G.R. No. 200784
An alteration in the use or condition of a thing insured from
Malayan Insurance Company, Inc., Petitioner,
vsPAP CO, LTD (Phil Branch), Respondent
Facts:
Malayan Insurance Company issued Fire Insurance policy to PAP Co, LTD
for the latter’s machineries and equipment located at Sanyo Precision
Philippines building in Rosario, Cavite. After one year and before the
expiration of the contract, PAP CO LTD renewed the policy on “as-is”
basis. PAP Co, LTD, without the consent of Malayan Insurance, moved the
properties from Cavite to a different place. Fire then broke out. Malayan
denied liability,hence, this petition.
Issue:
Whether Malayan Insurance is liable to PAP Co, LTD and whether such
transfer increase the risk of loss of the insured properties.
Held:
No. Supreme Court held that the insurance company is not liable for the
reason that the transfer of properties without its consent was a violation of
the contract and that the same increased the risk of loss of the insured
properties.
Insurance Case #048 Malayan Insurance Co. Inc. vs. PAP Ltd. Co. (Phil.
Br.)
G.R. No. 200784, 7 August 2013
Topic: Concealment, Rescission of Insurance Contract, Alteration in the
use of the thing insured
Ponente: Mendoza, J.
Doctrine: Under the Insurance Code of the Philippines:
“Sec. 26. A neglect to communicate that which a party knows and
ought to communicate, is called a concealment.
Sec. 27.A concealment whether intentional or unintentional entitles the
injured party to rescind a contract of insurance. (As amended by
BatasangPambansaBlg. 874)
Sec. 168.
that to which it is limited by the policy made without the consent of the
insurer, by means within the control of the insured, and increasing the
risks, entitles an insurer to rescind a contract of fire insurance.”
Facts:
1. 13 May 1996- Malayan Insurance Company (Malayan) issued Fire
Insurance Policy to PAP Co., Ltd. (PAP Co) for the latter’s
machineries and equipment located at Sanyo Precision Phils, Bldg.,
Phase III, Lot 4, Block 15, PEZA, Rosario, Cavite (Sanyo Building).
2. Insurance was worth P15M and effective for 1 year. It was procured
by PAP Co for RCBC, the mortgagee of the insured machineries and
equipment.
3. Prior to expiration of the insurance coverage, PAP Co. renewed
policy on an “as is” basis. This was for 13 May 1997 to 13 May 1998.
4. 12 October 1997 and during the subsistence of the renewal policy,
the insured machineries and equipment were totally lost by fir.
5. PAP Co. filed a fire insurance claim with Malayan in the amount
insured.
6. 15 December 1997- Malayan denied since at the time of loss, the
insured machineries and equipment were transferred by PAP Co. to
a location different from that indicated in the policy.
7. PAP Co. argued that Malayan cannot avoid liability since it was
informed of the transfer by RCBC, the mortgage and the party duty-
bound to relay such information.
8. 17 September 2009- RTC ordered Malayan to pay PAP an indemnity
for the loss.
9. 27 October 2011- CA affirmed RTC decision. Hence this case.
Issue: Is Malayan liable under the insurance contract?
Ruling: No. Under the policy and when it was renewed, it forbade the
removal of the insured properties unless sanctioned/consented by Malayan.
PAP failed to notify and to obtain consent of Malayan regarding the removal.
The transfer also increased the risk. With the transfer of location of the
subject properties, without notice to and consent of Malayan, PAP committed
concealment, misrepresentation and breach of a material warranty. Under
the Insurance Code, Malayan can rescind the insurance contract.
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Dispositive: WHEREFORE, the October 27, 2011 Decision of the Court of
Appeals is hereby REVERSED and SET ASIDE. Petitioner Malayan
Insurance Company, Inc. is hereby declared NOT liable for the loss of the
insured machineries and equipment suffered by PAP Co., Ltd.
