Great Pacific v CA G.R. No.

L-31845 April 30, 1979

J. De Castro

Facts:

Ngo Hing filed an application with the Great Pacific for a twenty-year endowment policy in the amount
of P50,000.00 on the life of his one-year old daughter Helen. He supplied the essential data which
petitioner Mondragon, the Branch Manager, wrote on the form. The latter paid the annual premium the
sum of P1,077.75 going over to the Company, but he retained the amount of P1,317.00 as his
commission for being a duly authorized agent of Pacific Life.

Upon the payment of the insurance premium, the binding deposit receipt was issued Ngo Hing. Likewise,
petitioner Mondragon handwrote at the bottom of the back page of the application form his strong
recommendation for the approval of the insurance application. Then Mondragon received a letter from
Pacific Life disapproving the insurance application. The letter stated that the said life insurance
application for 20-year endowment plan is not available for minors below seven years old, but Pacific
Life can consider the same under the Juvenile Triple Action Plan, and advised that if the offer is
acceptable, the Juvenile Non-Medical Declaration be sent to the company.

The non-acceptance of the insurance plan by Pacific Life was allegedly not communicated by petitioner
Mondragon to private respondent Ngo Hing. Instead, on May 6, 1957, Mondragon wrote back Pacific
Life again strongly recommending the approval of the 20-year endowment insurance plan to children,
pointing out that since the customers were asking for such coverage.

Helen Go died of influenza. Ngo Hing sought the payment of the proceeds of the insurance, but having
failed in his effort, he filed the action for the recovery before the Court of First Instance of Cebu, which
ruled against him.

Issues:

1. Whether the binding deposit receipt constituted a temporary contract of the life insurance in
question

2. Whether Ngo Hing concealed the state of health and physical condition of Helen Go, which rendered
void the policy

Held: No. Yes. Petition dismissed.

Ratio:

The receipt was intended to be merely a provisional insurance contract. Its perfection was subject to
compliance of the following conditions: (1) that the company shall be satisfied that the applicant was
insurable on standard rates; (2) that if the company does not accept the application and offers to issue a
policy for a different plan, the insurance contract shall not be binding until the applicant accepts the
policy offered; otherwise, the deposit shall be refunded; and (3) that if the company disapproves the
application, the insurance applied for shall not be in force at any time, and the premium paid shall be
returned to the applicant.

The receipt is merely an acknowledgment that the latter's branch office had received from the applicant
the insurance premium and had accepted the application subject for processing by the insurance
company. There was still approval or rejection the same on the basis of whether or not the applicant is
"insurable on standard rates." Since Pacific Life disapproved the insurance application of respondent
Ngo Hing, the binding deposit receipt in question had never become in force at any time. The binding
deposit receipt is conditional and does not insure outright. This was held in Lim v Sun.

The deposit paid by private respondent shall have to be refunded by Pacific Life.

2. Ngo Hing had deliberately concealed the state of health of his daughter Helen Go. When he supplied
data, he was fully aware that his one-year old daughter is typically a mongoloid child. He withheld the
fact material to the risk insured.

The contract of insurance is one of perfect good faith uberrima fides meaning good faith, absolute and
perfect candor or openness and honesty; the absence of any concealment or demotion, however slight.

The concealment entitles the insurer to rescind the contract of insurance.

Geagonia v CA G.R. No. 114427

Geagonia v CA G.R. No. 114427 February 6, 1995

Facts:

