Gercio v. Sun Life Assurance Co.

of Canada (1925)

G.R. No. 23703 September 28, 1925

Lessons Applicable:
Blood relationship (Insurance)
Revocable Designation (Insurance)

FACTS:
January 29, 1910: Sun Life Assurance Co. of Canada issued a 20-year endowment insurance
policy on the life of Hilario Gercio
o insurance company agreed to insure the life of Gercio for the sum of P2,000, to be paid him
on February 1, 1930, or if the insured should die before said date, then to his wife, Mrs. Andrea
Zialcita, should she survive him; otherwise to the executors, administrators, or assigns of the
insured
o policy did not include any provision reserving to the insured the right to change the beneficiary
End of 1919: she was convicted of the crime of adultery
September 4, 1920: a decree of divorce was issued
March 4, 1922: Gercio formally notified the Sun Life that he had revoked his donation in favor
of Andrea Zialcita, and that he had designated in her stead his present wife, Adela Garcia de
Gercio, as the beneficiary of the policy
o Sun Life refused
Gercio filed a petition for mandamus to compel Sun Life
Trial Court: favored Gercio

ISSUE: W/N Gercio has the right to change the beneficiary of the policy

HELD: NO. Dismissed.

The wife has an insurable interest in the life of her husband.
The beneficiary has an absolute vested interest in the policy from the date of its issuance and
delivery. So when a policy of life insurance is taken out by the husband in which the wife is
named as beneficiary, she has a subsisting interest in the policy
o applies to a policy to which there are attached the incidents of a loan value, cash surrender
value, an automatic extension by premiums paid, and to an endowment policy, as well as to an
ordinary life insurance policy.
If the husband wishes to retain to himself the control and ownership of the policy he may so
provide in the policy.
o But if the policy contains no provision authorizing a change of beneficiary without the
beneficiary's consent, the insured cannot make such change.
Accordingly, it is held that a life insurance policy of a husband made payable to the wife as
beneficiary, is the separate property of the beneficiary and beyond the control of the husband.
effect produced by the divorce, the Philippine Divorce Law, Act No. 2710, merely provides in
section 9 that the decree of divorce shall dissolve the community property as soon as such
decree becomes final
o absence of a statute to the contrary, that if a policy is taken out upon a husband's life the wife
is named as beneficiary therein, a subsequent divorce does not destroy her rights under the
policy
Neither the husband, nor the wife, nor both together had power to destroy the vested interest
of the children in the policy.
Separate Opinion:
Johnson, Concurring Opinion:
o I agree with the majority of the court, that the judgment of the lower court should be revoked,
but for a different reason. In my judgment, the action is premature and should have been
dismissed.
Consuegra v GSIS G.R. No. L-28093 January 30, 1971
J. Zaldivar

Facts:
Appeal on purely questions of law from the decision of the Court of First Instance of Surigao del
Norte, dated March 7, 1967, in its Special Proceeding No. 1720.
The late Jose Consuegra was employed as a shop foreman in the province of Surigao del
Norte. He contracted two marriages, the first with Rosario Diaz and the second, which was
contracted in good faith while the first marriage was subsisting, with Basilia Berdin.
Consuegra died, while the proceeds of his GSIS life insurance were paid to petitioner Basilia
Berdin and her children who were the beneficiaries named in the policy. They received Php
6,000.
Consuegra did not designate any beneficiary who would receive the retirement insurance
benefits due to him. Respondent Rosario Diaz, the widow by the first marriage, filed a claim with
the GSIS asking that the retirement insurance benefits be paid to her as the only legal heir of
Consuegra, considering that the deceased did not designate any beneficiary with respect to his
retirement insurance benefits.
Petitioner Berdin and her children, likewise, filed a similar claim with the GSIS, asserting that
being the beneficiaries named in the life insurance policy of Consuegra, they are the only ones
entitled to receive the retirement insurance benefits due the deceased Consuegra.
The GSIS ruled that the legal heirs of the late Jose Consuegra were Rosario Diaz, his widow by
his first marriage who is entitled to one-half, or 8/16, of the retirement insurance benefits, on the
one hand; and Basilia Berdin, his widow by the second marriage and their seven children, on
the other hand, who are entitled to the remaining one-half, or 8/16.
Basilia Berdin didnt agree. She filed a petition declaring her and her children to be the legal
heirs and exclusive beneficiaries of the retirement insurance.
The trial court affirmed stating that: "when two women innocently and in good faith are legally
united in holy matrimony to the same man, they and their children, born of said wedlock, will be
regarded as legitimate children and each family be entitled to one half of the estate.
Hence the present appeal by Basilia Berdin and her children.

Issue: To whom should this retirement insurance benefits of Jose Consuegra be paid, because
he did not designate the beneficiary of his retirement insurance?

Held: No. Petition denied.

