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Married Women and Minors
Insurance Code, Section 3
Sec. 3. Any contingent or unknown event, whether past or future, which
may damnify a person having an insurable interest, or create a liability
against him, may be insured against, subject to the provisions of this
chapter.
The consent of the husband is not necessary for the validity of an insurance
policy taken out by a married woman on her life or that of her children.
Any minor of the age of eighteen years or more, may, notwithstanding such
minority, contract for life, health and accident insurance, with any insurance
company duly authorized to do business in the Philippines, provided the
insurance is taken on his own life and the beneficiary appointed is the
minor's estate or the minor's father, mother, husband, wife, child, brother or
sister.
The married woman or the minor herein allowed to take out an insurance
policy may exercise all the rights and privileges of an owner under a policy.
All rights, title and interest in the policy of insurance taken out by an
original owner on the life or health of a minor shall automatically vest in the
minor upon the death of the original owner, unless otherwise provided for in
the policy.
Article 234.(Family Code)
When there is danger that a person obliged to give support may lose his or
her fortune because of grave mismanagement or on account of riotous
living, his or her spouse, if any, and a majority of those entitled to be
supported by him or by her may petition the Court of First Instance for the
creation of the family home.
Republic Act No. 6809 December 13, 1989
AN ACT LOWERING THE AGE OF MAJORITY FROM TWENTY-
ONE TO EIGHTEEN YEARS, AMENDING FOR THE PURPOSE
EXECUTIVE ORDER NUMBERED TWO HUNDRED NINE, AND
FOR OTHER PURPOSES
Be it enacted by the Senate and House of Representatives of the Philippines
in Congress assembled::
Section 1. Article 234 of Executive Order No. 209, the Family Code of the
Philippines, is hereby amended to read as follows:
"Art. 234. Emancipation takes place by the attainment of majority. Unless
otherwise provided, majority commences at the age of eighteen years."
Section 2. Articles 235 and 237 of the same Code are hereby repealed.
Section 3. Article 236 of the same Code is also hereby amended to read as
follows:
"Art. 236. Emancipation shall terminate parental authority over the person
and property of the child who shall then be qualified and responsible for all
acts of civil life, save the exceptions established by existing laws in special
cases.
"Contracting marriage shall require parental consent until the age of twenty-
one.
"Nothing in this Code shall be construed to derogate from the duty or
responsibility of parents and guardians for children and wards below
twenty-one years of age mentioned in the second and third paragraphs of
Article 2180 of the Civil Code."
Section 4. Upon the effectivity of this Act, existing wills, bequests,
donations, grants, insurance policies and similar instruments containing
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references and provisions favorable to minors will not retroact to their
prejudice.
Section 5. This Act shall take effect upon completion of its publication in at
least two (2) newspapers of general circulation.
Mortgagor/Mortgagee
Insurance Code
Sec. 8. Unless the policy otherwise provides, where a mortgagor of property
effects insurance in his own name providing that the loss shall be payable to
the mortgagee, or assigns a policy of insurance to a mortgagee, the
insurance is deemed to be upon the interest of the mortgagor, who does not
cease to be a party to the original contract, and any act of his, prior to theloss, which would otherwise avoid the insurance, will have the same effect,
although the property is in the hands of the mortgagee, but any act which,
under the contract of insurance, is to be performed by the mortgagor, may
be performed by the mortgagee therein named, with the same effect as if it
had been performed by the mortgagor.
Sec. 9. If an insurer assents to the transfer of an insurance from a mortgagor
to a mortgagee, and, at the time of his assent, imposes further obligation on
the assignee, making a new contract with him, the act of the mortgagor
cannot affect the rights of said assignee.
Sec. 13. Every interest in property, whether real or personal, or any relation
thereto, or liability in respect thereof, of such nature that a contemplated
peril might directly damnify the insured, is an insurable interest.
Sec. 53. The insurance proceeds shall be applied exclusively to the proper
interest of the person in whose name or for whose benefit it is made unless
otherwise specified in the policy.
Palileo v. Cosio (1955)
Lessons Applicable: Mortgagor (Insurance)
FACTS:
Cherie Palileo (debtor-mortgagor) filed a complaint against BeatrizCosio (creditor-mortgagee) praying that their transaction be one ofa loan with an equitable mortgage to secure the payment of theloan. The original counsel of Cosio Atty. Guerrero beingappointed Undersecretary of Foreign Affairs so she forgot the dateof the trial and she was substituted.
it is a loan of P12,000 secured by a "Conditional Sale ofResidential Building" with right to repurchase. After the executionof the contract, Cosio insured in her name the buildingwith Associated Insurance & Surety Co. against fire.
