Professional Documents
Culture Documents
NG V Asian Crusader G
NG V Asian Crusader G
Facts:
Held: No. Yes. Petition dismissed.
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 Ratio:
Helen. He supplied the essential data which
petitioner Mondragon, the Branch Manager, wrote The receipt was intended to be merely a provisional
on the form. The latter paid the annual premium the insurance contract. Its perfection was subject to
sum of P1,077.75 going over to the Company, but he compliance of the following conditions: (1) that the
retained the amount of P1,317.00 as his commission company shall be satisfied that the applicant was
for being a duly authorized agent of Pacific Life. insurable on standard rates; (2) that if the company
does not accept the application and offers to issue a
Upon the payment of the insurance premium, the policy for a different plan, the insurance contract shall
binding deposit receipt was issued Ngo Hing. not be binding until the applicant accepts the policy
Likewise, petitioner Mondragon handwrote at the offered; otherwise, the deposit shall be refunded; and
bottom of the back page of the application form his (3) that if the company disapproves the application,
strong recommendation for the approval of the the insurance applied for shall not be in force at any
insurance application. Then Mondragon received a time, and the premium paid shall be returned to the
letter from Pacific Life disapproving the insurance applicant.
application. The letter stated that the said life
insurance application for 20-year endowment plan is The receipt is merely an acknowledgment that the
not available for minors below seven years old, but latter's branch office had received from the applicant
Pacific Life can consider the same under the Juvenile the insurance premium and had accepted the
Triple Action Plan, and advised that if the offer is application subject for processing by the insurance
acceptable, the Juvenile Non-Medical Declaration be company. There was still approval or rejection the
sent to the company. same on the basis of whether or not the applicant is
"insurable on standard rates." Since Pacific Life
disapproved the insurance application of respondent The company then made an excuse that the insured
Ngo Hing, the binding deposit receipt in question had had not filed any claim with it, nor submitted proof of
never become in force at any time. The binding loss which is a clear violation of Policy Condition
deposit receipt is conditional and does not insure No.11, as a result, determination of the liability of
outright. This was held in Lim v Sun. private respondent could not be made.
The deposit paid by private respondent shall have to Pacific Banking filed in the trial court an action for a
be refunded by Pacific Life. sum of money for P61,000.00 against Oriental
Assurance.
2. Ngo Hing had deliberately concealed the state of
health of his daughter Helen Go. When he supplied At the trial, petitioner presented communications of
data, he was fully aware that his one-year old the insurance adjuster to Asian Surety revealing
daughter is typically a mongoloid child. He withheld undeclared co-insurances with the following: P30,000
the fact material to the risk insured. with Wellington Insurance; P25,000 with Empire
Surety and P250,000 with Asian Surety undertaken by
“The contract of insurance is one of perfect good faith
insured Paramount on the same property covered by
uberrima fides meaning good faith, absolute and
its policy with Oriental whereas the only co-
perfect candor or openness and honesty; the absence
of any concealment or demotion, however slight.” insurances declared in the subject policy are those of
P30,000.00 with Malayan P50,000.00 with South Sea
The concealment entitles the insurer to rescind the and P25.000.00 with Victory.
contract of insurance.
The defense of fraud, in the form of non-declaration
Pacific v CA G.R. No. L-41014 November 28, 1988 of co-insurances which was not pleaded in the
J. Paras answer, was also not pleaded in the Motion to
Dismiss.
The trial court denied the respondent’s motion.
Facts: Oriental filed another motion to include additional
An open fire insurance policy, was issued to evidence of the co-insurance which could amount to
Paramount Shirt Manufacturing by Oriental fraud.
Assurance Corporation to indemnify P61,000.00, The trial court still made Oriental liable for P 61,000.
caused by fire to the factory’s stocks, materials and The CA reversed the trial court decision. Pacific
supplies. Banking filed a motion for reconsideration of the said
The insured was a debtor of Pacific Banking in the decision of the respondent Court of Appeals, but this
amount of (P800,000.00) and the goods described in was denied for lack of merit.
the policy were held in trust by the insured for Pacific
Banking under trust receipts.
