP filed by respondent. The complaint alleged that petitioner issued two surety
MRI Pool for MRI coverage.In dealing with Dans, DBP was wearing two legal bonds in behalf of its principal Sagum General Merchandise for (P500,000.00)
hats: the first as a lender, and the second as an insurance agent.As an PESOS and 1,000,000.00) PESOS, respectively. petitioner admitted having
insurance agent, DBP had full knowledge that Dan's application was never executed the said bonds, but denied liability because allegedly 1) the checks
going to be approved. The maximum age for MRI acceptance is 60 years. which were to pay for the premiums bounced and were dishonored hence
Under Article 1987 of the Civil Code of the Philippines, "the agent who acts as there is no contract to speak of between petitioner and its supposed principal;
such is not personally liable to the party with whom he contracts, unless he
and 2) that the bonds were merely to guarantee payment of its principal's
expressly binds himself or exceeds the limits of his authority without giving such
party sufficient notice of his powers."The DBP is not authorized to accept obligation, thus, excussion is necessary. The trial court ruled in favor of plaintiff,
applications for MRI when its clients are more than 60 years of age (Exh. "1- on ground that petitioner must be held liable to the surety. MR was filed but
Pool"). Knowing all the while that Dans was ineligible for MRI coverage because was denied. On appeal, the CA affirmed the RTC. Hence, this petition.
of his advanced age, DBP exceeded the scope of its authority when it
accepted Dan's application for MRI by collecting the insurance premium, and Issue: Whether or not the Court of Appeals erred in affirming the RTC
deducting its agent's commission and service fee.However, One is only entitled
to an adequate compensation only for such pecuniary loss suffered by him as
he has duly proved ) The SC affirmed the decision of the CA and awarded (1)
Ruling: No. The SC ruled that petitioner hinges its defense on fact that the
to REIMBURSE respondent Estate of Juan B. Dans the amount of P1,476.00 with checks issued by its principal which were supposed to pay for the premiums,
legal interest from the date of the filing of the complaint until fully paid; and (2) bounced, hence there is no contract of surety to speak of. However, the
to PAY said Estate the amount of Fifty Thousand Pesos (P50,000.00) as moral Insurance Code states that:Sec. 177. The surety is entitled to payment of the
damages and the amount of Ten Thousand Pesos (P10,000.00) as attorney's premium as soon as the contract of suretyship or bond is perfected and
fees. delivered to the obligor. No contract of suretyship or bonding shall be valid and
binding unless and until the premium therefor has been paid, except where the
obligee has accepted the bond, in which case the bond becomes valid and
enforceable irrespective of whether or not the premium has been paid by the
obligor to the surety. . . . (emphasis added)

The above provision outrightly negates petitioner's first defense. In the first
place, petitioner, in its answer, admitted to have issued the bonds subject
matter of the original action. petitioner's defense that it did not have authority
to issue a Surety Bond when it did is an admission of fraud committed against
respondent. No person can claim benefit from the wrong he himself
committed. The SC dismissed the petition.

