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Insurance Case Digests
Insurance Case Digests
WHEREFORE, premises considered, the Court DENIES the instant Petition for Review
on Certiorari under Rule 45 of the Rules of Court. The Court AFFIRMS the Orders dated
10 April 2008 and 3 July 2008 of the RTC of Gapan City, Branch 34, in Civil Case No.
2177, denying petitioner Violeta R. Lalicans Notice of Appeal, on the ground that the
Decision dated 30 August 2007 subject thereof, was already final and executor. No costs.
Estoppel as applied to insurance contracts
QUA CHEE GAN vs. LAW UNION AND ROCK INSURANCE CO., LTD.
G.R. No. L-4611, 17 December 1955
FACTS:
Plaintiff-appellee owned four bodegas used for the storage of copra and hemp. These
buildings, together with their contents, were insured with the defendant company since
1937 and the loss made payable to the Philippine National Bank as mortgage of the
hemp and crops, to the extent of its interest.
Sometime after, three of the bodegas, together with the merchandise inside, were
completely destroyed by fire of an undetermined origin. Consequently, Qua Chee Gan
notified the insurance company of his loss. The latter conducted an extensive
investigation. The damage was determined to be equivalent to P398,562.81 which was
later reduced to the full amount of the insurance, Php370,000.00. However, the
insurance company refused payment, claiming violation of warranties and conditions,
filing of fraudulent claims, and that the fire had been deliberately caused by the insured
or by other persons in connivance with him.
If moreover argued that since the bodegas insured had an external wall perimeter of 500
meters or 1,640 feet, the appellee should have 11 fire hydrants in the compound, and
that he actually had only 2 with a further pair nearby, belonging to the municipality of
Tabaco.
ISSUE:
Whether or not the insurer company is liable
HELD:
YES. The SC is in agreement with the trial court that the appellant is barred by waiver (or
rather estoppel) to claim violation of the so-called fire hydrants warranty, for the reason
that knowing fully all that the number of hydrants demanded therein never existed from
the very beginning, the appellant nevertheless issued the policies in question subject to
such warranty, and received the corresponding premiums. It would be perilously close to
conniving at fraud upon the insured to allow appellant to claims now as void ab initio the
policies that it had issued to the plaintiff without warining of their fatal defect, of which it
was informed, and after it had misled the defendant into believing that the policies were
effective.
The contract of insurance is one of perfect good faith (uferrimal fidei) not for the insured
alone, but equally so for the insurer, in fact, it is mere so for the latter, since its dominant
bargaining position carries with it stricter responsibility.
We find no reversible error in the judgment appealed from, wherefore the same is hereby
affirmed. Costs against the appellant.
NO. 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 the policy. 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.
2) NO. the alleged acquiescence of the six 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 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.
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.
WHEREFORE, premises considered, the questioned Orders of the respondent Judge
are hereby nullified and set aside.
Concealment
SUNLIFE ASSURANCE COMPANY OF CANADA vs. COURT OF APPEALS
G.R. No. 105135, 22 June 1995
FACTS:
Robert John Bacani procured a life insurance contract for himself from petitionercompany, designating his mother Bernarda Bacani, herein private respondent, as the
beneficiary. He was issued a policy valued at P100,000.00 with double indemnity in case
of accidental death. Sometime after, the insured died in a plane crash. Bernarda filed a
claim with petitioner, seeking the benefits of the insurance policy taken by her son.
However, said insurance company rejected the claim on the ground that the insured did
not disclose material facts relevant to the issuance of the policy, thus rendering the
contract of insurance voidable. Petitioner 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. The RTC, as affirmed by the
CA, this fact was concealed, as alleged by the petitioner. But the fact that was concealed
was not the cause of death of the insured and that matters relating to the medical history
of the insured is deemed to be irrelevant since petitioner waived the medical examination
prior to the approval and issuance of the insurance policy.
ISSUE:
Whether or not the concealment of such material fact, despite it not being the cause of
death of the insured, is sufficient to render the insurance contract voidable
HELD:
YES. Section 26 of the Insurance Code is explicit in requiring a party to a contract of
insurance to communicate to the other, in good faith, all facts within his knowledge which
are material to the contract and as to which he makes no warranty, and which the other
has no means of ascertaining.
Anent the finding that the facts concealed had no bearing to the cause of death of the
insured, it is well settled that the insured need not die of the disease he had failed to
disclose to the insurer. It is sufficient that his non-disclosure misled the insurer in forming
his estimates of the risks of the proposed insurance policy or in making inquiries.
The SC, therefore, ruled that petitioner properly exercised its right to rescind the contract
of insurance by reason of the concealment employed by the insured. It must be
emphasized that rescission was exercised within the two-year contestability period as
recognized in Section 48 of The Insurance Code.
WHEREFORE, the petition is GRANTED and the Decision of the Court of Appeals is
REVERSED and SET ASIDE.
Incontestability Clause
EMILIO TAN vs. COURT OF APPEALS
G.R. No. 48049, 29 June 1989
FACTS:
Tan Lee Siong, father of herein petitioners, applied for life insurance in the amount of
P80,000.00 with respondent company Philippine American Life Insurance Company. Said
application was approved and a corresponding policy was issued effective November 5,
1973, with petitioners as the beneficiaries.
On April 26, 1975, Tan Lee Siong died of hepatoma. Hence, petitioners filed with
respondent company their claim for the proceeds of the life insurance policy. However,
the insurance company denied the said claim and rescinded the policy by reason of the
alleged misrepresentation and concealment of material facts made by the deceased Tan
Lee Siong in his application for insurance. The premiums paid on the policy were
thereupon refunded.
The petitioners contend that the respondent company no longer had the right to rescind
the contract of insurance as rescission must allegedly be done during the lifetime of the
insured within two years and prior to the commencement of action.
ISSUE:
Whether or not the insurance company has the right to rescind the contract of insurance
despite the presence of an incontestability clause
HELD:
YES. The so-called incontestability clause precludes the insurer from raising the
defenses of false representations or concealment of material facts insofar as health and
previous diseases are concerned if the insurance has been in force for at least two years
during the insureds lifetime. The phrase during the lifetime found in Section 48 of the
Insurance Law simply means that the policy is no longer considered in force after the
insured has died. The key phrase in the second paragraph of Section 48 is for a period
of two years.
The policy was issued on November 6, 1973 and the insured died on April 26, 1975. The
policy was thus in force for a period of only one year and five months. Considering that
the insured died before the two-year period has lapsed, respondent company is not,
therefore, barred from proving that the policy is void ab initio by reason of the insureds
fraudulent concealment or misrepresentation. Moreover, respondent company rescinded
the contract of insurance and refunded the premiums paid on November 11, 1975,
previous to the commencement of this action on November 27, 1975.
WHEREFORE, the petition is hereby DENIED for lack of merit. The questioned decision
of the Court of Appeals is AFFIRMED.