CASE DIGEST FOR INSURANCE

UCPB GENERAL INSURANCE CO., INC., petitioner,

vs. MASAGANA TELAMART, INC., respondent.
G.R. No.137172, April 4, 2001

Facts:

Respondent obtained from Petitioner five (5) insurance policies on its properties in the City
of Manila and Pasay. All five (5) policies reflect on their face the effectivity term: from 22 May
1991 to 22 May 1992.

On 13 June 1992, respondent’s properties were razed by fire. However, on 13 July 1992,
respondent tendered payment of which the petitioner accepted in five (5) Manager’s
Checks.

On 14 July 1992, respondent Masagana made its formal demand for indemnification for the
burned properties but on the same day, petitioner UCPB returned the five (5) checks on the
reason that said policies were not renewed for another term and that the fire took place
before tender of premium payment.

Both the RTC and the Court of Appeals ruled in favor of the respondent but was reversed by
the Supreme Court on Appeal.

Hence, this Motion for Reconsideration by the respondent.

Issue:

Whether the fire insurance policies issued by the petitioner to the respondent had been extended or
renewed by an implied credit arrangement though actual payment of premium was tendered on a
later date and after the occurrence of the fire insured against.

Ruling:

The court resolved the MR in the affirmative. While it is true, under Section 77 of the Insurance Code
of 1978 that: An insurer is entitled to payment of the premium as soon as the thing insured is
exposed to the peril insured against. Notwithstanding any agreement to the contrary, no policy or
contract of the insurance issued by an insurance company is valid and binding unless and until the
premium thereof has been paid, except in the case of a life or an industrial life policy whenever the
grace period provision applies.

One of the exceptions to Section 77 is that the insurer may grant credit extension for the payment of
the premium. This simply means that if the insurer has granted the insured a credit term for the
payment of the premium and loss occurs before the expiration of the term, recovery on the policy
should be allowed even though the premium is paid after the loss but within the credit term.
Finally in the instant case, it would be unjust and inequitable if recovery on the policy would not be
permitted against petitioner, which had consistently granted a 60 to 90 day credit term for the
payment of premiums despite its full awareness of Section 77. Estoppel bars it from taking refuge
under said Section.

MAKATI TUSCANY CONDOMINIUM CORPORATION, petitioner

vs. THE COURT OF APPEALS, AMERICAN HOME ASSURANCE CO., respondent.
G.R. NO. 95546, November 6, 1992

Facts:

Private respondent American Home Assurance Co., issued in favor of petitioner Makati Tuscany
Condominium Corporation Insurance Policy on the latter’s building and premises.

The premium was paid on installments after the expiration of such Insurance Policy which was duly
accepted by the respondent. The same thing happened when the petitioner TUSCANY renewed its
insurance policy on the following year.

However on the third renewal after having made two installment payments, petitioner thereafter
refused to pay the balance of the premium.

Consequently, private respondent filed an action to recover the unpaid balance. In its answer with
counterclaim petitioner explained that it discontinued the payment of premiums because the policy
did not contain a credit clause in its favor and that the policy was never binding and valid as no risk is
attached to the policy.

RTC dismissed both the complaint and the counterclaim. However the CA, affirmed the dismissal of
the counterclaim but ruled in favor of the complaint ordering the payment of the petitioner of the
unpaid balance of the premium plus interest until fully paid.

Hence, this petition.

Issue:

Whether payment by installment of the premiums due on an insurance policy invalidates the contract
of insurance.

Ruling:

We hold that the subject policies are valid even if the premiums were paid on installments. The
records clearly show that petitioner and private respondent intended subject insurance policy to be
binding and effective notwithstanding the staggered payment of the premiums.

Section 77 merely precludes the parties from stipulating that the policy is valid even if premiums are
not paid, but does not expressly prohibit an agreement granting credit extension, and such an
agreement is not contrary to morals, good customs, public order or public policy. So is an
understanding to allow insured to pay premiums in installments not so proscribed. At the very least,
both parties should be deemed in estoppel to question the arrangement they may have voluntarily
accepted.

AMERICAN HOME ASSURANCE COMPANY, petitioner

vs. TANTUCO ENTERPRISES, INC., respondent.
G. R. No. 138941, October 8, 2001

Facts:

Respondent Tantunco Enterprises, Inc. is engaged in the coconut oil milling and refining industry. It
owns two (2) oil mills both located at factory compound. The two (2) oil mills were separately
covered by fire insurance policies by petitioner American Home Assurance Company. Official receipts
indicating full payment were issued by petitioner’s agent.

