Insurance Cases 3

rd
Set Nos. 7-14
8. Lalican vs Insular Life 597 SCRA 159 (2009);

DOCTRINE: Mercantile Law; Insurance Law; Insurable Interest; An insurable
interest is that interest which a person is deemed to have in the subject matter insured,
where he has a relation or connection with or concern in it, such that the person will
derive pecuniary benefit or advantage from the preservation of the subject matter
insured and will suffer pecuniary loss or damage from its destruction, termination, or
injury by the happening of the event insured against.An insurable interest is one of
the most basic and essential requirements in an insurance contract. In general, an
insurable interest is that interest which a person is deemed to have in the subject
matter insured, where he has a relation or connection with or concern in it, such that
the person will derive pecuniary benefit or advantage from the preservation of the
subject matter insured and will suffer pecuniary loss or damage from its destruction,
termination, or injury by the happening of the event insured against. The existence of
an insurable interest gives a person the legal right to insure the subject matter of the
policy of insurance. Section 10 of the Insurance Code indeed provides that every
person has an insurable interest in his own life. Section 19 of the same code also states
that an interest in the life or health of a person insured must exist when the insurance
takes effect, but need not exist thereafter or when the loss occurs.

Insurance Law; Statutory Construction; Cardinal principle of insurance law that a
policy or contract of insurance is to be construed liberally in favor of the insured and
strictly as against the insurer company, yet, contracts of insurance, like other
contracts, are to be construed according to the sense and meaning of the terms, which
the parties themselves have used.Violeta did not adduce any evidence that Eulogio
might have failed to fully understand the import and meaning of the provisions of his
Policy Contract and/or Application
Mercantile Law; Insurance Law; Insurable Interest; An insurable interest is that
interest which a person is deemed to have in the subject matter insured, where he has
a relation or connection with or concern in it, such that the person will derive
pecuniary benefit or advantage from the preservation of the subject matter insured
and will suffer pecuniary loss or damage from its destruction, termination, or injury by
the happening of the event insured against.An insurable interest is one of the most
basic and essential requirements in an insurance contract. In general, an insurable
interest is that interest which a person is deemed to have in the subject matter insured,
where he has a relation or connection with or concern in it, such that the person will
derive pecuniary benefit or advantage from the preservation of the subject matter
insured and will suffer pecuniary loss or damage from its destruction, termination, or
injury by the happening of the event insured against. The existence of an insurable
interest gives a person the legal right to insure the subject matter of the policy of
insurance. Section 10 of the Insurance Code indeed provides that every person has an
insurable interest in his own life. Section 19 of the same code also states that an
interest in the life or health of a person insured must exist when the insurance takes
effect, but need not exist thereafter or when the loss occurs.

Insurance Law; Statutory Construction; Cardinal principle of insurance law that a
policy or contract of insurance is to be construed liberally in favor of the insured and
strictly as against the insurer company, yet, contracts of insurance, like other
contracts, are to be construed according to the sense and meaning of the terms, which
the parties themselves have used.Violeta did not adduce any evidence that Eulogio
might have failed to fully understand the import and meaning of the provisions of his
Policy Contract and/or Application

FACTS:
Eulogio, the husband of herein petitioner, applied for an insurance policy the value of
which is P1,500,000.00. Under the policy terms, Eulogio is obliged to pay the
premiums on a quarterly basis, until the end of the 20-year period of the policy. It was
likewise stated therein that the insured has 31-day grace period for the payment of
each premium subsequent to the first and that default in any payment of said
premiums shall result in the automatic lapse of the said policy. Eulogio failed to pay a
premium even after the lapse of the 31-day grace period. Hence, the policy lapsed and
became void. He filed an Application for Reinstatement of said policy and paying the
amount of the premium due. However, Insular Life notified him that they could not
fully process his application because the amount he paid is inadequate to cover the
accrued interests. Hence, he again applied for the reinstatement of said policy this
time, together with the required amount. The husband of the insurance agent was the
one who received his application because the agent was away at that time. Within the
same day, the insured died. This fact was unknown to the agent who then submitted
Eulogios application for reinstatement to the Insular Life Regional Office.
Violeta then filed a claim for payment of the full proceeds of the policy. However, the
company said that she is not entitled to the insurance proceeds because they claimed
that the policy was not reinstated during her husbands lifetime and good health.