Geagonia, owner of a store, obtained from Country Bankers fire insurance policy for P100,000.00. The 1
year policy and covered thestock trading of dry goods. The policy noted the requirement that "3. The
insured shall give notice to the Company of any insurance or insurances already effected, or which may
subsequently be effected, covering any of the property or properties consisting of stocks in trade, goods
in process and/or inventories only hereby insured, and unless notice be given and the particulars of such
insurance or insurances be stated therein or endorsed in this policy pursuant to Section 50 of the
Insurance Code, by or on behalf of the Company before the occurrence of any loss or damage, all
benefits under this policy shall be deemed forfeited, provided however, that this condition shall not
apply when the total insurance or insurances in force at the time of the loss or damage is not more than
P200,000.00." The petitioners stocks were destroyed by fire. He then filed a claim which was
subsequently denied because the petitioners stocks were covered by two other fire insurance policies
for Php 200,000 issued by PFIC. The basis of the private respondent's denial was the petitioner's alleged
violation of Condition 3 of the policy. Geagonia then filed a complaint against the private respondent in
the Insurance Commission for the recovery of P100,000.00 under fire insurance policy and damages. He
claimed that he knew the existence of the other two policies. But, he said that he had no knowledge of
the provision in the private respondent's policy requiring him to inform it of the prior policies and this
requirement was not mentioned to him by the private respondent's agent. The Insurance Commission
found that the petitioner did not violate Condition 3 as he had no knowledge of the existence of the two
fire insurance policies obtained from the PFIC; that it was Cebu Tesing Textiles w/c procured the PFIC
policies w/o informing him or securing his consent; and that Cebu Tesing Textile, as his creditor, had
insurable interest on the stocks. The Insurance Commission then ordered the respondent company to
pay complainant the sum of P100,000.00 with interest and attorneys fees. CA reversed the decision of
the Insurance Commission because it found that the petitioner knew of the existence of the two other
policies issued by the PFIC.

Issues:

1. WON the petitioner had not disclosed the two insurance policies when he obtained the fire insurance
and thereby violated Condition 3 of the policy.

2. WON he is prohibited from recovering

Held: Yes. No. Petition Granted

Ratio:

1. The court agreed with the CA that the petitioner knew of the prior policies issued by the PFIC. His
letter of 18 January 1991 to the private respondent conclusively proves this knowledge. His testimony to
the contrary before the Insurance Commissioner and which the latter relied upon cannot prevail over a
written admission made ante litem motam. It was, indeed, incredible that he did not know about the
prior policies since these policies were not new or original.

2. Stated differently, provisions, conditions or exceptions in policies which tend to work a forfeiture of
insurance policies should be construed most strictly against those for whose benefits they are inserted,
and most favorably toward those against whom they are intended to operate. With these principles in
mind, Condition 3 of the subject policy is not totally free from ambiguity and must be meticulously
analyzed. Such analysis leads us to conclude that (a) the prohibition applies only to double insurance,
and (b) the nullity of the policy shall only be to the extent exceeding P200,000.00 of the total policies
obtained. Furthermore, by stating within Condition 3 itself that such condition shall not apply if the total
insurance in force at the time of loss does not exceed P200,000.00, the private respondent was
amenable to assume a co-insurer's liability up to a loss not exceeding P200,000.00. What it had in mind
was to discourage over-insurance. Indeed, the rationale behind the incorporation of "other insurance"
clause in fire policies is to prevent over-insurance and thus avert the perpetration of fraud. When a
property owner obtains insurance policies from two or more insurers in a total amount that exceeds the
property's value, the insured may have an inducement to destroy the property for the purpose of
collecting the insurance. The public as well as the insurer is interested in preventing a situation in which
a fire would be profitable to the insured.
Geagonia v CA G.R. No. 114427 February 6, 1995

Facts:

Geagonia, owner of a store, obtained from Country Bankers fire insurance policy for P100,000.00. The 1
year policy and covered thestock trading of dry goods.

The policy noted the requirement that

"3. The insured shall give notice to the Company of any insurance or insurances already effected, or
which may subsequently be effected, covering any of the property or properties consisting of stocks in
trade, goods in process and/or inventories only hereby insured, and unless notice be given and the
particulars of such insurance or insurances be stated therein or endorsed in this policy pursuant to
Section 50 of the Insurance Code, by or on behalf of the Company before the occurrence of any loss or
damage, all benefits under this policy shall be deemed forfeited, provided however, that this condition
shall not apply when the total insurance or insurances in force at the time of the loss or damage is not
more than P200,000.00."