The building was partly destroyed by fire so she claimed anindemnity of P13,107
Palileo demanded that the amount of insurance proceeds becredited to her loan
RTC: it is a loan with equitable mortgage so the insuranceproceeds should be credited to the loan and refund theoverpayment.
ISSUE:W/N Cosio as mortgagee is entitled to the insurance proceeds for her ownbenefit
HELD:YES. Modify. collection of insurance proceeds shall not be deemed to
have compensated the obligation of the Palileo to Cosio, but bars the Cosiofrom claiming its payment from the Palileo; and Cosio shall pay to PalileoP810 representing the overpayment made by Palileo by way of interest onthe loan.
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When the the mortgagee may insure his interest in the pr opertyindependently of the mortgagor , upon the destruction of theproperty the insurance money paid to the mortgagee will not inureto the benefit of the mortgagor, and the amount due under themortgage debt remains unchanged. The mortgagee, however, is
not allowed to retain his claim against the mortgagor, but it passesby subrogation to the insurer, to the extent of the insurance moneypaid
It is true that there are authorities which hold that "If a mortgageeprocures insurance on his separate interest at his own expense andfor his own benefit, without any agreement with the mortgagorwith respect thereto, the mortgagor has no interest in the policy,and is not entitled to have the insurance proceeds applied inreduction of the mortgage debt" But these authorities merelyrepresent the minority view.
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SAN MlGUEL BREWERY, ETC., plaintiff and appellee, vs. LAW
UNION AND ROCK INSURANCE Co. (LTD.) ET AL., defendants
and appellees. HENRY HARDING, defendant and appellant.
No. 14300. January 19, 1920. J. Street
Doctrine: Insurer cannot recover beyond the scope of the policy. A
purchaser of insured property who does not take the precaution. to obtain
a transfer of the policy of insurance cannot, in case of loss, recover upon
such contract, as the transfer of the property has the effect of suspending
the insurance until the purchaser becomes owner of the policy as well as of
the property insured.
Facts:
1. D. P. Dunn, then the owner of the property to which the insurance relates,mortgaged the same to the San Miguel Brewery to secure a debt of P10,000.
2. In the contract of mortgage Dunn agreed to keep the property insured at
his expense to the full amount of its value in companies to be selected by
the Brewery Company and authorized the latter in case of loss to receive the
proceeds of the insurance and to retain such part as might be necessary to
cover the mortgage debt.
3. At the same time, in order more conveniently to accomplish the end in
view, Dunn authorized and requested the Brewery Company to effect said
insurance itself.
4. Accordingly on the same date Antonio Brias, general manager of the
Brewery, made a verbal application to the Law Union and Rock Insurance
Company for insurance to the extent of P15,000 upon said property.
5. In reply to a question of the company's agent as to whether the Brewery
was the owner of the property, he stated that the company was interested
only as a mortgagee.
6. Tow insurance companies divided the risks. It therefore issued its own
policy for P7,500 and procured a policy in a like amount to beissued by the
"Filipinas" Compaa de Seguros.
7. Both policies were issued in the name of the San Miguel Brewery as the
assured, and contained no reference to any other interest in the property.
Both policies contain the usual clause requiring assignments to be approved
and noted on the policy.
8. The premiums were paid by the Brewery and charged to Dunn. A year
later the policies were renewed, without change, the renewal premiums
being paid by the Brewery, supposedly for the account of the owner.
9. In the month of March of the year 1917 Dunn sold the insured property to
the defendant Henry Harding, but no assignment of the insurance, 01" of the
insurance policies, was at any time made to him.
10. IN the complaint, Brewery prayed that judgment be entered in favor of
the plaintiff against the two companies named for the sum of P15,000, with
interest and costs, and further that upon satisfaction of the balance of
P4,505.30 due to the plaintiff upon the mortgage debt, and upon the
cancellation of the mortgage, the plaintiff be absolved from liability to the
defendants or any of them.
11. Accordingly, as was to be expected, Harding answered, admitting the
material allegations of the complaint and claiming for himself the right to
recover the difference between the plaintiff's mortgage credit and the face
value of the policies.