ISSUE:
Whether or not Eulogio was able to reinstate the lapsed insurance policy before his
death

HELD:
NO. The Court agrees with the RTC that the conditions for reinstatement under the
Policy Contract and Application for Reinstatement were written in clear and simple
language, which could not admit of any meaning or interpretation other than those
that they so obviously embody. Violeta did not adduce any evidence that Eulogio
might have failed to fully understand the import and meaning of the provisions of his
Policy Contract and/or Application for Reinstatement both of which he voluntarily
signed. While it is a cardinal principle of insurance law that a policy or contract of
insurance is to be construed liberally in favor of the insured and strictly as against the
insurer company, yet, contracts of insurance, like other contracts are to be construed
according to the sense and meaning of the terms, which the parties themselves have
used, if such terms are clear and unambiguous, they must be taken and understood in
their plain, ordinary and popular sense.
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.

9. Vda de Consuegra vs GSIS 37 SCRA 315 (1971);

Doctrine: Government Service Insurance System; Designation of beneficiaries in life
insurance differs from that in retirement insurance.When Consuegra designated his
beneficiaries in his life insurance he could not have intended those beneficiaries of his
life insurance as also the beneficiaries of his retirement insurance because the
provisions on retirement insurance under the_GSIS came about only when Com. Act
186 was amended by Rep. Act 660 on June 16, 1951. Hence, it cannot be said that
because appellants were designated beneficiaries in Consuegras life insurance they
automatically became the beneficiaries also of his retirement insurance. The
provisions of subsection (b) of Section 11 of Commonwealth Act 186, as amended by
Rep. Act 660, clearly indicate that there is need for the employee to file an application
for retirement insurance benefits when he becomes a member of the GSIS, and he
should state in his application the beneficiary of his retirement insurance. Hence, the
beneficiary named in the life insurance does not automatically become the beneficiary
in the retirement insurance unless the same beneficiary in the life insurance is so
designated in the application for retirement insurance.
Same; Benefits offered to members.The GSIS offers two separate and distinct
systems of benefits to its membersone 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.
Same; Beneficiaries in life insurance.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 life insurance provided for in the Insurance Act (Act 2427, as amended),
the beneficiary in a life insurance under the GSIS may not necessarily be an 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.

Facts:
> Jose Consuegra was employed as a shop foreman of the Office of the District
Engineer in Surigao Del Norte.
> When he was still alive, he contracted two marriages:
o First Rosario Diaz; 2 children = Jose Consuegra Jr. and Pedro but both
predeceased him
o 2nd Basilia Berdin; 7 children. (this was contracted in GF while the first
marriage subsisted)
> Being a GSIS member when he died, the proceeds of his life insurance were paid
by the GSIS to Berdin and her children who were the beneficiaries named in the
policy.
> Since he was in the govt service for 22.5028 years, he was entitled to retirement
insurance benefits, for which no beneficiary was designated.
> Both families filed their claims with the GSIS, which ruled that the legal heirs were
Diaz who is entitled to one-half or 8/16 of the retirement benefits and Berdin and her
children were entitled to the remaining half, each to receive an equal share of 1/16.
> Berdin went to CFI on appeal. CFI affirmed GSIS decision.

Issue:
To whom should the retirement insurance benefits be paid?

Held:
Both families are entitled to half of the retirement benefits.
The beneficiary named in the life insurance does NOT automatically become the
beneficiary in the retirement insurance. When Consuegra, during the early part of
1943, or before 1943, designated his beneficiaries in his life insurance, he could NOT
have intended those beneficiaries of his life insurance as also the beneficiaries of his
retirement insurance because the provisions on retirement insurance under the GSIS
came about only when CA 186 was amended by RA 660 on June 18, 1951.

Sec. 11(b) clearly indicates that there is need for the employee to file an application
for retirement insurance benefits when he becomes a GSIS member and to state his
beneficiary. The life insurance and the retirement insurance are two separate and
distinct systems of benefits paid out from 2 separate and distinct funds.