Issues:
The policy was endorsed to Pacific Banking as
mortgagee/ trustor of the properties insured, with 1. WON unrevealed co-insurances Violated policy
the knowledge and consent of private respondent to conditions No. 3
the effect that "loss if any under this policy is payable 2. WON the insured failed to file the required proof of
to the Pacific Banking Corporation". loss prior to court action.
A fire broke out on the premises destroying the goods
contained in the building.
Held: Yes. Petition dismissed.
The bank sent a letter of demand to Oriental for
indemnity.
Ratio:
The company wasn’t ready to give since it was
awaiting the adjuster’s report. 1. Policy Condition No. 3 explicitly provides:
3. The Insured shall give notice to the Company of any provided, that in case the mortgagor or owner/
insurance already effected, or which may trustee neglects or refuses to pay any premium, the
subsequently be effected, covering any of the mortgagee/ trustor shall, on demand pay the same.”
property hereby insured, and unless such notice be The paragraph clearly states the exceptions to the
given and the particulars of such insurance or general rule that insurance as to the interest of the
insurances be stated in or endorsed on this Policy by mortgagee, cannot be invalidated; namely: fraud, or
or on behalf of the Company before the occurrence misrepresentation or arson. Concealment of the
of any loss or damage, all benefit under this policy aforecited co-insurances can easily be fraud, or in the
shall be forfeited. very least, misrepresentation.
The insured failed to reveal before the loss three Undoubtedly, it is but fair and just that where the
other insurances. Had the insurer known that there insured who is primarily entitled to receive the
were many co-insurances, it could have hesitated or proceeds of the policy has by its fraud and/or
plainly desisted from entering into such contract. misrepresentation, forfeited said right.
Hence, the insured was guilty of clear fraud.
Petitioner further stressed that fraud which was not
Concrete evidence of fraud or false declaration by the pleaded as a defense in private respondent's answer
insured was furnished by the petitioner itself when or motion to dismiss, should be deemed to have been
the facts alleged in the policy under clauses "Co- waived. It will be noted that the fact of fraud was tried
Insurances Declared" and "Other Insurance Clause" by express or at least implied consent of the parties.
are materially different from the actual number of co- Petitioner did not only object to the introduction of
insurances taken over the subject property. evidence but on the contrary, presented the very
As the insurance policy against fire expressly required evidence that proved its existence.
that notice should be given by the insured of other 2. Generally, the cause of action on the policy accrues
insurance upon the same property, the total absence when the loss occurs, But when the policy provides
of such notice nullifies the policy. that no action shall be brought unless the claim is first
Petitioner points out that Condition No. 3 in the policy presented extrajudicially in the manner provided in
in relation to the "other insurance clause" supposedly the policy, the cause of action will accrue from the
to have been violated, cannot certainly defeat the time the insurer finally rejects the claim for payment
right of the petitioner to recover the insurance as In the case at bar, policy condition No. 11 specifically
mortgagee/assignee. Hence, they claimed that the provides that the insured shall on the happening of
purpose for which the endorsement or assignment any loss or damage give notice to the company and
was made was to protect the mortgagee/assignee
shall within fifteen (15) days after such loss or damage
against any untoward act or omission of the insured. deliver to the private respondent (a) a claim in writing
It would be absurd to hold that petitioner is barred giving particular account as to the articles or goods
from recovering the insurance on account of the destroyed and the amount of the loss or damage and
alleged violation committed by the insured. (b) particulars of all other insurances, if any.
It is obvious that petitioner has missed all together Twenty-four days after the fire did petitioner merely
the import of subject mortgage clause which wrote letters to private respondent to serve as a
specifically provides: notice of loss. It didn’t even furnish other documents.
“Loss, if any, under this policy, shall be payable to the Instead, petitioner shifted upon private respondent
PACIFIC BANKING CORPORATION Manila the burden of fishing out the necessary information
mortgagee/trustor as its interest may appear, it being to ascertain the particular account of the articles
hereby understood and agreed that this insurance as destroyed by fire as well as the amount of loss. Since
to the interest of the mortgagee/trustor only herein, the required claim by insured, together with the
shall not be invalidated by any act or neglect—except preliminary submittal of relevant documents had not
fraud or misrepresentation, or arson—of the been complied with, it follows that private
mortgagor or owner/trustee of the property insured; respondent could not be deemed to have finally
rejected petitioner's claim and therefore there was Surety and P250,000 with Asian Surety undertaken by
no cause of action. insured Paramount on the same property covered by
its policy with Oriental whereas the only co-
It appearing that insured has violated or failed to
insurances declared in the subject policy are those of
perform the conditions under No. 3 and 11 of the
P30,000.00 with Malayan P50,000.00 with South Sea
contract, and such violation or want of performance
and P25.000.00 with Victory.
