REGINA L. EDILLON, as assisted by her husband, MARCIAL EDILLON, petitioners-appellants, vs. MANILA AN!

ER" LI#E IN"$RANCE COR%ORA&ION and the CO$R& O# #IR"& IN"&ANCE O# RI'AL, RANC( ), *$E'ON CI&+, respondents-appellees.

Rulin65

G.R. No. L-,-.// "epte0ber ,/, 123. #a4ts5

Sometime in April 1969, Carmen Lapuz applied with respondent insurance corporation for insurance coverage against accident and injuries. She filled up the lan! application form given to her and filed the same with the respondent insurance corporation. "n the said application form which was dated April 1#, 1969, she gave the date of her irth as $ul% 11, 19&'. (n the same date, she paid the sum of )*&.&& representing the premium for which she was issued the corresponding receipt signed % an authorized agent of the respondent insurance corporation.+pon the filing of said application and the pa%ment of the premium on the polic% applied for, the respondent insurance corporation issued its Certificate. ,he polic% was to e effective for a period of 9& da%s. (n -a% .1, 1969 or during the effectivit% of Certificate of "nsurance, Carmen (. Lapuz died in a vehicular accident. )etitioner /egina L. 0dillon, a sister of the insured and who was the named eneficiar% in the polic%, filed her claim for the proceeds of the insurance, su mitting all the necessar% papers and other re1uisites with the private respondent. 2er claim having een denied, /egina L. 0dillon instituted this action in the Court of 3irst "nstance.

"n resisting the claim of the petitioner, the respondent insurance corporation relies on a provision contained in the Certificate of "nsurance, e4cluding its lia ilit% to pa% claims under the polic% in ehalf of 5persons who are under the age of si4teen 6167 %ears of age or over the age of si4t% 66&7 %ears ...5 "t is pointed out that the insured eing over si4t% 66&7 %ears of age when she applied for the insurance coverage, the polic% was null and void, and no ris! on the part of the respondent insurance corporation had arisen therefrom.

,he Supreme Court reversed trial court:s decision. ,he Court ruled that the age of the insured Carmen Lapuz was not concealed to the insurance compan%. 2er application for insurance coverage which was on a printed form furnished % private respondent and which contained ver% few items of information clearl% indicated her age of the time of filing the same to e almost 6# %ears of age. ;espite of, it could hardl% e overloo!ed in the application form, considering its prominence thereon and its materialit% to the coverage applied for, the respondent insurance corporation received her pa%ment of premium and issued the corresponding certificate of insurance without 1uestion. ,he accident which resulted in the death of the insured, a ris! covered % the polic%, occurred on -a% .1, 1969 or 3(/,<=3">0 6'#7 ;A<S after the insurance coverage was applied for. ,here was sufficient time for the private respondent to process the application and to notice that the applicant was over 6& %ears of age and there % cancel the polic% on that ground if it was minded to do so. "f the private respondent failed to act, it is either ecause it was willing to waive such dis1ualification8 or, through the negligence or incompetence of its emplo%ees for which it has onl% itself to lame, it simpl% overloo!ed such fact. +nder the circumstances, the insurance corporation is alread% deemed in estoppel. "t is usuall% held that where the insurer, at the time of the issuance of a polic% of insurance, has !nowledge of e4isting facts which, if insisted on, would invalidate the contract from its ver% inception, such !nowledge constitutes a waiver of conditions in the contract inconsistent with the !nown facts, and the insurer is stopped thereafter from asserting the reach of such conditions. ,he law is charita le enough to assume, in the a sence of an% showing to the contrar%, that an insurance compan% intends to e4ecute a valid contract in return for the premium received8 and when the polic% contains a condition which renders it voida le at its inception, and this result is !nown to the insurer, it will e presumed to have intended to waive the conditions and to e4ecute a inding contract, rather than to have deceived the insured into thin!ing he is insured when in fact he is not, and to have ta!en is mone% without consideration. &(E CA%I&AL IN"$RANCE 7 "$RE&+ CO., INC., petitioner, vs. %LA"&IC ERA CO., INC., AND CO$R& O# A%%EAL", respondents. G.R. No. L-..,89 :uly 13, 1289

,he trial court sustained the contention of the private respondent and dismissed the complaint. "t was reasoned out that a polic% of insurance eing a contract of adhesion, it was the dut% of the insured to !now the terms of the contract he or she is entering into8 the insured in this case, upon learning from its terms that she could not have een 1ualified under the conditions stated in said contract, what she should have done is simpl% to as! for a refund of the premium that she paid. "t was further argued % the trial court that the ruling calling for a li eral interpretation of an insurance contract in favor of the insured and strictl% against the insurer ma% not e applied in the present case in view of the peculiar facts and circumstances o taining therein.

#a4ts5

Issue5 9hether or not the acceptance % the private respondent insurance corporation of the premium and the issuance of the corresponding certificate of insurance should e deemed a waiver of the e4clusionar% condition of overage stated in the said certificate of insurance.

(n ;ecem er 1?, 196&, petitioner Capital "nsurance @ Suret% Co., "nc.delivered to the respondent )lastic 0ra -anufacturing Co., "nc., its open 3ire )olic% wherein the former undertoo! to insure the latter:s uilding, e1uipments, raw materials, products and accessories. ,he polic% e4pressl% provides that if the propert% insured would e destro%ed or damaged % fire after the pa%ment of the premiums, at an%time etween the 1#th da% of ;ecem er 196& and one o:cloc! in the afternoon of the 1#th da% of ;ecem er 1961, the insurance compan% shall ma!e good all such loss or damage in an amount not e4ceeding )1&&,&&&.&&. 9hen the polic% was delivered, )lastic 0ra failed to pa% the corresponding insurance premium. 2owever, through its dul% authorized representative, it e4ecuted promisor% note pa%a le within .& da%s which was accepted % the respondent. (n $anuar% A, 1961, in partial pa%ment of the insurance premium, )lastic 0ra delivered to Capital "nsurance, a chec! for the amount of )1,&&&.&& postdated $anuar% 16, 1961 pa%a le to the order of the latter and drawn against the Ban! of America. 2owever, the same was dishonored % the an! for

lac! of funds. ,he records show that as of $anuar% 19, 1961 )lastic 0ra had a alance of )1,19..'1 with the Ban! of America. ,wo da%s after the insurance premium ecame due, at a out 'C&& to #C&& o:cloc! in the morning, the propert% insured % )lastic 0ra was destro%ed % fire. "n due time, the latter notified Capital "nsurance of the loss of the insured propert% % fire and accordingl% filed its claim for indemnit%. ,he loss andDor damage suffered % )lastic 0ra was estimated to e )*A.,A?#. 2owever, according to the records the same propert% has een insured % )lastic 0ra with the )hilamgen "nsurance Compan% for )*&&,&&&.&&. "n less than a month )lastic 0ra demanded from Capital "nsurance the pa%ment of the sum of )1&&,&&&.&& as indemnit% for the loss of the insured propert% under )olic% ut the latter refused for the reason that, among others, )lastic 0ra failed to pa% the insurance premium.

)recisel%, this was what actuall% happened when the Capital "nsurance accepted the ac!nowledgment receipt of the )lastic 0ra promising to pa% the insurance premium within thirt% 6.&7 da%s from ;ecem er 1?, 196&. 2ence, when the damage or loss of the insured propert% occurred, the insurance polic% was in full force and effect. ,he fact that the chec! issued % )lastic 0ra in partial pa%ment of the promissor% note was later on dishonored did not in an% wa% operate as a forfeiture of its rights under the polic%, there eing no e4press stipulation therein to that effect. "n the a sence of e4press agreement or stipulation to that effect in the polic%, the non=pa%ment at maturit% of a note given for and accepted as premium on a polic% does not operate to forfeit the rights of the insured even though the note is given for an initial premium, nor does the fact that the collection of the note had een enjoined % the insured in an% wa% affect the polic%.

(n August *#, 1961, )lastic 0ra filed its complaint against Capital "nsurance for the recover% of the sum of )1&&,&&&.&& plus )*#,&&&.&& for attorne%:s fees and )*&,&&&.&& for additional e4penses. Capital "nsurance filed a counterclaim of )*#,&&&.&& as and for attorne%:s fees. ,he trial court rendered judgment in favor of the plaintiff and against the defendant for the sum of )AA,.*#.6. with interest at the legal rate from the filing of the complaint and to pa% the costs. Court of appeals affirmes lower court:s decision. ,hus, Capital "nsurance elevated the case in the Supreme Court. Issue5 9hether or not a contract of insurance has een dul% perfected etween the petitioner, Capital "nsurance, and respondent )lastic 0ra. Rulin65 +es

... "f the chec! is accepted as pa%ment of the premium even though it turns out to e worthless, there is pa%ment which will prevent forfeiture.

B% accepting its promise to pa% the insurance premium within thirt% 6.&7 da%s from the effectivit% date of the polic% E ;ecem er 1?, 196& Capital "nsurance had in effect e4tended credit to )lastic 0ra. ,he pa%ment of the premium on the insurance polic% therefore ecame an independent o ligation the non=fulfillment of which would entitle Capital "nsurance to recover. "t could just deduct the premium due and unpaid upon the satisfaction of the loss under the polic%. "t did not have the right to cancel the polic% for nonpa%ment of the premium e4cept % putting )lastic 0ra in default and giving it personal notice to that effect. ,his Capital "nsurance failed to do.

"n clear and une1uivocal terms the insurance polic% provides that it is onl% upon pa%ment of the premiums % )lastic 0ra that Capital "nsurance agrees to insure the properties of the former against loss or damage in an amount not e4ceeding )1&&,&&&.&&. ,he mere deliver% of a ill of e4change in pa%ment of a de t does not immediatel% effect pa%ment. "t simpl% suspends the action arising from the original o ligation in satisfaction of which it was delivered, until pa%ment is accomplished either actuall% or presumptivel%. ,ender of draft or chec! in order to effect pa%ment that would e4tinguish the de tor:s lia ilit% should e actuall% cashed. "f the deliver% of the chec! of )lastic 0ra to Capital "nsurance were to e viewed in the light of the foregoing, no pa%ment of the premium had een effected, for it is onl% when the chec! is cashed that it is said to effect pa%ment. Significantl%, in the case at ar, the Capital "nsurance accepted the promise of )lastic 0ra to pa% the insurance premium within thirt% 6.&7 da%s from the effective date of polic%. B% so doing, it has implicitl% agreed to modif% the tenor of the insurance polic% and in effect, waived the provision therein that it would onl% pa% for the loss or damage in case the same occurs after the pa%ment of the premium. Considering that the insurance polic% is silent as to the mode of pa%ment, Capital "nsurance is deemed to have accepted the promissor% note in pa%ment of the premium. ,his rendered the polic% immediatel% operative on the date it was delivered. ,he view ta!en in most cases in the +nited StatesC ... is that although one of conditions of an insurance policy is that "it shall not be valid or binding until the first premium is paid", if it is silent as to the mode of payment, promissory notes received by the company must be deemed to have been accepted in payment of the premium. In other words, a requirement for the payment of the first or initial premium in advance or actual cash may be waived by acceptance of a promissory note ...

... 9here credit is given % an insurance compan% for the pa%ment of the premium it has no right to cancel the polic% for nonpa%ment e4cept % putting the insured in default and giving him personal notice....

(n the contrar% Capital "nsurance had accepted a chec! for )1,&&&.&& from )lastic 0ra in partial pa%ment of the premium on the insurance polic%. Although the chec! was due for pa%ment on $anuar% 16, 1961 and )lastic 0ra had sufficient funds to cover it as of $anuar% 19, 1961, Capital "nsurance decided to hold the same for thirt%=five 6.#7 da%s efore presenting it for pa%ment. 2aving held the chec! for such an unreasona le period of time, Capital "nsurance was estopped from claiming a forfeiture of its polic% for non=pa%ment even if the chec! had een dishonored late.

IGNACIO "A&$RNINO, in his o;n behal< and as the :$DICIAL G$ARDIAN O# CARLO" "A&$RNINO vs. &(E %(ILI%%INE AMERICAN LI#E IN"$RANCE COM%AN+

G.R. No. L-1=1=, #a4ts5

#ebruary .3, 12=,

,he polic% sued upon is one for *&=%ear endowment non=medical insurance. ,his !ind of polic% dispenses with the medical e4amination of the applicant usuall% re1uired in ordinar% life policies. 2owever, detailed

information is called for in the application concerning the applicant:s health and medical histor%. ,he written application in this case was su mitted % Saturnino to appellee on Fovem er 16, 19#?, witnessed % appellee:s agent 0dward A. Santos. ,he polic% was issued on the same da%, upon pa%ment of the first %ear:s premium of )..9.*#. (n Septem er 19, 19#A Saturnino died of pneumonia, secondar% to influenza. Appellants here, who are her surviving hus and and minor child, respectivel%, demanded pa%ment of the face value of the polic%. ,he claim was rejected and this suit was su se1uentl% instituted. ,wo months prior to the issuance of the polic% or on Septem er 9, 19#?, Saturnino was operated on for cancer, involving complete removal of the right reast, including the pectoral muscles and the glands found in the right armpit. She sta%ed in the hospital for a period of eight da%s, after which she was discharged, although according to the surgeon who operated on her she could not e considered definitel% cured, her ailment eing of the malignant t%pe. Fotwithstanding the fact of her operation 0stefania A. Saturnino did not ma!e a disclosure thereof in her application for insurance. (n the contrar%, she stated therein that she did not have, nor had she ever had, among other ailments listed in the application, cancer or other tumors8 that she had not consulted an% ph%sician, undergone an% operation or suffered an% injur% within the preceding five %ears8 and that she had never een treated for nor did she ever have an% illness or disease peculiar to her se4, particularl% of the reast, ovaries, uterus, and menstrual disorders. ,he application also recites that the foregoing declarations constituted 5a further asis for the issuance of the polic%.5

"n the case of Hasprz%! v. -etropolitan "nsurance Co., 1'& F.<.S. *11, *1', it was heldC -oreover, if it were the law that an insurance compan% could not depend a polic% on the ground of misrepresentation, unless it could show actual !nowledge on the part of the applicant that the statements were false, then it is plain that it would e impossi le for it to protect itself and its honest polic%holders against fraudulent and improper claims. "t would e wholl% at the merc% of an% one who wished to appl% for insurance, as it would e impossi le to show actual fraud e4cept in the e4tremest cases. "t could not rel% on an application as containing information on which it could act. ,here would e no incentive to an applicant to tell the truth. "n this jurisdiction a concealment, whether intentional or unintentional, entitles the insurer to rescind the contract of insurance, concealment eing defined as 5negligence to communicate that which a part% !nows and ought to communicate5 6Sections *' @ *6, Act Fo. *'*?7. "n the case of Argente v. 9est Coast Life "nsurance Co., #1 )hil. ?*#, ?.*, this Court said, 1uoting from $o%ce, ,he Law of "nsurance, *nd ed., >ol. .C

5,he asis of the rule vitiating the contract in cases of concealment is that it misleads or deceives the insurer into accepting the ris!, or accepting it at the rate of premium agreed upon. ,he insurer, rel%ing upon the elief that the assured will disclose ever% material fact within his actual or presumed !nowledge, is misled into a elief that the circumstance withheld does not e4ist, and he is there % induced to estimate the ris! upon a false asis that it does not e4ist.5

)laintiffs, now appellants, filed this action in the Court of to recover the sum of )#,&&&.&&, corresponding to the face value of an insurance polic% issued % defendant on the life of 0stefania A. Saturnino, and the sum of )1,#&&.&& as attorne%:s fees. Both the complaint and the counterclaim were dismissed % the trial court8 ut appellants were declared entitled to the return of the premium alread% paid8 plus interest at 6G up to $anuar% A, 19#9, when a chec! for the corresponding amount = ).#9.6# = was sent to them % appellee.

Supreme Court affirmed the decision of the lower court.

"$N IN"$RANCE O##ICE, L&D vs. CO$R& O# A%%EAL" and EMILIO &AN G.R. No. 328-1 Mar4h 1,, 1221 #a4ts5 (n August 1#, 19A., herein private respondent 0milio ,an too! from herein petitioner a ).&&,&&&.&& propert% insurance polic% to cover his interest in the electrical suppl% store of his rother housed in a uilding in "loilo Cit%. 3our 6'7 da%s after the issuance of the polic%, the uilding was urned including the insured store. (n August *&, 19A., ,an filed his claim for fire loss with petitioner, ut on 3e ruar% *9, 19A', petitioner wrote ,an den%ing the latter:s claim. (n April ., 19A', ,an wrote petitioner, see!ing reconsideration of the denial of his claim. (n Septem er ., 19A#, ,an:s counsel wrote the "nsurer in1uiring a out the status of his April ., 19A' re1uest for reconsideration. )etitioner answered the letter on (cto er 11, 19A#, advising ,an:s counsel that the "nsurer:s denial of ,an:s claim remained unchanged, enclosing copies of petitioners: letters of 3e ruar% *9, 19A' and -a% 1?, 19A# 6response to petition for reconsideration7. (n Fovem er *&, 19A#, ,an filed Civil Case with the /egional ,rial Court ut petitioner filed a motion to dismiss on the alleged ground that the action had alread% prescri ed. Said motion was denied in an order dated Fovem er ., 19A?8 and petitioner:s motion for reconsideration was also denied in an order dated $anuar% 1', 19AA. )etitioner went to the Court of Appeals and sought the nullification of the said Fov. ., 19A? and $anuar% 1', 19AA orders, ut the Court of Appeals, in its $une *&, 19A9 decision denied the petition and held that the court a quoma% continue until its final termination. A motion for reconsideration was filed, ut the same was denied % the Court of Appeals in its resolution of August **, 19A9. 2ence, petitioners elevated the case to the Supreme Court. I""$E5 9hether or not the filing of a motion for reconsideration interrupts the 1* months prescriptive period to contest the denial of the insurance claim.

I""$E5 9hether or not the insured made such false representations of material facts as to avoid the polic%.

R$LING5

,he "nsurance Law 6Section .&7 provides that 5materialit% is to e determined not % the event, ut solel% % the pro a le and reasona le influence of the facts upon the part% to whom the communication is due, in forming his estimate of the proposed contract, or in ma!ing his in1uiries.5 "t seems to e the contention of appellants that the facts su ject of the representation were not material in view of the 5non= medical5 nature of the insurance applied for, which does awa% with the usual re1uirement of medical e4amination efore the polic% is issued. ,he contention is without merit. "f an%thing, the waiver of medical e4amination renders even more material the information re1uired of the applicant concerning previous condition of health and diseases suffered, for such information necessaril% constitutes an important factor which the insurer ta!es into consideration in deciding whether to issue the polic% or not. "t is logical to assume that if appellee had een properl% apprised of the insured:s medical histor% she would at least have een made to undergo medical e4amination in order to determine her insura ilit%.