12. The two insurance companies also answered,' admitting in effect their
liability to the San Miguel Brewery to the extent of its mortgage- credit, but
denying liability to Harding on the ground that under the contracts of
insurance the liability of the insurance companies was limited to the
insurable interest of the plaintiff therein.
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Issues:
1. Does Harding have cause of action against the two insurance companies?
NO
2. Does the Brewery have insurable interest? YES
3. Is the policy intended to protect not only the interest of the mortgagee but
also the residual interest of the owner? NO
Held:
1. Harding is not a party in the case.
'maintain an action thereon.
made effective, if at all, through the San Miguel Brewery in whose name
the contracts are written.
"a change of i nterest in any part of a thing insured unaccompanied by a
corresponding change of interest in the insurance, suspends the
insurance to an equivalent extent, unti l the interest in the thing and th e
in terest in the insurance are vested in the same person."
" the mere transfer of a thing
insured does not transfer the poli cy, but suspends it unti l the same person
becomes the owner of both the poli cy and the thin g insured."
2. THE BREWERY has insurable interest but could recover on the
policy only to the extent of the credit secured by the mortgage.
company with which the insurance was placed that the Brewery was
interested only as a mortgagee. I t would, therefor e, be impossibl e for th e
Brewery to recover anyth ing beyond the amountsecur ed by its mortgage
on the insured property.
Section 16 of the Insurance Act, it is declared that "the measure of an
insurable interest in property is the extent to which the insured might be
damnified by loss or injury thereof"
Section 50 of the insurance act: "the insurance shall be applied
exclusively to the proper interest of the person in whose name it is made
unless otherwise specified in the policy" (sec. 50).
3. Undoubtedly these policies of insurance might have been so framed as to
have been "payable to the San Miguel Brewery, mortgagee, as its interest
may appear, remainder to whomsoever, during the continuance of the risk,
may become the owner of the interest insured." Such a clause would have
proved an intention to insure the entire interest in the property, not merely
the insurable interest of the San Miguel Brewery, and would have shown
exactly to whom the money, in case of loss, should be paid. BUT
THE POLICIES ARE NOT SO WRITTEN.
If during the negotiations which resulted in the writing of this insurance,
it had been agreed between the contracting parties that the insurance
should be so written as to protect not only the interest of the mortgagee but
also the residuary interest of the owner, and the policies had been, by
inadvertence, ignorance, or mistake written in the form in which they were
issued, a court would have the power to reform the contracts and give effect
to them in the sense in which the parties intended to be bound.
i. But in order to justify this, it must be made clearly to appear that the
minds of the contracting parties did actually meet in agreement and that
they labored under some mutual error or mistake in respect to the
expression of their purpose.
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and none other was
offeredthat the parties intended for the policy to cover the risk of the
owner in addition to that of the mortgagee. It results that the defendant
Harding is not entitled to relief in any aspect of the case.
BREWERY
AND NOT THE INSURANCE COMPANIES:
i. Dunn in the mortgage contract agreed, at his own expense, to insure the
mortgaged property for its full value and to indorse the policies in such
manner as to authorize the Brewery Company to receive the proceeds in
case of loss and to retain such part thereof as might be necessary to satisfy
the remainder then due upon the mortgage debt. Instead, however, of
effecting the insurance himself Dunn authorized and requested the Brewery
Company to procure insurance on the property in the amount of P15,000 at
Dunn's expense.
ii. The Brewery Company undertook to carry this mandate into effect, and it
of course became its duty to procure insurance of the character
contemplated, that is, to have the policies so written as to protect not only
the insurable interest of the Brewery, but also the owner.
iii. Brias seems to have supposed that the policies as written had this effect,
but in this he was mistaken. It was certainly a hardship on the owner to be
required to pay the premiums upon P15,000 of insurance when he was
receiving no benefit whatever except in protection to the extent of his
indebtedness to the Brewery.
Decision: The judgment is therefore affirmed, with costs against the
appellant.
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Gonzalez Lao v. Yek Tong Lin Fire & Marine Insurance - Insurance
Premiums
55 PHIL 386
Facts:> Gonzales was issued 2 fire insurance policies by Yek for 100T coveringhis leaf tobacco products.
> They were stored in Gonzales building on Soler St., which on Jan. 11,1928, burned down.
> Art. 3 of the Insurance policies provided that: Any insurance in forceupon all or part of the things unsured must be declared in writing by the
insured and he (insured) should cause the company to insert or mention it
in the policy. Without such requisite, such policy will be regarded as null
and void and the insured will be deprived of all rights of indemnity in case
of loss.
