UCPB GENERAL INSURANCE CO., INC. v.

MASAGANA TELEMART,
INC.
G.R. No. 137172, April 4, 2001
FACTS

In a legal dispute between petitioner CDASIA and the respondent over

insurance policies issued on April 15, 1991, covering properties against fire,
the Court reversed the decisions of the Regional Trial Court (RTC) and the
Court of Appeals. CDASIA had given notice of non-renewal on April 6,
1992, and a fire occurred on June 13, 1992, affecting properties covered
by three insurance policies. Despite the loss, the respondent presented
manager's checks for policy renewal on July 13, 1992, with a claim filed the
next day. CDASIA rejected the claim and returned the checks. The Court
ruled that non-life insurance policies are only valid and binding upon the
actual payment of the premium, declaring any agreement suggesting
otherwise as void. Therefore, as the respondent failed to pay before the
loss, the insurance policies were deemed invalid, absolving CDASIA from
liability.

ISSUE

Whether or not the fire insurance policies issued by the insurer to the
insured had lapsed in May 1992 or had been implicitly extended or
renewed through a credit arrangement, despite the actual payment being
made after the fire incident occurred?

RULING

No insurance contract, other than life, is valid and binding until actual
payment of premium. An insurance policy, other than life, issued originally
or on renewal, is not valid and binding until actual payment of the
premium. Any agreement to the contrary is void. The parties may not
agree expressly or impliedly on the extension of credit or time to pay the
premium and consider the policy binding before actual payment.
 MAKATI TUSCANY CONDOMINIUM CORP. v. COURT OF APPEALS
G.R. No. 95546, November 6, 19992

FACTS

In a dispute between insurer AHAC and insured Tuscany regarding an

insurance policy covering a one-year period with staggered payments,
Tuscany paid only 2 out of 5 installments for the 1984 policy, refusing to
pay the balance and demanding a refund, citing the absence of a credit
clause. The trial court dismissed both insurer and insured's claims. The
Court of Appeals ruled that the insurance contract became valid upon the
first premium payment, and the insurer couldn't deny liability despite
partial payment. Tuscany appealed to the Supreme Court, arguing that,
under Section 77 of the Insurance Code, no insurance contract is valid
unless the full premium is paid, regardless of any contrary agreement.

ISSUE

Whether payment by installment of the premiums due on an insurance

policy invalidates the contract of insurance, in view of Sec. 77 of the
Insurance Code, as amended.

RULING

Petitioner may not be allowed to renege on its obligation to pay the

balance of the premium after the expiration of the whole term of the third
policy in March 1985. Moreover, as correctly observed by the appellate
court, where the risk is entire and the contract is indivisible, the insured is
not entitled to a refund of the premiums paid if the insurer was exposed to
the risk insured for any period, however brief or momentary.
 GAISANO v. DEVELOPMENT INSURANCE AND SURETY CORP
G.R. No 190702, February 27, 2017

FACTS

The petitioner, registered owner of a 1992 Mitsubishi Montero, obtained a

comprehensive commercial vehicle policy from the respondent, an
insurance corporation. The policy covered the vehicle from September 27,
1996, to September 27, 1997. The petitioner processed the premium
payment through a Far East Bank check for P140,893.50 issued on
September 27, 1996, with P55,620.60 designated for the vehicle's
coverage. However, the vehicle was stolen on the same day while under
the custody of Noah's Ark marketing manager Achilles Pacquing. Despite
the loss report to the police, Trans-Pacific, the insurance agent, picked up
the check on September 28, and an official receipt was issued. The
deposited check for P140,893.50 was encashed on October 1, 1996.

ISSUE

Whether there is a binding insurance contract between petitioner and

respondent.