R$LING5 NO 9hile it is a cardinal principle of insurance law that a polic% or contract of insurance is to e construed li erall% in favor of the insured and strictl% against the insurer compan%, %et, contracts of insurance, li!e other contracts, are to e construed according to the sense and meaning of the terms which the parties themselves have used. "f such terms are clear and unam iguous, the% must e ta!en and understood in their plain, ordinar% and popular sense. Condition *? of the "nsurance )olic%, which is the su ject of the conflicting contentions of the parties, readsC *?. Action or suit clause If a claim e made and rejected and an action or suit e not commenced either in the "nsurance Commission or in an% court of competent jurisdiction within twelve 61*7 months from receipt of notice of such rejection, or in case of ar itration ta!ing place as provided herein, within twelve 61*7 months after due notice of the award made % the ar itrator or ar itrators or umpire, then the claim shall for all purposes e deemed to have een a andoned and shall not thereafter e recovera le hereunder. As the terms are ver% clear and free from an% dou t or am iguit% whatsoever, it must e ta!en and understood in its plain, ordinar% and popular sense pursuant to the a ove=cited principle laid down % this Court. /espondent ,an, in his letter addressed to the petitioner insurance compan% dated April ., 19A', admitted that he received a cop% of the letter of rejection on April *, 19A'. ,hus, the 1*=month prescriptive period started to run from the said date of April *, 19A', for such is the plain meaning and intention of Section *? of the insurance polic%. "t is also important to note the principle laid down % this Court in the case of Ang v. Fulton Fire Insurance Co., 6* SC/A 9'# I1961J7, to witC ,he condition contained in an insurance polic% that claims must e presented within one %ear after rejection is not merel% a procedural re1uirement ut an important matter essential to a prompt settlement of claims against insurance companies as it demands that insurance suits e rought % the insured while the evidence as to the origin and cause of destruction have not %et disappeared. "n enunciating the a ove=cited principle, this Court had definitel% settled the rationale for the necessit% of ringing suits against the "nsurer within one %ear from the rejection of the claim. ,he contention of the respondents that the one=%ear prescriptive period does not start to run until the petition for reconsideration had een resolved % the insurer, runs counter to the declared purpose for re1uiting that an action or suit e filed in the "nsurance Commission or in a court of competent jurisdiction from the denial of the claim. ,o uphold respondents: contention would contradict and defeat the ver% principle which this Court had laid down. -oreover, it can easil% e used % insured persons as a scheme or device to waste time until an% evidence which ma% e considered against them is destro%ed. "t is apparent that Section *? of the insurance polic% was stipulated pursuant to Section 6. of the "nsurance Code, which states thatC Sec. 6.. A condition, stipulation or agreement in an% polic% of insurance, limiting the time for commencing an action thereunder to a period of less than one %ear from the time when the cause of action accrues, is void.

IN"$RANCE and "$RE&+ CO., INC., defendants. CA%I&AL IN"$RANCE and "$RE&+ CO., INC., defendant=appellant. G.R. No. L-../-. Au6ust 18, 12=8

#AC&"5 $ulio Aguilar owned and operated several jeepne%s in the Cit% of -anila. . 2e entered into a contract with the Capital "nsurance @ Suret% Co., "nc. insuring the operation of his jeepne%s against accidents with third=part% lia ilit%. "nsurance polic% was e4ecuted % the Capital "nsurance @ Suret% Co., "nc., it contains the following provisionC ection II !IA"I!I#$ #% #&' ()"!IC 1. ,he Compan%, will, su ject to the limits of lia ilit%, indemnif% the "nsured in the event of accident caused % or arising out of the use of the -otor >ehicleDs or in connection with the loading or unloading of the -otor >ehicleDs, against all sums including claimant:s costs and e4penses which the "nsured shall ecome legall% lia le to pa% in respect ofC a. death of or odil% injur% to an% person . damage to propert% ;uring the effectivit% of such insurance polic%, "luminado del -onte, one of the drivers of the jeepne%s operated % Aguilar, umped with the jeepne% a ovementioned one Kervacio Kuingon who had just alighted from another jeepne% and as a conse1uence the latter died some da%s thereafter. An information for homicide thru rec!less imprudence was filed against "luminado del -onte, who pleaded guilt%. A penalt% of four months imprisonment was imposed on him. ,he heirs of Kervacio Kuingon filed an action for damages to e paid to them jointl% and severall% % the defendants, driver "luminado del -onte, owner and operator $ulio Aguilar, and the Capital "nsurance @ Suret% Co., "nc. ,he Court of 3irst "nstance of -anila rendered its judgment in favor of the heirs of the deceased holding the defendants jointl% lia le for damages. ARG$MEN&5 ,he case was appealed to the Court of Appeals contending that 5no action5 clause in the polic% closes the avenue to an% third part% which ma% e injured in an accident wherein the jeepne% of the insured might have een the cause of the injur% of third persons, alleging the freedom of contracts. 9ill the mere fact that such clause was agreed upon % the parties in an insurance polic% prevail over the /ules of Court which authorizes the joining of parties plaintiffs or defendants. I""$E5 9hether or not the plaintiffs eing a third part% can jointl% sue the insurer and the insured. R$LING5 <es. ,he polic% in the present case is one for indemnit% against lia ilit%8 from the fact then that the insured is lia le to the third person, such third person is entitled to sue the insurer. And the 5no action5 clause in the polic% of insurance cannot prevail over the /ules of Court provision aimed at avoiding multiplicit% of suits.

DIONI"IA, E$LOGIO, MARINA, G$ILLERMO and NOR ER&O all surna0ed G$INGON, plaintiffs=appellees, vs. IL$MINADO DEL MON&E, :$LIO AG$ILAR and CA%I&AL

,he /ules of Court provides that8 two causes of action are connected with each other, or grow out of the same transaction, the% ma% e properl% joined, and in such suit all parties against whom the plaintiff

asserts a common or an alternative lia ilit% ma% e joined as defendants. . . . 0ven if appellants had presented an% plea in a atement as to joinder of damages arising from a tort with those arising from a contract, it could not, under the facts of this case, e sustained, for the rule is that a suit ma% include an action for reach of contract and one for tort, provided the% are connected with each other or grew out of the same transaction. "n the case at ar, Sec. # of /ule * on 5$oinder of causes of action5 and Sec. 6 of /ule . on 5)ermissive joinder of parties5 cannot e superseded, at least with respect to third persons not a party to the contract, as herein, % a 5no action5 clause in the contract of insurance. 9herefore, the judgment appealed from is affirmed.

<es. ,he injured for whom the contract of insurance is intended can sue directl% the insurer. ,he general purpose of statutes ena ling an injured person to proceed directl% against the insurer is to protect injured persons against the insolvenc% of the insured who causes such injur%, and to give such injured person a certain eneficial interest in the proceeds of the polic%, and statutes are to e li erall% construed so that their intended purpose ma% e accomplished. It has even been held that such a provision creates a contractual relation which inures to the benefit of any and every person who may be negligently in*ured by the named insured as if such in*ured person were specifically named in the policy. 3irst "nsurance cannot evade its lia ilit% as insurer % hiding under the cloa! of the insured. "ts lia ilit% is primar% and not dependent on the recover% of judgment from the insured. Compulsor% -otor >ehicle Lia ilit% "nsurance 6third part% lia ilit% or ,)L7 is primaril% intended to provide compensation for the death or odil% injuries suffered % innocent third parties or passengers as a result of a negligent operation and use of motor vehicles. ,he victims andDor their dependents are assured of immediate financial assistance, regardless of the financial capacit% of the motor vehicle owners. ,he insurer:s lia ilit% accrues immediatel% upon the occurrence of the injur% or event upon which the lia ilit% depends, and does not depend on the recovery of *udgment by the in*ured party against the insured. 9herefore, the petition is dismissed. )IRGINIA A. %ERE', petitioner, vs. CO$R& O# A%%EAL" and LI#EMAN IN"$RANCE COR%ORA&ION, respondents. G.R. No. 11.,.2. :anuary .3, ./// #

#IR"& IN&EGRA&ED ONDING 7 IN"$RANCE COM%AN+, INC., petitioner, vs. (ON. (AROLD M. (ERNANDO, )IC&ORINO AD)INC$LA, ROMANA AD)INC$LA, "IL)ERIO LANCO 7 &(E "(ERI## O# MANILA and his DE%$&+ "(ERI##", respondents. G.R. No. L-91..1 :uly ,1, 1221

#AC&"5 Silverio Blanco was the owner of a passenger jeepne% which he insured against lia ilities for death and injuries to third persons with 3irst "ntegrated Bonding and "nsurance Compan%, "nc. 63irst "nsurance7. ,he said jeepne% driven % Blanco himself umped a five=%ear old child, ;eogracias Advincula, causing the latter:s death.,hereafter, a complaint for damages was rought % the child:s parents, the Advincula spouses, against Silverio Blanco. 3irst "nsurance was also impleaded in the complaint as the insurer. (n the asis of the evidence presented % the Advincula spouses, judgment was rendered % the trial court. 3irst "nsurance received a cop% of the decision and upon motion of the Advincula spouses, the decision was amended, which, in addition to the damages granted in the original decision, awarded damages to Silverio Blanco. 3irst "nsurance filed a petition for relief from judgment in the same case. But the Court denied the said petition for relief from judgment. ,he Advincula spouses moved for the e4ecution of judgment ut the 3irst "nsurance filed a petition for relief from the order of e4ecution and judgment with preliminar% injunction ut was denied % the court. ,he motion for reconsideration was li!ewise denied. ARG$MEN&5 "t is the contention of the petitioner that the Advincula spouses have no cause of action against it. As parents of the victim, the% ma% proceed against the driver, Silverio Blanco on the asis of the provisions of the Few Civil Code. 2owever, the% have no cause of action against 3irst "nsurance, ecause the% are not parties to the insurance contract. "t is settled that where the insurance contract provides for indemnit% against lia ilit% to a third part%, such third part% can directl% sue the insurer. ,he lia ilit% of the insurer to such third person is ased on contract while the lia ilit% of the insured to the third part% is ased on tort. I""$E5 9hether or not Advincula spouses can directl% sue the insurer 63irst "nsurance7. R$LING5

#AC&"5 )rimitivo )erez had een insured with B3 Lifeman "nsurance Corporation since 19A& for )*&,&&&. "n (cto er 19A? , an agent of Lifeman "nsurance, /odolfo Lalog, visited )erez in Luezon and convinced him to appl% for additional insurance coverage of )#&,&&&, to avail of the ongoing promotional discount of )'&& if the premium were paid annuall%. )rimitivo accomplished an application form for the additional insurance coverage. >irginia )erez, his wife, paid )*,&?# to Lalog. ,he receipt issued % Lalog indicated the amount receives as Mdeposit.N +nfortunatel%, Lalog lost the application form accomplished % )erez and so on, he as!ed the latter to fill up another application form. Sometime in 19A?, )erez was made to undergo the re1uired medical e4amination, which he passed. Lalog forwarded the application for additional insurance of )erez, together with all its supporting papers, to the office of B3 Lifeman "nsurance in Luezon which was supposed to forward the papers to the -anila (ffice. (n Fovem er *#, 19A?, )erez died while he was riding a anca which capsized during a storm. At the time of his death, his application papers for the additional insurance were still in the Luezon (ffice. Lalog testified that when he went to follow up the papers, he found them still in the Luezon office and so he personall% rought the papers to the -anila office. "t was onl% on Fovem er *?, 19A? that the said papers were received in -anila. 9ithout !nowing that )erez died on Fovem er *#, 19A?, B3 Lifeman "nsurance Corporation approved the application and issued the corresponding polic% for )#&,&&& on ;ecem er *, 19A?. >irginia went to -anila to claim the enefits under the insurance policies of the deceased. She was paid )'&,&&& under the first insurance polic% for )*&,&&& 6dou le indemnit% in case of accident7 ut the insurance

compan% refused to pa% the claim under the additional polic% coverage of )#&,&&&, the proceeds of which amount to )1#&,&&& in view of a triple indemnit% rider on the insurance polic%. "n its letter to >irginia , the insurance compan% maintained that the insurance for )#&,&&& had not een perfected at the time of the death of )rimitivo )erez. Conse1uentl%, the insurance compan% refunded the amount of )*,&?# which >irginia had paid. ARG$MEN&5 Lifeman "nsurance filed for the rescission and declaration of nullit% contending that the insurance polic% in 1uestion was not %et perfected, hence, the wife cannot claim under said unperfected contract of insurance. )erez, on the other hand, averred that the deceased had fulfilled all his prestations under the Contract and all the elements of a valid contract are present. ,rial Court ruled in favor of >irginia )erez, ut on appeal the decision was reversed % the Court of Appeals, hence this petition.

Conse1uentl%, there was a solutel% no wa% the acceptance of the application could have een communicated to the applicant for the latter to accept inasmuch as the applicant at the time was alread% dead. 9herefore, the decision of the Court of Appeals is here % affirmed.

L$' %INEDA, MARILO$ MON&ENEGRO, )IRGINIA ALARCON, DINA LORENA A+O, CELIA CAL$M AG and L$CIA LON&O!, petitioners, vs. (ON. CO$R& O# A%%EAL" and &(E IN"$LAR LI#E A""$RANCE COM%AN+, LIMI&ED, respondents. G.R. No. 1/99=. "epte0ber .8, 122,

#AC&"5 ,he petitioners were the complainants in an administrative complaint against private respondent "nsular Life Assurance Compan%, Ltd. 6"nsular Life7, which was filed with the "nsurance Commission. ,he% pra%ed that "nsular Life 5 e ordered to pa% the claimants their insurance claims5 and that 5proper sanctionsDpenalties e imposed on5 it 5for its deli erate, fec!less violation of its contractual o ligations to the complainants, and of the "nsurance Code.N "nsular Life:s motion to dismiss the complaint on the ground that 5the claims of complainants are all respectivel% e%ond the jurisdiction of the "nsurance Commission as provided in Section '16 of the "nsurance Code.5 2aving een denied it filed its answer, thereafter, hearings were conducted.,he Commission rendered its decision in favor of the complainants. "nsular Life appealed the decision see!ing that the appellate court to reverse the decision ecause the "nsurance CommissionC 6a7 had no jurisdiction over the case considering that the claims e4ceeded )1&&,&&&.&&, 6 7 erred in holding that the powers of attorne% relied upon % "nsular Life were insufficient to conve% a solute authorit% to Capt. Fuval to demand, receive and ta!e deliver% of the insurance proceeds pertaining to the petitioners, 6c7 erred in not giving credit to the version of "nsular Life that the power of attorne% supposed to have een e4ecuted in favor of the Alarcons was missing, and 6d7 erred in holding that "nsular Life was lia le for violating Section 1A& of the "nsurance Code for having released to the surviving mothers the insurance proceeds pertaining to the eneficiaries who were still minors despite the failure of the former to o tain a court authorization or to post a ond. ,he Court of Appeals rendered its decision with modification. 2ence this petition. ARG$MEN&5 ,he "nsurance Commission had jurisdiction over the case on the ground that although some of the claims e4ceed )1&&,&&&.&&, the petitioners had as!ed for administrative sanctions against "nsular Life which are within the Commission:s jurisdiction to grant8 hence, 5there was merel% a misjoinder of causes of action . . . and, li!e misjoinder of parties, it is not a ground for the dismissal of the action as it does not affect the other reliefs pra%ed for.5 9hen the officers of respondent=appellant read these written powers, the% must have assumed Capt. Fuval indeed had authorit% to collect the insurance proceeds in ehalf of the eneficiaries who dul% affi4ed their signatures therein. ,he written power is specific enough to define the authorit% of the agent to collect an% sum of mone% pertaining to the sin!ing of the fatal vessel. /espondent=appellant interpreted this power to include the collection of insurance proceeds in ehalf of the

I""$E5 9hether or not there was a perfected additional insurance contract.

R$LING5 Fo. the contract was not perfected. A contract of insurance, li!e all other contracts, must e assented to % oth parties, either in person or through their agents and so long as an application for insurance has not een either accepted or rejected, it is merel% a proposal or an offer to ma!e a contract. "nsurance is a contract where %, for a stipulated consideration, one part% underta!es to compensate the other for loss on specific su ject % specific perils. A contract, on the other hand, is a meeting of the minds etween two persons where % one inds himself, with respect to the other to give something or to render some service. Consent must e manifested % the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. ,he offer must e certain and the acceptance a solute. 9hen )rimitivo filed an application for insurance, paid the )*,&?# and su mitted the results of his medical e4amination, his application was su ject to the acceptance of the insurance compan%. ,he perfection of the contract of insurance etween the deceased and the respondent insurance compan% was further conditioned upon compliance with the following re1uisites stated in the application formC there shall be no contract of insurance unless and until a policy issued on this application and that the said policy shall not take effect until the premium has been paid and the policy delivered to and accepted by me/us in person while I/we,am/are in good health. ,he assent of respondent insurance compan% therefore was not given when it merel% received the application form and all the re1uisite supporting papers of the applicant. "ts assent was given when it issues a corresponding polic% to the applicant. +nder the a ovementioned provision, it is onl% when the applicant pa%s the premium and receives and accepts the polic% while he is in good health that the contract of insurance is deemed to have een perfected. "t is not disputed, however, that )rimitivo died on Fovem er *#, 19A?, his application papers for additional insurance coverage were still with the ranch office in Luezon and it was onl% two da%s later, when Lalog personall% delivered the application papers to the head office in -anila.

eneficiaries concerned. 9e elieve this is a reasona le interpretation even % an officer of respondent=appellant unschooled in the law. 2ad respondent appellant, consulted its legal department it would not have received a contrar% view. ,here is nothing in the law which mandates a specific or special power of attorne% to e e4ecuted to collect insurance proceeds. I""$E5 9hether or not the parents of the minors have a right in the polic% in ehalf of their minor children.

5"f the propert% here % insured shall, at the rea!ing out of an% fire, e collectivel% of greater value than the sum insured thereon then the insured shall e considered as eing his own insurer for the difference, and shall ear a rata le proportion of the loss accordingl%. 0ver% item, if more than one, of the polic% shall e separatel% su ject to this condition5

ARG$MEN&" #OR &(E RE"%ONDEN& R$LING5 <es. ,he "nsurance Code e4pressl% provides that8 "n the a sence of a judicial guardian, the father, or in the latter:s a sence or incapacit%, the mother, of an% minor, who is an insured or a eneficiar% under a contract of life, health or accident insurance, ma% e4ercise, in ehalf of said minor, an% right under the polic%, without necessit% of court authorit% or the giving of a ond, where the interest of the minor in the particular act involved does not e4ceed twent% thousand pesos. Such a right, ma% include, ut shall not e limited to, o taining a polic% loan, surrendering the polic%, receiving the proceeds of the polic%, and giving the minor:s consent to an% transaction on the polic%. As amended % the 3amil% Code which grants the father and mother joint legal guardianship over the propert% of their unemancipated common child without the necessit% of a court appointment8 however, when the mar!et value of the propert% or the annual income of the child e4ceeds )#&,&&&.&&, the parent concerned shall e re1uired to put up a ond in such amount as the court ma% determine. "t is clear from the said Article that regardless of the value of the unemancipated common child:s propert%, the father and mother ipso *ure ecome the legal guardian of the child:s propert%. 2owever, if the mar!et value of the propert% or the annual income of the child e4ceeds )#&,&&&.&&, a ond has to e posted % the parents concerned to guarantee the performance of the o ligations of a general guardian. 9herefore, the instant petition is K/AF,0;. ,he ;ecision of the "nsurance Commission is reinstated. DE)ELO%MEN& IN"$RANCE COR%ORA&ION vs IAC G.R. No. 81,=/ :uly 1=, 123= DI"C$""ION >4ase ? ,8@ #AC&" ,he court in ruling that private respondent is entitled to an indemnit% if )hp #&A,A6? instead of )hp 6?,6*9 as assessed % petitioner noted that the uilding at the time of loss is still under construction and not completed, furthermore it o served that the insurance contract 6polic% /<D3=&A*7 entered was an open polic% ased from the contract itself

%hilippine $nion Realty Develop0ent contends that it should e paid for the value of the uilding at the time when the fire occured and should not e limited from the value of the polic% ecause the insurance contract entered is an open polic%.