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Complusory motor vehicle liability insurance Government Service Insurance System vs. Court of Appeals G.R. No. 101439. June 21, 1999.*
QUISUMBING, J.:
G.R. No. 98414 February 8, 1993 FIRST QUEZON CITY INSURANCE COMPANY, INC., petitioner, vs. THE
HON. COURT OF APPEALS and DE DIOS MARIKINA TRANSPORTATION CO., respondents. GRIÑO- Facts: National Food Authority (NFA, formerly National Grains Authority) was the owner of a
AQUINO, J. Chevrolet truck which was insured against liabilities for death of and injuries to third persons with
the GSIS. the said truck driven by Guillermo Corbeta collided with a public utility vehicle, a Toyota
Tamaraw. All the collision victims were passengers of the Toyota Tamaraw. Five (5) passengers died
Facts: While the plaintiff was still on the bus' running board with his hand on the bus door's handle
while ten (10) others sustained bodily injuries. Among those injured were private respondents. Three
bar, the slowly moving bus sped forward at a high speed, as a result of which, the plaintiff was
(3) cases were filed with the Court of First Instance of Agusan del Norte and Butuan City. The first,
dragged by the bus along the asphalted road for about two (2) seconds. Plaintiff screamed of
for quasi-delict, damages and attorneys fees, the second, for damages, was filed by an injured
pain and anguished even as the other passengers shouted and the bus' driver, Gil Agpalo, an
passenger. In turn, Uy filed a cross-claim against MIGC and a third-party complaint against
employee of defendant and third-party plaintiff DMTC, abruptly stopped the bus. Then, Gil
Corbeta and NFA. The third, Civil Case was instituted by herein private respondents against NFA
forthwith fled from the scene, leaving the bus and the injured plaintiff behind. the plaintiff was
and Corbeta for damages due to quasi-delict; GSIS as insurer of the truck; Uy for breach of contract
brought to the Manila Sanitarium and Hospital and incurred medical expenses in the total amount
of carriage; and MIGC as insurer of the Toyota Tamaraw. These cases were consolidated. The trial
of P69,444.41. Plaintiff's medical expenses were advanced by his employer Maglines but he was
court held that Corbetas’ negligence was the proximate cause of the collision and awarded
required to reimburse Maglines on a staggered basis by way of salary deductions. Plaintiff filed
corresponding damages to the victims. The CA affirmed in full. Hence, this petition.
complaint against DMTC and its driver, Gil Agpalo. Agpalo was later dropped as a party defendant
because he could not be served with summons. After the trial, the court a quo rendered the
decision ordering said defendant to pay plaintiff Jose V. del Rosario: (a) the sum of P76,944.41, as Issue: WON the petition has merit.
the actual and compensatory damages and moral damages. the bus company appealed to the
Court of Appeals. The Court of Appeals modified the dispositive part of the decision of the trial
Ruling: Yes. The SC ruled that under Compulsory Motor Vehicle Liability Insurance (third party
court finding that the third-party defendant First Quezon City Insurance Co., Inc., be ordered to
liability, or TPL) is primarily intended to provide compensation for the death or bodily injuries suffered
indemnify third-party plaintiff DMTC, herein appellant the sum of P50,090.00 with legal interest
by innocent third parties or passengers as a result of a negligent operation and use of motor
thereon from date of filing of the third-party complaint. The insurance company (now the
vehicles. The victims and/or their defendants [dependents] are assured of immediate financial
petitioner) filed a motion for reconsideration which was denied.
assistance, regardless of the financial capacity of motor vehicle owners. The injured for whom the
contract of insurance is intended can sue directly the insurer. The general purpose of statutes
Issue: WON the insurance company must be held liable beyond the maximum limit of liability enabling an injured person to proceed directly against the insurer is to protect injured persons
against the insolvency of the insured who causes such injury, and to give such injured person a
certain beneficial interest in the proceeds of the policy, and statutes are to be liberally construed
Ruling: No. The SC ruled that The insurance company clearly passed the maximum limit of the
so that their intended purpose may be accomplished. It has even been held that such a provision
petitioner's liability for damages arising from death or bodily injury at P12,000.00 per passenger and
creates a contractual relation which inures to the benefit of any and every person who may be
its maximum liability per accident at P50,000.00. Since only one passenger was injured in the
negligently injured by the named insured as if such injured person were specifically named in the
accident, the insurer's liability for the damages suffered by said passenger is pegged to the amount
policy. However, although the victim may proceed directly against the insurer for indemnity, the
of P12,000.00 only. What does the limit of P50,000.00 per accident mean? It means that the insurer's
third party liability is only up to the extent of the insurance policy and those required by law. the
liability for any single accident will not exceed P50,000.00 regardless of the number of passengers
direct liability of the insurer under indemnity contracts against third party liability does not mean
killed or injured therein. For example, if ten (10) passengers had been injured by the operation of
that the insurer can be held liable in solidum with the insured and/or the other parties found at
the insured bus, the insurer's liability for the accident would not be P120,000.00 (at the rate of
fault. For the liability of the insurer is based on contract; that of the insured carrier or vehicle owner
P12,000.00 per passenger) but would be limited to only P50,000.00 for the entire accident, as
is based on tort.[19] The liability of GSIS based on the insurance contract is direct, but not solidary
provided in the insurance contract. The bus company may not recover from the insurance
with that of the NFA. the NFAs liability is based on quasi-delict, while petitioners liability is based on
company (herein petitioner) more than P 12,000.00 per passenger killed or injured, or fifty thousand
the contract of insurance. when there are two or more debtors or two or more creditors, the
(P50,000.00) pesos per accident even if under the judgment of the court, the erring bus operator
obligation as a general rule is joint. It claims that the only exceptions are: (1) when there is a
will have to pay more than P12,000.00 to each injured passenger. The trial court's interpretation of
stipulation for solidary obligation; (2) when the nature of the obligation requires solidary liability;
the insurance contract was the correct interpretation. The SC granted the petition.
and (3) when the law declares the obligation to be solidary. However, since neither the provision
of the contract nor the insurance law provides for solidary liability, the presumption is that its
obligation arising from a contract of insurance is joint. The SC granted the petition.