> Notwithstanding said provision, Gonzales entered into other insurancecontracts. When he sought to claim from Yek after the fire, the latter deniedany liability on the ground of violation of Art. 3 of the said policies.
> Gonzales however proved that the insurer knew of the other insurancepolicies obtained by him long efore the fire, and the insurer did NOTrescind the insurance polices in question but demanded and collected fromthe insured the premiums.
Issue:
Whether or not Yek is still entitled to annul the contract.
Held:
NO.The action by the insurance company of taking the premiums of the insurednotwithstanding knowledge of violations of the provisions of the policiesamounted to waiver of the right to annul the contract of insurance..
SYLLABUS1. FIRE INSURANCE; POLICIES MORTGAGED TO A THIRDPARTY; REAL PARTY IN INTEREST. The fact that the plaintiff
himself presented in evidence the policies mortgaged to the Bank of thePhilippine Islands gives rise to the presumption that the debt secured by themortgage has been paid, in accordance with article 1191 of the Civil Code.On the other hand, "Insured may be regarded as the real party in interest,although he has assigned the policy for the purpose of collection, or hasassigned as collateral security any judgment he may obtain." (33 C. J., pp.82 et seq.)
2. ID.; INSURANCE IN VARIOUS COMPANIES. The tobaccoinsured in the other companies was different from that insured with thedefendant, since the number of bales of tobacco in the warehouse greatlyexceeded that insured with the defendant and the other companies put
together. And according to the doctrine enunciated in 26 Corpus Juris, 188,"to be insurance of the sort prohibited the prior policy must have beeninsurance upon the same subject matter, and upon the same interest therein."
3. ID.; ID.; WAIVER TO AN ACTION FOR ANNULMENT OFCONTRACT.If, with the knowledge of the existence of other insuranceswhich the defendant deemed violations of the contract, it has preferred tocontinue the policy, its action amounts to a waiver of the annulment of thecontract (19 Cyc., 791, 792).
D E C I S I O NVILLAMOR, J p:
This is an action to recover of the defendant the Yek Tong Lin Fire &Marine Insurance Co., Ltd., the amount of two insurance policies totallingP100,000 upon leaf tobacco belonging to the plaintiff, which was damagedby the fire that destroyed the building on Soler Street No. 188, where saidtobacco was stored, on January 11, 1928.
The defendant filed a general and specific denial of each and everyallegation of the complaint, set up three special defenses, and prayed to beabsolved from the complaint with costs against the plaintiff.
After the case was tried, the court below rendered judgment as follows:
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"In this case and in Nos. 33458, 33868, and 33480 of this court, which, byagreement of the interested parties, were jointly tried, the plaintiff demandsP290,000 from the defendant assurance companies, alleging that to be theamount of the insurance on his leaf tobacco which was damaged by the firethat destroyed the warehouse at No. 188 Soler Street, Manila, where it was
stored, on January 11,1928, the plaintiff's claim against the hereindefendant, the Yek Tong Lin Fire & Marine Insurance Co. being forP100,000, and against the defendants in the three other cases mentionedabove, for P190,000.
"After the plaintiff had presented his evidence, the defendant companies incases Nos. 33458, 33868, and 33480, offered to compromise with him bypaying eighty-five per cent of his claim against them. In view of the factthat said defendants had in their answer raised the question of warranties Aand G of the plaintiff's policies, providing that the building used for theeffects insured would not be occupied by any other lessee, nor would beused for the deposit of other goods, without the consent of said defendants,
and inasmuch as the latter alleged in their answer that the owner of theburnt building had leased the warehouse to several persons for the storageof sundry articles, the plaintiff had to accept the proposed compromise, andin consequence thereof, the three cases aforesaid were dismissed.
"The present case followed the usual course of procedure because theplaintiff refused to accept the compromise which, in the same terms as thosemade by the defendants in the three cases mentioned, was proposed to himby the defendant the Yek Tong Lin Fire & Marine Insurance Company, theplaintiff contending that said defendant did not, nor could, raise the questionof warranties A and G heretofore mentioned for the simple reason that itwas the defendant itself, as owner, who had leased the building which later
was destroyed by fire, to another person after having already ceded aportion of it to said plaintiff.