I""$E

9hether the amount of indemnit% due to private respondent is ased on the value of the propert% at the time of loss.

R$LING O# &(E CO$R&

<es. As defined in the aforestated provision, which is now Section 6& of the "nsurance Code, 5an open polic% is one in which the value of the thing insured is not agreed upon ut is left to e ascertained in case of loss. 5 ,his means that the actual loss, as determined, will represent the total indemnit% due the insured from the insurer e4cept onl% that the total indemnit% shall not e4ceed the face value of the polic%.

a fire occurered in the uilding of the private respondent %hilippine $nion Realty Develop0ent Corporation and it sued for recover% of damages from petitioner on the asis of an insurance contract etween them. "nitiall%, petitioner failed to answer on the said claims and was declared in default prompting the court to decide in favor of private respondents

ARG$MEN&" #OR &(E %E&I&IONER

5,his is an open polic% as defined in Section #? of the "nsurance Act. "n the event of loss, whether total or partial, it is understood that the amount of the loss shall e su ject to appraisal and the lia ilit% of the compan%, if esta lished, shall e limited to the actual loss, su ject to the applica le terms, conditions, warranties and clauses of this )olic%, and in no case shall e4ceed the amount of the polic%5 %(ILI%%INE AN"ALDO AMERICAN LI#E IN"$RANCE COM%AN+ )".

)etitioner refuses to pa% the whole claim of the insured ecuase at the time the fire occured the uilding was worth )hp #,A&&,&&& the private respondent should e considered its own insurer for the difference etween that amount and the face value of the polic% and should share pro rata the loss sustained. accordingl%, the private respondent is entitled to an indemnit% of onl% )hp 6?,6*9, the rest of the loss to e shouldered % it alone. "n support of this contention, petitioner cites condition 1? of the polic% which provides

G.R. NO. 8=-9. :$L+ .=, 122>Case ? ,3@

#AC&"

to adjudicating claims and complaints filed insurance compan%.

% the insured against the

)rivate respondent /amon )aterno filed a letter of complaint efore the respondent commissioner alleging certain pro lems encountered % agents, supervisors, managers and pu lic consumers of the )hilippine American Life "nsurance Compan% 6)hilamlife7 as a result of certain practices % said compan%. )etitioner as!ed for clarifications on what specific acts are complained 6Bill of )articulars7 of % )aterno. the commissioner too! cognizance of the case and set the hearing.

DI"C$""ION

ARG$MEN&" #OR &(E %E&I&IONER

the court e4plained in arriving at this ruling that ,he "nsurance Code does not have provisions governing the relations etween insurance companies and their agents. "t follows that the "nsurance Commissioner cannot, in the e4ercise of its 1uasi=judicial powers, assume jurisdiction over controversies etween the insurance companies and their agents. in the cases of +reat (acific !ife Assurance Corporation v. ,udico, 1A& SC/A ''# 619A97, and Investment (lanning Corporation of the (hilippines v. ocial ecurity Commission , *1 SC/A 9&' 6196*7, an insurance compan% ma% have two classes of agents who sell its insurance policiesC 617 salaried emplo%ees who !eep definite hours and wor! under the control and supervision of the compan%8 and 6*7 registered representatives, who wor! on commission asis. +nder the first categor%, the relationship etween the insurance compan% and its agents is governed % the Contract of 0mplo%ment and the provisions of the La or Code, while under the second categor%, the same is governed % the Contract of Agenc% and the provisions of the Civil Code on the Agenc%. ;isputes involving the latter are cogniza le % the regular courts.

)etitioner contends that the commissioner has no jurisdiction to entertain such complaint filed % paterno alleging anomalies in the agenc% contract etween )2"LA- and its agents, eing cogniza le % the regular courts

ARG$MEN&" #OR &(E RE"%ONDEN&

)rivate respondent contends that the "nsurance Commissioner has jurisdiction to ta!e cognizance of the complaint in the e4ercise of its 1uasi=judicial powers. ,he Solicitor Keneral, upholding the jurisdiction of the "nsurance Commissioner, claims that under Sections '1' and '1# of the "nsurance Code, the Commissioner has authorit% to nullif% the alleged illegal provisions of the Contract of Agenc%.

%AN MALA+AN A%%EAL"

IN"$RANCE

COR%ORA&ION

)"

CO$R

O#

G.R. NO. 31/.= A%RIL /,, 122/ >CA"E ? ,2@

#AC&" I""$E (n ;ecem er 1&, 19A#, )AF-ALA< filed a complaint for damages with the /,C of -a!ati against private respondents 0rlinda 3a ie and her driver. )AF-ALA< averred the followingC that it insured a -itsu ishi Colt Lancer car with plate Fo. ;;O='.1 and registered in the name of Canlu ang Automotive /esources Corporation ICAFL+BAFKJ8 that on -a% *6, 19A#, due to the 5carelessness, rec!lessness, and imprudence5 of the un!nown driver of a pic!=up with plate no. )C/=**&, the insured car was hit and suffered damages in the amount of )'*,&#*.&&8 that )AF-ALA< defra%ed the cost of repair of the insured car and, therefore, was su rogated to the rights of CAFL+BAFK against the driver of the pic!=up and his emplo%er, 0rlinda 3a ie8 and that, despite repeated demands, defendants, failed and refused to pa% the claim of )AF-ALA<.

9hether the commisioner has jurisdiction over the su ject matter of the complaint filed % the private respondent R$LING O# &(E CO$R&

Fo. the 1uasi=judicial power of the insurance commissioner under section '16 of the insurance code which states that 5,he Commissioner shall have the power to adjudicate claims and complaints involving an% loss, damage or lia ilit% for which an insurer ma% e answera le under an% !ind of polic% or contract of insurance, or for which such insurer ma% e lia le under a contract of suret%ship, or for which a reinsurer ma% e used under an% contract or reinsurance it ma% have entered into, or for which a mutual enefit association ma% e held lia le under the mem ership certificates it has issued to its mem ers, where the amount of an% such loss, damage or lia ilit%, e4cluding interest, costs and attorne%:s fees, eing claimed or sued upon an% !ind of insurance, ond, reinsurance contract, or mem ership certificate does not e4ceed in an% single claim one hundred thousand pesos5 is limited % law 5to claims and complaints involving an% loss, damage or lia ilit% for which an insurer ma% e answera le under an% !ind of polic% or contract of insurance, . . .5 2ence, this power does not cover the relationship affecting the insurance compan% and its agents ut is limited

ARG$MEN&" #OR &(E %E&I&IONER

)etitioner contends that pursuant to a motor vehicle insurance polic%, it had indemnified CAFL+BAFK for the damage to the insured car resulting from a traffic accident allegedl% caused % the negligence of the driver of private respondent, 0rlinda 3a ie. )AF-ALA< contended, therefore, that its cause of action against private respondents was anchored upon Article **&? of the Civil Code, which readsC

"f the plaintiffs propert% has een insured, and he has received indemnit% from the insurance compan% for the injur% or loss arising out of the wrong or reach of contract complained of, the insurance compan% shall e su rogated to the rights of the insured against the wrongdoer or the person who has violated the contract. . . .

>CA"E ? -/@

#AC&" (n April *&, 19#*, /ufino ;. Andres filed a complaint in the Court of 3irst "nstance of "locos Forte against the Crown Life "nsurance Compan% for the recover% of the amount of )#,&&&, as the face value of a joint *&=%ear endowment insurance polic% issued in favor of the plaintiff /ufino ;. Andres and his wife Severa K. Andres on the 1.th of 3e ruar%, 19#&, % said insurance compan%. (n $un ?, 19#1, /ufino Andres presented his death claim as survivor= eneficiar% of the deceased Severa K. Andres, who died -a% ., 19#1. )a%ment having een denied % the insurance compan% on April *&, 19#*, this case was instituted.

ARG$MEN&" #OR &(E RE"%ONDEN&

private respondents contends that )AF-ALA< had no cause of action against them. ,he% argued that pa%ment under the 5own damage5 clause of the insurance polic% precluded su rogation under Article **&? of the Civil Code, since indemnification thereunder was made on the assumption that there was no wrongdoer or no third part% at fault.

ARG$MEN&" #OR &(E %E&I&IONER I""$E5 9hether petitioner insurance compan% has a cause of action against private respondent R$LING O# &(E CO$R& )etitioner contends that although the polic% has lapsed, the compan% waived its right to collect the pa%ment of the premiums as communicated % the latter in a letter8 M"f %ou cannot pa% the full amount immediatel%, send as large an amount as possi le and advise us how soon %ou e4pect to e a le to pa% the alance. 0ver% consideration will e given to %our re1uest consistent with the compan%:s regulations 604hi it '7. "f %ou are una le to cover this amount in full, send us as ig an amount as %ou are a le and we will wor! out an adjustment most eneficial to %ouN 3urthermore petitioner paid a partial amount of the alance due

<es. Article **&? of the Civil Code is founded on the well=settled principle of su rogation. "f the insured propert% is destro%ed or damaged through the fault or negligence of a part% other than the assured, then the insurer, upon pa%ment to the assured, will e su rogated to the rights of the assured to recover from the wrongdoer to the e4tent that the insurer has een o ligated to pa%. )a%ment % the insurer to the assured operates as an e1uita le assignment to the former of all remedies which the latter ma% have against the third part% whose negligence or wrongful act caused the loss. ,he right of su rogation is not dependent upon, nor does it grow out of, an% privit% of contract or upon written assignment of claim. "t accrues simpl% upon pa%ment of the insurance claim % the insurer ICompania -aritima v. "nsurance Compan% of Forth America, K./. Fo. L=1A96#, (cto er .&, 196', 1* SC/A *1.8 3ireman:s 3und "nsurance Compan% v. $amilla @ Compan%, "nc., K./. Fo. L=*?'*?, April ?, 19?6, ?& SC/A .*.J.

ARG$MEN&" #OR &(E RE"%ONDEN&" /espondent contends that since the polic% has lapsed, the insured is no longer protected % the polic% the Compan% did not consider the partial pa%ment as sufficient consideration for the reinstatement. )etitionerPs failure to remit the alance efore the death of his wife operated to deprive him of an% right to waive the polic% and recover the face value thereof. I""$E 9hether there is a perfected contract of reinstatement after the polic% lapsed due to non=pa%ment of premiumsQ R$LING O# &(E CO$R& Fo. in the case of $ames -cKuire vs. ,he -anufacturer:s Life "nsurance Co. 6A? )hil,. .?&, 'A (ff. Kaz. I1J, 11'7, it was held that M,he stipulation in a life insurance polic% giving the insured the privilege to reinstate it upon written application does not give the insured a solute right to such reinstatement % the mere filing of an application. ,he Compan% has the right to den% the reinstatement if it is not satisfied as to the insura ilit% of the insured and if the latter does no pa% all overdue premium and all other inde tedness to the Compan%. After the death of the insured the insurance Compan% cannot e compelled to entertain an application for reinstatement of the polic% ecause the conditions precedent to reinstatement can no longer e determined and satisfiedN

DI"C$""ION ,he court e4plained that although there are a few recognized e4ceptions to this rule. 3or instance, if the assured % his own act releases the wrongdoer or third part% lia le for the loss or damage, from lia ilit%, the insurer:s right of su rogation is defeated I)hoeni4 "ns. Co. of Broo!l%n v. 0rie @ 9estern ,ransport, Co., 11? +S .1*, *9 L. 0d. A?. 61AA678 "nsurance Compan% of Forth America v. 0lgin, $oliet @ 0astern /ailwa% Co., **9 3 *d ?&# 619#67J. Similarl%, where the insurer pa%s the assured the value of the lost goods without notif%ing the carrier who has in good faith settled the assured:s claim for loss, the settlement is inding on oth the assured and the insurer, and the latter cannot ring an action against the carrier on his right of su rogation I-cCarth% v. Bar er Steamship Lines, "nc., '# )hil. 'AA 619*.7J. And where the insurer pa%s the assured for a loss which is not a ris! covered % the polic%, there % effecting 5voluntar% pa%ment5, the former has no right of su rogation against the third part% lia le for the loss ISveriges Angfart%gs Assurans 3orening v. Lua Chee Kan, K. /. Fo. L=**1'6, Septem er #, 196?, *1 SC/A 1*J.Fone of the e4ceptions are availing in the present case.

ANDRE" )". &(E CROAN LI#E IN"$RANCE COM%AN+ G.R. NO. L B 1/38- :AN$AR+ .3 1293

DI"C$""ION ,he supreme court e4plained that the conditions set forth in the polic% for reinstatement are the followingC 6a7 application shall e

made within three %ears from the date of lapse8 6 7 there should e a production of evidence of the good health of the insuredC 6c7 if the rate of premium depends upon the age of the Beneficiar%, there should li!ewise e a production of evidence of his or her good health8 6d7 there should e presented such other evidence of insura ilit% at the date of application for reinstatement8 6e7 there should e no change which has ta!en place in such good health and insura ilit% su se1uent to the date of such application and efore the polic% is reinstated8 and 6f7 all overdue premiums and other inde tedness in respect of the polic%, together with interest at si4 per cent, compounded annuall%, should first e paid. ,he plaintiff=appellant did not compl% with the last condition8 for he onl% paid )1&& 6on account of the overdue semi=annual premium of )16#.1#7 on 3e ruar% *&, 19#1, efore his wife:s death 6Stipulation, par. ?7 8 and, despite the Compan%:s reminders on April 1' and *?, he remitted the alance of )6# on -a% #, 19#1 6received % the Compan%:s agenc% on -a% 117, two da%s after his wife died. (n the face of such facts, the Compan% had the right to treat the contract as lapsed and refuse pa%ment of the polic%. 92",0 K(L; -A/"F0 S0/>"C0S ,"FC. >S. )"(F00/ "FS+/AFC0AF; S+/0,< C(/)(/A,"(F AF; ,20 S,0A-S2") -+,+AL +F;0/9/","FK ASS(C"A,"(F K./. Fo. L=''&#9, *A (cto er 19??

another against loss, damage or lia ilit% arising from un!nown or contingent event. "n particular, a marine insurance underta!es to indemnif% the assured against marine losses, such as the losses incident to a marine adventure. Section 99 of the "nsurance Code enumerates the coverage of marine insurance. B% definition then, Steamship -utual as a ) and " Clu is a mutual insurance association engaged in the marine insurance usiness.

;"SC+SS"(F (F 2(9 ,20 SC /+L0; ,20 CAS0 A mutual insurance compan% is a cooperative enterprise where the mem ers are oth the insurer nd insured. the mem ers all contri ute, % a s%stem of premiums or assessments, to the creation of fund from which all losses and lia ilities are paid, and where the profits are divided among themselves, in proportion to their interest. Additionall%, mutual insurance associations, or clu s, provides three t%pes of coverage, namel%, protection and indemnit%, war ris!, and defense costs. K+L3 /0S(/,,"FC C(/)(/A,"(F >S )2"L"))"F0 C2A/,0/ "FS+/AFC0

3AC,SC 9hite Kold -arine Services, "nc. procured a protection and indemnit% coverage for its vessels from the Steamship -utual +nderwriting Association Limited through )ioneer "nsurance and Suret% Corporation. 9hite Kold was issued a certificate of entr% and acceptance. )ioneer also issued receipts evidencing pa%ments for the coverage. 9hen 9hite Kold failed to full% pa% its accounts, Steamship -utual refused to renew the coverage. Steamship -utual thereafter filed case against 9hite Kold for collection of sum of mone% to recover the latters unpaid alance. 9hite Kold on the other hand, filed a complaint efore the "nsurance Commission claiming that Steamship -utual >iolated Sections 1A6 and 1A?, while )ioneer violated Sections *99 to .&1 of the "nsurance Code.

K./. Fo. 1#616? -a% 16, *&&#

3AC,S C

Kulf /esorts is the owner of the )laza /esort situated at Agoo, La +nion and had its properties in said resort insured originall% with the American 2ome Assurance Compan% 6A2AC7. "n the first ' policies issued, the ris!s of loss from earth1ua!e shoc! was e4tended onl% to petitionerPs two swimming pools. Kulf /esorts agreed to insure with )hil Charter the

A/K+-0F,SC )etitioner insists that Steamship -utual is a ) @ " Clu is engaged in the insurance usiness. ,o uttress its assertion, it sites the definition of a ) @ " clu in 2%opsung -aritime Co.,Ltd. vs CA as Man association composed of ship owners in generalwho and together for the specific purposes of providing insurance cover on a mutual asis against lia ilities incidental to ship owning that the mem ers incur in favor of third parties.N "t stresses that as a ) @ " Clu , Steamship -utualPs primar% purpose is to solicit and provide protection and indemnit% coverage and for this purpose, it has engaged the services pioneer to act as its agent.

properties covered % the A2AC polic% provided that the polic% wording and rates in said polic% e copied in the polic% to e issued % )hil

Charter. )hil Charter issued )olic% Fo. .19'' to Kulf /esorts covering the period of -arch 1', 199& to -arch 1', 1991 for )1&,?&&,6&&.&& for a total premium of )'#,1#9.9*. the rea!=down of premiums shows that

Kulf /esorts paid onl% ).9..&& as premium against earth1ua!e shoc! 60S7. "n )olic% Fo. .19'' issued % defendant, the shoc! endorsement /espondent contends that although Steamship -utual is a ) @ " Clu , it is not engaged in the insurance usiness in the )hilippines. "t is merel% as association of vessel owners who have come together to provide mutual protection against lia ilities incidental to ship owning. provided that M"n consideration of the pa%ment % the insured to the

compan% of the sum included additional premium the Compan% agrees, notwithstanding what is stated in the printed conditions of this polic% due

"SS+0C 9hether or not Steamship -utual, a )rotection and "nsurance Clu , engaged in the usiness in the )hilippines.

to the contrar%, that this insurance covers loss or damage to shoc! to an% of the propert% insured % this )olic% occasioned % or through or in conse1uence of earth1ua!e. "n 04hi it 5?=C5 the word 5included5 a ove

20L;C ,he test to determine if a contract is an insurance contract or not, depends on the nature of the promise, the act re1uired to e performed, and the e4act nature of the agreement in the light of the occurrence, contingenc%, or circumstances under which the performance ecomes re1uisite. "t is not % what it is called. Basicall%, an insurance contract is a contract of indemnit%. "n it, one underta!es for a consideration to indemnif%

the underlined portion was deleted. (n $ul% 16, 199& an earth1ua!e struc! Central Luzon and Forthern Luzon and plaintiffPs properties covered % )olic% Fo. .19'' issued % defendant, including the

two swimming pools in its Agoo )la%a /esort were damaged.

earth1ua!e

shoc!.