In case of failure to name a beneficiary in an insurance policy, the proceeds will accrue
to the estate of the insured. And when there exists two marriages, each family will be
entitled to one-half of the estate.
10. Ong Lim Sing vs FGB Leasing Finance 524 SCRA 333 2007;

Doctrine: Same; Same; Insurance; A lessee has an insurable interest in the equipment
and motor vehicles leased, and the measure of its insurable interest is the extent to
which it may be damnified by loss or injury thereof.The stipulation in Section 14 of
the lease contract, that the equipment shall be insured at the cost and expense of the
lessee against loss, damage, or destruction from fire, theft, accident, or other insurable
risk for the full term of the lease, is a binding and valid stipulation. Petitioner, as a
lessee, has an insurable interest in the equipment and motor vehicles leased. Section
17 of the Insurance Code provides that the measure of an insurable interest in
property is the extent to which the insured might be damnified by loss or injury
thereof. It cannot be denied that JVL will be directly damnified in case of loss,
damage, or destruction of any of the properties leased.

FACTS:

FEB Leasing and Finance Corporation (FEB) leased equipment and motor vehicles to
JVL Food Products with a monthly rental of P170,494
At the same date, Vicente Ong Lim Sing, Jr. (Lim) an executed an Individual
Guaranty Agreement with FEB to guarantee the prompt and faithful performance of
the terms and conditions of the lease agreement
JVL defaulted in the payment of the monthly rentals resulting to arrears of
P3,414,468.75 and refused to pay despite demands
FEB filed a complaint for damages and replevin against JVL, Lim and John Doe
JVL and Lim admitted the existence of the lease agreement but asserted that it is in
reality a sale of equipment on installment basis, with FEB acting as the financier
RTC: Sale on installment and the FEB elected full payment of the obligation so for
the unreturned units and machineries the JVL and Lim are jointly and severally liable
to pay
CA: granted FEB appeal that it is a financial lease agreement under Republic Act
(R.A.) No. 8556 and ordered JVL and Lim jointly and severally to pay P3,414,468.75
ISSUE: W/N JVL and Lim should jointly and severally be liable for the insured
financial lease

HELD: YES. CA affirmed.

contract of adhesion is as binding as any ordinary contract
The Lease Contract with corresponding Lease Schedules with Delivery and
Acceptance Certificates is, in point of fact, a financial lease within the purview of R.A.
No. 8556
FEB leased the subject equipment and motor vehicles to JVL in consideration of a
monthly periodic payment of P170,494.00. The periodic payment by petitioner is
sufficient to amortize at least 70% of the purchase price or acquisition cost of the said
movables in accordance with the Lease Schedules with Delivery and Acceptance
Certificates.
JVL entered into the lease contract with full knowledge of its terms and conditions.
Lim, as a lessee, has an insurable interest in the equipment and motor vehicles leased.
In the financial lease agreement, FEB did not assume responsibility as to the quality,
merchantability, or capacity of the equipment. This stipulation provides that, in case
of defect of any kind that will be found by the lessee in any of the equipment,
recourse should be made to the manufacturer. The financial lessor, being a financing
company, i.e., an extender of credit rather than an ordinary equipment rental
company, does not extend a warranty of the fitness of the equipment for any
particular use. Thus, the financial lessee was precisely in a position to enforce such
warranty directly against the supplier of the equipment and not against the financial
lessor. We find nothing contra legem or contrary to public policy in such a
contractual arrangement.

11. Cha vs CA 277 SCRA 690;

DOCTRINE: Same; Insurance; 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. 18 of the Insurance Code provides: 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. A non-life insurance
policy such as the fire insurance policy taken by petitionerspouses over their
merchandise is primarily a contract of indemnity. Insurable interest in the property
insured must exist at the time the insurance takes effect and at the time the loss
occurs. The basis of such requirement of insurable interest in property insured is
based on sound public policy: to prevent a person from taking out an insurance policy
on property upon which he has no insurable interest and collecting the proceeds of
said policy in case of loss of the property. In such a case, the contract of insurance is a
mere wager which is void under Section 25 of the Insurance Code.