Ratio:
Berdin averred that because the deceased Jose Consuegra failed to designate the beneficiaries
in his retirement insurance, the appellants who were the beneficiaries named in the life
insurance should automatically be considered the beneficiaries to receive the retirement
insurance benefits.
The GSIS offers two separate and distinct systems of benefits to its members one is the life
insurance and the other is the retirement insurance. These two distinct systems of benefits are
paid out from two distinct and separate funds that are maintained by the GSIS.
In the case of the proceeds of a life insurance, the same are paid to whoever is named the
beneficiary in the life insurance policy. As in the case of a life insurance provided for in the
Insurance Act, the beneficiary in a life insurance under the GSIS may not necessarily be a heir
of the insured. The insured in a life insurance may designate any person as beneficiary unless
disqualified to be so under the provisions of the Civil Code. And in the absence of any
beneficiary named in the life insurance policy, the proceeds of the insurance will go to the estate
of the insured.
Retirement insurance is primarily intended for the benefit of the employee, to provide for his old
age, or incapacity, after rendering service in the government for a required number of years. If
the employee reaches the age of retirement, he gets the retirement benefits even to the
exclusion of the beneficiary or beneficiaries named in his application for retirement insurance.
The beneficiary of the retirement insurance can only claim the proceeds of the retirement
insurance if the employee dies before retirement. If the employee failed or overlooked to state
the beneficiary of his retirement insurance, the retirement benefits will accrue to his estate and
will be given to his legal heirs in accordance with law, as in the case of a life insurance if no
beneficiary is named in the insurance policy.
GSIS had correctly acted when it ruled that the proceeds should be divided equally between his
first living wife and his second. The lower court has correctly applied the ruling of this Court in
the case of Lao v Dee.
Gomez vs. Lipana- in construing the rights of two women who were married to the same man,
held "that since the defendant's first marriage has not been dissolved or declared void the
conjugal partnership established by that marriage has not ceased. Nor has the first wife lost or
relinquished her status as putative heir of her husband under the new Civil Code, entitled to
share in his estate upon his death should she survive him. Consequently, whether as conjugal
partner in a still subsisting marriage or as such putative heir she has an interest in the
husband's share in the property here in dispute....
With respect to the right of the second wife, although the second marriage can be presumed to
be void ab initio as it was celebrated while the first marriage was still subsisting, still there is
need for judicial declaration of such nullity. And inasmuch as the conjugal partnership formed by
the second marriage was dissolved before judicial declaration of its nullity, "the only lust and
equitable solution in this case would be to recognize the right of the second wife to her share of
one-half in the property acquired by her and her husband and consider the other half as
pertaining to the conjugal partnership of the first marriage."
Lopez v. Del Rosario
44 PHIL 98

Facts:
> Benita Del Rosario is the owner of a bonded warehouse in Manila where copra and other
merchandise are deposited.
> Among those who had copra deposited in the warehouse was Froilan Lopez, the owner of 14
warehouse receipts with a declared value of P107,990.40 in his name.
> Del Rosario secured insurance on the warehouse and its contents with 5 different insurance
companies in the amount of P404,800.
> All policies were in the name of Del Rosario, except for one (with Natl Insurance Co.) for 40T,
in favor of Compania Copra de Tayabas.
> The warehouse and its contents were destroyed by fire. When Bayne, a fire loss adjuster,
failed to effect a settlement between the Insurance companies and Del Rosario, the latter
authorized Atty. Fisher to negotiate with the Companies.
> An agreement was reached to submit the matter to arbitration. The claims by different people
who had stored copra in the warehouse were settled with the exception of Friolan Lopez.
> A case was filed in CFI by Lopez. The court awarded him the sum of P88,492.21 with legal
interest.

Issue:

Whether or not Del Rosario acted as the agent of Lopez in taking out the insurance on the
contents of the warehouse or whether she acted as the reinsurer of the copra.

Held:
She acted as the agent of Lopez.
The agency can be deduced from the warehouse receipts, the insurance policies and the
circumstances surrounding the transaction. Under any aspect, Del Rosario is liable. The law is
that a policy effected by a bailee and covering by its terms in his own property and property held
in trust, inures, in the event of loss, equally and proportionately to the benefit of all owners of the
property insured. Even if one secured insurance covering his own goods and goods stored with
him, and even if the owner of the stored goods did not request or know the insurance, and did
not ratify it before the payment of the loss, it has been held by a reputable court that the
warehouseman is liable to the owner of such stored goods for his share.

In a case of contributing policies, adjustments of loss made by an expert or by a board of

arbitrators may be submitted to the court NOT as evidence of the facts stated therein, or as
obligatory, but for the purpose of assisting the court in calculating the amount of liability
Argente vs West Coast Life Insurance Company
On January 15, 2012

Insurance Law Representation Concealment Rescission of an Insurance Contract

FACTS:

In February 1925, Argente and his wife applied for a joint life insurance under West Coast Life
Insurance Company. The couple was examined by the insurance company doctor (Doctor Sta.
Ana). The couple disclosed to the doctor that they never had any serious medical histories; that
they were never confined; that Vicenta De Ocampo (wife of Argente) was not an alcoholic.
Doctor Sta. Ana then recommended the approval of the application. In May 1925, the couple
were issued with the insurance policy. In November 1925, Vicenta died. West Coast Life denied
the subsequent insurance claim filed by Argente as it averred that the application made in June
was attended by fraud because the couple failed to disclose the fact that each of them were
actually confined prior to their application; that Vicenta in particular was diagnosed for
alcoholism and ultimately for psycho-neurosis; that in sum, their statement as to their health and
previous illnesses within the last 5-7 years prior to their application were untrue.
Argente conceded to the allegations of West Coast however he stated that those facts were
actually disclosed to Dr. Sta. Ana however Dr. Sta. Ana connived with the insurance agent
hence he failed to record them in the medical reports. Further, Argente averred that if West
Coast did have the right to rescind the insurance, it should have done so prior to the filing of a
suit involving the insurance claim.

