15.

Republic v. Sunlife Assurance Company of Canada

G.R. No. 158085, 14 October 2005, 473 SCRA 129

FACTS:

Respondent is a mutual life insurance company organized and existing under the laws of Canada. It
is registered and authorized by the SEC and the Insurance Commission to engage in business in the
Philippines as mutual life insurance company. Sun Life filed with the CIR its insurance premium tax
return for the third quarter of 1997 in the amount of 31,485, 834. 51 and paid its DST for the amount
of 30,000,000.00.
On December 20, 1997, CA, as affirmed by the Supreme Court, rendered in Insular Life Assurance
Co. Ltd. vs CIR a decision that mutual life insurance companies are purely cooperative companies
and are exempt from the payment of premium tax and DST. Sun Life surmised that being a mutual life
insurance it is exempt from the payment of premium tax and DST and hence filed an administrative
case against the CIR for tax credit for its erroneously paid premium tax and DST. CIR raised as special
and affirmative defences that petitioner’s claim for refund is subject to administrative routinary
investigation by the CIR, Petitioner must prove that it falls under the exception provided for under
Section 121 (now 123) of the Tax Code to be exempted from premium tax and be entitled to the refund
sought and It is incumbent upon petitioner to show that it has complied with the provisions of Section
204[,] in relation to Section 229, both in the 1997 Tax Code.

ISSUE:

Whether or not respondent is a cooperative and whether or not it needs to be registered under CDA

RULING:

For the first issue, the court ruled that respondent is a cooperative. The tax code defines cooperative
as an association conducted by the members thereof with the money collected from among
themselves and solely for their own protection and not for profit. Respondent is without doubt a
cooperative because of the following reasons:
First, it is managed by its members. Both CA and CTA found that the management and affairs of
respondent were conducted by its policyholders. A stock insurance company doing business in the
Philippines may alter its organization and transform itself into a mutual insurance company.
Respondent has been mutualized or converted from a stock life insurance company to a nonstock
mutual life insurance corporation pursuant to Section 266 of the Insurance Code of 1978.
Second, it operated with money collected from its members. Since respondent is composed entirely
of members who are also it policyholders, all premiums obviously comes only from them. The member-
policyholders constitute both insurer and insured who contribute, by a system of premiums or
assessments, to the creation of a fund from which all losses and liabilities are paid. The premiums
pooled into this fund are earmarked for the payment of their indemnity and benefit claims.
Third, it is licensed for the mutual protection of its members, not for the profit of anyone. A mutual life
insurance company is conducted for the benefit of its member-policyholders, who pay into its capital
by way of premiums. To that extent, they are responsible for the payment of all its losses. The cash
paid in for premiums and the premium notes constitute their assets x x x. In the event that the company
itself fails before the terms of the policies expire, the member-policyholders do not acquire the status
of creditors. Rather, they simply become debtors for whatever premiums that they have originally
agreed to pay the company, if they have not yet paid those amounts in full, for [m]utual companies x
x x depend solely upon x x x premiums. Only when the premiums will have accumulated to a sum
larger than that required to pay for company losses will the member-policyholders be entitled to a pro
rata division thereof as profits.
For the second issue, the court ruled that under the Tax Code although respondent is a cooperative,
registration with the Cooperative Development Authority (CDA) is not necessary in order for it to be
exempt from the payment of both percentage taxes on insurance premiums, under Section 121; and
documentary stamp taxes on policies of insurance or annuities it grants, under Section 199.
First, the Tax Code does not require registration with the CDA. No tax provision requires a mutual life
insurance company to register with that agency in order to enjoy exemption from both percentage and
documentary stamp taxes.
Second, the provisions of the Cooperative Code of the Philippines do not apply. only cooperatives to
be formed or organized under the Cooperative Code needed registration with the CDA. Respondent
already existed before the passage of the new law on cooperatives. It was not even required to
organize under the Cooperative Code, not only because it performed a different set of functions, but
also because it did not operate to serve the same objectives under the new law — particularly on
productivity, marketing and credit extension.
The insurance against losses of the members of a cooperative referred to in Article 6(7) of the
Cooperative Code is not the same as the life insurance provided by respondent to member-
policyholders. The former is a function of a service cooperative, the latter is not. Cooperative insurance
under the Code is limited in scope and local in character. It is not the same as mutual life insurance.
Consequently, the court held that respondent is exempt from insurance premium tax and DST.
16.