FACTS:

Spouses Nilo Cha and Stella Uy-Cha and CKS Development Corporation entered a 1
year lease contract with a stipulation not to insure against fire the chattels,
merchandise, textiles, goods and effects placed at any stall or store or space in the
leased premises without first obtaining the written consent and approval of the lessor.
But it insured against loss by fire their merchandise inside the leased premises for
P500,000 with the United Insurance Co., Inc. without the written consent of CKS
On the day the lease contract was to expire, fire broke out inside the leased premises
and CKS learning that the spouses procured an insurance wrote to United to have the
proceeds be paid directly to them. But United refused so CKS filed against Spouses
Cha and United.
RTC: United to pay CKS the amount of P335,063.11 and Spouses Cha to pay
P50,000 as exemplary damages, P20,000 as attorneys fees and costs of suit
CA: deleted exemplary damages and attorneys fees
ISSUE: W/N the CKS has insurable interest because the spouses Cha violated the
stipulation

HELD: NO. CA set aside. Awarding the proceeds to spouses Cha.

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
A non-life insurance policy such as the fire insurance policy taken by petitioner-
spouses over their merchandise is primarily a contract of indemnity. Insurable
interest in the property insured must exist a t the time the insurance takes effect and at
the time the loss occurs. The basis of such requirement of insurable interest in
property insured is based on sound public policy: to prevent a person from taking out
an insurance policy on property upon which he has no insurable interest and
collecting the proceeds of said policy in case of loss of the property. In such a case,
the contract of insurance is a mere wager which is void under Section 25 of the
Insurance Code.
SECTION 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
Section 17. The measure of an insurable interest in property is the extent to which
the insured might be damnified by loss of injury thereof
The automatic assignment of the policy to CKS under the provision of the lease
contract previously quoted is void for being contrary to law and/or public policy.
The proceeds of the fire insurance policy thus rightfully belong to the spouses. The
liability of the Cha spouses to CKS for violating their lease contract in that Cha
spouses obtained a fire insurance policy over their own merchandise, without the
consent of CKS, is a separate and distinct issue which we do not resolve in this case.

12. Philamcare of Health System vs CA 379 SCRA 356 (2002);

Doctrine: Insurance; Elements; Words and Phrases; A contract of insurance is an
agreement whereby one undertakes for a consideration to indemnify another against
loss, damage or liability arising from an unknown or contingent event.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 insurers promise, the insured pays a premium.

Same; Every person has an insurable interest in the life and health of himself.
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.

Same; Health Care Agreements; A health care agreement is in the nature of non-life
insurance, which is primarily a contract of indemnity.In the case at bar, the
insurable interest of respondents 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.

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

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

Held: No. Petition dismissed.

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

While petitioner contended that the husband concealed materialfact of his sickness,
the contract stated that:
that any physician is, by these presents, expressly authorized to disclose or give
testimony at anytime relative to any information acquired by him in his professional
capacity upon any question affecting the eligibility for health care coverage of the
Proposed Members.
This meant that the petitioners required him to sign authorization to furnish reports
about his medical condition. The contract also authorized Philam to inquire directly to
his medical history.
Hence, the contention of concealment isnt valid.
They cant also invoke the Invalidation of agreement clause where failure of the
insured to disclose information was a grounds for revocation simply because the
answer assailed by the company was the heart condition question based on the
insureds opinion. He wasnt a medical doctor, so he cant accurately gauge his
condition.
Henrick v Fire- in such case the insurer is not justified in relying upon such
statement, but is obligated to make further inquiry.
Fraudulent intent must be proven to rescind the contract. This was incumbent upon
the provider.
Having assumed a responsibility under the agreement, petitioner is bound to answer
the same to the extent agreed upon. In the end, the liability of the health care
provider attaches once the member is hospitalized for the disease or injury covered by
the agreement or whenever he avails of the covered benefits which he has prepaid.
Section 27 of the Insurance Code- a concealment entitles the injured party to rescind
a contract of insurance.
As to cancellation procedure- Cancellation requires certain conditions:
1. Prior notice of cancellation to insured;
2. Notice must be based on the occurrence after effective date of the policy of
one or more of the grounds mentioned;
3. Must be in writing, mailed or delivered to the insured at the address shown in
the policy;
4. Must state the grounds relied upon provided in Section 64 of the Insurance
Code and upon request of insured, to furnish facts on which cancellation is based
None were fulfilled by the provider.
As to incontestability- The trial court said that under the title Claim procedures of
expenses, the defendant Philamcare Health Systems Inc. had twelve months from the
date of issuance of the Agreement within which to contest the membership of the
patient if he had previous ailment of asthma, and six months from the issuance of the
agreement if the patient was sick of diabetes or hypertension. The periods having
expired, the defense of concealment or misrepresentation no longer lie.