"The only question to be determined, having been raised in the defendant'sanswer both parties agreeing that the plaintiff insured his leaf tobaccowith the defendant assurance company, and that said goods were damagedby the fire which destroyed the warehouse where they were stored, onJanuary 11, 1928 is whether said goods were worth what the plaintiffclaims, that is, about equal to the amount for which they were insured in thefour above-mentioned assurance companies, including the defendant in thiscase.
"The plaintiff has conclusively shown by the Official Register Book(Exhibit I) and the Official Guide (Exhibit J), furnished by the Bureau ofInternal Revenue, and kept under the supervision thereof in the usual form,in accordance with articles 10, 34 to 38 of the Regulations of the same
promulgated under No. 17, by the Secretary of Finance; the Stock Book forrecording the quantity of tobacco, Exhibit K, kept by the plaintiff andpresented as part of the testimony of witnesses Claveria, Bonete, andLeoncio Jose; the testimony of Estanislao Lopez, Inspector of InternalRevenue, and the latter's report (Exhibit N), submitted to the Collector ofInternal Revenue in pursuance of article 33 of the aforementionedRegulations; the tobacco invoices of stock damaged by the fire, Exhibits Land L-1 to L-20; and by the testimony of Clemente Uson who went over theplaintiff's books as auditor and public accountant, and also preparedExhibits T and U, attached to the record, that the plaintiff had in thewarehouse at No. 188 Soler at the time of the fire, not less, but rather more,than 6,200 bales of leaf tobacco worth over P300,000, which is of course
more than the sum total of all the insurances taken out with the defendantherein and the defendants in the three aforementioned cases Nos. 33458,33868, and 33480.
"The reason why the entry showing that 258 bales of tobacco had beenremoved from the warehouse, appearing in the Official Register Book,Exhibit I, was not posted in the Stock Book, Exhibit K, has beensatisfactorily explained by the plaintiff's witnesses, who stated that it wasdue to the fact that there was no time to post it in the Stock Book, becausethe fire took place and the plaintiff told them not to touch, and to make nofurther entries in the books. Witness White, the defendant company'sadjuster, who carefully examined the plaintiff's books not only immediately
after the fire, but also during the hearing of this case, seems not to havefound any irregularity therein; at least he said nothing on the point when hetook the witness stand. On the contrary, in his report Exhibit UU sent to thedefendant herein in his capacity as adjuster, appointed by the latter, and inExhibits WW and XX, admitted by the Yek Tong Lin Ins. Co., Ltd., headmitted that the leaf tobacco belonging to the plaintiff in the warehousewhen the fire took place exceeded, in quantity and value, the amount of theinsurance.
"The defendant did not present any evidence to rebut the plaintiff'sevidence, but only presented witness Rowlands, whose testimony or opinion
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as to the probable number of bales of tobacco in the warehouse at the dateof the fire does not deserve serious consideration, not only because of theplaintiff's evidence, but because his opinion or estimate is based solely uponphotographs of the place taken after the fire.
"In view of the foregoing, the court hereby sentences the defendant the YekTong Lin Fire and Marine Insurance Company, Ltd., to pay the plaintiffEmilio Gonzalez La O, the amount of one hundred thousand pesos(P100,000), for which it had accepted the insurance on the leaf tobaccobelonging to said plaintiff, damaged by fire which destroyed the warehouseat No. 188 Soler Street, where it was stored, on January 11, 1928, and legalinterest upon said amount from June 27, 1928, when the complaint wasfiled in this case, plus the costs.
"So ordered."Manila, P. I., this 24th day of December, 1929.
"ANACLETO DIAZ
"Judge"The defendant duly appealed from this judgment, alleging that the trialcourt erred in making reference to the settlement arrived at by the plaintiffand other insurance companies, and in declaring that the only questioninvolved in the case is whether or not the tobacco damaged by the fire isworth at least P290,000.
There is no merit in these assignments of error. Since the settlementbetween the plaintiff and the other defendant companies was reached afterthe plaintiff had presented his evidence, and as those three cases were triedjointly with the instant case, there is no valid reason why the trial courtshould not refer to it in deciding this case. Furthermore, the court's holding
here assigned as error, granting there were other incidental matters to bedecided by the court, does not in itself constitute a reversible error.