Philamcare v CA G.R. No. 125678. March 18, 2002

J. Ynares-Santiago

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 didn’t 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 husband’s 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 isn’t valid.
They can’t 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 insured’s opinion. He wasn’t a medical doctor, so he can’t
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.”
17.

CIR V. Lincoln Philippine Life Insurance GR No. 119176, March 19, 2001

FACTS:

Respondent Lincoln Philippine Life Insurance Co., Inc., (now Jardine-CMA Life Insurance Company,
Inc.) is a domestic corporation engaged in life insurance business. Respondents issued a special kind
of life insurance policy known as the Junior Estate Builder Policy, in which there is a clause providing
for an automatic increase in the amount of life insurance coverage upon attainment of a certain age by
the insured without the need of issuing a new policy.

CIR then issued deficiency documentary stamps tax assessment corresponding to the amount of
automatic increase of the sum assured on the policy issued by respondent.

Respondent filed a petition with the CTA which was held in their favor. The CIR appealed with the CA
affirming the decision of the CTA.

ISSUE: Whether a new insurance policy is distinct from the main policy making it liable for additional
taxes.

RULING:

YES.

The subject insurance policy at the time it was issued contained an automatic increase clause. Although
the clause was to take effect on a later date, it was written into the policy at the time of its issuance.

Section 173 of the NIRC provides that the payment of documentary stamp taxes is done at the time the
act is done. Section 183 of the NIRC provides that the tax base for the computation of documentary
stamp taxes on life insurance policies is the amount fixed in policy.

Here, although the automatic increase in the amount of life insurance coverage was to take effect later
on, the amount of the increase was already definite at the time of the issuance of the policy. Thus, the
amount insured by the policy at the time of its issuance necessarily included the additional sum
covered by the automatic increase clause because it was already determinable at the time the
transaction was entered into and formed part of the policy.

The additional insurance was an obligation subject to a suspensive obligation, but still a part of the
insurance sold to which respondent was liable for the payment of the documentary stamp tax. The
deficiency of documentary stamp tax imposed on respondent is not on the amount of the original
insurance coverage, but on the increase of the amount insured upon the effectivity of the Junior Estate
Builder Policy.
18.
Republic v Del Monte G.R. No. 156956 October 9, 2006
C.J. Panganiban

Facts:
Vilfran Liner lost in a case against Del Monte Motors. They were made to pay 11 million pesos for
service contracts with Del Monte, and such was sourced from the counterbond posted by Vilfran.
CISCO issued the counterbond. CISCO opposed but was rebuffed. The RTC released a motion for
execution commanding the sheriff to levy the amount on the property of CISCO. To completely
satisfy the amount, the Insurance Commissioner was also commanded to withdraw the security
deposit filed by CISCO with the Commission according to Sec 203 of the Insurance Code.
Insurance Commissioner Malinis was ordered by the RTC to withdraw the security bond of CISCO
for the payment of the insurance indemnity won by Del Monte Motor against Vilfran Liner, the
insured.
Malinis didn’t obey the order, so the respondent moved to cite him in contempt of Court. The RTC
ruled against Malinis because he didn’t have legal basis.

Issues:
1. Whether or not the security deposit held by the Insurance Commissioner pursuant to Section 203
of the Insurance Code may be levied or garnished in favor of only one insured.
2. Whether or not the Insurance Commissioner has power to withhold the release of the security
deposit.

Held: No. Yes. Petition granted.

Ratio:
1. Sec 203- No judgment creditor or other claimant shall have the right to levy upon any of the
securities of the insurer held on deposit pursuant to the requirement of the Commissioner.