A fire broke out and gutted and consumed the new oil mill. Respondent immediately notified the
petitioner while the latter sent its appraisers to inspect the burned premises and found out that the
new oil mill was under Building No. 14 which no policy was issued by the petitioner but pertains
based on the description to Building No. 5.

A complaint for specific performance and damages was instituted by the respondent before the RTC
which the latter rendered its decision ordering the defendant to pay the plaintiff damages for loss by
fire. Petitioner appealed to the CA which affirmed the decision of the RTC in toto. MR was filed by the
same was denied by the CA.

Hence, this petition.

Issue:

Whether the respondent can claim the insurance policy of the burned new oil mill notwithstanding
the inaccurate description of the property covered by such policy.

Ruling:

Yes. In construing the words used descriptive of a building insured, the greatest liberality is shown by
the courts in giving effect to the insurance. Notwithstanding, therefore, the misdescription in the
policy, it is beyond dispute, to our mind, that what the parties manifestly intended to insure is was
the new oil mill.

Indeed, it would be absurd to assume that respondent would protect its first oil mill for different
amounts and leave uncovered its second one.

The imperfection in the description of the insured oil mill’s boundaries can be attributed to a
misunderstanding between the petitioner’s general agent and its policy issuing clerk who made the
error of copying the boundaries of the first mill when typing the policy to be issued or the new one.
THE INSULAR LIFE ASSURANCE COMPANY, LTD., petitioner
vs. PAZ Y. KHU, FELIPE Y. KHU, JR., AND FREDERICK Y. KHU, respondents.
G.R. No. 195176, April 18, 2016

Facts:

Felipe N. Khu, Sr. applied for a life insurance policy with Insular Life. Upon accomplishing the
required medical questionnaire wherein no declaration of any illness or adverse medical condition,
Insular Life thereafter issued him a Policy valued at one (1) million pesos.

On June 23, 1999, Felipe’s policy lapsed due to non-payment of the premium covering the period
from June 22, 1999 to June 23, 2000.

On September 7, 1999, Felipe applied for reinstatement of his policy subject to certain conditions
which the former agreed. Premium was paid and accepted by Insular Life covering the period from
June 22, 2001 to June 21, 2002.

On September 22, 2001 Felipe died, which prompted the respondent’s beneficiary to file a claim for
benefit under the reinstated policy. The claim was denied by the Insular on the ground of
concealment and misrepresentation by Felipe.

Respondent’s instituted a complaint for specific performance with damages before the RTC which
the latter rendered a decision ordering the Insular Life to pay the former jointly and severally the
amount of one (1) million plus interest.

On appeal to the CA, the latter affirmed the decision of the lower court with modification deleting
the award for moral damages, attorney’s fees and litigation expenses.

Thus, this petition for review on certiorari.

Issue:

Whether Felipe’s reinstated life insurance policy is already incontestable at the time of his death, two
years from its last reinstatement.

Ruling:

Yes. Under Section 48 of the Insurance Code: After a policy of life insurance made payable on the
death of the insured shall have been in force during the lifetime of the insured for a period of two
years from the date of its issue or of its last reinstatement, the insurer cannot prove that the policy is
void ab initio or is rescindable by reason of the fraudulent concealment or misrepresentation of the
insured or his agent.

The insurer is deemed to have the necessary facilities to discover such fraudulent concealment or
misrepresentation within a period of two (2) years. It is not fair for the insurer to collect the premium
as long as the insured is still alive, only to raise the issue of fraudulent concealment or
misrepresentation when the insured dies in order to defeat the right of the beneficiary to recover
under the policy.
To reinstate a policy means to restore the same to premium-paying status after it has been permitted
to lapse. Thus, it is settled that the reinstatement of an insurance policy should be reckoned from the
date when the same was approved by the insurer.

MANULIFE PHILIPPINES, INC., petitioner

vs. HERMENEGILDA YBANEZ, respondent
G. R. No. 204736, November 28, 2016

Facts:

A complaint for Rescission of Insurance Contracts against Hermenegilda Ybanez was instituted by
Manulife alleging among others that the Insurance Policy issued by the latter were void due to
concealment or misrepresentation of material facts in the former’s applications for life insurance.

In particular, the forms entitled Non-Medical Evidence, Medical Evidence Exam and the Declaration
of Insurability; that Hermenegilda Ybanez was revocably designated as beneficiary.

Hermenegilda filed a Claimant’s Statemennt-Death Claim and that upon investigation into the
circumstances leading to the death of the insured it was found out that the insured misrepresented
or concealed material facts of his health condition. Thus, Manulife prayed that the insurance policies
be declared null and void and be discharged from any obligation whatsoever.

In the Answer of the respondent, she countered that it was the Insurance agent who filled
everything in the questionnaire and it was the insurance physician who examined the physical
condition of the insurance policy holder.