MA. LOURDES S. FLORENDO v. PHILAM PLANS, GR No. 186983, 2012-
02-22
Facts:
Manuel Florendo filed an application for comprehensive pension plan Philam
Plans, Inc. after some convincing by respondent Perla Abcede
Manuel signed the application and left to Perla the task of supplying the
information needed in the application Ma. Celeste Abcede, Perla's daughter,
signed the application as sales... counselor.
pension... life insurance coverage
Group Master Policy that Philippine American Life Insurance Company
(Philam Life)... including accidental death
Eleven months later or on September 15, 1998, Manuel died of blood
poisoning.
Subsequently, Lourdes filed a claim with Philam Plans for the payment of the
benefits under her husband's plan.
Philam Plans wrote Lourdes a letter,[12] declining her claim.
found that Manuel was on maintenance medicine for his heart and had an
implanted pacemaker.
Lourdes points out that, seeing the unfilled spaces in Manuel's pension plan
application relating to his medical history, Philam Plans should have returned
it to him for completion. Since Philam Plans chose to approve the application
just as it was, it cannot cry... concealment on Manuel's part. Further, Lourdes
adds that Philam Plans never queried Manuel directly regarding the state of
his health. Consequently, it could not blame him for not mentioning it.
Lourdes insists that Manuel had concealed nothing since Perla, the soliciting
agent, knew that Manuel had a pacemaker implanted on his chest in the 70s
or about 20 years before he signed up for the pension plan.
Lourdes next points out that it made no difference if Manuel failed to reveal
the fact that he had a pacemaker implant in the early 70s since this did not
fall within the five-year timeframe that the disclosure contemplated.
Lourdes contends that the mere fact that Manuel signed the application in
blank and let Perla fill in the required details did not make her his agent and
bind him to her concealment of his true state of health. Since there is no
evidence of collusion between them,... Perla's fault must be considered
solely her own and cannot prejudice Manuel.
Lourdes points out that any defect or insufficiency in the information provided
by his pension plan application should be deemed waived after the same has
been approved, the policy has... been issued, and the premiums have been
collected.
Issues:
1. Whether or not the CA erred in finding Manuel guilty of concealing
his illness when he kept blank and did not answer questions in his
pension plan application regarding the ailments he suffered from;
2. Whether or not the CA erred in holding that Manuel was bound by
the failure of respondents Perla and Ma. Celeste to declare the
condition of Manuel's health in the pension plan application;
Ruling:
Lourdes is shifting to Philam Plans the burden of putting on the pension plan
application the true state of Manuel's health.
since Philam Plans waived medical examination for Manuel, it had to rely
largely on his stating the truth regarding his health in his... application.
he knew more than anyone that he had been under treatment for heart
condition and diabetes for more than five years preceding his submission of
that application. But he kept those crucial facts from Philam Plans.
when Manuel signed the pension plan application, he adopted as his own the
written representations and declarations embodied in it.
It is clear from these representations that he concealed his chronic heart
ailment and diabetes from Philam Plans.
Since Manuel signed the application without filling in the details regarding his
continuing treatments for heart condition and diabetes, the assumption is that
he has never been treated for the said illnesses in the last five years
preceding his application.
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But by its tenor, the responsibility for... preparing the application belonged to
Manuel.
Nothing in it implies that someone else may provide the information that
Philam Plans needed. Manuel cannot sign the application and disown the
responsibility for having it filled up.
That Manuel still had his... pacemaker when he applied for a pension plan in
October 1997 is an admission that he remained under treatment for irregular
heartbeat within five years preceding that application.
Manuel had been taking medicine for his heart condition and diabetes when
he submitted his pension plan application. These clearly fell within the five-
year period. More, even if Perla's knowledge of Manuel's pacemaker may be
applied to Philam Plans... under the theory of imputed knowledge,[26] it is
not claimed that Perla was aware of his two other afflictions that needed
medical treatments. Pursuant to Section 27[27] of the Insurance Code,
Manuel's concealment entitles Philam Plans... to rescind its contract of
insurance with him.