The court also claimed that the security deposit shall be (1) answerable for all the obligations of the
depositing insurer under its insurance contracts; (2) at all times free from any liens or encumbrance;
and (3) exempt from levy by any claimant.
“To allow the garnishment of that deposit would impair the fund by decreasing it to less than the
percentage of paid-up capital that the law requires to be maintained. Further, this move would
create, in favor of respondent, a preference of credit over the other policy holders and beneficiaries.”
“Also, the securities are held as a contingency fund to answer for the claims against the insurance
company by all its policy holders and their beneficiaries. This step is taken in the event that the
company becomes insolvent or otherwise unable to satisfy the claims against it. Thus, a single
claimant may not lay stake on the securities to the exclusion of all others. The other parties may
have their own claims against the insurance company under other insurance contracts it has entered
into.”
2. The Insurance Code has vested the Office of the Insurance Commission with both regulatory and
adjudicatory authority over insurance matters.
Under Sec 414 of the Insurance Code, "The Commissioner may issue such rulings, instructions,
circulars, orders and decisions as he may deem necessary to secure the enforcement of the
provisions of this Code.”
“The commissioner is authorized to (1) issue (or to refuse to issue) certificates of authority to
persons or entities desiring to engage in insurance business in the Philippines;16 (2) revoke or
suspend these certificates of authority upon finding grounds for the revocation or suspension; (3)
impose upon insurance companies, their directors and/or officers and/or agents appropriate
penalties -- fines, suspension or removal from office -- for failing to comply with the Code or with any
of the commissioner's orders, instructions, regulations or rulings, or for otherwise conducting
business in an unsafe or unsound manner.”
Included here is the duty to hold security deposits under Secs 191 and 202 of the Code for the
benefit of policy holders. Sec 192, on the other hand, states:

“the securities deposited as aforesaid shall be returned upon the company's making application
therefor and proving to the satisfaction of the Commissioner that it has no further liability under any
of its policies in the Philippines.”
He has been given great discretion to regulate the business to protect the public. Also “An implied
trust is created by the law for the benefit of all claimants under subsisting insurance contracts issued
by the insurance company.” He believed that the security deposit was exempt from execution to
protect the policy holders.
19.

Enriquez v. Sun Life Assurance Co. of Canada

G.R. No. L-15895, 29 November 1920, 41 Phil. 269

FACTS:

On Sept. 24 1917, Herrer made an application to SunLife through its office in Manila for life annuity.
Two (2) days later, he paid the sum of 6T to the company’s manager in its Manila office and was given
a receipt.
On Nov. 26, 1917, the head office gave notice of acceptance by cable to Manila. On the same date,
the Manila office prepared a letter notifying Herrer that his application has been accepted and this was
placed in the ordinary channels of transmission, but as far as known was never actually mailed and
never received by Herrer. Herrer died on Dec. 20, 1917. The plaintiff as administrator of Herrer’s estate
brought this action to recover the 6T paid by the deceased.

ISSUES:

Whether or not the insurance contract was perfected.

HELD:

NO. The contract for life annuity was NOT perfected because it had NOT been proved satisfactorily
that the acceptance of the application ever came to the knowledge of the applicant. An acceptance of
an offer of insurance NOT actually or constructively communicated to the proposer does NOT make a
contract of insurane, as the locus poenitentiae is ended when an acceptance has passed beyond the
control of the party.
20.

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.
21.

Dev. Bank of the Phils. v. Court of Appeals

G.R. No. L-109937, 21 March 1994, 231 SCRA 370

FACTS:

Juan B. Dans, together with his family applied for a loan of P500,000 with DBP. As principal mortgagor,
Dans, then 76 years of age was advised by DBP to obtain a mortgage redemption insurance (MRI)
with DBP MRI pool. A loan in the reduced amount was approved and released by DBP. From the
proceeds of the loan, DBP deducted the payment for the MRI premium. The MRI premium of Dans,
less the DBP service fee of 10%, was credited by DBP to the savings account of DBP MRI-Pool.
Accordingly, the DBP MRI Pool was advised of the credit. Dans died of cardiac arrest. DBP MRI Pool
notified DBP that Dans was not eligible for MRI coverage, being over the acceptance age limit of 60
years at the time of application. DBP apprised Candida Dans of the disapproval of her late husband’s
MRI application. DBP offered to refund the premium which the deceased had paid, but Candida Dans
refused to accept the same demanding payment of the face value of the MRI or an amount equivalent
of the loan. She, likewise, refused to accept an ex gratia settlement which DBP later offered. Hence,
the case at bar.

ISSUE:

Whether or not the DBP MRI Pool should be held liable on the ground that the contract was already
perfected?