RTC dismissed the complaint for insufficiency of evidence which was affirmed by the Court of
Appeals.

Hence, this petition.

Issue:

Whether or not the CA committed reversible error in dismissing Manulife’s Complaint for failure to
prove concealment on the part of the insured.

Ruling:

No. Manulife had utterly failed to prove by convincing evidence that it had been beguiled, inveigled
or cajoled into selling the insurance to the insured who purportedly with malice and deceit passed
himself off as thoroughly sound and healthy, and thus a fit and proper applicant for life insurance.
Manulife’s sole witness gave no evidence at all relative to the particulars of the purported
concealment or misrepresentation allegedly perpetrated by the insured.
Misrepresentation as a defense of the insurer to avoid liability is an affirmative defense and the duty
to establish such defense by the satisfactory and convincing evidence rests upon the insurer.

MALAYAN INSURANCE CO., INC., YVONNE S. YUCHENGCO, ATTY EMMANUEL VILLANUEVA. SONNY
RUBIN. ENGR. FRANCISCO MONDELO, AND MICHAEL REQUIJO, petitioners,
vs. EMMA CONCEPCION L. LIN, respondent.
G.R, No. 207277, January 16, 2017

Facts:

Emma Concepcion Lin filed a Complaint for the Collection of Sum of Money with Damages against
Malayan Insurance Co., and the RCBC alleging that she obtained various loans from RCBC secured by
six warehouses and that the five warehouses were insured with Malayan Insurance.

Five warehouses were gutted by fire and after having determined by BFP that the cause of fire was
accidental, a Fire Certification Clearance was issued by BFP.

On the other hand, payment of the insurance claim was denied by Malayan since the forensic
investigator hired by the latter claimed that the cause of the fire was arson and not accidental.

Five months later, Lin filed before the Insurance Commission an administrative case against Malayan
claiming that since it had been conclusively found that the cause of the fire was accidental.

Malayan filed a Motion to Dismiss on the ground of forum shopping.

RTC denied the motion and ordered the petitioner to pay the respondent the claim for insurance.
Likewise, the CA affirmed the decision of the RTC. Thus, this petition

Issue:

Whether or not Malayan should be held liable for unfair claim settlement practice under Section 241
in relation to Section 147 of the Insurance Code due to its unjustified refusal to settle respondent’s
claim.

Ruling:

Yes, Malayan is liable for unfair claim settlement practice under the Insurance Code.

The settled rule is that criminal and civil cases are altogether different from administrative matters,
such that the disposition in the first two will not inevitably govern the third and vice versa.

The provisions of the Insurance Code clearly indicate that the Office of the Commissioner is an
administrative agency vested with regulatory as well as with the adjudicatory authority and the
grounds for revocation or suspension if an insurer’s Certificate of Authority are set out in Section 241
and 247.
JAIME T. GAISANO, petitioner
vs. DEVELOPMENT INSURANCE AND SURETY CORPORATION, respondent.
G.R. No. 190702, February 27, 2017

Facts:

Petitioner Gaisano was a registered owner of a vehicle, while respondent is a domestic corporation
engaged in the insurance business.

Respondent issued a comprehensive commercial vehicle policy to the petitioner for his three
vehicles. To collect the premiums respondent’s agent issued a statement of account to the petitioner
which the latter immediately processed the payments by issuing a check on the same day.

However, nobody from the respondent’ agent could pick up the check, respondent informed the
petitioner that they will be sending their messenger to pick up the check the following day.

In the evening of the same day, a day before the premium is to be paid the vehicle was stolen in the
vicinity of SM Megamall. Despite search and retrieval efforts, the vehicle was not recovered.

The next day the check was picked up and was deposited for encashment three days after. On the
same day of encashment, petitioner informed the respondent of the vehicle’s loss and filed a claim
for the insurance proceeds to which the petitioner refused.

As a result, petitioner filed a Complaint for Collection of Sum of Money and damages before the RTC.
RTC ruled in favor of the petitioner. However it was denied by the CA on the ground that no premium
was paid upon the loss of the vehicle.

Hence, this petition.

Issue:

Whether or not there is a binding insurance contract between petitioner and respondent.

Ruling:

No, there is no valid and binding insurance contract between the parties.

Under Section 77 of the Insurance Code: An insurer is entitled to payment of the premium as soon as
the thing insured is exposed to the peril insured against. Notwithstanding any agreement to the
contrary, no policy or contract of insurance issued by an insurance company is binding and valid
unless and until the premium thereof has been paid.

Thus, we find that petitioner is not entitled to the insurance proceeds because no insurance policy
became effective for lack of premium payment.