,his

is

consistent

with

the

histor%

of

petitionerPsinsurance policies with A2AC. )etitioner advised respondent that it would e ma!ing a claim under its "nsurance )olic% .19'' for damages on its properties. /espondent denied petitionerPs claim on the ground that its insurance polic% onl% ;"SC+SS"(F (F 2(9 ,20 SC /+L0; ,20 CAS0 afforded earth1ua!e shoc! coverage to the twoswimming pools of the resort. ,he trial court ruled in favor of respondent. "n its ruling, the schedule clearl% shows that petitioner paid onl% a premium of ).9..&& against the peril of earth1ua!e shoc!, the same premium it had paid against earth1ua!e shoc! onl% on the two swimming pools in all the policies issued % A2AC. A careful e4amination of the premium recapitulation will show that it is the clear intent of the parties to e4tend earth1ua!e shoc! coverage onl% to the two swimming pools. Section *617 of the "nsurance Code defines a contract of insurance as an agreement where % one underta!es for a consideration to indemnif% another against loss, damage or lia ilit% arising from an un!nown or contingent event. ,hus, an insurance contract e4ists where the following elements concurC 1. ,he insured has an insura le interest8 *. ,he insured is su ject to a ris! of loss % the happening of the designated peril8 .. ,he insurer assumes the ris!8 '. Such assumption of ris! is part of a general scheme to distri ute actual losses among a large group of persons earing a similar ris!8 and #. In 4onsideration o< the insurerCs pro0ise, the insured pays a pre0iu0. An insurance premium is the consideration paid an insurer for underta!ing to indemnif% the insured against a specified peril.*? "n fire, casualt%, and marine insurance, the premium pa%a le ecomes a de t as soon as the ris! attaches.*A "n the su ject polic%, no premium pa%ments were made with regard to earth1ua!e shoc! coverage, e4cept on the two swimming pools. ,here is no mention of an% premium pa%a le for the other resort properties with regard to earth1ua!e shoc!. ,his is consistent with the histor% of petitionerPs previous insurance policies from A2AC=A"+. As orne out % petitionerPs witnesses. "$MMI& G$ARAN&+ 7 IN"$RANCE COM%AN+, INC ., vs.&(E (ONORA LE GREGORIA C. ARNALDO, in her 4apa4ity as Insuran4e Co00issioner, and #G$ IN"$RANCE COR%ORA&ION G.R. No. L--39-= #ebruary .2, 1233

A/K+-0F,SC %etitioner 4ontends5 #irst, that the polic%Ps earth1ua!e shoc! endorsement clearl% covers all of the properties insured and not onl% the swimming pools. "t used the words 5an% propert% insured % this polic%,5 and it should e interpreted as all inclusive. Respondent Ar6u0ents5 Fone of the previous policies issued % A2AC=A"+ from 19A. to 199& e4plicitl% e4tended coverage against earth1ua!e shoc! to petitionerPs insured properties other than on the two swimming pools. )etitioner admitted that from 19A' to 19AA, onl% the two swimming pools were insured against earth1ua!e shoc!. 3rom 19AA until 199&, the provisions in its polic% were practicall% identical to its earlier policies, and there was no increase in the premium paid. A2AC=A"+, in a letter 19 % its representative -anuel C. Luijano, categoricall% stated that its previous polic%, from which respondentPs polic% was copied, covered onl% earth1ua!e shoc! for the two swimming pools.

"SS+0C 9hether or not the polic% covers onl% the two swimming pools owned % Kulf /esorts and does not e4tend to all properties

damaged therein 3AC,SC As a result of a vehicular accident that happened on Fovem er *6,19?6 where % a 3ord )ic!=up with )late Fo. +C=#9*# )hil. :?6 owned % -arcos (laso was umped % a cargo truc! with )late Fo. (<=?A. then owned % Al erto 3loralde, 3K+ insurance poration 3K+ % reason of -otor >ehicle "nsurance )olic% Fo. "C=>3=&?1A# paid (laso the sum of ) *,A1?.#& as its share in the repair cost of the said 3ord )ic!=up. 2aving thus een su rogated to the rights and causes of action of said (laso in the said amount 3K+ formall% demanded pa%ment of said amount from 3loralde and attempted to verif% 3loralde:s insurance carrier. 3loralde failed to reveal his insurance carrier. "n the earl% part of 19?A 3K+ was a le to ascertain the "dentit% of 3loralde:s insurance carrier to e the Summit Kuarant% and "nsurance Compan%, "nc. 6Summit7. (n 3e ruar% **,19?A 3K+ wrote to the insurance commissioner re1uesting for a conference with Summit and demanded from Summit through counsel on 3e ruar% *A,19?A the pa%ment of the damages sustained % the car of (laso ut to no avail. 2ence on -a% **,19?A 3K+ filed "C Case Fo. A*# in the "nsurance Commissioner:s (ffice against Summit for recover% of said amount. ARG$MEN&"5

20L;C <es, All the provisions and riders ta!en and interpreted together, indu ita l% show the intention of the parties to e4tend earth1ua!e shoc! coverage to the two swimming pools onl%. Aninsurance premium is the consideration paid an insurer for underta!ing to indemnif% the insured against a specified peril. "n fire, casualt% and marine insurance, the premium ecomes a de t as soon as the ris! attaches. "n the su ject polic%, no premium pa%ments were made with regard to earth1ua!e shoc! coverage e4cept on the two swimming pools. ,here is no mention of an% premium pa%a le for the other resort properties with regard to

)etitioner s1uarel% rings into focus the provisions of Section .A' of ); 61*, the "nsurance Code, )etitioner compan% contends that the two periods prescri ed in the aforementioned law E that is, the si4=month period for filing the notice of claim and the one=%ear period for ringing an action or suit E are mandator% and must alwa%s concur. /espondent 3K+, however, contends that the said one=%ear prescriptive period can not appl% to it ecause it was merel% su rogated to the rights of (laso. /espondent Commissioner invites attention to the phrase 5in proper cases5 in Section .A' of ); 61* and argues that the prescriptive period was interrupted upon the e4trajudicial demand for pa%ment made % 3K+ on petitioner I""$E5 9hether the claim of "nsurance Corporation is under section .A' of ); Fo. 61*. (ELD5 arred % prescription

;ue to its failure to collect from the petitioner despite prior demand, private respondent filed a complaint with the /egional ,rial Court of -a!ati Cit%, Branch 1.?, for collection of a sum of mone%. A/K+-0F,SC )etitioner ;elsan ,ransport Lines, "nc. invo!es the provision of Section 11. of the "nsurance Code of the )hilippines, which states that in ever% marine insurance upon a ship or freight, or freightage, or upon an% thin which is the su ject of marine insurance there is an implied warrant% % the shipper that the ship is seaworth%. )rivate respondent argues that the vessel was not seaworth% "SS+0C 9hether or not the pa%ment made % the private respondent to Calte4 for the insured value of the lost cargo amounted to an admission that the vessel was seaworth%, thus precluding an% action for recover% against the petitioner. (ELD5

"n the present case, it is not denied that an e4trajudicial demand for pa%ment was made % respondent 3K+ on petitioner ut petitioner failed to respond to the same. Fevertheless the complaint was filed even efore a denial of the claim was made % petitioner. 3or all legal purposes, the one=%ear prescriptive period provided for in Section .A' of the "nsurance Code has not egun to run. ,he cause of action arises onl% and starts to run upon the denial of the claim % the insurance compan%. DI"C$""ION ON (OA &(E "C R$LED &(E CA"E 9e find no merit in the contention of petitioner compan%. ,here is a solutel% nothing in the law which mandates that the two periods must alwa%s concur. (n the contrar%, it is ver% clear that the one=%ear period is onl% re1uired :in proper cases.: "t appears that petitioner compan% disregarded this ver% significant phrase when it made its own interpretation of the law. 2ad the lawma!ers intended it to e the wa% petitioner compan% assumes it to e, then the phrase in proper cases: would not have een inserted. DEL"AN &RAN"%OR& LINE", vs. &(E (ON. CO$R& O# A%%EAL" and A""$RANCE COR%ORA&ION, respondents. G.R. No. 1.8328 #AC&"5 ,he facts show that Calte4 )hilippines 6Calte4 for revit%7 entered into a contract of affreightment with the petitioner, ;elsan ,ransport Lines, "nc., for a period of one %ear where % the said common carrier agreed to transport Calte4Ps industrial fuel oil from the Batangas=Bataan /efiner% to different parts of the countr%. +nder the contract, petitioner too! on oard its vessel, -, -a%sun *,*??..1' !iloliters of industrial fuel oil of Calte4 to e delivered to the Calte4 (il ,erminal in Oam oanga Cit%. ,he shipment was insured with the private respondent, American 2ome Assurance Corporation. (n August 1', 19A6, -, -a%sum set sail from Batangas for Oam oanga Cit%. +nfortunatel%, the vessel san! in the earl% morning of August 16, 19A6 near )ana% Kulf in the >isa%as ta!ing with it the entire cargo of fuel oil. Su se1uentl%, private respondent paid Calte4 the sum of 3ive -illion Finet%=Si4 ,housand Si4 2undred ,hirt%=3ive )esos and 3ift%=Seven Centavos 6)#,&96,6.#.6?7 representing the insured value of the lost cargo. 04ercising its right of su rogation under Article **&? of the Few Civil Code, the private respondent demanded of the petitioner the same amount it paid to Calte4.-.wphi-.n/t Nove0ber 19, .//1 INC., petitioner, AMERICAN (OME

,he pa%ment made % the private respondent for the insured value of the lost cargo operates as waiver of its 6private respondent7 right to enforce the term of the implied warrant% against Calte4 under the marine insurance polic%. 2owever, the same cannot e validl% interpreted as an automatic admission of the vesselPs seaworthiness % the private respondent as to foreclose recourse against the petitioner for an% lia ilit% under its contractual o ligation as a common carrier. ,he fact of pa%ment grants the private respondent su rogator% right which ena les it to e4ercise legal remedies that would otherwise e availa le to Calte4 as owner of the lost cargo against the petitioner common carrier. DI"C$""ION ON (OA &(E "C R$LED &(E CA"E ,he right of su rogation has its roots in e1uit%. "t is designed to promote and to accomplish justice and is the mode which e1uit% adopts to compel the ultimate pa%ment of a de t % one who in justice and good conscience ought to pa%.9 "t is not dependent upon, nor does it grow out of, an% privit% of contract or upon written assignment of claim. "t accrues simpl% upon pa%ment % the insurance compan% of the insurance claim.1& Conse1uentl%, the pa%ment made % the private respondent 6insurer7 to Calte4 6assured7 operates as an e1uita le assignment to the former of all the remedies which the latter ma% have against the petitioner. %ERLA COM%ANIA DE "EG$RO", INC., %E&I&IONER, ). (ON. CON"&AN&E A. ANC(E&A., RE"%ONDEN&". GR L--2=22. A$G$"& 3, 1233 Case no. -, #a4ts5 "2 Scout in which private respondents were riding collided with Superlines us, private respondent sustained ph%sical injuries in var%ing degrees of gravit%. ,hus, the% filed a complaint for damages against Superlines, the us driver and petitioner, the insurer of the us. ,he judge ordered petitioner to pa% private respondents the :no fault indemnit%P in the amount of )#,&&&. )etitioner contended that under Sec. .?A of the "nsurance Code, the insurer lia le to pa% the )#,&&&.&& is the insurer of the vehicle in which private respondents were riding, not petitioner. -otions for /econsiderations were denied. Issue5 whether or not petitioner is the insurer lia le to indemnif% private respondents under Sec. .?A of the "nsurance Code. Rulin65 under the 5no fault indemnit%5 provision, where proof of fault or negligence is not necessar% for pa%ment of an% claim for death (r injur% to a passenger or a third part%, are esta lishedC 1. A claim ma% e made against one motor vehicle onl%. *. "f the victim is an occupant of a vehicle, the claim shall lie against the insurer of the vehicle. in which he is riding, mounting or dismounting from. .. "n an% other case 6i.e. if the victim is not an occupant of a vehicle7, the claim shall lie against the insurer of the directl% offending vehicle.

'. "n all cases, the right of the part% pa%ing the claim to recover against the owner of the vehicle responsi le for the accident shall e maintained. ,he claimant is not free to choose from which insurer he will claim the 5no fault indemnit%,5 as the law, % using the word 5shall, ma!es it mandator% that the claim e made against the insurer of the vehicle in which the occupant is riding, mounting or dismounting from. ,hat said vehicle might not e the one that caused the accident is of no moment since the law itself provides that the part% pa%ing the claim under Sec. .?A ma% recover against the owner of the vehicle responsi le for the accident. ,his is precisel% the essence of 5no fault indemnit%5 insurance which was introduced to and made part of our laws in order to provide victims of vehicular accidents or their heirs immediate compensation, although in a limited amount, pending final determination of who is responsi le for the accident and lia le for the victims:injuries or death. "rrespective of whether or not fault or negligence lies with the driver of the Superlines us, as private respondents were not occupants of the us, the% cannot claim the 5no fault indemnit%5 provided in Sec. .?A from petitioner. ,he claim should e made against the insurer of the vehicle the% were riding.

#a4ts5 )etitioners filed a writ of preliminar% injunction alleging that the% were the legitimate wife and children of Loreto -aramag 6Loreto7, while respondents were LoretoPs illegitimate famil%8 0va de Kuzman -aramag 60va7 was a concu ine of Loreto and a suspect in the !illing of the latter, thus she is dis1ualified to receive an% proceeds from his insurance policies and the illegitimate children of Loreto (dessa, Harl, Brian and ,risha Angelie were entitled onl% to one=half of the legitime children, thus petitioners could not e deprived of their legitime. ,he insurance compan% claimed that it was ound to honor the insurance policies designating the children of Loreto with 0va as eneficiaries pursuant to Section #. of the "nsurance and not to the estate or to the heirs of the insured. ,he /,C granted the petition which states that civil code does not appl%. "t is ver% clear under Sec. #. thereof that the insurance proceeds shall e applied e4clusivel% to the proper interest of the person in whose name or for whose enefit it is made, unless otherwise specified in the polic%. ,he CA dismissed the case for lac! of jurisdiction for filing e%ond reglementar% period. Issue5 9DF 0va can claim even though prohi ited under the civil code against donation. Rulin65 <0S. )etition is ;0F"0;.

>"LLAC(/,A >. "FS+/AFC0 C(--"SS"(F, )0,","(F0/ AF; 0-)"/0 "FS+/AFC0 C(-)AF<, /0S)(F;0F,S K./. F(. L=#'1?1 (C,(B0/ *A, 19A& Case no. '' 3AC,SC )0,","(F0/ >"LLAC(/,A 2A; 20/ C(L, LAFC0/ CA/ "FS+/0; 9",2 0-)"/0 "FS+/AFC0 C(-)AF< AKA"FS, (9F ;A-AK0, ,203, AF; ./; )A/,< L"AB"L",<. 92"L0 ,20 CA/ 9AS "F ,20 /0)A"/ S2(), (F0 (3 ,20
0-)L(<00S (3 ,20 SA"; /0)A"/ S2() ,((H ", (+, 3(/ A $(</";0 A3,0/ 92"C2 ", 3"K+/0; "F A >02"C+LA/ ACC";0F,. ,2"S /0S+L,0; ,( ,20 ;0A,2 (3 ,20 ;/">0/ AF; S(-0 (3 ,20 )ASS0FK0/S AS 90LL AS ,( 0R,0FS">0 ;A-AK0 ,( ,20 CA/. >"LLAC(/,A 3"L0; A CLA"- 3(/ ,(,AL L(SS 9",2 ,20 SA"; "FS+/AFC0 C(-)AF<. 2(90>0/, ", ;0F"0; ,20 CLA"- (F ,20 K/(+F; ,2A, ,20 ACC";0F, ;"; F(, 3ALL 9",2"F ,20 )/(>"S"(FS (3 ,20 )(L"C< 0",20/ 3(/ ,20 (9F ;A-AK0 (/ ,203, C(>0/AK0, "F>(H"FK ,20 )(L"C< )/(>"S"(F (F MA+,2(/"O0; ;/">0/ CLA+S0N 92"C2 S,A,0S ,2A, ,20 )(L"C< L"-",S ,20 +S0 (3 ,20 "FS+/0; >02"CL0 ,( ,9( 6*7 )0/S(FS (FL<, FA-0L<C ,20 "FS+/0; 2"-S0L3 (/ AF< )0/S(F (F 2"S 6"FS+/0;:S7 )0/-"SS"(F. ,2"S 9AS +)20L; B< ,20 "FS+/AFC0 C(--"SS"(F 3+/,20/ S,A,"FK ,2A, ,20 CA/ 9AS F(, S,(L0F AF; ,20/03(/0 F(, C(>0/0; B< &(E &(E#& CLA$"E ECA$"E I& I" NO& E)IDEN& &(A& &(E %ER"ON A(O &OO! &(E CAR #OR A :O+RIDE IN&END" &O %ERMANEN&L+ DE%RI)E &(E IN"$RED O# (I"D (ER CAR.