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G.R. No. L-49699 August 8, 1988 provision, where proof of fault or negligence is not necessary for payment of
any claim for death Or injury to a passenger or a third party, are established:
PERLA COMPANIA de SEGUROS, INC., petitioner,
vs. HON. CONSTANTE A. ANCHETA, Presiding Judge of the Court of First instance 1. A claim may be made against one motor vehicle only.
of Camarines Norte, Branch III, ERNESTO A. RAMOS and GOYENA ZENAROSA-
RAMOS, for themselves and as Guardian Ad Litem for Minors JOBET, BANJO, 2. If the victim is an occupant of a vehicle, the claim shall lie against the insurer
DAVID and GRACE all surnamed RAMOS, FERNANDO M. ABCEDE, SR., for himself of the vehicle. in which he is riding, mounting or dismounting from.
and Guardian Ad Litem for minor FERNANDO G. ABCEDE, JR., MIGUEL JEREZ
MAGO as Guardian Ad Litem for minors ARLEEN R. MAGO, and ANACLETA J. 3. In any other case (i.e. if the victim is not an occupant of a vehicle), the claim
ZENAROSA., respondents. CORTES, J.: shall lie against the insurer of the directly offending vehicle.

Facts: 4. In all cases, the right of the party paying the claim to recover against the
owner of the vehicle responsible for the accident shall be maintained.
a collision happened between the IH Scout in which private respondents were
riding and a Superlines bus along the national highway in Camarines Norte, That said vehicle might not be the one that caused the accident is of no
private respondents sustained physics injuries. they filed with the Court of First moment since the law itself provides that the party paying the claim under Sec.
Instance of Camarines Norte a complaint for damages against Superlines, the 378 may recover against the owner of the vehicle responsible for the accident.
bus driver and petitioner, the insurer of the The bus was insured with petitioner This is precisely the essence of "no fault indemnity" insurance which was
for the amount of P50,000.00 as and for passenger liability and P50,000.00 as introduced to and made part of our laws in order to provide victims of vehicular
and for third party liability. The vehicle in which private respondents were riding accidents or their heirs immediate compensation, although in a limited
was insured with Malayan Insurance Co. respondent judge issued an order amount, pending final determination of who is responsible for the accident and
mandating Insurance Company, Perla Compania de Seguros, Inc., to pay liable for the victims'injuries or death. In turn, the "no fault indemnity" provision is
immediately the P5,000.00 under the "no fault clause" as provided for under part and parcel of the Insurance Code provisions on compulsory motor vehicle
Section 378 of the Insurance Code. Petitioner denied in its Answer its alleged ability insurance [Sec. 373-389] and should be read together with the
liability under the "no fault indemnity" provision . mr was fled but was denied. requirement for compulsory passenger and/or third party liability insurance.
Hence, this case. The claim should be made against the insurer of the vehicle they were riding.
The SC granted the petition.
Issue: whether or not petitioner is the insurer liable to indemnify private
respondents under Sec. 378 of the Insurance Code.

Ruling:

No. The SC ruled that under Sec. 378. Any claim for death or injury to any
passenger or third party pursuant to the provision of this chapter shall be paid
without the necessity of proving fault or negligence of any kind. From a reading
of the provision, the following rules on claims under the "no fault indemnity"