In the third assignment of error, the defendant contends that the plaintiffcannot recover under the policy as he has failed to prove that the Bank ofthe Philippine Islands, to whom the policy was made payable, no longer hasany rights and interests in it. It should be noted that the defendant did not inits answer allege defect of parties plaintiff, and, besides, it does not appearthat the plaintiff ceded to the bank all his rights or interests in the insurance,the note attached to the policies merely stating: "There shall be paid to theBank of the Philippine Islands an indemnity for any loss caused by fire,
according to the interest appearing in its favor." And the fact that theplaintiff himself presented in evidence the policies mortgaged to the Bankof the Philippine Islands gives rise to the presumption that the debt thussecured has been paid, in accordance with article 1191 of the Civil Code.
Corpus Juris, volume 26, pages 483 et seq., states:"Insured, being the person with whom the contract was made, is primarilythe proper person to bring suit thereon. . . . Subject to some exceptions,insured may thus sue, although the policy is taken wholly or in part for thebenefit of another person named or unnamed, and although it is expresslymade payable to another as his interest may appear or otherwise. . . .Although a policy issued to a mortgagor is taken out for the benefit of themortgagee and is made payable to him, yet the mortgagor may sue thereonin his own name, especially where the mortgagee's interest is less than thefull amount recoverable under the policy, . . .."
And in volume 33, page 82, of the same work, we read the following:
"Insured may be regarded as the real party in interest, although he hasassigned the policy for the purpose of collection, or has assigned ascollateral security any judgment he may obtain."
It is also contended that the trial court erred in not declaring that inasmuchas the plaintiff failed to notify the defendant corporation in writing, of otherinsurance policies obtained by him, he has violated article 3 of theconditions of the policies in question, thereby rendering these policies nulland void. Article 3 of the conditions of the policies in question prescribes:"ART. 3. Any insurance in force upon all or part of the thingsinsured must be declared in writing by the insured and he should cause thecompany to insert or mention it in the policy, and without such requisite
said policy will be regarded as null and void, and the assured deprived of allrights of indemnity in case of loss."
The following clause has been inserted with a typewriter in the policies:"Subject to clauses G and A and other insurances with a special short periodattached to this policy." And attached to said policies issued by thedefendant there is a sheet of "Other insurances" with the amount and theassurance companies in blank, which, according to the appellee, constitutesa notification that there were other insurances existing at the time.
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In the case of Benedict vs. Ocean Insurance Co. (31 N. Y., 391-393), theconstruction of the clause, "privilege for $4,500 additional insurance," wasdiscussed. One of the printed clauses of the policy reads as follows:"If said assured, or his assigns, shall hereafter make any other insuranceupon the same property, and shall not, with all reasonable diligence, give
notice to this corporation, and have the same indorsed on this instrument, orotherwise acknowledged by them, in writing, this policy shall cease and beof no further effect."
The Supreme Court of New York held that the words "Privilege for $4,500additional insurance" made it unnecessary for the assured to inform theinsurer of any other policy up to that amount.
In the case cited the same goods insured by the defendant company werereinsured to the amount of $4,500 in accordance with the clause "privilegefor $4,500 additional insurance," but in the instant case it may be said thatthe tobacco insured in the other companies was different from that insured
with the defendant, since the number of bales of tobacco in the warehousegreatly exceeded that insured with the defendant and the other companiesput together. And according to the doctrine enunciated in 26 Corpus Juris,188, "to be insurance of the sort prohibited the prior policy must have beeninsurance upon the same subject matter, and upon the same interest therein."Furthermore, the appellant cannot invoke the violation of article 3 of theconditions of the insurance policies for the first time on appeal, havingfailed to do so in its answer; besides, as the appellee correctly contends inhis brief, Guillermo Cu Unjieng, who was then president and majorityshareholder of the appellant company, the Yek Tong Lin Fire & MarineInsurance Co., knew that there were other insurances, at least from theattempt to raise the insurance premium on the warehouse and the appellee's
tobacco deposited therein to 1 per centum, and it was later reduced uponpetition of the appellant itself and other assurance companies to 0.75 percentum presented to the association of assurance companies in the year1927, and notwithstanding this, said appellant did not rescind the insurancepolicies in question, but demanded and collected from the appellee theincreased premium.