An% person who is for idden from receiving an% donation under Article ?.9 cannot e named eneficiar% of a life insurance polic% of the person who cannot ma!e an% donation to him. "f a concu ine is made the eneficiar%, it is elieved that the insurance contract will still remain valid, ut the indemnit% must go to the legal heirs and not to the concu ine, for evidentl%, what is prohi ited under Art. *&1* is the naming of the improper eneficiar%. S0C,"(F #.. ,he insurance proceeds shall e applied e4clusivel% to the proper interest of the person in whose name or for whose enefit it is made unless otherwise specified in the polic%.(nl% persons entitled to claim the insurance proceeds are either the insured, if still alive8 or the eneficiar%, if the insured is alread% deceased, upon the maturation of the polic%. ,he revocation of 0va as a eneficiar% in one polic% and her dis1ualification as such in another are of no moment considering that the designation of the illegitimate children as eneficiaries in LoretoPs insurance policies remains valid. Because no legal proscription e4ists in naming as eneficiaries the children of illicit relationships % the insured, the shares of 0va in the insurance proceeds, whether forfeited % the court in view of the prohi ition on donations under Article ?.9 of the Civil Code or % the insurers themselves for reasons ased on the insurance contracts, must e awarded to the said illegitimate children, the designated eneficiaries, to the e4clusion of petitioners. "t is onl% in cases where the insured has not designated an% eneficiar%, or when the designated eneficiar% is dis1ualified % law to receive the proceeds, that the insurance polic% proceeds shall redound to the enefit of the estate of the insured. E&ERNAL GARDEN" )" %(ILI%%INE AMERICAN LI#E IN"$RANCE G.R. NO. 1==.-9 A%RIL 2, .//3 #AC&"5 RE"%ONDEN& %(ILI%%INE AMERICAN LI#E IN"$RANCE COM%AN+ >%(ILAMLI#E@ EN&ERED IN&O A CREDI&OR GRO$% LI#E %OLIC+ AI&( %E&I&IONER E&ERNAL GARDEN" MEMORIAL %AR! COR%ORA&ION >E&ERNAL@. $NDER &(E %OLIC+, &(E CLIEN&" O# E&ERNAL A(O %$RC(A"ED
$RIAL LO&" #ROM I& ON IN"&ALLMEN& A"I" AO$LD E IN"$RED +

I""$E5 A(E&(ER OR NO& &(E IN"$RER COM%AN+ "(O$LD %A+ &(E "AID CLAIM. /+L"FKC <0S. 920/0 ,20 "FS+/0;PS CA/ "S 9/(FK3+LL< ,AH0F 9",2(+, ,20 "FS+/0;PS C(FS0F, 3/(- ,20 CA/ S0/>"C0 AF; /0)A"/ S2() ,( 92(- ", 2A; B00F 0F,/+S,0; 3(/ C20CH=+) AF; /0)A"/S 6ASS+-"FK ,2A, S+C2 ,AH"FK 9AS 3(/ A $(< /";0, "F ,20 C(+/S0 (3 92"C2 ", 9AS ,(,ALL< S-AS20; "F AF ACC";0F,7, /0S)(F;0F, "FS+/0/ "S L"ABL0 AF;
-+S, )A< "FS+/0; 3(/ ,20 ,(,AL L(SS (3 ,20 "FS+/0; >02"CL0 +F;0/ ,20 ,203, CLA+S0 (3 ,20 )(L"C<. ASS+-"FK, ;0S)",0 ,20 ,(,ALL< "FA;0L+A,0 0>";0FC0, ,2A, ,20 ,AH"FK 9AS M,0-)(/A/<N AF; 3(/ A M$(< /";0N, ,20 C(+/, S+S,A"FS AS ,20 B0,,0/ >"09 ,2A, 92"C2 2(L;S ,2A, 920F A )0/S(F, 0",20/ 9",2 ,20 (B$0C, (3 K("FK ,( A C0/,A"F )LAC0, (/ L0A/F"FK 2(9 ,( ;/">0, (/ 0F$(<"FK A 3/00 /";0, ,AH0S )(SS0SS"(F (3 A >02"CL0 B0L(FK"FK ,( AF(,20/, 9",2(+, ,20 C(FS0F, (3 ",S (9F0/, 20 "S K+"L,< (3 ,203, B0CA+S0 B< ,AH"FK )(SS0SS"(F (3 ,20 )0/S(FAL )/()0/,< B0L(FK"FK ,( AF(,20/ AF; +S"FK ",, 2"S "F,0F, ,( KA"F "S 0>";0F, S"FC0 20 ;0/">0S ,20/0 3/(- +,"L",<, SA,"S3AC,"(F, 0F$(<-0F, AF; )L0AS+/0. ACC(/;"FKL<, ,20 A))0AL0; ;0C"S"(F "S S0, AS";0 AF; $+;K-0F, "S 20/0B< /0F;0/0; S0F,0FC"FK )/">A,0 /0S)(F;0F, ,( )A< )0,","(F0/ ,20 S+- (3 ).#,&&&.&& 9",2 L0KAL "F,0/0S, 3/(- ,20 3"L"FK (3 ,20 C(-)LA"F, +F,"L 3+LL )A<-0F, "S -A;0 AF; ,( )A< ,20 C(S,S (3 S+",.

%(ILAMLI#E. E&ERNAL AA" RE*$IRED $NDER &(E %OLIC+ &O "$ MI& &O %(ILAMLI#E A LI"& O# ALL NEA LO& %$RC(A"ER", &OGE&(ER AI&( A CO%+ O# &(E A%%LICA&ION O# EAC( %$RC(A"ER, AND &(E AMO$N&" O# &(E RE"%EC&I)E $N%AID ALANCE" O# ALL IN"$RED LO& %$RC(A"ER". E&ERNAL COM%LIED + "$ MI&&ING A LE&&ER CON&AINING A LI"& O# IN"$RA LE ALANCE" O# I&" LO& $+ER", ONE O# &(O"E INCL$DED A CER&AIN :O(N C($ANG A(O "$ "E*$EN&L+ DIED. E&ERNAL GARDEN" COM%LIED AI&( &(E RE*$IREMEN&" "E& #OR&( + %(ILAMLI#E. (OAE)ER, ONE +EAR (AD ALREAD+ ELA%"ED +E& %(ILAMLI#E "&ILL (A" NO RE%L+. &(I" %ROM%&ED E&ERNAL &O DEMAND #ROM %(ILAMLI#E &(E ALANCE D$E &O C($ANG. ARG$MEN&"5

(EIR" O# LORE&O C. MARAMAG, %E&I&IONER" ). E)A )ERNA DE G$'MAN E& AL., RE"%ONDEN&" G R 1311,.. :$L+ 9, .//2 Case no. -9

%(ILAMLI#E DENIE" &(E CLAIM O# E&ERNAL CON&ENDING &(A& NO

A%%LICA&ION AA" #ILED IN &(EIR O##ICE %RIOR &O &(E DEA&( A" &(E %OLIC+ "&A&E" &(A& E&(ERE "(ALL E NO IN"$RANCE I# &(E A%%LICA&ION I" NO& A%%RO)ED + &(E COM%AN+.E &($", &(E+ ARE NO& LIA LE.

E&ERNAL CLAIM" &(A& &(E E)IDENCE &(A& I& %RE"EN&ED

E#ORE &(E &RIAL CO$R& "$%%OR&" I&" CON&EN&ION &(A& I& "$ MI&&ED A CO%+ O# &(E IN"$RANCE A%%LICA&ION O# C($ANG E#ORE (I" DEA&(.

I""$E5 A(E&(ER OR NO& %(ILAMLI#E RECEI)ED &(E A%%LICA&ION %RIOR &O &(E DEA&( O# C($ANG AND &(ERE + E (ELD LIA LE. R$LING O# &(E CO$R&5 +E". IN"$RANCE CON&RAC&" ARE A(OLL+ %RE%ARED

#AC&"5 %RI)A&E RE"%ONDEN& "%O$"E" &RINIDAD %$RC(A"ED AN I"$'$ GEMINI CAR ON IN"&ALLMEN&" #ROM A$&OAORLD "ALE" COR%ORA&ION. &O "EC$RE %A+MEN&, &RINIDAD" EFEC$&ED A %ROMI""OR+ NO&E AND A DEED O# C(A&&EL MOR&GAGE IN #A)O$R O# A$&OAORLD. &(E LA&&ER A""IGNED I&" IN&ERE"& &O #ILIN)E"&, A #AC& !NOAN &O &RINIDAD". &($", &RINIDAD" I""$ED %O"&DA&ED C(EC!" &O #$LL+ %A+ &(E CAR IN #A)O$R O# #ILIN)E"&. #ILIN)E"& A""IGNED ALL I&" RIG(&" IN #A)O$R O# "ER)ICEAIDE A(O DEMANDED %A+MEN& #ROM &RINIDAD". A(EN &(E LA&&ER RE#$"ED &O %A+, "ER)ICEAIDE #ILED AI&( &(E M$NICI%AL &RIAL CO$R& AN AC&ION #OR RE%LE)IN AND DAMAGE". M&C R$LED IN #A)OR O# "ER)ICEAIDE. R&C RE)ER"ED &(E DECI"ION. CA A##IRMED &(E DECI"ION O# &(E R&C. (ENCE, &(I" %E&I&ION. ARG$MEN&"5 %E&I&IONER CON&END" &(A& &(E MA&&ER A O$& &(E NO&ICE I" DEEMED
AAI)ED + %RI)A&E RE"%ONDEN&" ECA$"E &(E CAR "(O$LD E #$LL+ CO)ERED A& ALL &IME". %E&I&IONER CLAIM" &(A& I#, A" "&A&ED IN &(E C(A&&EL MOR&GAGE, %RI)A&E RE"%ONDEN&" #AILED &O RENEA &(E IN"$RANCE, %E&I&IONER I" EN&I&LED &O RENEA &(E "AME #OR &(E ACCO$N& O# %RI)A&E RE"%ONDEN&" AI&(O$& AN+ NO&ICE &O &(EM.

+ &(E IN"$RER AI&( )A"& AMO$N&" O# EF%ERIENCE IN &(E IND$"&R+ %$R%O"E#$LL+ $"ED &O I&" AD)AN&AGE. MORE O#&EN &(AN NO&, IN"$RANCE CON&RAC&" ARE CON&RAC&" O# AD(E"ION CON&AINING &EC(NICAL &ERM" AND CONDI&ION" O# &(E IND$"&R+, CON#$"ING I# A& ALL $NDER"&ANDA LE &O LA+%ER"ON", &(A& ARE IM%O"ED ON &(O"E A(O AI"( &O A)AIL O# IN"$RANCE. A" "$C(, IN"$RANCE CON&RAC&" ARE IM $ED AI&( %$ LIC IN&ERE"& &(A& M$"& E CON"IDERED A(ENE)ER &(E RIG(&" AND O LIGA&ION" O# &(E IN"$RER AND &(E IN"$RED ARE &O E DELINEA&ED. (ENCE, IN ORDER &O %RO&EC& &(E IN&ERE"& O# IN"$RANCE A%%LICAN&", IN"$RANCE COM%ANIE" M$"& E O LIGA&ED &O AC& AI&( (A"&E $%ON IN"$RANCE A%%LICA&ION", &O EI&(ER DEN+ OR A%%RO)E &(E "AME, OR O&(ERAI"E E O$ND &O (ONOR &(E A%%LICA&ION A" A )ALID, INDING, AND E##EC&I)E IN"$RANCE CON&RAC&.

I""$E5 A(E&(ER OR NO& %E&I&IONER "(O$LD (A)E A%%LIED &(E IN"&ALLMEN&

%A+MEN&" MADE + %RI)A&E RE"%ONDEN&" #OR &(E %A+MEN& O# &(E CAR &O &(E %A+MEN& O# &(E IN"$RANCE %REMI$M" AI&(O$& %RIOR NO&ICE &O %RI)A&E RE"%ONDEN&".

&($", &(E MERE INAC&ION O# &(E IN"$RER DOE" NO& &ERMINA&E &(E CON&RAC&. (A)ING %RO)ED &(A& %(ILAMLI#E RECEI)ED &(E LE&&ER %RIOR
&O &(E DEA&( AND #AIL$RE ON &(E %AR& O# &(E LA&&ER &O %ROD$CE E)IDENCE AGAIN"& I&, %(ILAMLI#E I" DEEMED &O (A)E RECEI)ED &(E A%%LICA&ION. #IELDMENG" IN"$RANCE CO. )". )DA DE "ONGCO G.R. NO. .-3,, "E%&EM ER .,, 123=

R$LING O# &(E CO$R&5 NO. A(ILE I& I" &R$E &(A& &(E C(A&&EL MOR&GAGE DOE" NO& "A+ &(A&
NO&ICE &O &(E MOR&GAGOR O# &(E RENEAAL O# &(E IN"$RANCE %REMI$M + &(E MOR&GAGEE I" NECE""AR+, A& &(E "AME &IME, &(ERE I" NO %RO)I"ION &(A& A$&(ORI'E" %E&I&IONER &O A%%L+ &(E %A+MEN&" MADE &O I& #OR &(E %A+MEN& O# &(E C(A&&EL &O &(E %A+MEN& O# &(E "AID %REMI$M". #ROM &(E RECORD" O# &(E CA"E, I& I" CLEAR &(A& %RI)A&E RE"%ONDEN&" (AD #$LL+ %AID #OR &(E CAR. &(I" #AC& AA" NE)ER RE $&&ED + %E&I&IONER. %E&I&IONER A" MOR&GAGEE AA" NO& D$&+O$ND &O RENEA &(E IN"$RANCE IN &(E E)EN& &(A& %RI)A&E RE"%ONDEN&" #AILED &O DO "OH I& AA" MEREL+ O%&IONAL ON I&" %AR&.

#AC&"5 #EDERICO "ONGCO, OANER O# A %RI)A&E :EE%NE+, AA" IND$CED + &(E AGEN& O# #IELDMENG" IN"$RANCE CO. &O A%%L+ #OR A COMMON CARRIERG" IN"$RANCE %OLIC+ A(IC( AA" LA&ER RENEAED. D$RING &(E E##EC&I)I&+ O# &(E RENEAED %OLIC+, &(E :EE%NE+ COLLIDED AI&( A CAR RE"$L&ING DEA&( &O #EDERICO AND (I" "ON. NOA, &(E "$R)I)ING "%O$"E O# #EDERICO "EE!" RELIE# &O #IELDMENG". &(E COM%AN+ RE#$"ED &O %A+. ARG$MEN&"5 &(E AGEN& O# #IELDMENG" CON&END" &(A& "INCE &(E+ ARE NO& GO)ERNMEN&-OANED, &(E+ CO$LD DO A(A& &(E+ %LEA"E A(ENE)ER &(E+ ELIE)E A )E(ICLE I" IN"$RA LE. "ONGCO, ON &(E O&(ER (AND, A""ER&" &(A& &(E+ "(O$LD E EN&I&LED #OR &(E %A+MEN&. I""$E5 A(E&(ER OR NO& #IELDMENG" "(O$LD E (ELD LIA LE. R$LING O# &(E CO$R&5 +E". I& I" A AELL-"E&&LED :$RI"%R$DENCE &(A& A(ERE INE*$I&A LE COND$C& I" "(OAN + AN IN"$RANCE #IRM, I& I" EE"&O%%ED #ROM EN#ORCING #OR#EI&$RE" IN I&" #A)OR, IN ORDER &O #ORE"&ALL #RA$D OR IM%O"I&ION ON &(E IN"$RED.E A" E"&O%%EL I" %RIMARIL+ A"ED ON &(E DOC&RINE O#
GOOD #AI&( AND &(E A)OIDANCE O# (ARM &(A& AILL E#ALL &(E INNOCEN& %AR&+ D$E &O I&" IN:$RIO$" RELIANCE, &(E #AIL$RE &O A%%L+ I& IN &(I" CA"E AO$LD RE"$L& IN A GRO"" &RA)E"&+ O# :$"&ICE.

A" &O &(E A&&ORNE+G" #EE", AR&ICLE ../3 O# &(E CI)IL CODE ALLOA" A&&ORNE+C" #EE" &O E AAARDED + A CO$R& A(EN I&" CLAIMAN& I"
COM%ELLED &O LI&IGA&E AI&( &(IRD %ER"ON" OR &O INC$R EF%EN"E" &O %RO&EC& (I" IN&ERE"& + REA"ON O# AN $N:$"&I#IED AC& OR OMI""ION ON &(E %AR& O# &(E %AR&+ #ROM A(OM I& I" "O$G(&. &O E "$RE, %RI)A&E RE"%ONDEN&" AERE #ORCED &O LI&IGA&E &O %RO&EC& &(EIR RIG(&" $& A" AE (A)E %RE)IO$"L+ (ELD5 EA(ERE NO "$##ICIEN& "(OAING O# AD #AI&( AO$LD E RE#LEC&ED IN A %AR&+C" %ER"I"&ENCE IN A CA"E O&(ER &(AN AN ERRONEO$" CON)IC&ION O# &(E RIG(&EO$"NE"" O# (I" CA$"E, A&&ORNE+C" #EE "(ALL NO& E RECO)ERED A" CO"&.E

A"IAN &ERMINAL", INC., )". MALA+AN IN"$RANCE CO. G.R. NO. 181-/= A%RIL -, ./11 #AC&"5 &(E "(I%MEN& O# "(ANDONG AEI#ANG "ODA A"( %LAN& AA" IN"$RED AI&( RE"%ONDEN& MALA+AN IN"$RANCE COM%AN+ >MALA+AN@. D$E &O &(E $NLOADING DONE + &(E "&E)EDORE" O# %E&I&IONER A"IAN &ERMINAL", INC., >A&I@, A &O&AL O# .,331 AG" AERE IN AD ORDER CONDI&ION D$E &O "%ILLAGE, CA!ING, AND (ARDENING O# &(E CON&EN&". MALA+AN, A" IN"$RER, %AID &(E )AL$E O# &(E LO"&D DAMAGED CARGOE" &O &(E CON"IGNEE (OAE)ER A"!" #OR REIM $R"EMEN& &O A&I. ARG$MEN&"5 A&I CON&END" &(A& RE"%ONDEN& (A" NO CA$"E O# AC&ION ECA$"E I&
#AILED &O %RE"EN& &(E IN"$RANCE CON&RAC& OR %OLIC+ CO)ERING &(E "$ :EC& "(I%MEN&. &($", %E&I&IONER "$ MI&" &(A& AI&(O$& %ROO# O# A )ALID "$ ROGA&ION, RE"%ONDEN& I" NO& EN&I&LED &O AN+ REIM $R"EMEN&.

A" "&A&ED IN *$A C(EE GAN CA"E, &(E CON&RAC& O# IN"$RANCE I" ONE O# %ER#EC& GOOD #AI&( >UB !I"# $I% &@ NO& #OR &(E IN"$RED ALONE, $& E*$ALL+ "O #OR &(E IN"$RERH IN #AC&, I& I" MORE "O #OR &(E LA&&ER, "INCE I&" DOMINAN& ARGAINING %O"I&ION CARRIE" AI&( I& "&RIC&ER RE"%ON"I ILI&+. &(I" I" MEREL+ &O "&RE"" &(A& A(ILE &(E
MORALI&+ O# &(E $"INE"" AORLD I" NO& &(E MORALI&+ O# IN"&I&$&ION" O# REC&I&$DE LI!E &(E %$L%I& AND &(E ACADEME, I& CANNO& DE"CEND "O LOA A" &O E ANO&(ER NAME #OR G$ILE OR DECE%&ION. MOREO)ER, "(O$LD I& (A%%EN &($", NO CO$R& O# :$"&ICE "(O$LD ALLOA I&"EL# &O LEND I&" A%%RO)AL AND "$%%OR&.

MALA+AN, ON &(E O&(ER (AND, ARG$E" &(A& $NDER %RE)AILING :$RI"%R$DENCE, %RE"EN&A&ION O# &(E IN"$RANCE %OLIC+ I" NO& INDI"%EN"A LE. RE"%ONDEN& #$R&(ER A)ER" &(A& E&(E RIG(& O# "$ ROGA&ION (A" I&" ROO&" IN E*$I&+ - I& I" DE"IGNED &O %ROMO&E AND
&O ACCOM%LI"( :$"&ICE AND I" &(E MODE A(IC( E*$I&+ ADO%&" &O COM%EL &(E $L&IMA&E %A+MEN& O# A DE & + ONE A(O IN :$"&ICE, E*$I&+ AND GOOD CON"CIENCE O$G(& &O %A+.E

"ER)ICEAIDE "%ECIALI"& )" CO$R& O# A%%EAL" G.R. NO. 11/928 MA+ 3, 122=

I""$E5 A(E&(ER OR NO& MALA+AN (A" A RIG(& O# RELIE# AGAIN"& A&I. R$LING5 +E". Fon=presentation of the insurance contract or polic% is not necessaril% fatal. ,he su rogation receipt, % itself, is sufficient to esta lish not onl% the relationship of insurer and the assured shipper of the lost cargo, ut also the amount paid to settle the insurance claim. ,he right of su rogation accrues simpl% upon pa%ment % the insurance compan% of the insurance claim. Since there was no issue regarding the validit% of the insurance contract or polic%, or an% provision thereof, respondent had no reason to present the insurance contract or polic% as evidence during the trial. &(E MAN$#AC&$RER" LI#E IN"$RANCE CO vs. I IANO L. MEER, in the 4apa4ity as Colle4tor o< Internal Revenue #AC&"5 -anufacturer Life "nsurance Compan% is a corporation dul% organized in Canada with head office at ,oronto. "t is dul% registered and licensed to engage in life insurance usiness in the )hilippines, and maintains a ranch office in -anila. "t was engaged in such usiness in the )hilippines for more than five %ears efore and including the %ear 19'1. But due to the e4igencies of the war it closed the ranch office at -anila during 19'* up to Septem er 19'#. "n the course of its operations efore the war, plaintiff issued a num er of life insurance policies in the )hilippines containing stipulations referred to as non=forfeiture clauses. Since the insured failed to pa% from 19'* to 19'6, the compan% applied the provision of the automatic premium loan clauses8 and the net amount of premiums so advanced or loaned totaled )1,&69,*#'.9A. (n this sum the defendant Collector of "nternal /evenue assessed )1?,91?.1*. ,he assessment was made pursuant to section *## of the F"/C which put ta4es on insurance premiums paid % mone%, notes, credits or an% su stitutes for mone%.