has not been waived by the insurer, the insured
cannot recover, much less the herein petitioner. The defense of fraud, in the form of non-declaration
of co-insurances which was not pleaded in the
Pacific v CA G.R. No. L-41014 November 28, 1988
answer, was also not pleaded in the Motion to
J. Paras Dismiss.
The trial court denied the respondent’s motion.
Facts: Oriental filed another motion to include additional
evidence of the co-insurance which could amount to
An open fire insurance policy, was issued to fraud.
Paramount Shirt Manufacturing by Oriental
Assurance Corporation to indemnify P61,000.00, The trial court still made Oriental liable for P 61,000.
caused by fire to the factory’s stocks, materials and The CA reversed the trial court decision. Pacific
supplies. Banking filed a motion for reconsideration of the said
decision of the respondent Court of Appeals, but this
The insured was a debtor of Pacific Banking in the was denied for lack of merit.
amount of (P800,000.00) and the goods described in
the policy were held in trust by the insured for Pacific
Banking under trust receipts. Issues:
The policy was endorsed to Pacific Banking as 1. WON unrevealed co-insurances Violated policy
mortgagee/ trustor of the properties insured, with conditions No. 3
the knowledge and consent of private respondent to
2. WON the insured failed to file the required proof of
the effect that "loss if any under this policy is payable
loss prior to court action.
to the Pacific Banking Corporation".
A fire broke out on the premises destroying the goods
contained in the building. Held: Yes. Petition dismissed.
The bank sent a letter of demand to Oriental for
indemnity. Ratio:
The company wasn’t ready to give since it was 1. Policy Condition No. 3 explicitly provides:
awaiting the adjuster’s report.
3. The Insured shall give notice to the Company of any
The company then made an excuse that the insured insurance already effected, or which may
had not filed any claim with it, nor submitted proof of subsequently be effected, covering any of the
loss which is a clear violation of Policy Condition property hereby insured, and unless such notice be
No.11, as a result, determination of the liability of given and the particulars of such insurance or
private respondent could not be made. insurances be stated in or endorsed on this Policy by
Pacific Banking filed in the trial court an action for a or on behalf of the Company before the occurrence
sum of money for P61,000.00 against Oriental of any loss or damage, all benefit under this policy
Assurance. shall be forfeited.
At the trial, petitioner presented communications of The insured failed to reveal before the loss three
the insurance adjuster to Asian Surety revealing other insurances. Had the insurer known that there
undeclared co-insurances with the following: P30,000 were many co-insurances, it could have hesitated or
with Wellington Insurance; P25,000 with Empire
plainly desisted from entering into such contract. proceeds of the policy has by its fraud and/or
Hence, the insured was guilty of clear fraud. misrepresentation, forfeited said right.
Concrete evidence of fraud or false declaration by the Petitioner further stressed that fraud which was not
insured was furnished by the petitioner itself when pleaded as a defense in private respondent's answer
the facts alleged in the policy under clauses "Co- or motion to dismiss, should be deemed to have been
Insurances Declared" and "Other Insurance Clause" waived. It will be noted that the fact of fraud was tried
are materially different from the actual number of co- by express or at least implied consent of the parties.
insurances taken over the subject property. Petitioner did not only object to the introduction of
evidence but on the contrary, presented the very
As the insurance policy against fire expressly required
evidence that proved its existence.