The petitioners stocks were destroyed by fire. He then filed a claim which was subsequently denied
because the petitioners stocks were covered by two other fire insurance policies for Php 200,000 issued
by PFIC. The basis of the private respondent's denial was the petitioner's alleged violation of Condition 3
of the policy.

Geagonia then filed a complaint against the private respondent in the Insurance Commission for the
recovery of P100,000.00 under fire insurance policy and damages. He claimed that he knew the
existence of the other two policies. But, he said that he had no knowledge of the provision in the private
respondent's policy requiring him to inform it of the prior policies and this requirement was not
mentioned to him by the private respondent's agent.

The Insurance Commission found that the petitioner did not violate Condition 3 as he had no knowledge
of the existence of the two fire insurance policies obtained from the PFIC; that it was Cebu Tesing
Textiles w/c procured the PFIC policies w/o informing him or securing his consent; and that Cebu Tesing
Textile, as his creditor, had insurable interest on the stocks.

The Insurance Commission then ordered the respondent company to pay complainant the sum of
P100,000.00 with interest and attorneys fees.

CA reversed the decision of the Insurance Commission because it found that the petitioner knew of the
existence of the two other policies issued by the PFIC.

Issues:

1. WON the petitioner had not disclosed the two insurance policies when he obtained the fire insurance
and thereby violated Condition 3 of the policy.

2. WON he is prohibited from recovering

Held: Yes. No. Petition Granted

Ratio:

1. The court agreed with the CA that the petitioner knew of the prior policies issued by the PFIC. His
letter of 18 January 1991 to the private respondent conclusively proves this knowledge. His testimony to
the contrary before the Insurance Commissioner and which the latter relied upon cannot prevail over a
written admission made ante litem motam. It was, indeed, incredible that he did not know about the
prior policies since these policies were not new or original.

2. Stated differently, provisions, conditions or exceptions in policies which tend to work a forfeiture of
insurance policies should be construed most strictly against those for whose benefits they are inserted,
and most favorably toward those against whom they are intended to operate.

With these principles in mind, Condition 3 of the subject policy is not totally free from ambiguity and
must be meticulously analyzed. Such analysis leads us to conclude that (a) the prohibition applies only to
double insurance, and (b) the nullity of the policy shall only be to the extent exceeding P200,000.00 of
the total policies obtained.

Furthermore, by stating within Condition 3 itself that such condition shall not apply if the total insurance
in force at the time of loss does not exceed P200,000.00, the private respondent was amenable to
assume a co-insurer's liability up to a loss not exceeding P200,000.00. What it had in mind was to
discourage over-insurance. Indeed, the rationale behind the incorporation of "other insurance" clause in
fire policies is to prevent over-insurance and thus avert the perpetration of fraud. When a property
owner obtains insurance policies from two or more insurers in a total amount that exceeds the
property's value, the insured may have an inducement to destroy the property for the purpose of
collecting the insurance. The public as well as the insurer is interested in preventing a situation in which
a fire would be profitable to the insured.
Fortune v CA G.R. No. 115278 May 23, 1995

J. Davide Jr.

Facts:

Producers Banks money was stolen while it was being transported from Pasay to Makati. The people
guarding the money were charged with the theft. The bank filed a claim for the amount of Php 725,000,
and such was refused by the insurance corporation due to the stipulation:

GENERAL EXCEPTIONS

The company shall not be liable under this policy in report of

(b) any loss caused by any dishonest, fraudulent or criminal act of the insured or any officer, employee,
partner, director, trustee or authorized representative of the Insured whether acting alone or in
conjunction with others. . . .

In the trial court, the bank claimed that the suspects were not any of the above mentioned. They won
the case. The appellate court affirmed on the basis that the bank had no power to hire or dismiss the
guard and could only ask for replacements from the security agency.

Issue: Did the guards fall under the general exceptions clause of the insurance policy and thus absolved
the insurance company from liability?

Held: Yes to both. Petition granted.