1. MA person secures a *&=%ears endowment polic% for )#,&&& from -anufacturers and pa%s an annual premium of )*#&. 2e pa%s the first ten %earl% premiums amounting to )*,#&& and on this amount plaintiff= appellant pa%s the ta4es. Also, the cash value of said polic% after the pa%ment of the 1&th annual premium amounts to )1,&&&.5 9hen on the eleventh %ear the annual premium fell due and the insured remitted no mone% within the grace period, the insurer treated the premium then overdue as paid from the cash value, the amount eing loan to the polic%holder who could discharge it at an%time with interest at 6 per cent. ,he insurance contract, therefore, continued in force for the eleventh %ear.N +nder the circumstances descri ed, did the insurer collect the amount of )*#& as the annual premium for the eleventh %ear on the said polic%Q "n effect the -anufacturers Life "nsurance Co. loaned to the person )*#& and the latter in turn paid with that sum the annual premium on his polic%. ,he Compan% therefore collected the premium for the eleventh %ear. 52ow could there e such a collection when insurer ecomes a creditor, ac1uires a lien on the polic% and is entitled to collect interest on the amount of the unpaid premiumsQ5. 9ittingl%, the 5premium5 and the 5loan5 have een interchanged in the argument. ,he insurer 5 ecame a creditor5 of the loan, ut not of the

premium that had alread% een paid. And it is entitled to collect interest on the loan, not on the premium. ,he insured paid the premium for the eleventh8 ut in turn he ecame a de tor of the compan% for the sum of )*#&. ,his de t he could repa% either % later remitting the mone% to the insurer or % letting the cash value compensate for it. ,he de t ma% also e deducted from the

amount of the polic% should he die thereafter during the continuance of -anufacturer contended that when it made premium loans or premium advances % virtue of the non=forfeiture clauses, it did not the polic%. ,here was new credit for the advances made. ,rue, the compan% could not sue the insured to enforce that credit. But it has means of satisfaction out of the cash surrender value. 2ere again it ma% e urged that if the credit is paid out of the cash

collect premiums within the meaning of the a ove sections of the law, and therefore it is not amenda le to the ta4 provided.

I""$ED"5 6a7 9hether or not premium advances made % plaintiff= appellant under the automatic premium loan clause of its policies are 5premium collected5 % the Compan% su ject to ta4 6 7 9hether or not, in the application of the automatic premium loan clause of plaintiff=appellant:s policies, there is 5pa%ment in mone%, notes, credit, or an% su stitutes for mone%

surrender value, there were no new funds added to the compan%:s assets. Cash surrender value 5as applied to life insurance polic%, is the amount of mone% the compan% agrees to pa% to the holder of the polic% if he surrenders it and releases his claims upon it. ,he more premiums the insured has paid the greater will e the surrender value8 ut the

surrender value is alwa%s a lesser sum than the total amount of R$LING O# &(E CO$R&5
O&( IN A##IRMA&I)E.

premiums paid.5 ,he cash value or cash surrender value is therefore an amount which the insurance compan% holds in trust for the insured to e delivered to + CI&ING AN IN"&ANCE5

RA&IONALE O# &(E CO$R&

him upon demand. "t is therefore a lia ilit% of the compan% to the insured.

Fow then, when the compan%:s credit for advances is paid out of the cash value or cash surrender value, that value and the compan%:s lia ilit% is there % dismissed. Conse1uentl%, the net assets of the insurance compan% increase.

insurance applies or in an% uilding communicating therewith, provided, alwa%s, however, that the "nsured e permitted to stored a small 1uantit% of the hazardous goods specified elow, ut not e4ceeding in all . per cent of the total value of the whole of the goods or merchandise contained in said warehouse, viz8 . . . . Also, the court stated a oo! that said, 5an% e4press warrant% or ut, li!e an% other part of an

*.

,he insurer agreed to consider the premium paid on the strength of the automatic loan. ,he premium was paid %

condition is alwa%s a part of the polic%,

e4press contract, ma% e written in the margin, or contained in proposals or documents e4pressl% referred to in the polic%, and so made a part of it.5 M"t is well settled that a rider attached to a polic% is a part of the contract, to the same e4tent and with li!e effect as it actuall% em odied therein. "n the second place, it is e1uall% well settled that an e4press

means of a 5note5 or 5credit5 or 5other su stitute for mone%5 and the ta4es due ecause section *## a ove 1uoted levies ta4es according to the total premiums collected % the insurer 5whether such premiums are paid in mone%, notes, credits or an% su stitutes for mone%.

ANG GIO! C(I%, vs. "%RING#IELD #IRE 7 MARINE IN"$RANCE COM%AN+

warrant% must appear upon the face of the polic%, or

e clearl%

incorporated therein and made a part thereof % e4plicit reference, or % words clearl% evidencing such intention.N

#AC&"5 Ang Kio! Chip doing usiness under the name and st%le of 2ua Bee Hong Si was formerl% the owner of a warehouse situated at Fo. 6'. Calle /eina /egente, Cit% of -anila. ,he contents of the warehouse were insured with the three insurance companies for the total sum of )6&,&&&. (ne insurance polic%, in the amount of )1&,&&&, was ta!en out with the Springfield 3ire @ -arine "nsurance Compan%. ,he warehouse was destro%ed % fire on $anuar% 11, 19*A, while the polic% issued % the latter compan% was in force. ,he insurance compan% interposed its defense on a rider in the polic% in the form of 9arrant% 3, fi4ing the amount of hazardous good that can e stored in a uilding to e covered % the insurance. ,he% claimed that Ang violated the . percent limit % placing hazardous goods to as high as .9 percent of all the goods stored in the uilding. 2is suit to recover was granted % the trial court. """$E5 9hether a warrant% referred to in the polic% as forming part of the contract of insurance and in the form of a rider to the insurance polic%, is null and void ecause not compl%ing with the )hilippine "nsurance Act R$LING O# &(E CO$R& ,he "nsurance Act, Section 6#, ta!en from California law, statesC 50ver% e4press warrant%, made at or efore the e4ecution of a polic%,

,he court concluded that 9arrant% 3 is contained in the polic% itself, ecause % the contract of insurance agreed to % the parties it was made to e a part. "t wasnPt a separate instrument agreed to % the parties. ,he receipt of the polic% % the insured without o jection inds him. "t was his dut% to read the polic% and !now its terms. 2e also never chose to accept a different polic% % considering the earlier one as a mista!e. %IONEER IN"$RANCE AND "$RE&+ COR%ORA&ION vs. OLI)A +A%

3AC,SC /espondent (liva <ap was the owner of a store in a two=store% uilding located at Fo. A#6 $uan Luna Street, -anila, where in 196* she sold shopping ags and footwear, such as shoes, sandals and step=ins. Chua Soon )oon (liva <ap:s son=in=law, was in charge of the store. <ap too! out a 3ire "nsurance )olic% Fo. '*16 from )ioneer "nsurance with a value of )*#,&&&.&& covering her stoc!s, office furniture, fi4tures and fittings. Among the conditions in the polic% e4ecuted followingC unless such notice e given and the particulars of such insurance or % the parties are the

must e contained in the polic% itself, or in another instrument signed % the insured and referred to in the polic%, as ma!ing a part of it.5 9arrant% 3, indemnif%ing for a value of )hp *&,&&& and pasted on the left margin of the polic% statedC "t is here % declared and agreed that during the currenc% of this polic% no hazardous goods e stored in the Building to which this

insurances e stated in, or endorsed on this )olic% % or on ehalf of the Compan% efore the occurrence of an% loss or damage, all enefits

under this )olic% shall e forfeitedS An% false declaration or reach or this condition will render this polic% null and void.

Another insurance polic% for )*&,&&&.&& issued

% Kreat

"n 196#, $aco S. Lim was engaged in the airline usiness as owner=operator of Southern Air Lines 6SAL7 a single proprietorship. (n -a% 1?, 196#, at ,o!%o, $apan, $apan ;omestic Airlines 6$;A7 and Lim entered into and e4ecuted a sales contract 604hi it A7 for the sale and purchase of two 6*7 ;C=.A ,%pe aircrafts and one 617 set of necessar% spare parts for the total agreed price of +S T1&9,&&&.&& to e paid in installments. (ne ;C=. Aircraft with /egistr% Fo. )"C=?1A, arrived in -anila on $une ?,196# while the other aircraft, arrived in -anila on $ul% 1A,196#. (n -a% **, 196#, )ioneer "nsurance and Suret% Corporation 6)ioneer, petitioner in K./. Fo. A'19?7 as suret% e4ecuted and issued its Suret% Bond Fo. 66.9 604hi it C7 in favor of $;A, in ehalf of its principal, Lim, for the alance price of the aircrafts and spare parts. (n $une 1&, 196#, Lim doing usiness under the name and

American covering the same properties. ,he endorsement recognized co=insurance % Forthwest for the same value. (liva <ap too! out another fire insurance polic% for )*&,&&&.&& covering the same properties from the 3ederal "nsurance Compan%, "nc., which was procured without notice to and the written consent of )ioneer. A fire ro!e out in the uilding, and the store was urned. <ap filed an insurance claim, ut the same was denied for a reach. (liva <ap filed a case for pa%ment of the face value of her fire insurance polic%. ,he insurance compan% refused to pa% ecause she never

st%le of SAL e4ecuted in favor of )ioneer as deed of chattel mortgage as securit% for the latter:s suret%ship in favor of the former. "t was stipulated therein that Lim transfer and conve% to the suret% the two aircrafts. ,he deed 604hi it ;7 was dul% registered with the (ffice of the /egister of ;eeds of the Cit% of -anila and with the Civil Aeronautics Administration

informed )ioneer of another insurer. ,he trial court decided in favor of <ap. ,he CA affirmed.

"SS+0C 9hether or not petitioner should e a solved from lia ilit% on 3ire "nsurance )olic% Fo. '*19 on account of an% violation % respondent <ap of the co=insurance clause therein. /+L"FK (3 ,20 C(+/,C ,here was a violation % respondent (liva <ap of the co= insurance clause contained in )olic% Fo. '*19 that resulted in the avoidance of petitioner:s lia ilit%. ,he insurance polic% for )*&,&&&.&& issued % the Kreat American, ceased to e recognized % them as a co=insurance polic%.

pursuant to the Chattel -ortgage Law and the Civil Aeronautics Law 6/epu lic Act Fo. ??67, respectivel%. Lim defaulted on his su se1uent installment pa%ments prompting $;A to re1uest pa%ments from the suret%. )ioneer paid a total sum of )*9A,6*6.1*.

)ioneer then filed a petition for the e4trajudicial foreclosure of the said chattel mortgage efore the Sheriff of ;avao Cit%. ,he Cervanteses and -aglana, however, filed a third part% claim alleging that the% are co=owners of the aircrafts, (n $ul% 19, 1966, )ioneer filed an action for judicial foreclosure with an application for a writ of preliminar% attachment against Lim and respondents, the Cervanteses, Bormaheco and -aglana.

,he endorsement shows the clear intention of the parties to recognize on the date the endorsement was made, the e4istence of onl% one co=insurance, the Forthwest one. ,he finding of the Court of Appeals that the Kreat American "nsurance polic% was su stituted % the 3ederal "nsurance polic% is indeed contrar% to said stipulation. (ther insurance without the consent of )ioneer would avoid the contract. "t re1uired no affirmative act of election on the part of the compan% to ma!e operative the clause avoiding the contract, wherever the specified conditions should occur. "ts o ligations ceased, unless, eing informed of the fact, it consented to the additional insurance. %IONEER vs. &(E (ON. CO$R& O# A%%EAL", ORDER MAC(INER+ 7 (EA)+ IN"$RANCE 7 "$RE&+ COR%ORA&ION

"n their Answers, -aglana, Bormaheco and the Cervanteses filed cross=claims against Lim alleging that the% were not privies to the contracts signed % Lim and, % wa% of counterclaim, sought for damages for eing e4posed to litigation and for recover% of the sums of mone% the% advanced to Lim for the purchase of the aircrafts in 1uestion. After trial on the merits, a decision was rendered holding Lim lia le to pa% )ioneer ut dismissed )ioneer:s complaint against all other defendants. ,he appellate court modified the trial court:s decision in that the plaintiffs complaint against all the defendants was dismissed

I""$E5 9hether or not )ioneer is the real part% in interest with regard to the portion of the indemnit% paid.

R$LING O# &(E CO$R&5

E*$I%MEN&, INC., > ORMA(ECO@, CON"&ANCIO M. MAGLANA and :ACO ". LIM #AC&"5

,he real part% in interest with regard to the portion of the indemnit% paid is the insurer and not the insured. )etitioner was not the real part% in interest in the complaint therefore has no cause of action against the respondents.

"nterpreting the aforesaid provision, we ruled in the case of (hil. Air !ines, Inc. v. &eald !umber Co . 61&1 )hil. 1&.1 I19#?J7 which we su se1uentl% applied in 0anila 0ahogany 0anufacturing Corporation v. Court of Appeals61#' SC/A 6#& I19A?J7C

Fote that if a propert% is insured and the owner receives the indemnit% from the insurer, it is provided in said article that the insurer is deemed su rogated to the rights of the insured against the wrongdoer and if the amount paid % the insurer does not full% cover the loss, then the aggrieved part% is the one entitled to recover the deficienc%. 'vidently, under this legal provision, the real party in interest with regard to the portion of the indemnity paid is the insurer and not the insured.

"t is clear from the records that )ioneer sued in its own name and not as an attorne%=in=fact of the reinsurer.

freightage, or upon an%thing which is the su ject of marine insurance, a warrant% is implied that the ship is seaworth%.5 +nder Sec. 11', a ship is 5seaworth% when reasona l% fit to perform the service, and to encounter the ordinar% perils of the vo%age, contemplated % the parties to the polic%.5 ,hus it ecomes the o ligation of the cargo owner to loo! for a relia le common carrier which !eeps its vessels in seaworth% condition. 2e ma% have no control over the vessel ut he has full control in the selection of the common carrier that will transport his goods. 2e also has full discretion in the choice of assurer that will underwrite a particular venture. ,he marine polic% issued % )2"LA-K0F to the Coca=Cola ottling firm in at least two 6*7 instances has dispensed with the usual warrant% of worthiness. )aragraph 1# of the -arine (pen )olic% Fo. 1&&.6?=)AK reads 56t7he li erties as per Contract of Affreightment the presence of the Fegligence Clause andDor Latent ;efect Clause in the Bill of Lading andDor Charter )art% andDor Contract of Affreightment as etween the Assured and the Compan% shall not prejudice the insurance. ,he seaworthiness of the vessel as etween the Assured and the Assurers is here % admitted.5 19 2aving disposed of this matter, we move on to the legal asis for su rogation. )2"LA-K0F:s action against 30L-AF is s1uarel% sanctioned % Art. **&? of the Civil Code which providesC Art. **&?. "f the plaintiff:s propert% has een insured, and he has received indemnit% from the insurance compan% for the injur% or loss arising out of the wrong or reach of contract complained of, the insurance compan% shall e su rogated to the rights of the insured against the wrongdoer or the person who has violated the contract. "f the amount paid % the insurance compan% does not full% cover the injur% or loss, the aggrieved part% shall e entitled to recover the deficienc% from the person causing the loss or injur%. ,he doctrine of su rogation has its roots in e1uit%. "t is designed to promote and to accomplish justice and is the mode which e1uit% adopts to compel the ultimate pa%ment of a de t % one who in justice, e1uit% and good conscience ought to pa%. 12 ,herefore, the pa%ment made % )2"LA-K0F to Coca=Cola Bottlers )hilippines, "nc., gave the former the right to ring an action as su rogee against 30L-AF. 2aving failed to re ut the presumption of fault, the lia ilit% of 30L-AF for the loss of the ?,#&& cases of 1=liter Coca=Cola soft drin! ottles is inevita le. Case &itleC Co00issioner vs. Lin4oln Case Nu0ber5 G.R. No. 11218= Mar4h 12, .//.

Case titleC )hilippine American Keneral "nsurance vs. 3elman Shipping Lines Case nu0berC K/ 1169'&. $une 11, 199? #a4ts5 Coca=Cola Bottlers )hilippines, "nc., loaded on oard 501 Asilda,5 a vessel owned and operated % respondent 3elman Shipping Lines 630L-AF for revit%7, ?,#&& cases of 1=liter Coca=Cola soft drin! ottles to e transported from Oam oanga Cit% to Ce u Cit% for consignee Coca=Cola Bottlers )hilippines, "nc., Ce u. 1 ,he shipment was insured with petitioner )hilippine American Keneral "nsurance Co., "nc. 6)2"LA-K0F for revit%7, under -arine (pen )olic% Fo. 1&&.6?=)AK. 501 Asilda5 left the port of Oam oanga in fine weather at eight o:cloc! in the evening of the same da%. At around eight fort%=five the following morning, the vessel san! in the waters of Oam oanga del Forte ringing down her entire cargo with her including the su ject ?,#&& cases of 1= liter Coca=Cola soft drin! ottles. ,he consignee Coca=Cola Bottlers )hilippines, "nc., Ce u plant, filed a claim with respondent 30L-AF. /espondent denied the claim thus prompting the consignee to file an insurance claim with )2"LA-K0F.Claiming its right of su rogation )2"LA-K0F sought recourse against respondent 30L-AF which disclaimed an% lia ilit% for the loss. Conse1uentl%, )2"LA-K0F sued the ship owner. Ar6u0entsC "n its complaint )2"LA-K0F alleged that the sin!ing and total loss of 501 Asilda5 and its cargo were due to the vessel:s unseaworthiness as she was put to sea in an unsta le condition. "t further alleged that the vessel was improperl% manned and that its officers were grossl% negligent in failing to ta!e appropriate measures to proceed to a near % port or each after the vessel started to list.30L-AF filed a motion to dismiss ased on the affirmative defense that no right of su rogation in favor of )2"LA-K0F was transmitted % the shipper, and that, in an% event, 30L-AF had a andoned all its rights, interests and ownership over 501 Asilda5 together with her freight and appurtenances for the purpose of limiting and e4tinguishing its lia ilit% under Art. #A? of the Code of Commerce. . Issue5 9(F)2"LA-K0F was properl% su rogated to the rights and legal actions which the shipper had against 30L-AF, the ship=owner.