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[G.R. No. 60887. November 13, 1991.] PERLA COMPANIA DE SEGUROS, INC., Petitioner, v. HON. Concealment:
JOSE R. RAMOLETE, PRIMITIVA Y. PALMES, HONORATO BORBON, SR., OFFICE OF THE
PROVINCIAL SHERIFF, PROVINCE OF CEBU, Respondents. Hector L. Fernandez for Petitioner.
G.R. No. 92492 June 17, 1993 THELMA VDA. DE CANILANG, petitioner,
vs. HON. COURT OF APPEALS and GREAT PACIFIC LIFE ASSURANCE
Facts: a Cimarron PUJ owned and registered in the name of Nelia Enriquez, and driven by
Cosme Casas collided with a private jeep owned by the late Calixto Palmes (husband of CORPORATION, respondents. FELICIANO, J.:
private respondent Primitiva Palmes) who was then driving the private jeep. the private jeep
was flung away to a distance of about thirty (30) feet and then fell on its right side pinning Facts: Jaime Canilang was diagnosed as suffering from "sinus tachycardia." On
down Calixto Palmes. He died as a result of cardio-respiratory arrest due to a crushed chest. next day, he applied for a "non-medical" insurance policy with respondent
The accident also caused physical injuries on two (2) years old boy. private respondents
Primitiva Palmes (widow of Calixto Palmes) and Honorato Borbon, Sr. (father of minor
Great Pacific Life Assurance Company ("Great Pacific") naming his wife,
Adeudatus Borbon) filed a complaint against Cosme Casas and Nelia Enriquez (assisted by Thelma Canilang, as his beneficiary.1 days after, Jaime Canilang died of
her husband Leonardo Enriquez) before the then Court of First Instance of Cebu. The RTC "congestive heart failure," "anemia," and "chronic anemia." 2 Petitioner then filed
granted the same. The judgment of the trial court became final and executory and a writ of a complaint against Great Pacific with the Insurance Commission for recovery
execution was thereafter issued. The writ of execution was, however, returned unsatisfied. of the insurance proceeds. During the hearing called by the Insurance
private respondent Palmes filed a motion for garnishment praying that an order of
Commissioner, petitioner testified that she was not aware of any serious illness
garnishment be issued against the insurance policy issued by petitioner in favor of the
judgment debtor. The rtc granted the same. Hence, this petition. suffered by her late husband. Insurance company refused to award the
proceeds for reason of concealment. RTC and CA affirmed, hence this petition.
Issue: WON the RTC judge acted in GADALEJ in ruling that insurance contract can be
subjected to garnishment or executio Issue: WON the petitioner is entitiled to claim the proceeds of the insurance
contract
Ruling: No. The SC ruled that Every interest which the judgment debtor may have in property
may be subjected to execution. In the instant case, the judgment debtor Nelia Enriquez Ruling: No. the S ruled that the information which Jaime Canilang failed to
clearly had an interest in the proceeds of the third-party liability insurance contract. In a third-
disclose was material to the ability of Great Pacific to estimate the probable
party liability insurance contract, the insurer assumes the obligation of paying the injured third
party to whom the insured is liable. The insurer becomes liable as soon as the liability of the risk he presented as a subject of life insurance. Sec. 27.of the insurance code
insured to the injured third person attaches. From the moment that the insured became liable provides A concealment whether intentional or unintentional entitles the
to the third person, the insured acquired an interest in the insurance contract, which interest injured party to rescind a contract of insurance. Hence, "any concealment"
may be garnished like any other credit. Garnishment has been defined as a species of without regard to whether such concealment is intentional or unintentional is
attachment for reaching any property or credits pertaining or payable to a judgment debtor. being addressed in the provision. In the case, Had Canilang disclosed his visits
13 In legal contemplation, it is a forced novation by the substitution of creditors: 14 the
judgment debtor, who is the original creditor of the garnishee is, through service of the writ of
to his doctor, the diagnosis made and medicines prescribed by such doctor, in
garnishment, substituted by the judgment creditor who thereby becomes creditor of the the insurance application, it may be reasonably assumed that Great Pacific
garnishee. Garnishment has also been described as a warning to a person having in his would have made further inquiries and would have probably refused to issue a
possession property or credits of the judgment debtor, not to pay the money or deliver the non-medical insurance policy or, at the very least, required a higher premium
property to the latter, but rather to appear and answer the plaintiff’s suit. The garnishee need for the same coverage. The SC denied the petition.
not be impleaded as a party to the case. All that is necessary for the trial court lawfully to
bind the person of the garnishee or any person who has in his possession credits belonging to
the judgment debtor is service upon him of the writ of garnishment. The SC dismissed the
petition