Ratio:

The insurance agency contended that the guards automatically became the authorized representatives
of the bank when they cited International Timber Corp. vs. NLRC where a contractor is a "labor-only"
contractor in the sense that there is an employer-employee relationship between the owner of the
project and the employees of the "labor-only" contractor.

They cited Art. 106. Of the Labor Code which said:

Contractor or subcontractor. There is "labor-only" contracting where the person supplying workers
to an employer does not have substantial capital or investment in the form of tools, equipment,
machineries, work premises, among others, and the workers recruited and placed by such persons are
performing activities which are directly related to the principal business of such employer. In such cases,
the person or intermediary shall be considered merely as an agent of the employer who shall be
responsible to the workers in the same manner and extent as if the latter were directly employed by
him.

The bank asserted that the guards were not its employees since it had nothing to do with their selection
and engagement, the payment of their wages, their dismissal, and the control of their conduct.

They cited a case where an employee-employer relationship was governed by (1) the selection and
engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power
to control the employee's conduct.

The case was governed by Article 174 of the Insurance Code where it stated that casualty insurance
awarded an amount to loss cause by accident or mishap.

The term "employee," should be read as a person who qualifies as such as generally and universally
understood, or jurisprudentially established in the light of the four standards in the determination of the
employer-employee relationship, or as statutorily declared even in a limited sense as in the case of
Article 106 of the Labor Code which considers the employees under a "labor-only" contract as
employees of the party employing them and not of the party who supplied them to the employer.

But even if the contracts were not labor-only, the bank entrusted the suspects with the duty to safely
transfer the money to its head office, thus, they were representatives. According to the court, a
representative is defined as one who represents or stands in the place of another; one who represents
others or another in a special capacity, as an agent, and is interchangeable with agent.
Insurance Case Digest: Fortune Insurance and Surety Co., Inc. v. CA (1995)

G.R. No. 115278 May 23, 1995

Lessons Applicable: Stipulations Cannot Be Segregated (Insurance)

FACTS:

Producers Bank of the Philippines insured with Fortune Insurance and Surety Co. P725,000 which was
lost during a robbery of Producer's armored vehicle while it was in transit from Pasay City City to its
Makati head office.

The armored car was driven by Benjamin Magalong Y de Vera, escorted by Security Guard Saturnino
Atiga Y Rosete.

After an investigation conducted by the Pasay police authorities, the driver Magalong and guard Atiga
were charged, together with Edelmer Bantigue Y Eulalio, Reynaldo Aquino and John Doe, with violation
of P.D. 532 (Anti-Highway Robbery Law)

Upon claiming, Fortune refused stating that it is not liable since under the general exceptions of the
policy:

any loss caused by any dishonest, fraudulent or criminal act of the insured or any officer, employee,
partner, director, trustee or authorized representative of the Insured whether acting alone or in
conjunction with others. . . .

RTC: favored Producers Bank since Driver and Security Guard were merely assigned

CA: Affirmed RTC

ISSUE: W/N the driver and security guard are employees under the general exception

HELD: YES. Petition is granted.

It is clear to us that insofar as Fortune is concerned, it was its intention to exclude and exempt from
protection and coverage losses arising from dishonest, fraudulent, or criminal acts of persons granted or
having unrestricted access to Producers' money or payroll. When it used then the term "employee," it
must have had in mind any person who qualifies as such as generally and universally understood, or
jurisprudentially established in the light of the four standards in the determination of the employer-
employee relationship, 21 or as statutorily declared even in a limited sense as in the case of Article 106
of the Labor Code which considers the employees under a "labor-only" contract as employees of the
party employing them and not of the party who supplied them to the employer
 Producers entrusted the three with the specific duty to safely transfer the money to its head office,
with Alampay to be responsible for its custody in transit; Magalong to drive the armored vehicle which
would carry the money; and Atiga to provide the needed security for the money, the vehicle, and his
two other companions.

A "representative" is defined as one who represents or stands in the place of another; one who
represents others or another in a special capacity, as an agent, and is interchangeable with "agent."