Rulin6 o< the Court5 ,he court ruled in favor of )2"LA-K0F.

#a4ts5 )rivate respondent Lincoln )hilippine Life "nsurance Co., "nc., 6now $ardine=C-A Life "nsurance Compan%, "nc.7 is a domestic corporation registered with the Securities and 04change Commission and engaged in life insurance usiness. "n the %ears prior to 19A', private respondent issued a special !ind of life insurance polic% !nown as the 5$unior 0state Builder )olic%,5 the distinguishing feature of which is a clause providing for an automatic increase in the amount of life insurance coverage upon attainment of a certain age % the insured without the need of issuing a new polic%. ,he clause was to ta!e effect in the %ear 19A'. ;ocumentar% stamp ta4es due on the polic% were paid % petitioner onl% on the initial sum assured. ;ocumentar% stamp ta4es were paid ased onl% on the par value of )#,&&&,&&&.&& and not on the oo! value. Su se1uentl%, petitioner issued deficienc% documentar% stamps ta4 assessment for the %ear 19A' corresponding to the amount of automatic increase of the sum assured on the polic% issued % respondent, and 6corresponding to the oo! value in e4cess of the par value of the stoc! dividends. )rivate

Dis4ussion on ho; the "C ruled the 4aseC

"t is generall% held that in ever% marine insurance polic% the assured impliedl% warrants to the assurer that the vessel is seaworth% and such warrant% is as much a term of the contract as if e4pressl% written on the face of the polic%. 1. ,hus Sec. 11. of the "nsurance Code provides that 56i7n ever% marine insurance upon a ship or freight, or

respondent 1uestioned the deficienc% assessments and sought their cancellation in a petition filed in the Court of ,a4 Ar6u0ent5 )etitioner claims that the 5automatic increase clause5 in the su ject insurance polic% is separate and distinct from the main agreement and involves another transaction8 and that, while no new polic% was issued, the original polic% was essentiall% re=issued when the additional o ligation was assumed upon the effectivit% of this 5automatic increase clause5 in 19A'8 hence, a deficienc% assessment ased on the additional insurance not covered in the main polic% is in order.

Issue5 ,20 2(F(/ABL0 C(+/, (3 A))0ALS 0//0; 920F ", /+L0; ,2A, ,20/0 "S A S"FKL0 AK/00-0F, 0-B(;"0; "F ,20 )(L"C< AF; ,2A, ,20 A+,(-A,"C "FC/0AS0 CLA+S0 "S F(, A S0)A/A,0 AK/00-0F,, C(F,/A/< ,( S0C,"(F '9 (3 ,20 "FS+/AFC0 C(;0 AF; S0C,"(F 1A. (3 ,20 /0>0F+0 C(;0 ,2A, A /";0/, A CLA+S0 "S )A/, (3 ,20 )(L"C<. Rulin65 ,he petition is impressed with merit. Dis4ussion on ho; the "C ruled the 4aseC ,he su ject insurance polic% at the time it was issued contained an 5automatic increase clause.5 Although the clause was to ta!e effect onl% in 19A', it was written into the polic% at the time of its issuance. ,he distinctive feature of the 5junior estate uilder polic%5 called the 5automatic increase clause5 alread% formed part and parcel of the insurance contract, hence, there was no need for an e4ecution of a separate agreement for the increase in the coverage that too! effect in 19A' when the assured reached a certain age. 2ere, although the automatic increase in the amount of life insurance coverage was to ta!e effect later on, the date of its effectivit%, as well as the amount of the increase, was alread% definite at the time of the issuance of the polic%. ,hus, the amount insured % the polic% at the time of its issuance necessaril% included the additional sum covered % the automatic increase clause ecause it was alread% determina le at the time the transaction was entered into and formed part of the polic%. ,he 5automatic increase clause5 in the polic% is in the nature of a conditional o ligation under Article 11A1, A % which the increase of the insurance coverage shall depend upon the happening of the event which constitutes the o ligation. "n the instant case, the additional insurance that too! effect in 19A' was an o ligation su ject to a suspensive o ligation,9 ut still a part of the insurance sold to which private respondent was lia le for the pa%ment of the documentar% stamp ta4. ,he deficienc% of documentar% stamp ta4 imposed on private respondent is definitel% not on the amount of the original insurance coverage, ut on the increase of the amount insured upon the effectivit% of the 5$unior 0state Builder )olic%.5 Case & it le5 & ibay vs . Cou rt o< Appea ls

(n ** $anuar % 19A?, 3or tune Li fe and Kenera l "n surance Co., "n c. 63or tune7 issued 3ire "nsuran ce )olic% 1.61?1 in favor of >ioleta /. ,i a% andDor Ficolas /oraldo on their two= store% residential uilding located at #A## Oo el Street, -a!ati Cit%, together with all their personal effects therein. ,he insurance was for )6&&, &&&.&& covering the period from *. $anuar% 19A? to *. $anuar% 19AA. (n *. $anuar% 19A?, of the total premium of )*,9A..#&, petitioner >ioleta ,i a% onl% paid )6&&.&& thus leaving a considera le alance unpaid. (n A -arch 19A? the insured uild ing was comple tel % destro%ed % fi re. ,wo da%s later >ioleta ,i a% paid the alance of the premium. (n the same da%, she filed with 3ortune a claim on the fire insurance polic%. 2er claim was accordingl% referred to its adjuster, Koodwill Adjustment Services,"nc. 6KAS"7, which immediatel% wrote >ioleta re1uesting her to furnish it with the necessar% documents for the investigation and processing of her claim. )etitioner forthwith complied. (n *A -arch 19A? she signed a non=waiver agreement with KAS" to the effect that an% action ta!en % the companies or their representatives in investigating the claim made % the claimant for his loss which occurred at #A## Oo el /o4as, -a!ati on A-arch 19A?, or in the investigating or ascertainment of the amount of actual cash value and loss, shall not waive or invalidate an% condition of the policies of such companies held % said claimant, nor the rights of either or an% of the parties to this agreement, and such action shall not e, or e claimed to e, an admission of lia ilit% on the part of said companies or an% of them. "n a letter 3ortune denied the claim of >ioleta for violation of )olic% Condition * and of Section ?? of the "nsurance Code. 0fforts to settle the case efore the "nsurance Commission proved futile. >ioleta and the other petitioners6 Antonio ,i a %, (felia - . /oraldo, >ictor ina - . /oraldo, >irgi lio -. /oraldo, - %rna - . /oraldo, and /osa ella - . /ora ldo7 sued 3or tune for damages in the amoun t of the tota l coverage of the fire insurance polic% plus 1*G inter est per annum, )1&&,&&&.&& moral damages, and attorne%:s fees e1uivalent to *&G of the total claim

Ar6u0ent5 )etitioners maintain otherwise. "nsisting that 3(/,+F0 is lia le on the polic% despite partial pa%ment of the premium due and the e4press stipulation thereof to the contrar%, petitioners rel% heavil% on the 196? case of (hilippine (hoeni2 and Insurance Co., Inc. v. 3oodwor4s, Inc. 3 where the Court through -r. $ustice Arsenio ). ;izon sustained the ruling of the trial court that partial pa%ment of the premium made the polic% effective during the whole period of the polic%. "n that case, the insurance compan% commenced action against the insured for the unpaid alance on a fire insurance polic%. "n its defense the insured claimed that nonpa%ment of premium produced the cancellation of the insurance contract.

Issue5 9he ther a fire insu rance polic% e valid , inding and enfor cea le upon mere partial pa%men t o f premium..

(eld5

,he SC answered in the negative

Dis4ussion on ho; the "C ruled the 4aseC

Case Nu 0be r5 I GR 112=99 , .- May 122=J

#a4ts5

"nsurance is a contract where % one underta!es for a consideration to indemnif% another against lo ss, damage or lia il it% arising from an un!no wn or contingent event. ,he consideration is the premium , whi ch must e paid at the time and in the wa% and manner specified in the polic%, and if not so paid, the poli c% will lapse and e for fei ted % i ts own terms. ,he )oli c% provide s for pa%ment o f prem ium in ful l. Accordingl%, where the premium has onl% een partiall% paid and the alance paid onl% after the peril insured against has occurred ,

the insuran ce contract did no t ta !e effect and the insured canno t co llect a t all on the polic%. ,his is full% supported % Section ?? of the "nsurance Code which provides that 5An insurer is entitled to pa%ment of the premium as soon as the thi ng insured is e4posed to the peril insured ag a i n s t . Fotw ith standing an% agreemen t to the con trar %, no poli c% or con tra ct o f in surance issued % an insurance compan% is valid and inding unless and until the premium thereof has een paid, e4cept in the case of a life or an industrial life polic% whenever the grace perio d provision applies.5 Apparentl% the cru4 of the con tro vers% lie s in the phra se 5unle ss and un til the premium thereof has een paid .5 ,hi s leads us to the manner of pa%ment envisioned % the law to ma!e the insurance polic% operative and inding. 3or whatever judicial construction ma% e accorded the disputed phrase must ultimatel% %ield to the clear mandate of the law. ,he principle that where the law does not distinguish the court should neither distinguish assumes that the legislature made no 1ualification on the use of a general word or e4pression and it cannot e disputed that premium is the eli4ir vitae of the insurance usiness ecause % law the insurer must maintain a legal reserve fund to meet its contingent o ligations to the pu lic, hence, the imperative need for its prompt pa%ment and full satisfaction. "t must e emphasized here that al l actuarial calculations and various ta ulations of pro a ilities of losses under the ris!s insured against are ased on the sound h%pothesis of prompt pa%ment of premiums. +pon this edroc! insurance firms are ena led to offer the assurance of securit% to the pu lic at favora le ra tes. But once pa%men t of premium is le ft to the whim and cap rice of the insu red, as when the courts tolerate the pa%ment of a mere )6&&.&& as partial underta!ing out of the stipulated total premium of)*,9A..#& and the alance to e paid even after the ris! insured against has occurred, as ,i a% et al. have done in this case, on the principle that the strength of the vinculum juris is not measured % an% specific amount of premium pa%ment, we will surel% wrea! havoc on the usiness and set to naught what has ta!en actuarians centuries to devise to arrive at a fair and e1uita le distri ution of ris!s and enefits etween the insurer and the insured.

ArgumentC

>da Canilang filed a complaint with the "nsurance

Commissioner against Krepalife contending that as far as she !nows her hus and was not suffering from an% disorder and that he died of !idne% disorder. Krepalife was ordered to pa% the widow % the "nsurance

Commissioner holding that there was no intentional concealment on the )art of Canilang and that Krepalife had waived its right to in1uire into the health condition of the applicant % the issuance of the polic% despite the lac! of answers to 5some of the pertinent 1uestions5 in the insurance application. CA reversed.

Issue' 9hether or not Krepalife is lia le. (eld5 (etition lac4 of merit

Dis4ussion on ho; the "C ruled the 4aseC

SC too! note of the fact that Canilang failed to disclose that hat he had twice consulted ;r. 9ilfredo B. Claudio who had found him to suffering from 5sinus tach%cardia5 and 5acute e

ronchitis. +nder the

relevant provisions of the "nsurance Code, the information concealed must e information which the concealing part% !new and 5ought to

IhaveJ communicateIdJ,5 that is to sa%, information which was 5material to the contract. Case &itle5 Canilan6 vs. Great %a4i<i4 Case Nu0ber5 GR No. 2.-2. ,he information which Canilang failed to disclose was material to the $acts' Canilang consulted ;r. Claudio and was diagnosed as suffering from 5sinus tach%cardia.5 -r. Canilang consulted the same doctor again on . August 19A* and this time was found to have 5acute ronchitis.5 (n the ne4t da%, ' August 19A*, Canilang applied for a 5non=medical5 insurance polic% with Krepalife naming his wife, as his eneficiar%. a ilit% of Krepalife to estimate the pro a le ris! he presented as a su ject of life insurance. 2ad Canilang disclosed his visits to his doctor, the diagnosis made and the medicines prescri ed % such doctor, in the insurance application, it ma% e reasona l% assumed that Krepalife

would have made further in1uiries and would have pro a l% refused to issue a non=medical insurance polic% or, at the ver% least, re1uired a higher premium for the same coverage.

Canilang was issued ordinar% life insurance with the face value of )19,?&&. (n # August 19A., Canilang died of 5congestive heart failure,5 5anemia,5 and 5chronic anemia.5 ,he wife as eneficiar%, filed a claim with Krepalife which the insurer denied on the ground that the insured had concealed material information from it. ,he materialit% of the information withheld % Canilang from Krepalife did not depend upon the state of mind of $aime Canilang. A man:s state of mind or su jective elief is not capa le of proof in our judicial process, e4cept through proof of e4ternal acts or failure to act from which inferences as to his su jective elief ma% e reasona l% drawn. Feither does materialit% depend upon the actual or ph%sical events which ensue.

-aterialit% relates rather to the 5pro a le and reasona le influence of the facts5 upon the part% to whom the communication should have een

made, in assessing the ris! involved in ma!ing or omitting to ma!e further in1uiries and in accepting the application for insurance8 that 5pro a le and reasona le influence of the facts5 concealed must, of course, e determined o jectivel%, % the judge ultimatel%.

issuance of the two regular marine insurance policies, there % leaving no account unpaid % petitioner due on the insurance coverage, which must e deemed to include the Cover Fote. "f the Fote is to e treated as a separate polic% instead of integrating it to the regular policies su se1uentl% issued, the purpose and function of the Cover Fote would e set at naught or rendered meaningless, for it is in a real sense a contract, not a mere application for insurance which is a mere offer.

SC found it difficult to ta!e seriousl% the argument that Krepalife had waived in1uir% into the concealment % issuing the insurance polic%

notwithstanding Canilang:s failure to set out answers to some of the 1uestions in the insurance application. Such failure precisel% constituted concealment on the part of Canilang. )etitioner:s argument, if accepted, would o viousl% erase Section *? from the "nsurance Code of 19?A.

;"SC+SS"(FC "t ma% e true that the marine insurance policies issued were for logs no longer including those which had een lost during loading operations. ,his had to e so ecause the ris! insured against is not for loss during operations an%more, ut for loss during transit, the logs having alread% een safel% placed a oard. ,his would ma!e no difference, however, insofar as the lia ilit% on the cover note is concerned, for the num er or volume of logs lost can e determined independentl% as in fact it had een so ascertained at the instance of private respondent itself when it sent its own adjuster to investigate and assess the loss, after the issuance of the marine insurance policies.

)AC"3"C BAFH"FK C(/)(/A,"(F vs. C(+/, (3 A))0ALS and (/"0F,AL ASS+/AFC0 C(/)(/A,"(F )AC"3"C ,"-B0/ 0R)(/, C(/)(/A,"(F vs. CA and 9(/H-0F:S "FS+/AFC0 C(-)AF<, "FC. K./. Fo. L=.A61. Case U #? 3AC,SC ,he plaintiff secured temporar% insurance from the defendant for its e4portation of 1,*#&,&&& oard feet logs.,he defendant issued Cover Fote Fo. 1&1&, insuring the said cargo of the plaintiff. ,he regular marine cargo policies were issued % the defendant in favor of the plaintiff. ,he two marine policies ore the num ers #. 2( 1&.* and #. 2( 1&... After the issuance of Cover Fote Fo. 1&1&, ut efore the issuance of the two marine policies Fos. #. 2( 1&.* and #. 2( 1&.., some of the logs intended to e e4ported were lost during loading operations. ,he plaintiff su se1uentl% su mitted a :Claim Statement demanding pa%ment of the loss under )olicies Fos. #. 2( 1&.* and #. 2( 1&... 3e ruar% *#, 19A* ;0 CAS,/(, $.C K./. Fo. L='1&1' Case U #A 3AC,SC 3ire )olic%, an open polic%, was issued to the )aramount Shirt -anufacturing Co. % which private respondent (riental Assurance Corporation ound itself to indemnif% the insured for an% loss or damage caused % fire to its propert%. Said polic% was dul% endorsed to petitioner as mortgageeD trustor of the properties insured, with the !nowledge and consent of private respondent to the effect that 5loss if an% under the polic% is pa%a le to the )acific Ban!ing Corporation5. 9hile the aforesaid polic% was in full force and effect, a fire ro!e out on the su ject premises destro%ing the goods . )etitioner sent a letter of demand to private respondent for indemnit% . At the trial, petitioner presented evidence, a communication of the insurance adjuster to Asian Suret% "nsurance Co., "nc., revealing undeclared co=insurances with the followingC with 9ellington "nsurance8 with 0mpire Suret% and with Asian Suret%8 underta!en % insured )aramount on the same propert% covered % its polic% with private respondent whereas the onl% co=insurances declared in the su ject polic% are those of with -ala%an, with South Sea and with >ictor%. A/K+-0F,SC /0S)(F;0F,C )rivate respondent raised the defense of fraud andDor violation of Condition Fo. . in the )olic%, in the form of non= declaration of co=insurances. )0,","(F0/C suspicion. "SS+0C ,he allegation of fraud is ut a mere inference or Fovem er *A, 19AA )A/AS, $.C

A/K+-0F,SC /0S)(F;0F,C ,he defendant denied the claim, on the ground the% defendant:s investigation revealed that the entire shipment of logs covered % the two marines policies Fo. #. 11& 1&.* and ?1. 2( 1&.. were received in good order at their point of destination. "t was further stated that the said loss ma% e considered as covered under Cover Fote Fo. 1&1& ecause the said Fote had ecome :null and void % virtue of the issuance of -arine )olic% Fos. #. 2( 1&.* and 1&... )0,","(F0/C )etitioner contendd that the Cover Fote was issued with a consideration when, % e4press stipulation, the cover note is made su ject to the terms and conditions of the marine policies, and the pa%ment of premiums is one of the terms of the policies.