But Manuel forgot that in signing the pension plan application, he certified
that he wrote all the information stated in it or had someone do it under his
direction.
Assuming that it was Perla who filled up the application form, Manuel is still
bound by what it contains since he certified that he authorized her action.
Philam Plans had every right to act on the faith of that certification.
Lourdes could not seek comfort from her claim that Perla had assured
Manuel that the state of his health would not hinder the approval of his
application and that what is written on his application made no difference to
the insurance company. But, indubitably, Manuel was made... aware when
he signed the pension plan application that, in granting the same, Philam
Plans and Philam Life were acting on the truth of the representations
contained in that application.
The Court cannot agree. The comprehensive pension plan that Philam Plans
issued contains a one-year incontestability period.
The above incontestability clause precludes the insurer from disowning
liability under the policy it issued on the ground of concealment or
misrepresentation regarding the health of the insured after a year of its
issuance.
Since Manuel died on the eleventh month following the issuance of his
plan,[36] the one year incontestability period has not yet set in.
Consequently, Philam Plans was not barred from questioning Lourdes'
entitlement to the benefits of her husband's pension... plan.
FACTS: On October 23, 1997 Manuel Florendo filed an application for
comprehensive pension plan with respondent Philam Plans, Inc. (Philam
Plans) after some convincing by respondent Perla Abcede. The plan had a
pre-need price of P997,050.00, payable in 10 years, and had a maturity
value of P2,890,000.00 after 20 years. Manuel signed the application and left
to Perla the task of supplying the information needed in the application.
Respondent Ma. Celeste Abcede, Perla’s daughter, signed the application as
sales counselor.
Aside from pension benefits, the comprehensive pension plan also provided
life insurance coverage to Florendo. This was covered by a Group Master
Policy that Philippine American Life Insurance Company (Philam Life) issued
to Philam Plans. Under the master policy, Philam Life was to automatically
provide life insurance coverage, including accidental death, to all who signed
up for Philam Plans’ comprehensive pension plan. If the plan holder died
before the maturity of the plan, his beneficiary was to instead receive the
proceeds of the life insurance, equivalent to the pre-need price. Further, the
life insurance was to take care of any unpaid premium until the pension plan
matured, entitling the beneficiary to the maturity value of the pension plan.
On October 30, 1997 Philam Plans issued Pension Plan Agreement
PP43005584 to Manuel, with petitioner Ma. Lourdes S. Florendo, his wife, as
beneficiary. In time, Manuel paid his quarterly premiums.
Eleven months later or on September 15, 1998, Manuel died of blood
poisoning. Subsequently, Lourdes filed a claim with Philam Plans for the
payment of the benefits under her husband’s plan. Because Manuel died
before his pension plan matured and his wife was to get only the benefits of
his life insurance, Philam Plans forwarded her claim to Philam Life.
On May 3, 1999 Philam Plans wrote Lourdes a letter, declining her claim.
Philam Life found that Manuel was on maintenance medicine for his heart
and had an implanted pacemaker. Further, he suffered from diabetes mellitus
and was taking insulin. Lourdes renewed her demand for payment under the
plan but Philam Plans rejected it, prompting her to file the present action
against the pension plan company before the Regional Trial Court (RTC) of
Quezon City.
On March 30, 2006 the RTC rendered judgment, ordering Philam Plans,
Perla and Ma. Celeste, solidarily, to pay Lourdes all the benefits from her
husband’s pension plan, namely: P997,050.00, the proceeds of his term
insurance, and P2,890,000.00 lump sum pension benefit upon maturity of his
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plan; P100,000.00 as moral damages, and to pay the costs of the suit. The
RTC ruled that Manuel was not guilty of concealing the state of his health
from his pension plan application.