13. Blue Cross vs Olivares 544 SCRA 580 (2008);

Doctrine: Health Care Agreements; Insurance; The established rule in insurance
contracts that when their terms contain limitations on liability, they should be
construed strictly against the insurer and must equally apply to health care agreements,
which is in nature of non-life insurance.In Philamcare Health Systems, Inc. v. CA,
379 SCRA 356 (2002), we ruled that a health care agreement is in the nature of a non-
life insurance. It is an established rule in insurance contracts that when their terms
contain limitations on liability, they should be construed strictly against the insurer.
These are contracts of adhesion the terms of which must be interpreted and enforced
stringently against the insurer which prepared the contract. This doctrine is equally
applicable to health care agreements.

Nature of Case: Petition for review on certiorari of a CA decision affirming that of
the RTC Makati City, which reversed the decision of the MeTC Makati City.
Facts:
1) Neomi T. Olivares applied for a health care program with petitioner, a health
maintenance firm. From October 16, 2002 to October 15, 2003, she paid the amount
of P11,117. She also availed of the additional service of limitless consultations for an
additional amount of P1,000. She paid these amounts in full on October 17, 2002.
The application was approved on October 22, 2002. In the health care agreement,
ailments due to "pre-existing conditions" were excluded from the coverage.
2) November 30, 2002: Neomi suffered a stroke and was admitted at the Medical
City which was one of the hospitals accredited by petitioner. During her confinement,
she underwent several laboratory tests.
3) December 2, 2002: Attending physician, Dr. Edmundo Saniel informed Neomi
that she could be discharged from the hospital. She incurred hospital expenses
amounting to P34,217.20 and requested from the representative of petitioner at
Medical City a letter of authorization in order to settle her medical bills. Petitioner
refused to issue the letter and suspended payment pending the submission of a
certification from her attending physician that the stroke she suffered was not caused
by a pre-existing condition.
4) December 5, 2002: Neomi, after being discharged from the hospital 2 days
prior, demanded that petitioner pay her medical bill. When petitioner still refused, she
and her husband, respondent Danilo Olivares, were constrained to settle the bill. They
thereafter filed a complaint for collection of sum of money against petitioner in the
MeTC.
5) In a letter to petitioner dated February 14, 2003, Dr. Saniel stated that: Neomi
instructed him not to release and medical information concerning her neurologic
status invoking patient-physician confidentiality. She also averred that she no longer
has any relationship with [petitioner].
6) MeTC dismissed the complaint for lack of cause of action. It held that since it
was no less than respondent Neomi herself who prevented her attending physician
from issuing the required certification, petitioner cannot be faulted from suspending
payment of her claim until it can be shown by her physician that the stroke was not
due to pre-existing conditions.
7) RTC reversed the MeTC ruling. It held that it was the burden of petitioner to
prove that the stroke of respondent Neomi was excluded from the coverage of the
health care program for being caused by a pre-existing condition. It was not able to
discharge that burden.
8) CA affirmed the decision of the RTC. It denied reconsideration in a resolution
promulgated on September 21, 2005.
Issue(s): WON petitioner was able to prove that respondent Neomi's stroke was
caused by a pre-existing condition and therefore was excluded from the coverage of
the health care agreement.
Disposition: Petition DENIED.
Held/Ratio:
1) The health care agreement defined a "pre-existing condition" as a disability
which existed before the commencement date of membership whose natural history
can be clinically determined, whether or not the Member was aware of such illness or
condition.
Under this provision, petitioner is not liable for pre-existing conditions if they
occur within one year from the time the agreement takes effect.
2) Philamcare Health Systems, Inc. v. CA:1 A health care agreement is in the
nature of a non-life insurance. It is an established rule in insurance contracts that
when their terms contain limitations on liability, they should be construed strictly
against the insurer. This doctrine is equally applicable to health care agreements.
Petitioner never presented any evidence to prove that respondent Neomi's
stroke was due to a pre-existing condition. It merely speculated that Dr. Saniel's
report would be adverse to Neomi, based on her invocation of the doctor-patient
privilege. This was a disputable presumption at best.
3) As for damages, it can clearly be seen that respondent, being forced to engage
in a dispute shortly after her stroke experience mental anguish, shock, serious anxiety
and great stress. It was even she herself who paid the hospital bills which petitioner
was obliged to pay for.