ISSUE: Whether or not Argente is entitled to the insurance claim.

HELD: No. In an action on a life insurance policy where the evidence conclusively shows that
the answers to questions concerning diseases were untrue, the truth or falsity of the answers
become the determining factor. If the policy was procured by fraudulent representations, the
contract of insurance apparently set forth therein was never legally existent. It can fairly be
assumed that had the true facts been disclosed by the assured, the insurance would never have
been granted. The allegations of Argente do not have a leg to stand on, Dr. Sta. Ana has no
motive whatsoever and such alleged illicit act will only destroy his reputation as a physician.
As to the allegation of Argente regarding the failure of West Coast to rescind the insurance prior
to the filing of this case, there are two answers:
1. The failure of West Coast to rescind the contract cannot prejudice any defense to the suit
which concealment may furnish.
2. Prior to the filing of this case, West Coast sent a notice to Argente advising him that the policy
is being canceled due to the concealment and that his premium is being refunded this
operates as a rescission to the contract of insurance.
Soliman v. US Life- Rescind Contract of Insurance
104 PHIL 1046
Facts:
> US Life issued a 20 yr endowment life policy on the joint lives of Patricio Soliman and his wife
Rosario, each of them being the beneficiary of the other.
> In Mar. 1949, the spouses were informed that the premium for Jan 1949 was still unpaid
notwithstanding that the 31-day grace period has already expired, and they were furnished at
the same time long-form health certificates for the reinstatement of the policies.
> In Apr 1949, they submitted the certificates and paid the premiums.
> In Jan. 1950, Rosario died of acute dilation of the heart, and thereafter, Patricio filed a claim
for the proceeds of the insurance.
> US life denied the claim and filed for the rescission of the contract on the ground that the
certificates failed to disclose that Rosario had been suffering from bronchial asthma for 3 years
prior to their submission.

Issue:
Whether or not the contract can still be rescinded.

Held:

Yes.
The insurer is once again given two years from the date of reinstatement to investigate into the
veracity of the facts represented by the insured in the application for reinstatement. When US
life sought to rescind the contract on the ground of concealment/misrepresentation, two years
had not yet elapsed. Hence, the contract can still be rescinded.
Ng Gan Zee vs Asian Crusader Life Assurance Corporation
On November 27, 2011
Insurance Law Concealment Misrepresentation Duty of Insurance Company to Make
Inquiry

FACTS:

In May 1962, Kwong Nam applied for a 20-year endowment policy with Asian Crusader. Asian
Crusader asked the following question:
Has any life insurance company ever refused your application for insurance or for reinstatement
of a lapsed policy or offered you a policy different from that applied for? If, so, name company
and date.
Kwong Nam answered No to the above question.
Kwong Nam was also examined by Asian Crusaders medical examiner to whom he disclosed
that he was once operated and a tumor was removed from his stomach and such was
associated with ulcer of the stomach.
Kwong Nams application was approved. In May 1963, he died. His widow, Ng Gan Zee, filed an
insurance claim but Asian Crusader refused her claim as it insisted that Kwong Nam concealed
material facts from them when he was applying for the insurance; that he misrepresented the
fact that he was actually denied application by Insular Life when he was renewing his
application with them; that Kwong Nam was actually operated for peptic ulcer.

ISSUE: Whether or not Ng Gan Zee can collect the insurance claim.

HELD: Yes. Asian Crusader was not able to prove that Kwong Nams statement that Insular Life
did not deny his insurance renewal with them is untrue. In fact, evidence showed that in April
1962, Insular Life approved Kwong Nams request of reinstatement only with the condition that
Kwong Nams plan will be lowered from P50,000.00 to P20,000.00 considering his medical
history.
Kwong Nam did not conceal anything from Asian Crusader. His statement that his operation, in
which a tumor the size of a hens egg was removed from his stomach, was only associated with
ulcer of the stomach and not peptic ulcer can be considered as an expression made in good
faith of his belief as to the nature of his ailment and operation. Indeed, such statement must be
presumed to have been made by him without knowledge of its incorrectness and without any
deliberate intent on his part to mislead Asian Crusader.
While it may be conceded that, from the viewpoint of a medical expert, the information
communicated was imperfect, the same was nevertheless sufficient to have induced Asian
Crusader to make further inquiries about the ailment and operation of Kwong Nam. It has been
held that where, upon the face of the application, a question appears to be not answered at all
or to be imperfectly answered, and the insurers issue a policy without any further inquiry, they
waive the imperfection of the answer and render the omission to answer more fully immaterial.