On December 18, 2007 the Court of Appeals (CA) reversed the RTC
decision, holding that insurance policies are traditionally contracts uberrimae
fidae or contracts of utmost good faith. As such, it required Manuel to
disclose to Philam Plans conditions affecting the risk of which he was aware
or material facts that he knew or ought to know.
ISSUE: WON THERE WAS CONCEALMENT
HELD: YES. One. Lourdes points out that, seeing the unfilled spaces in
Manuel’s pension plan application relating to his medical history, Philam
Plans should have returned it to him for completion. Since Philam Plans
chose to approve the application just as it was, it cannot cry concealment on
Manuel’s part. Further, Lourdes adds that Philam Plans never queried
Manuel directly regarding the state of his health. Consequently, it could not
blame him for not mentioning it.
But Lourdes is shifting to Philam Plans the burden of putting on the pension
plan application the true state of Manuel’s health. She forgets that since
Philam Plans waived medical examination for Manuel, it had to rely largely
on his stating the truth regarding his health in his application. For, after all, he
knew more than anyone that he had been under treatment for heart condition
and diabetes for more than five years preceding his submission of that
application. But he kept those crucial facts from Philam Plans.
Besides, when Manuel signed the pension plan application, he adopted as
his own the written representations and declarations embodied in it. It is clear
from these representations that he concealed his chronic heart ailment and
diabetes from Philam Plans.
Lourdes insists that Manuel had concealed nothing since Perla, the soliciting
agent, knew that Manuel had a pacemaker implanted on his chest in the 70s
or about 20 years before he signed up for the pension plan. But by its tenor,
the responsibility for preparing the application belonged to Manuel. Nothing
in it implies that someone else may provide the information that Philam Plans
needed. Manuel cannot sign the application and disown the responsibility for
having it filled up. If he furnished Perla the needed information and delegated
to her the filling up of the application, then she acted on his instruction, not
on Philam Plans’ instruction.
Two. Lourdes contends that the mere fact that Manuel signed the application
in blank and let Perla fill in the required details did not make her his agent
and bind him to her concealment of his true state of health. Since there is no
evidence of collusion between them, Perla’s fault must be considered solely
her own and cannot prejudice Manuel. But Manuel forgot that in signing the
pension plan application, he certified that he wrote all the information stated
in it or had someone do it under his direction. The same may be said of
Manuel, a civil engineer and manager of a construction company. 33 He
could be expected to know that one must read every document, especially if
it creates rights and obligations affecting him, before signing the same.
Manuel is not unschooled that the Court must come to his succor. It could
reasonably be expected that he would not trifle with something that would
provide additional financial security to him and to his wife in his twilight
years.|
Three. In a final attempt to defend her claim for benefits under Manuel’s
pension plan, Lourdes points out that any defect or insufficiency in the
information provided by his pension plan application should be deemed
waived after the same has been approved, the policy has been issued, and
the premiums have been collected.
The Court cannot agree. The comprehensive pension plan that Philam Plans
issued contains a one-year incontestability period. It states:
VIII. INCONTESTABILITY
After this Agreement has remained in force for one ( 1) year, we can no
longer contest for health reasons any claim for insurance under this
Agreement, except for the reason that installment has not been paid
(lapsed), or that you are not insurable at the time you bought this pension
program by reason of age. If this Agreement lapses but is reinstated
afterwards, the one (1) year contestability period shall start again on the date
of approval of your request for reinstatement.
The above incontestability clause precludes the insurer from disowning
liability under the policy it issued on the ground of concealment or
misrepresentation regarding the health of the insured after a year of its
issuance.
Since Manuel died on the eleventh month following the issuance of his plan,
the one year incontestability period has not yet set in. Consequently, Philam
Plans was not barred from questioning Lourdes’ entitlement to the benefits of
her husband’s pension plan.