RULING

The court rejected the petition, emphasizing that insurance is a contractual

agreement requiring consideration, and the premium serves as this
consideration, which must be paid according to the policy terms for the
contract to be valid. Failure to pay the premium results in the policy lapsing
and being forfeited. Section 77 of the Insurance Code, applicable at the
time of policy issuance, specifies that an insurer is entitled to premium
payment as soon as the insured property faces the covered risk. The law
strictly dictates that no insurance policy is valid and binding until the
premium is paid, with a limited exception for life or industrial life policies
when the grace period provision is applicable.
 FLORENDO v. PHILAM PLANS, INC.
G.R. No. 186983, February 22, 2012

FACTS

Manuel Florendo applied for a comprehensive pension plan with Philam

Plans in 1997, under the persuasion of Perla Abcede. The plan, valued at
₱997,050.00, payable in 10 years, included a life insurance component.
Despite Manuel signing the application, Perla completed the necessary
information, and Celeste Abcede signed as the sales counselor. Philam Life
issued a Group Master Policy, automatically granting life insurance
coverage to all comprehensive pension plan enrollees. After Manuel's death
in 1998, his wife Lourdes sought benefits under the plan, but Philam Plans
denied the claim, citing Manuel's undisclosed health conditions. The RTC
ruled in Lourdes' favor, but the Court of Appeals reversed the decision,
applying the principle of utmost good faith, arguing that Manuel should
have disclosed relevant health information affecting the risk.

ISSUE

Whether or not Philam Plans’ approval of Manuel’s pension plan application

and acceptance of his premium payments precluded it from denying
Lourdes’ claim.

RULING

No, Philam Plans’ approval of Manuel’s pension plan application and

acceptance of his premium payments precluded it from denying Lourdes’
claim.

The comprehensive pension plan that Philam Plans issued contains a one-
year incontestability period. 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.
 SUN LIFE OF CANADA (PHILIPPINES), INC. v. SIBYA
G.R. No. 211212 June 8, 2016

FACTS

Atty. Jesus Sibya, Jr. applied for life insurance with Sun Life on January 10,
2001, disclosing that he had sought advice for kidney problems. Sun Life
approved the application and issued Insurance Policy No. 031097335, with
beneficiaries entitled to a death benefit of P1,000,000.00 if Atty. Jesus Jr.
died on or before February 5, 2021. However, when Atty. Jesus Jr. died
from a gunshot wound on May 11, 2001, Sun Life denied the claim, citing
undisclosed medical history details, and refunded the premiums. The
respondents, disputing misrepresentation, claimed that Atty. Jesus Jr. did
not conceal relevant information. The RTC ruled in favor of the
respondents, stating that Atty. Jesus Jr. did not commit material
concealment or misrepresentation, emphasizing that Sun Life had the
means to ascertain the allegedly concealed facts through the disclosed
information and the waiver and authorization provided by Atty. Jesus Jr.

ISSUE

Whether or not there was concealment or misrepresentation when Atty.

Jesus Jr. submitted his insurance application with Sun Life.

RULING

No, the intent to defraud on the part of the insured must be ascertained to
merit rescission of the insurance contract. Concealment as a defense for
the insurer to avoid liability is an affirmative defense and the duty to
establish such defense by satisfactory and convincing evidence rests upon
the provider or insurer. In the present case, Sun Life failed to clearly and
satisfactorily establish its allegations, and is therefore liable to pay the
proceeds of the insurance.
 THE INSULAR ASSURANCE CO., LTD. v. THE HEIRS OF JOSE
ALVAREZ
G.R. No. 207526, October 03, 2018

FACTS

In June 1997, Alvarez obtained a housing loan from UnionBank, securing it

with a promissory note, a real estate mortgage, and mortgage redemption
insurance with UnionBank as the beneficiary. Following Alvarez's death in
April 1998, UnionBank filed a death claim with Insular Life under the Group
Mortgage Redemption Insurance. However, Insular Life rejected the claim,
alleging that Alvarez, being supposedly over 60 years old at the time of
loan approval, was ineligible for coverage. Relying on Alvarez's Health
Statement Form indicating a birth year of "1942," Insular Life rescinded the
Group Mortgage Redemption Insurance obtained by UnionBank on
Alvarez's life.