HELD:

No, it is not liable. The power to approve MRI application is lodged with the DBP MRI Pool. The pool,
however, did not approve the application. There is also no showing that it accepted the sum which
DBP credited to its account with full knowledge that it was payment for the premium. There was as a
result no perfected contract of insurance, hence the DBP MRI Pool cannot be held liable on a contract
that does not exist. In dealing with Dans, DBP was wearing 2 legal hats: the first as a lender and the
second as an insurance agent. As an insurance agent, DBP made Dans go through the motion of
applying for said insurance, thereby leading him and his family to believe that they had already fulfilled
all the requirements for the MRI and that the issuance of their policy was forthcoming. DBP had full
knowledge that the application was never going to be approved. The DBP is not authorized to accept
applications for MRI when its clients are more than 60 years of age. . Knowing all the while that Dans
was ineligible for MRI coverage because of his advanced age, DBP exceeded the scope of its authority
when it accepted Dan’s application for MRI by collecting the insurance premium, and deducting its
agent’s commission and service fee.
The liability of an agent who exceeds the scope of his authority depends upon whether the third person
is aware of the limits of the agent’s powers. There is no showing that Dans knew of the limitation on
DBP’s authority to solicit applications for MRI.
If the third person dealing with an agent is unaware of the limits of the authority conferred by the
principal on the agent and he (third person) has been deceived by the non-disclosure thereof by the
agent, then the latter is liable for damages to him (V Tolentino, Commentaries and Jurisprudence on
the Civil Code of the Philippines, p. 422 [1992], citing Sentencia [Cuba] of September 25, 1907). The
rule that the agent is liable when he acts without authority is founded upon the supposition that there
has been some wrong or omission on his part either in misrepresenting, or in affirming, or concealing
the authority under which he assumes to act (Francisco, V., Agency 307 [1952], citing Hall v.
Lauderdale, 46 N.Y. 70, 75). Inasmuch as the non-disclosure of the limits of the agency carries with it
the implication that a deception was perpetrated on the unsuspecting client, the provisions of Articles
19, 20 and 21 of the Civil Code of the Philippines come into play.
22. BABE KITAM TO LATTA TA ISSUE NAN.
ADDA DTOY NGA CASEN NGEM SABALI ITI ISSUE NA
DTOY. AWAN MASARAKAK NGA SABALI BABE, ISU LA
NGA ISU DJAY ADDA IDJAY NGATO. hehe
Philamcare v CA G.R. No. 125678. March 18, 2002
J. Ynares-Santiago

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 didn’t 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 husband’s 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 isn’t valid.

They can’t 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 insured’s opinion. He wasn’t a medical doctor, so he can’t
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.”
23.
Gulf Resorts, Inc. v. Phil Charter Insurance, Corp.
G.R. No. 156167, 16 May 2005, 458 SCRA 550

FACTS:

Gulf Resorts, Inc at Agoo, La Union was insured with American Home Assurance Company which
includes loss or damage to shock to any of the property insured by this Policy occasioned by or through
or in consequence of earthquake. On July 16, 1990, an earthquake struck Central Luzon and Northern
Luzon so the properties and 2 swimming pools in its Agoo Playa Resort were damaged. On August
23, 1990, Gulf’s claim was denied on the ground that its insurance policy only afforded earthquake
shock coverage to the two swimming pools of the resort. Petitioner contends that pursuant to this rider,
no qualifications were placed on the scope of the earthquake shock coverage. Thus, the policy
extended earthquake shock coverage to all of the insured properties.The RTC Favored American
Home endorsement rider means that only the two swimming pools were insured against earthquake
shock the CA, affirmed RTC.

ISSUE:

W/N Gulf can claim for its properties aside from the 2 swimming pools

HELD:

YES. Affirmed.

It is basic that all the provisions of the insurance policy should be examined and interpreted in
consonance with each other. All its parts are reflective of the true intent of the parties. Under Section
2 (1), contrac of insurance as an agreement whereby one undertakes consideration to indemnify
another against loss damages or liability arising from unknown or contingent events. An insurance
premium is the consideration paid an insurer for undertaking to indemnify the insured against a
specified peril. In the subject policy, no premium payments were made with regard to earthquake
shock coverage, except on the two swimming pools.