that notice should be given by the insured of other
insurance upon the same property, the total absence 2. Generally, the cause of action on the policy accrues
of such notice nullifies the policy. when the loss occurs, But when the policy provides
that no action shall be brought unless the claim is first
Petitioner points out that Condition No. 3 in the policy
presented extrajudicially in the manner provided in
in relation to the "other insurance clause" supposedly
the policy, the cause of action will accrue from the
to have been violated, cannot certainly defeat the
right of the petitioner to recover the insurance as time the insurer finally rejects the claim for payment
mortgagee/assignee. Hence, they claimed that the In the case at bar, policy condition No. 11 specifically
purpose for which the endorsement or assignment provides that the insured shall on the happening of
was made was to protect the mortgagee/assignee any loss or damage give notice to the company and
against any untoward act or omission of the insured. shall within fifteen (15) days after such loss or damage
It would be absurd to hold that petitioner is barred deliver to the private respondent (a) a claim in writing
from recovering the insurance on account of the giving particular account as to the articles or goods
alleged violation committed by the insured. destroyed and the amount of the loss or damage and
(b) particulars of all other insurances, if any.
It is obvious that petitioner has missed all together
the import of subject mortgage clause which Twenty-four days after the fire did petitioner merely
specifically provides: wrote letters to private respondent to serve as a
notice of loss. It didn’t even furnish other documents.
“Loss, if any, under this policy, shall be payable to the
Instead, petitioner shifted upon private respondent
PACIFIC BANKING CORPORATION Manila
the burden of fishing out the necessary information
mortgagee/trustor as its interest may appear, it being
to ascertain the particular account of the articles
hereby understood and agreed that this insurance as
destroyed by fire as well as the amount of loss. Since
to the interest of the mortgagee/trustor only herein,
the required claim by insured, together with the
shall not be invalidated by any act or neglect—except
preliminary submittal of relevant documents had not
fraud or misrepresentation, or arson—of the
been complied with, it follows that private
mortgagor or owner/trustee of the property insured;
respondent could not be deemed to have finally
provided, that in case the mortgagor or owner/
rejected petitioner's claim and therefore there was
trustee neglects or refuses to pay any premium, the
no cause of action.
mortgagee/ trustor shall, on demand pay the same.”
It appearing that insured has violated or failed to
The paragraph clearly states the exceptions to the
perform the conditions under No. 3 and 11 of the
general rule that insurance as to the interest of the
contract, and such violation or want of performance
mortgagee, cannot be invalidated; namely: fraud, or
has not been waived by the insurer, the insured
misrepresentation or arson. Concealment of the
cannot recover, much less the herein petitioner.
aforecited co-insurances can easily be fraud, or in the
very least, misrepresentation. Digested by: Roxanne A. Huyo
Undoubtedly, it is but fair and just that where the Subject: Insurance
insured who is primarily entitled to receive the Title: Eguaras v. Great Eastern Life Ass. Co.
Topic: Misrepresentation, effect (Section 45) from the complaint, with the costs against the
plaintiff.
Facts:
Issue: WON the life insurance obtained is legal and
On April 14, 1913, counsel for Francisca
valid or whether on the contrary it was issued through
Eguaras filed a written complaint in the said Laguna
fraud and deceit, and in such case, whether the
court, alleging as a cause of action that about October
defendant, The Great Eastern Life Assurance
14, 1912, her son-in-law Dominador Albay had
Company, Ltd., is still under obligation to pay the
applied in writing to the defendant insurance
value thereof to the plaintiff.
company to insure his life for the sum of P5,000,
naming as the beneficiary in case of his death the
plaintiff Francisca Eguaras; that after compliance with Ruling:
the requisites and the investigation carried on by the
defendant company, and it had been satisfied It appears from the record that the insured had
concerning the physical condition of the applicant, it knowledge of the false replied contained in the two
accepted the application for insurance and on applications for insurance and knowing permitted
November 6, 1912, issued policy No. 5592, Exhibit A, fraud to be practised upon the insurance company,
which has been made a part of the complaint, for in his acknowledgment and consent his mother-
whereby the said insurance company insured the life in-law was designated as the beneficiary of the
of the said Dominador Albay in the sum of P5,000, insurance, despite the fact that he had children and
payable in the event of his death to Francisca Eguaras; his mother was still living. In the present case the
that on December 6, 1912, said policy No. 5592 being fraud consisted in the fact that a healthy and robust
in force, the insured Dominador Albay, died in the person was substituted in place of insured invalid
municipality of Santa Cruz, Laguna, and despite the when Dr. Vidal made the physical examination of the
fact that the beneficiary submitted satisfactory proofs one who seeking to be insured, for the real person
of his death and that the defendant company who desired to be insured and who ought to have
investigated the event, still it refused and continues been examined was in bad health on and before the
to refuse to pay to the plaintiff the value of the policy, date of executing the insurance contract of which
Exhibit A, thereby causing damages estimated at facts the insured Dominador Albay and the insurance
P1,000. The court was therefore asked to render agent Ponciano Remigio had full knowledge.