ISSUE

Whether or not Alvarez was guilty of fraudulent misrepresentation as to

warrant the rescission of the Group Mortgage Redemption Insurance
obtained by Union Bank on Alvarez’s life

RULING

No. The Insurance Code dispenses with proof of fraudulent intent in cases
of rescission due to concealment, but not so in cases of rescission due to
false representations. When an abundance of available documentary
evidence can be referenced to demonstrate a design to defraud, presenting
a singular document with an erroneous entry does not qualify as clear and
convincing proof of fraudulent intent.
THE INSULAR LIFE ASSURANCE COMPANY LTD. v. PAZ Y. KHU, ET.
AL.
G.R. No. 195176; April 18, 2016

FACTS

Felipe N. Khu, Sr. applied for a life insurance policy with Insular Life on
March 6, 1997. Although his policy lapsed on June 23, 1999, due to non-
payment, Felipe successfully applied for reinstatement on September 7,
1999. The reinstatement was approved with the condition of an additional
premium, effective June 22, 1999. Felipe passed away on September 22,
2001, prompting his beneficiaries to file a claim, which Insular Life denied,
citing concealment and misrepresentation. Despite court rulings in favor of
the beneficiaries, Insular Life seeks reversal, arguing that the two-year
contestability period had not lapsed since the policy was reinstated on
December 27, 1999. Respondents contend that the ambiguity in the phrase
"effective June 22, 1999" lies with Insular Life, the preparer of the
documents, and should not hinder their claim recovery.

ISSUE

Whether or not Felipe’s reinstated life insurance policy is already

incontestable at the time of his death?

RULING

Yes, Felipe’s reinstated life insurance policy is already incontestable at the

time of his death.

In light of the ambiguity in the insurance documents to this case, this Court
adopts the interpretation favorable to the insured in determining the date
when the reinstatement was approved. It must be remembered that an
insurance contract is a contract of adhesion which must be construed
liberally in favor of the insured and strictly against the insurer in order to
safeguard the latter’s interest.
 SUN LIFE OF CANADA (PHILS.) v. SANDRA TAN KIT
G.R. No. 183272, October 15, 2014

FACTS

Respondent Tan Kit, the widow and designated beneficiary of Norberto Tan
Kit, faced a denial of her claim for a life insurance policy with a
P300,000.00 face value, granted to Norberto on October 28, 1999, after he
died from disseminated gastric carcinoma within the two-year contestability
period. The petitioner, Sun Life, rejected the claim, citing Norberto's
alleged failure to disclose crucial health and smoking history information in
his application. Sun Life deemed the policy null and void, offering a refund
of premiums totaling P13,080.93. Tan Kit declined the refund, insisting on
the insurance proceeds, leading Sun Life to file for rescission of the
contract.

ISSUE

Whether or not the insurance contract should be rescinded due to

Norberto’s concealment of material information

RULING

Yes, the contract must be rescinded.

The CA correctly held that Norberto is guilty of concealment which misled

petitioner in forming its estimates of the risks of the insurance policy. This
gave petitioner the right to rescind the insurance contract which it properly
exercised in this case.
 MANULIFE PHILIPPINES, INC. VS YBAÑEZ
G.R. No. 204736 November 28, 2016

FACTS

Manulife Philippines, Inc. filed a complaint seeking rescission of two

insurance policies issued to Dr. Gumersindo Solidum Ybañez, who passed
away on November 17, 2003. Manulife alleged that the policies were void
due to the insured's concealment or misrepresentation of health
information in his application. The insurer, Manulife, denied the death
claims, citing the insured's failure to disclose medical conditions. The
Regional Trial Court (RTC) dismissed Manulife's complaint, stating it failed
to prove the alleged misrepresentations, especially as the medical records
from Cebu Doctors' Hospital were considered hearsay. The Court of
Appeals (CA) upheld the RTC decision, emphasizing that misrepresentation
must be proven by convincing evidence and that the medical records
lacked authentication, rendering them inadmissible. The CA concluded that
Manulife's complaint lacked legal and factual basis.

ISSUE

Whether the CA committed any reversible error in affirming the RTC

Decision dismissing Manulife's Complaint for rescission of insurance
contracts for failure to prove concealment on the part of the insured.

RULING

The RTC, affirmed by the CA, correctly deemed Cebu Doctors' Hospital's
medical records inadmissible as hearsay, emphasizing Manulife's failure to
present a confirming authority for their execution and authenticity. The
courts held that Manulife inadequately demonstrated, with convincing
evidence, that it was deceived into selling insurance to an applicant who
misrepresented his health. The sole witness, Ms. Victoriano, provided no
substantial evidence regarding the alleged concealment or
misrepresentation by the insured, merely identifying documentary exhibits
without testifying on their execution or content. The argument stresses
that without establishing fraudulent intent on the part of the insured, as
required for rescission, Manulife lacks grounds to sue for the annulment of
the insurance contracts.