That the defendant had knowledge of the existence of other policiesobtained by the plaintiff from other insurance companies, is specificallyshown by the defendant's answer wherein it alleges, by way of specialdefense, the fact that there exist other policies issued by the companies
mentioned therein. If, with the knowledge of the existence of otherinsurances which the defendant deemed violations of the contract, it haspreferred to continue the policy, its action amounts to a waiver of theannulment of the contract, in accordance with the following doctrine in 19Cyc., 791, 792:
"FAILURE TO ASSERT FORFEITURE IN GENERAL. While theweight of authority is that a policy conditioned to become void upon abreach of a warranty is void ipso facto upon such a breach without formalproceedings on the part of the insurer, yet it is true that such conditions areinserted for the benefit of the insurer and may be waived, and that theinsurer may elect to continue the policy despite the breach. If it does thepolicy is revived and restored. Its failure to assert a forfeiture therefore is atleast evidence tending to show a waiver thereof. Many authorities gofurther, however, and hold that the failure to assert a forfeiture afterknowledge of a ground thereof will amount of itself to a waiver. . . ."
The fifth and sixth assignments of error refer to the quantity of tobacco in
the Soler warehouse at the time of the fire, which, according to theappellant, did not exceed 4,930 bales. As may be seen, these assignments oferror by the appellant involved purely questions of fact, and it is for thiscourt to decide whether the findings of the trial court are supported by theevidence. The judgment appealed from sets forth clearly the evidencepresented to the court in order to determine the quantity of tobacco in thewarehouse at the time of the fire. We have studied the evidence aforesaid,and are fully convinced that the court's findings are well supported by thesame. Inasmuch as it has not, in our opinion, been shown that the trial judgeoverlooked any fact, which, if duly considered would have changed theresult of the case, we do not feel justified in altering or modifying hisfindings.
Finally, the appellant contends that the trial court erred in arriving at thedamages that plaintiff may recover under the policies in question by the costprice of the tobacco damaged by the fire, instead of computing the same onthe market price of the said tobacco at the time of the fire; and in declaringthat the tobacco damaged was worth more than P300,000. This error is notwell taken, for it is clear that the cost price is competent evidence tending toshow the value of the article in question. And it was so held the case ofGlaser vs. Home Ins. Co. (47 Misc. Rep., 89; 93 N. Y. Supp., 524; Abbott'sProof of Facts, 3d ed., p. 874), where it was declared that the cost of thegoods destroyed by fire is some evidence of value, in an action against the
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insurance company. Exhibits L to L-20, which are invoices for tobaccopurchased by the appellee, and the testimony of the public accountantClemente Uson, who went over them and the rest of the appellee's booksafter the fire, taken in connection with reports T and Z, adduced as part ofhis testimony, show that the cost price of each bale of tobacco belonging to
the appellee, damaged by the fire, was P51.8544, which, multiplied by6,264, the number of bales, yields a total of over P320,000.
The adjusters of the appellant, White & Page, in ascertaining the marketprice of the plaintiff's tobacco deposited in the burnt warehouse, taking theinformation furnished by the Tabacalera and by M. Pujalte, S. en C., as abasis, thus conclude their report: "We therefore are obliged to theconclusion that the value of the tobacco destroyed was not less thanP290,000." And, indeed, said adjusters, in behalf of the appellant, appraisedthe appellee's tobacco assured and damaged by the fire at P303,052.32,collecting from the proceeds of the sale of the tobacco saved from the fireP3,000, the appellant's share in proportion to the insurance of P100,000
belonging to it, and P190,000 belonging to the other assurance companies,and considered the appellee himself as his own assurer in the amount ofP13,052.32 which was the difference between the total value of the tobaccodamaged and the total amount of the insurance, P290,000, for which reasonthe appellee received P129.21, as his proportionate share of the tobaccosaved, as shown by Exhibits UU, WW, and XX.
Hence the last assignment of error is without merit.
Wherefore, the judgment appealed from is in accordance with law, and mustbe, as it is hereby, affirmed, with costs against the appellant. So ordered.Johnson, Street, Malcolm, Ostrand, Johns, Romualdez and Villa- Real, JJ.,
concur.
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Geagonia v CA
G.R. No. 114427
February 6, 1995
Facts:
Geagonia, owner of a store, obtained from Country Bankers fire insurancepolicy for P100,000.00. The 1 year policy and covered thestock tradingofdry goods.
The policy noted the requirement that"3. The insured shall give notice to the Company of any insurance orinsurances already effected, or which may subsequently be effected,covering any of the property or properties consisting of stocks in trade,goods in process and/or inventories only hereby insured, and unless noticebe given and the particulars of such insurance or insurances be statedtherein or endorsed in this policy pursuant to Section 50 of the InsuranceCode, by or on behalf of the Company before the occurrence of any loss or
damage, all benefits under this policy shall be deemed forfeited, providedhowever, that this condition shall not apply when the total insurance orinsurances in force at the time of the loss or damage is not more thanP200,000.00."