judgment against the Great Eastern Life Assurance It is therefore proven that the signatures on
Company, Ltd., and its general agent, West G. Smith, the insurance applications reading "Dominador
by sentencing them to pay to the plaintiff the sum of Albay" are false and forged; that the person who
P5,000, the value of policy No. 5592, plus the sum of presented himself to Dr. Vidal to be examined was
P1,000 for damages inflicted upon them, in addition not the real Dominador Albay, but another different
to the costs of the suit. person; that at the time of the application for
The demurrer filed to the foregoing complaint having insurance and the issuance of the policy which is the
been overruled, counsel for the insurance company subject matter of this suit the real Dominador Albay
and for West G. Smith replied thereto, admitting the was informed of all those machinations, wherefore it
allegations of the complaint with respect to the legal is plain that the insurance contract between the
status of the parties by denying all the rest, and defendant and Dominador Albay is null and void
setting forth in special defense that the insurance because it is false, fraudulent and illegal.
policy issued in the name of Dominador [Albay] had Article 1269 of the Civil Code states:
been obtained through fraud and deceit known and
consented to by the interested parties and is There is deceit when by words or insidious
therefore completely illegal, void, and ineffective; machinations on the part of one of the contracting
wherefore he prayed that the defendants be absolved parties the other is induced to execute a contract
which without them he would not have made.
It is essential to the nature of the deceit, to which the > Qua Chee Gan, a merchant, owned 4 warehouses
foregoing article refers, that said deceit be prior to or in Albay which were used for the storage or copra and
contemporaneous with the consent that is a hemp in which the appelle deals with exclusively.
necessary requisite for perfecting the contract, but > The warehouses together with the contents were
not that it may have occurred or happened insured with Law Union since 1937 and the loss made
thereafter. A contract is therefore deceitful, for the payable to PNB as mortgagee of the hemp and copra.
execution whereof the consent of one of the parties
has been secured by means of fraud, because he was > A fire of undetermined cause broke out in July 21,
persuaded by words or insidious machinations, 1940 and lasted for almost 1 whole week.
statements or false promises, and a defective consent > Bodegas 1, 3, and 4 including the merchandise
wrung from him, even though such do not constitute stored were destroyed completely.
estafa or any other criminal subject to the penal law.
> Insured then informed insurer of the unfortunate
With this array of circumstantial evidence event and submitted the corresponding fire claims,
derived from facts duly proven as a result of the which were later reduced to P370T.
present suit, we get, if not a moral certainly, at least
a full conviction that when Castor Garcia presented > Insurer refused to pay claiming violations of the
himself to be examined by the physician Vidal in place warranties and conditions, filing of fraudulent claims
of Dominador Albay, serious deceit occurred in and that the fire had been deliberately caused by the
perfecting the insurance contract, for had the agent insured.
of the company not been deceived it would not have > Insured filed an action before CFI which rendered a
granted the insurance applied for by Albay, nor would decision in favor of the insured.
it have executed the contract by virtue of whereof
payment is claimed of the value of policy obtained
through fraud; and consequently on such Issues and Resolutions:
assumptions it is improper, nor is it permitted by the (1) Whether or not the policies should be avoided for
law, to order collection of the amount claimed. the reason that there was a breach of warranty.
In a contract executed with the requisites fixed in
article 1261, one of the contracting parties may have
given his consent through error, violence, Under the Memorandum of Warranty, there should
intimidation, or deceit, and in any of such cases the be no less than 1 hydrant for each 150 feet of external
contract is void, even though, despite this nullity, no wall measurements of the compound, and since
crime was committed. (Article 1265, Civil Code.) bodegas insured had an external wall per meter of
There may not have been estafa in the case at bar, but 1640 feet, the insured should have 11 hydrants in the
it was conclusively demonstrated by the trial that compound. But he only had 2.