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Insular Life Assurance Co., Ltd. v. Feliciano, G.R. No. 47593,
[September 13, 1941], 73 PHIL 201-218
FACTS: One Evaristo Feliciano filed an application for insurance with the
herein petitioner upon the solicitation of one of its agents. Two insurance
policies to the aggregate amount of P25,000 were issued to him. Feliciano
died on September 29, 1935. The defendant company refused to pay on the
ground that the policies were fraudulently obtained, the insured having
given false answers and statements in the application as well as in the
medical report. (a detailed fact is given in the next case) ISSUE: W/N the
Insular has a right to avoid the policy? HELD: NO. 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 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 to deal with the applicant. It was the one who selected the
agent, thus implying that the insured could put his trust on him. 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 employed
and gave character to the third person as its agent should be the one to
bear the loss. The 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
knowledge of the applicant fills in false answers, either fraudulently or
otherwise, the insurer cannot assert the falsity of such answers as a defense
to liability on the policy, and this is true generally without regard to the
subject matter of the answers or the nature of the agent's duties or
limitations on his authority, at least if not brought to the attention of the
applicant. The fact that the insured did not read the application which he
signed, is not indicative of bad faith. It has been held that it is not
negligence for the insured to sign an application without first reading it if
the insurer by its conduct in appointing the agent influenced the insured to
place trust and confidence in the agent. (NOTE: This seemed to be reversed
by the SC in its decision in the next case.)
Insular Life Assurance Co., Ltd. v. Feliciano, G.R. No. 47593, [December 29,
1943] FACTS: Evaristo Feliciano, who died on September 29, 1935, was
suffering with advanced pulmonary tuberculosis when he signed his
application for insurance with the petitioner on October 12, 1934. On that
same date Doctor Trepp, who had taken X-ray pictures of his lungs,
informed the respondent Dr. Serafin D. Feliciano, brother of Evaristo, that
the latter "was already in a very serious and practically hopeless condition."
Nevertheless the question contained in the application — "Have you ever
suffered from any ailment or disease of the lungs, pleurisy, pneumonia or
asthma?" — appears to have been answered, "No." And above the
signature of the applicant, following the answers to the various questions
propounded to him, is the following printed statement: "I declare on behalf
of myself and of any person who shall have or claim any interest in any
policy issued hereunder, that each of the above answers is full, complete
and true, and that to the best of my knowledge and belief I am a proper
subject for life insurance." (Exhibit K.) The false answer above referred to, as
well as the others, was written by the Company's soliciting agent Romulo M.
David, in collusion with the medical examiner Dr. Gregorio Valdez, for the
purpose of securing the Company's approval of the application so that the
policy to be issued thereon might be credited to said agent in connection
with the inter-provincial contest which the Company was then holding
among its soliciting agents to boost the sales of its policies. Agent David
bribed Medical Examiner Valdez with money which the former borrowed
from the applicant's mother by way of advanced payment on the premium,
Insular insists that upon the facts of the case the policies in question are null
and void ab initio, invoking concealment, and that all that the respondents
are entitled to is the refund of the premiums paid thereon. ISSUE: W/N the
heir’s claim for the proceeds be granted? HELD: NO. There was
concealment. When Evaristo Feliciano, the applicant for insurance, signed
the application in blank and authorized the soliciting agent and/or the
5
medical examiner of the Company to write the answers for him, he made
them his own agents for that purpose, and he was responsible for their acts
in that connection. If they falsified the answers for him, he could not evade
the responsibility for the falsification. He was not supposed to sign the
application in blank. He knew that the answers to the questions therein
contained would be "the basis of the policy," and for that very reason he
was required with his signature to vouch for the truth thereof. Moreover,
from the facts of the case we cannot escape the conclusion that the insured
acted in connivance with the soliciting agent and the medical examiner of
the Company in accepting the policies in question. When the applicant
signed the application he was "having difficulty in breathing, . . . with a very
high fever." He had gone three times to the Santol Sanatorium and had X-
ray pictures taken of his lungs. He therefore knew that he was not "a proper
subject for life insurance." When he accepted the policy, he knew that he
was not in good health.