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 G.R. No. 105135 June 22, 1995 SUNLIFE ASSURANCE COMPANY OF CANADA, petitioner,
[G.R. No. 47593. September 13, 1941.] THE INSULAR LIFE ASSURANCE CO., LTD., Petitioner, v. SERAFIN vs. The Hon. COURT OF APPEALS and Spouses ROLANDO and BERNARDA
D. FELICIANO and ANGEL, FLORENDA, EUGENIO, HERMINIO and LETICIA, all surnamed FELICIANO, BACANI, respondents. QUIASON, J.:
represented by their guardian ad litem SERAFIN D. FELICIANO, Respondents. Araneta, Zaragoza,
Araneta & Bautista, for Petitioner.
Facts: Robert John B. Bacani procured a life insurance contract for himself from
petitioner. He was issued Policy with double indemnity in case of accidental death. The
Facts: Evaristo Feliciano filed an application for insurance with the herein petitioner upon the
solicitation of one of its agents. Two insurance policies were issued to him. Feliciano died. The designated beneficiary was his mother, respondent Bernarda Bacani. the insured died
defendant company refused to pay on the ground that the policies were fraudulently obtained, in a plane crash. Respondent Bernarda Bacani filed a claim with petitioner, seeking the
the insured having given false answers and statements in the application as well as in the medical benefits of the insurance policy taken by her son. Petitioner rejected the claim. In its
report. The present action was brought to recover on said policies. The lower court rendered letter, petitioner informed respondent Bernarda Bacani, that the insured did not disclose
judgment in favor of the plaintiffs.. The lower court held that neither the insured nor any member material facts relevant to the issuance of the policy, thus rendering the contract of
of his family concealed the real state of health of the insured. That as a matter of fact the insured, insurance voidable. The deceased answered question No. 5(a) in the affirmative but
as well as the members of his family, told the agent and the medical examiner that the applicant limited his answer to a consultation with a certain Dr. Reinaldo D. Raymundo of the
had been sick and coughing for sometime and that he had also gone three times to the Santol
Chinese General Hospital on February 1986, for cough and flu complications. Petitioner
Sanatorium. On appeal, this finding of facts of the lower court was sustained by the Court of
Appeals. Hence, this case discovered that two weeks prior to his application for insurance, the insured was
examined and confined at the Lung Center of the Philippines, where he was diagnosed
for renal failure. During his confinement, the deceased was subjected to urinalysis, ultra-
Issue: WON the The Court of Appeals erred in holding that an insurance company has no right to
avoid a policy where its agent knowingly and intentionally wrote down the answers in the
sonography and hematology tests. the trial court decided in favor of private
application differing from those made by the insured respondents, ruling that the cause of death is non-medical. On applea, the CA affirmed
the RTC, hence, this case.
Ruling: No. The SC ruled that In the present case, the agent knew all the time the true state of
health of the insured. The insurer’s medical examiner approved the application knowing full well Issue: WON petition has merit
that the applicant was sick. The situation is one in which one of two innocent parties must bear a
loss for his reliance upon a third person. In this case, it was the insurer who gave the agent authority
Ruling: Yes. The SC ruled that Section 26 of The Insurance Code is explicit in requiring a
to deal with the applicant. It was the one who drafted and accepted the policy and
consummated the contract. It seems reasonable that as between the two of them, the one who party to a contract of insurance to communicate to the other, in good faith, all facts
employed and gave character to the third person as its agent should be the one to bear the loss. If within his knowledge which are material to the contract and as to which he makes no
the policy should be avoided, it must be because it was void from the very beginning, and the warranty, and which the other has no means of ascertaining. Said Section provides: A
result would be that the insurer, while it received the money, never assumed any risk. The result neglect to communicate that which a party knows and ought to communicate, is
would be, in the language of one of the cases, "to place every simple or uneducated person called concealment.Materiality is to be determined not by the event, but solely by the
seeking insurance at the mercy of the insurer who could, through its agent, insert in every probable and reasonable influence of the facts upon the party to whom
application, unknown to the applicant and over his signature, some false statements which would communication is due, in forming his estimate of the disadvantages of the proposed
enable him to avoid all liability while retaining the price paid for the supposed insurance." ) The
contract or in making his inquiries The information which the insured failed to disclose
weight of authority is that if an agent of the insurer, after obtaining from an applicant for insurance
a correct and truthful answer to interrogatories contained in the application for insurance, without were material and relevant to the approval and issuance of the insurance policy. The
knowledge of the applicant fills in false answers, either facts: fraudulently or otherwise, the insurer matters concealed would have definitely affected petitioner's action on his application,
cannot assert the falsity of such answers as a defense to liability on the policy, and this is true either by approving it with the corresponding adjustment for a higher premium or
generally without regard to the subject matter of the answers or the nature of the agent’s duties rejecting the same. Moreover, a disclosure may have warranted a medical examination
or limitations on his authority, at least if not brought to the attention of the applicant. The fact that of the insured by petitioner in order for it to reasonably assess the risk involved in
the insured did not read the application which he signed, is not indicative of bad faith. It has been accepting the application. Thus, "goad faith" is no defense in concealment. The
held that it is not negligence for the insured to sign an application without first reading it if the insurer insured's failure to disclose the fact that he was hospitalized for two weeks prior to filing
by its conduct in appointing the agent influenced the insured to place trust and confidence in the
his application for insurance, raises grave doubts about his bonafides. The SC granted
agent. The SC dismissed the petition. S
the petition

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