deceit entered into the insurance contract, fulfillment
whereof is claimed, and therefore the conclusions
Even so, the insurer is barred by estoppel to claim
reached by the court in the judgment it rendered in
violation of the fire hydrants warranty, because
the criminal proceedings for estafa do not affect this
knowing that the number of hydrants it demanded
suit, nor do they influence the decision proper herein,
never existed from the very beginning, appellant
nor can they produce in the present suit, over the
nevertheless issued the policies subject to such
exception of the defendant, the force of res
warranty and received the corresponding
adjudicata.
premiums. The insurance company was aware, even
Qua Chee Gan v. Law Union Rock - Breach of Warranty before the policies were issued, that in the premises
98 PHIL 85 there were only 2 hydrants and 2 others were owned
by the Municipality, contrary to the requirements of
the warranties in question.
Facts:
It should be close to conniving at fraud upon the It is well to note that gasoline is not specifically
insured to allow the insurer to claim now as void the mentioned among the prohibited articles listed in the
policies it issued to the insured, without warning him so-called hemp warranty. The clause relied upon by
of the fatal defect, of which the insurer was informed, the insurer speaks of “oils”. Ordinarily, oils mean
and after it had misled the insured into believing that lubricants and not gasoline or kerosene. Here again,
the policies were effective. by reason of the exclusive control of the insurance
company over the terms of the contract, the
ambiguity must be held strictly against the insurer
Accdg to American Jurisprudence: It is a well-settled and liberally in favor of the insured, specially to avoid
rule that the insurer at the time of the issuance of a forfeiture.
a policy has the knowledge of existing facts, which if
insisted on, would invalidate the contract from its
very inception, such knowledge constitutes a waiver Furthermore, the gasoline kept was only incidental to
of conditions in the contract inconsistent with known the insured’s business. It is a well settled rule that
facts, and the insurer is stopped thereafter from keeping of inflammable oils in the premises though
asserting the breach of such conditions. The reason prohibited by the policy does NOT void it if such
for the rule is: To allow a company to accept one’s keeping is incidental to the business. Also, the hemp
money for a policy of insurance which it knows to be warranty forbade the storage only in the building to
void and of no effect, though it knows as it must that which the insurance applies, and/or in any building
the insured believes it to be valid and binding is so communicating therewith; and it is undisputed that
contrary to the dictates of honesty and fair dealing, as no gasoline was stored in the burnt bodegas and that
so closely related to positive fraud, as to be abhorrent Bodega No. 2 which was where the gasoline was
to fair-minded men. It would be to allow the found stood isolated from the other bodegas.
company to treat the policy as valid long enough to Qua v Law Union. G.R. No. L-4611 December 17, 1955
get the premium on it, and leave it at liberty to
repudiate it the next moment. J. Reyes
In February 1916, Mrs. Harding applied for car The court, therefore, of the opinion and hold that
insurance for a Studebaker she received as a gift from plaintiff was the owner of the automobile in question
her husband. She was assisted by Smith, Bell and Co and had an insurable interest therein; that there was
which was the duly authorized representative no fraud on her part in procuring the insurance; that
(insurance agent) of Commercial Union in the the valuation of the automobile, for the purposes of
Philippines. The car’s value was estimated with the the insurance, is binding upon the defendant
help of an experienced mechanic (Mr. Server) of the corporation, and that the judgment of the court
Luneta Garage. The car was bought by Mr. Harding for below is, therefore, correct and must be affirmed,
P2,800.00. The mechanic, considering some repairs with interest, the costs of this appeal to be paid by the
done, estimated the value to be at P3,000.00. This appellant.
estimated value was the value disclosed by Mrs.
Harding to Smith, Bell and Co. She also disclosed that
the value was an estimate made by Luneta Garage
(which also acts as an agent for Smith, Bell and Co).
In March 1916, a fire destroyed the Studebaker. Mrs.
Harding filed an insurance claim but Commercial
Union denied it as it insisted that the representations
and averments made as to the cost of the car were
false; and that said statement is a warranty.
Commercial Union also stated that the car does not
belong to Mrs. Harding because such a gift [from her
husband] is void under the Civil Code.
Issue
Whether or not Commercial is liable.
Answer
Yes. Commercial is liable.
Where it appears that the proposal form, while signed
by the insured was made out by the person