9hether the plaintiff if guilt% of fraudQ

"SS+0C

9hether the Fote is to e treated as a separate polic%Q

/+L"FKC "t is not disputed that petitioner paid in full all the premiums as called for % the statement issued % private respondent after the

/+L"FKC "t is not disputed that the insured failed to reveal efore the loss three other insurances. B% reason of said unrevealed insurances, the insured had een guilt% of a false declaration8 a clear misrepresentation and a vital one ecause where the insured had een as!ed to reveal ut did not, that was deception. (therwise stated, had the insurer !nown that there were man% co=insurances, it could have hesitated or plainl% desisted from entering into such contract. 2ence, the insured was guilt% of clear fraud

;"SC+SS"(FC Concrete evidence of fraud or false declaration % the insured was furnished % the petitioner itself when the facts alleged in the polic% under clauses 5Co="nsurances ;eclared5 and 5(ther "nsurance Clause5 are materiall% different from the actual num er of co= insurances ta!en over the su ject propert%. Conse1uentl%, 5the whole foundation of the contract fails, the ris! does not attach and the polic% never ecomes a contract etween the parties. /epresentations of facts are the foundation of the contract and if the foundation does not e4ist, the superstructure does not arise. 3alsehood in such representations is not shown to var% or add to the contract, or to terminate a contract which has once een made, ut to show that no contract has ever e4isted. ,AF vs. CA and ,20 )2"L"))"F0 A-0/"CAF L"30 "FS+/AFC0 C(-)AF< K./. Fo. 'A&'9 Case U #9 3AC,SC ,an Lee Siong, applied for life insurance with respondent compan%, with petitioners the eneficiaries thereof. ,an Lee Siong died of hepatoma. )etitioners then filed with respondent compan% their claim for the proceeds of the life insurance polic%. 2owever, respondent compan% denied petitioners: claim and rescinded the polic% . A/K+-0F,SC /0S)(F;0F,C Alleged misrepresentation and concealment of material facts made % the deceased ,an Lee Siong in his application for insurance. )0,","(F0/SC Contend that the respondent compan% no longer had the right to rescind the contract of insurance as rescission must allegedl% e done during the lifetime of the insured within two %ears and prior to the commencement of action. $une *9, 19A9 K+,"0//0O, $/., $.C

Case no. 6& 3AC,SC Lua Chee Kan owned four warehouses or odegas used for the storage of stoc!s of copra and of hemp, aled and loose, in which the appellee dealth e4tensivel%. ,he% had een, with their contents, insured with the defendant Compan%. 3ire of undetermined origin that ro!e out and lasted almost one wee!, gutted and completel% destro%ed Bodegas Fos. 1, * and ', with the merchandise stored theren. )laintiff=appellee informed the insurer % telegram, the fire adjusters engaged % appellant insurance compan% arrived and proceeded to e4amine and photograph the premises, pored over the oo!s of the insured and conducted an e4tensive investigation. ,he plaintiff having su mitted the corresponding fire claims, the "nsurance Compan% resisted pa%ment.

A/K+-0F,SC /0S)(F;0F,C warrant%. Claims violation of the so=called fire h%drants

)0,","(F0/C Claims that the respondent is estopped for failure to reject the application due to defect of warrant% which was e4isting at the inception of the insurance contract. "SS+0C 9hether the insurer is lia leQ

/+L""FKC ,he appellant is arred % waiver 6or rather estoppel7 to claim violation of the so=called fire h%drants warrant%, for the reason that !nowing full% all that the num er of h%drants demanded therein never e4isted from the ver% eginning, the appellant neverthless issued the policies in 1uestion su ject to such warrant%, and received the corresponding premiums. "t would e perilousl% close to conniving at fraud upon the insured to allow appellant to claims now as void a initio the policies that it had issued to the plaintiff without warning of their fatal defect, of which it was informed, and after it had misled the defendant into elieving that the policies were effective.

"SS+0C

9hether the contention of the petitioners is tena leQ ;"SC+SS"(FC "t is usuall% held that where the insurer, at the time of the issuance of a polic% of insurance, has !nowledge of e4isting facts which, if insisted on, would invalidate the contract from its ver% inception, such !nowledge constitutes a waiver of conditions in the contract inconsistent with the facts, and the insurer is estopped thereafter from asserting the reach of such conditions. ,he law is charita le enough to assume, in the a sence of an% showing to the contrar%, that an insurance compan% intends to e4ecuted a valid contract in return for the premium received8 and when the polic% contains a condition which renders it voida le at its inception, and this result is !nown to the insurer, it will e presumed to have intended to waive the conditions and to e4ecute a inding contract, rather than to have deceived the insured into thin!ing he is insured when in fact he is not, and to have ta!en his mone% without consideration Case no. =G.R. No. L-9/228 :une ,/, 1238 "$MMI& G$ARAN&+ AND IN"$RANCE COM%AN+, INC., petitioner, vs. (ON. :O"E C. DE G$'MAN, in his 4apa4ity as %residin6 :ud6e o< ran4h III, C#I o< &arla4, GERONIMA %$LMANO and ARIEL %$LMANO, respondents. No. L--3=82 :une ,/, 1238 "$MMI& G$ARAN&+ AND IN"$RANCE COM%AN+, INC., petitioner, vs. &(E (ONORA LE GREGORIA C. ARNALDO, in her 4apa4ity as Insuran4e Co00issioner, and :O"E G. LEDE"MA, :R., respondents. No. L--3893 :une ,/, 1238 "$MMI& G$ARAN&+ AND IN"$RANCE COM%AN+, INC., petitioner, vs. (ONORA LE RAMON ). :A "ON, in his 4apa4ity as %residin6 :ud6e o< ran4h FF)I, Court o< #irst Instan4e o< RiKal, %asi6, Metro Manila and AMELIA GENERAO, respondents.

/+L"FKC Sec. 'A. 444 After a polic% of life insurance made pa%a le on the death of the insured shall have een in force during the lifetime of the insured for a period of two %ears from the date of its issue or of its last reinstatement, the insurer cannot prove that the polic% is void a initio or is rescinda le % reason of the fraudulent concealment or misrepresentation of the insured or his agent. ,he so=called 5incontesta ilit% clause5 precludes the insurer from raising the defenses of false representations or concealment of material facts insofar as health and previous diseases are concerned if the insurance has een in force for at least two %ears during the insured:s lifetime. ,he phrase 5during the lifetime5 found in Section 'A simpl% means that the polic% is no longer considered in force after the insured has died. ,he !e% phrase in the second paragraph of Section 'A is 5for a period of two %ears.5 ;"SC+SS"(FC ,he insurer has two %ears from the date of issuance of the insurance contract or of its last reinstatement within which to contest the polic%, whether or not, the insured still lives within such period. After two %ears, the defenses of concealment or misrepresentation, no matter how patent or well founded, no longer lie. Congress felt this was a sufficient answer to the various tactics emplo%ed % insurance companies to avoid lia ilit%. ,he petitioners: interpretation would give rise to the incongruous situation where the eneficiaries of an insured who dies right after ta!ing out and pa%ing for a life insurance polic%, would e allowed to collect on the polic% even if the insured fraudulentl% concealed material facts. L+A C200 KAF vs. LA9 +F"(F AF; /(CH "FS+/AFC0 C(., L,;., represented % its agent, 9A/F0/, BA/F0S AF; C(., L,;., K./. Fo. L='611 ;ecem er 1?, 19## /0<0S, $. B. L., ,.5

#a4ts5 $ose Ledesma was the owner of a tractor which was umped % a mini us insured with petitioner for ,hird )art% Lia ilit%. Ledesma immediatel% made a notice of claim. )etitioner compan% advised private respondent to have car repaired % K.A. -achineries, which was later estimated at an amount of )hp*1,&&& and made assurance of pa%ment. +pon repair, respondent made several demands on insurance compan% ecause of repair shops warning that failure to pa% would result in the auctioning of the tractor to pa% e4penses. )etitioner Compan% continued giving assurance and promises to pa%. 0ventuall%, private respondent filed a formal complaint with the "nsurance Commission, which petitioner compan% moved to dismiss on ground of prescription. Keronima )ulmano was the owner of a jeep insured with petitioner compan% in the amount of )hp*&,&&&. ,he jeep got into a vehicular accident which resulted in the death of one of the victims and private respondent immediatel% filed a notice of accident and claim. )etitioner compan% too! no steps to process the claim so private respondents rought their claim to the "nsurance Commission, ut petitioner compan% still failed to settle. A complaint was eventuall% filed with the Court of 3irst "nstance of ,arlac which petitioner compan% moved to dismiss on the ground of prescription. Amelia Kenerao owned a passenger jeepne% insured with petitioner under a >ehicle Comprehensive )olic%. ,he jeepne% struc! the van of a certain -r. 2ahn and two da%s later Kenerao notified insurance compan% and demanded pa%ment on oth vehicles. Kenerao and petitioner insurance compan% even had a dialogue at the office of insurance compan% to settle the claim. Fonetheless, time passed without petitioner insurance compan% ta!ing an% final action. -r. 2ahn filed a complaint for damages against Kenerao who, in response, filed a third part% complaint against petitioner insurance compan% which in turn filed a motion to dismiss on the ground of prescription. )etitioner insurance Compan% argues that under Section .A' of the "nsurance Code, even if the notice of claim was timel% filed with the insurance compan% within the si4 month period, if the action or suit that follows is filed e%ond the one %ear period it should necessaril% e dismissed on the ground of prescription. Issue5 9hether or not the causes of action of private respondents have alread% prescri ed. Rulin65 F(. ,he Supreme Court finds a solutel% nothing in the law which mandates that the two periods must alwa%s concur. (n the contrar%, it is ver% clear that the one %ear period is onl% re1uired Min proper casesN. "t is ver% o vious that petitioner Compan% is tr%ing to use Section .A' of as a cloa! to hide itself from its lia ilities. "n violation of its duties to adopt and implement reasona le standards for the prompt investigation of claims and to effectuate prompt, fair and e1uita le settlement of claims, and with manifest ad faith, petitioner Compan% devised means and wa%s of stalling the settlement proceedings. ,he one %ear period should e counted from the date of rejection % the insurer as this is the time the cause of action accrues. Since in these cases there has %et een no accrual of cause of action, prescription has not %et set in. Section .A' has een amended as follows, MSAction or suit for recover% of damage due to loss or injur% must e rought in proper cases, with the Commissioner or the Courts within one %ear from denial of the claim, otherwise the claimant right of action shall prescri e.N

;uring the effectivit% of the insurance contract, the car met with an accident. 0nri1ue -ora, without the !nowledge and consent of 2S /e%es "nc. authorized Bonifacio Bros. "nc. to furnish the la or and materials and some of which were supplied % the A%ala Auto )arts Co. )roceeds of the insurance polic% was not given to Bonifacio Bros. "nc. and A%ala Auto )arts Co., hence, complaint was filed efore -unicipal Court of -anila against 0nri1ue -ora and the insurance compan% for the la or and materials supplied.

,he appellants argued that the% are priv% to the contract. (n the other hand, the insurance compan% maintains that appellants are not mentioned in the contract as parties thereto nor is there an% clause or provision from which it can e inferred that there is an o ligation on the part of the insurance compan% to pa% the cost of repairs directl% to them. Issue5 9hether there is privit% of contract etween the Bonifacio Bos. "nc and the A%ala Auto )arts Co. on the one hand and the insurance compan% on the other. Rulin65 ,he appellants are not priv% to the contract, hence, the% have no right of action against the insurance compan%.

A polic% of insurance is a distinct and independent contract etween the insured and insurer, and third persons have no right either in a court of e1uit%, or in a court of law, to the proceeds of it, unless there e some contract of trust, e4pressed or implied, % the insured and the third person.

"t is fundamental that contracts ta!e effect onl% etween the parties thereto, e4cept on some specific cases provided % law where the contract contains some stipulation in favor of a third person 6Art. 1.11, Civil Code7 Such stipulation is !nown as stipulation pour autrui or a provision in favor of a third person not part% to the contract. "n the instant case, the insurance contract does not contain an% words or clauses to disclose an intent to give an% enefit to an% repairmen or material men in case of repair of the car in 1uestion. ,he Mloss pa%a leN clause of the insurance polic% stipulates that MLoss, if an%, is pa%a le to 2S /e%es, "ncN indicating that it was onl% the 2S /e%es "nc. which the% intended to enefit. Malayan Insuran4e Co., In4 >MICO@ vs Gre6oria CruK Arnaldo and Corona4ion %in4a G.R. No. =83,9. O4tober 1., 1238 #a4ts5 (n $une ?, 19A1, petitioner -"C( issued to the private respondent, Coronacion )inca, 3ire "nsurance )olic% on her propert% effective $ul% **, 19A1 until $ul% **, 19A*. (n (cto er 1#, 19A1, -"C( allegedl% cancelled the polic% for non= pa%ment of the premium and sent the corresponding notice to )inca. (n ;ecem er *', 19A1, pa%ment of the premium for )inca was received % ;omingo Adora, agent of -"C(. (n $anuar% 1#, 19A*, Adora remitted this pa%ment to -"C(, together with other pa%ments. (n $anuar% 1A, 19A*, )incaPs propert% was completel% urned.

Bonifacio Bros., "nc., et al. vs 0nri1ue -ora, et al. K/ Fo. L=*&A#., -a% *9, 196?

#a4ts5 0nri1ue -ora, owner of an (ldsman sedan mortgaged the same to the 2S /e%es "nc. ,hereafter, the automo ile was insured with the State Bonding @ "nsurance Co., "nc with the provision that VLoss, if an%, is pa%a le to 2S /e%es "nc.P % virtue of the fact that said (ldsman sedan was mortgaged in favor of the latter.

(n 3e ruar% #, 19A*, )incaPs pa%ment was returned % -"C( to Adora on the ground that her polic% had een cancelled earlier ut Adora refused to accept.

same date, appellant, upon receipt of the re1uired premium from the insured, approved the application and issued the corresponding polic%.

)inca made demands for pa%ment ut -"C( rejected. Such demand was sustained % the respondent "nsurance Commission, hence this petition. ,he petitioner ar6ues that there was no pa%ment of premium and that the polic% had een cancelled efore the occurrence of the loss. Also, Adora was not authorized to accept the premium pa%ment ecause si4 months had elapsed since the issuance of the insurance polic% and such acceptance was prohi ited % the polic% itself. "t is also argued that this prohi ition was inding upon )inca, who made the pa%ment to Adora at her own ris! as she was ound to first chec! his authorit% to receive it.

+pon Hwong FamPs death due to cancer of the liver with metastasis, appellant denied the claim on the ground that the answers given % the insured to the 1uestions appearing in his application for life insurance were untrue. Appellant further maintains that when the insured was e4amined in connection with his application for life insurance he gave the appellantPs medical e4aminer false and misleading information as to his aliment and previous operation. Appellant ar6ues that the insuredPs statement in hi application that a tumorN hard and of a henPs egg sizeN was removed during said operation, constituted material concealment.

Issue5 Issue5 9hether there e4ists an insurance contract at the time of the loss sustained % )inca.

9hether the insurance compan%, ecause of the insuredPs representation, was mislead or deceived into entering the contract. Rulin65 <es. ,here e4ists a valid contract of insurance. )a%ment of premium was in fact made, rendering the polic% effective as of $une **, 19A1, and removing it from the provisions of Sec ??.= An insurer is entitled to pa%ment of the premium as soon as the thing is e4posed to the peril insured against. Fotwithstanding an% agreement to the contrar%, no poli4y or 4ontra4t o< insuran4e issued by an insuran4e 4o0pany is valid and bindin6 unless and until the pre0iu0 thereo< has been paid, eL4ept in the 4ase o< a li<e or an industrial li<e poli4y ;henever the 6ra4e period provision applies. Rulin65

Fo. "t ears emphasis that Hwong Fam had informed the appellantPs medical e4amine that the tumor for which he was operated on was Massociated with ulcer of the stomach and in the a sence of evidence that the insured had sufficient medical !nowledge as to ena le him to distinguish etween peptic ulcer and a tumor, his statement should e construed as an e4pression made in good faith of his elief as to the nature of hi ailment and operation. ,hus, Mconcealment e4ists where the assured had !nowledge o a fact material to the ris!, and honest%, good faith and fair dealing re1uires that he should communicate it to the assurer, ut he designedl% and intentionall% withholds the same.N "ndeed !wong FamPs statement must e presumed to have een made % him without !nowledge of its incorrectness and without an% deli erate intent on his part to mislead the appellant.

As to the claim of -"C( that it cancelled the polic% in 1uestion on (cto er 1#, 19A1, for non=pa%ment of premium, there is a flat denial of )inca that she never received the claimed cancellation and who, of course, did not have to prove such denial considering the strict language of Section 6' of the "nsurance Law that no insurance polic% shall e cancelled e4cept upon prior notice. -"C( has the urden in ma!ing sure that the cancellation was actuall% sent to and received % the insured. Adora, incidentall%, had not een informed of the cancellation either and saw no reason not to accept the said pa%ment. As to the authorit% of Adora to receive pa%ment, M)a%ment to an agent having the authorit% to receive or collect pa%ment is e1uivalent to pa%ment to the principal himself8 such pa%ment is complete when the mone% delivered is into the agentPs hand and is a discharge of the inde tedness owing to the principalN

Also, it has een held that where, upon the face of the application, a 1uestion appear to e not answered at all or to e imperfectl% answered, and the insurer issued a polic without an% further in1uir%, the% waive the imperfection of the answer and render the omission to answer more full% immaterial. &he %hilippine A0eri4an Li<e Insuran4e Co. vs (on. Gre6orio %ineda and Di0ayu6a G.R. No. 9-.1=. :uly 12, 1232

#a4ts5 )etition denied. ,he decision of the "nsurance Commission affirmed. "n 196A, private respondent procured an ordinar% life insurance polic% from the petitioner compan% and designated his wife and children as irrevoca le eneficiaries of said polic%. "n 19A&, the petitioner N6 Gan 'ee vs Asian Crusader Li<e Insuran4e su se1uentl% filed a petition efore the C3" of /izal to amend the designation of the eneficiaries in his life polic% from irrevoca le to GR No. L-,/=39, 0ay ,/, 123, revoca le. /espondent $udge )ineda allowed the private respondent to adduce evidence. ,he ar6u0ent of the petitioner is the designation of the eneficiaries in the polic% has een made without reserving the right #a4ts5 to change said eneficiar%D eneficiaries, such designation ma% not e surrendered to the Compan%, released or assigned8 and no right or privilege under the )olic% ma% e e4ercised, or agreement made with the Compan% to an% change in or amendment to the )olic%, without the (n -a% 1*, 196*, Hwong Fam applied for a *&=%ear endowment insurance on his life consent of the said eneficiar%D eneficiaries. (n the other hand, the for the sum of )*&,&&&.&&, with his wife, appellee Fg Kan Oee, as eneficiar%. (n the

private respondent contends that said designation can e amended if the Court finds a just, reasona le ground to do so.

,he Beneficiar% ;esignation "ndorsement in the polic% of the respondent states that the designation of the eneficiaries is irrevoca le, hence, oth the law and the polic% do not provide for an% other e4ception. Such fact was not disproved % the respondent.

Issue5 9hether the designation of the irrevoca le eneficiaries could e changed or amended without the consent of all the irrevoca le eneficiaries.

Rulin65 Fo. ,he applica le law in the instant case is the "nsurance Act, otherwise !nown as Act Fo. *'*? as amended, the polic% having een procured in 196A. +nder the said law, the eneficiar% designated in a life insurance contract cannot e changed without the consent of the eneficiar% ecause he has a vested interest in the polic% 6+ercio v. un !ife Ins. Co. of Canada, 78 (hil. 9:; +o v. <edfern and the International Assurance Co., !td., => (hil. =-?.

,he contract etween the parties is the law inding on oth of them and for so man% times, this court has consistentl% issued pronouncements upholding the validit% and effectivit% of contracts. 9here there is nothing in the contract which is contrar% to law, good morals, good customs, pu lic polic% or pu lic order the validit% of the contract must e sustained. Li!ewise, contracts which are the private laws of the contracting parties should e fulfilled according to the literal sense of their stipulations, if their terms are clear and leave no room for dou t as to the intention of the contracting parties, for contracts are o ligator%, no matter in what form the% ma% e, whenever the essential re1uisites for their validit% are present 6(hoeni2 Assurance Co., !td. vs. )nited tates !ines, >> C<A @=9, (hil. American +eneral Insurance Co., Inc. vs. 0utuc, @- C<A >>.?