14. Great Pacific Life Insurance vs CA 89 SCRA 543;

Doctrine: Insurance; Binding deposit receipt; Concept and Nature; When binding
deposit receipt not effective.Clearly implied from the aforesaid conditions is that
the binding deposit receipt in question is merely an acknowledgment, on behalf of the
company, that the latters branch office had received from the applicant the insurance
premium and had accepted the application subject for processing by the insurance
company; and that the latter will either approve or reject the same on the basis of
whether or not the applicant is insurable on standard rates. Since petitioner Pacific
Life disapproved the insurance application of respondent Ngo Hing, the binding
deposit receipt in question had never become in force at any time. Upon this premise,
the binding deposit receipt (Exhibit E) is, manifestly, merely conditional and does not
insure outright. As held by this Court, where an agreement is made between the
applicant and the agent, no liability shall attach until the principal approves the risk
and a receipt is given by the agent. The acceptance is merely conditional, and is
subordinated to the act of the company in approving or rejecting the application.
Thus, in life insurance, a binding slip or binding receipt does not insure by itself.
Same; Same; No insurance contract between private person and insurance company
for non-acceptance of alternative insurance plan of the company and non-compliance
of conditions in binding deposit receipt; Refund of deposit proper.It bears
repeating that through the intra-company communication of April 30, 1957 (Exhibit
3-M), Pacific Life disapproved the insurance application in question on the ground
that it is not offering the twenty-year endowment insurance policy to children less
than seven years of age. What it offered instead is another plan known as the Juvenile
Triple Action, which private respondent failed to accept. In the absence of a meeting
of the minds between petitioner Pacific Life and private respondent Ngo Hing over
the 20-year endowment life insurance in the amount of P50,000.00 in favor of the
latters one-year old daughter, and with the non-compliance of the abovequoted
conditions stated in the disputed binding deposit receipt, there could have been no
insurance contract duly perfected between them. Accordingly, the deposit paid by
private respondent shall have to be refunded by Pacific Life.
Same; Same; Completed Contract; Concept Of; Contract of insurance must be
completed contract to be binding.As held in De Lim vs. Sun Life Assurance
Company of Canada, supra, a contract
of insurance, like otter contracts, must be asserted to by both parties either in parson
or by their agents. x x x. The contract, to be binding from the date of the application,
must have been a completed contract, one that leaves nothing to be done, nothing to
be completed, nothing to be passed upon, or determined, before it shall take effect.
There can be no contract of insurance unless the minds of the parties have met in
agreement.


Facts:
Respondent Ngo Hing filed anapplicationwith petitioner Great Pacific Life
Assurance Company (Pacific Life) for atwenty-year endowment policy in the life of
Helen Go, his one year old daughter. Petitioner Lapulapu D.Mondragon, the branch
manager, preparedapplication form using the essential data supplied by respondent.
Thelatter paid the annual premium and Mondragonretaineda portion of it as his
commission. The binding depositreceipt wasissuedto respondent.Mondragon wrote
his strong recommendation for the approval of the insurance application. However,
Pacific Lifedisapproved the application since the plan was not available for
minorsbelow 7 years old but it can consider thesame under another plan. The non-
acceptance of the insurance plan was allegedly not communicated by Mondragonto
respondent. Mondragon again asserted his strong recommendation.Helen Go died of
influenza. Thereupon, respondent sought the payment of the proceeds of the
insurance, but havingfailed in his effort, he filed an action for the recovery of the
same. Hence the case at bar.

Issue:
Whether or not the insurance contract has been perfected on the ground that a
binding receipt has been issued?

Held:
NO, it was not perfected. The binding deposit receipt is merely an
acknowledgement, on behalf of the company, thatthe latters branch office had
received from theapplicantthe insurance premium and had accepted the
applicationsubject for processing by the insurance company; and that the latter will
either approve or reject the same on the basis of whether or not the applicant is
insurable on standard rates.The binding deposit receipt is merely conditional and does
not insure outright. Where an agreement is made betweenthe applicant and the agent,
no liability shall attach until the principal approves the risk and a receipt is given by
theagent. The acceptance is merely conditional, and is subordinated to the act of the
company in approving or rejectingthe application. Thus, in life insurance, a binding
slip or binding receipt does not insure by itself.