The petitioners stocks were destroyed by fire. He then filed a claim whichwas subsequently denied because the petitioners stocks were covered by
two otherfire insurancepolicies for Php 200,000 issued by PFIC. The basisof the private respondent's denial was the petitioner's alleged violation ofCondition 3 of the policy.
Geagonia then filed a complaint against the private respondent in the
Insurance Commission for the recovery of P100,000.00 underfire insurancepolicy and damages. He claimed that heknewthe existence of the other twopolicies. But, he said that he had no knowledge of the provision in theprivate respondent's policy requiring him to inform it of the prior policiesand this requirement was not mentioned to him by the private respondent'sagent.
The Insurance Commission found that the petitioner did not violateCondition 3 as he had no knowledge of the existence of the two fireinsurancepolicies obtained from the PFIC; that it was Cebu Tesing Textilesw/c procured the PFIC policies w/o informing him or securing his consent;
and that Cebu Tesing Textile, as his creditor, had insurable interest on thestocks.
The Insurance Commission then ordered the respondent company to paycomplainant the sum of P100,000.00 with interest and attorneys fees.
CA reversed the decision of the Insurance Commission because it foundthat the petitionerknewof the existence of the two other policies issued bythe PFIC.
Issues:1. WON the petitioner had not disclosed the two insurance policies when heobtained thefire insuranceand thereby violated Condition 3 of the policy.2. WON he is prohibited from recovering
Held: Yes. No. Petition Granted
Ratio:
1. The court agreed with the CA that the petitioner knew of the priorpolicies issued by the PFIC. His letter of 18 January 1991 to the privaterespondent conclusively proves this knowledge. His testimony to thecontrary before the Insurance Commissioner and which the latter reliedupon cannot prevail over a written admission made ante litem motam. Itwas, indeed, incredible that he did not know about the prior policies sincethese policies were not new or original.
2. Stated differently, provisions, conditions or exceptions in policies whichtend to work a forfeiture of insurance policies should be construed moststrictly against those for whose benefits they are inserted, and mostfavorably toward those against whom they are intended to operate.
With these principles in mind, Condition 3 of the subject policy is nottotally free from ambiguity and must be meticulously analyzed. Suchanalysis leads us to conclude that (a) the prohibition applies only to doubleinsurance, and (b) the nullity of the policy shall only be to the extentexceeding P200,000.00 of the total policies obtained.
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Furthermore, by stating within Condition 3 itself that such condition shallnot apply if the total insurance in force at the time of loss does not exceedP200,000.00, the private respondent was amenable to assume a co-insurer'sliability up to a loss not exceeding P200,000.00. What it had in mind was todiscourage over-insurance. Indeed, the rationale behind the incorporation of
"other insurance" clause in fire policies is to prevent over-insurance andthus avert the perpetration of fraud. When a property owner obtainsinsurance policies from two or more insurers in a total amount that exceedsthe property's value, the insured may have an inducement to destroy theproperty for the purpose of collecting the insurance. The public as well asthe insurer is interested in preventing a situation in which a fire would beprofitable to the insured.
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SAURA IMPORT & EXPORT CO., INC., plaintiff-appellant, vs.
PHILIPPINE INTERNATIONAL SURETY CO., INC., and
PHILIPPINE NATIONAL BANK,
defendants-appellees.
G.R. No. L-15184; May 31, 1963;
Doctrine: Actual personal notice to the insured is essential to a cancellationunder a provision for cancellation by notice. It is condition precedent to acancellation of the policy by the insurer, and consequently a lettercontaining notice of cancellation which is mailed by the insurer but notreceived by the insured, is ineffective as cancellation
FACTS:
1. December 26, 1952: the Saura Import & Export Co Inc., mortgaged to thePhil. National Bank, a parcel of land, to secure the payment of promissorynote of P27,000.00
2. April 30, 1953: the mortgage was amended to guarantee an increasedamount, bringing the total mortgaged debt to P37,000.00
3. The provisions of the mortgaged contact, pertinent to the resolution of thepresent case, provide as follows
a. 2. . . . he shall insure the mortgaged property at all times againstfire and earthquake for an amount and with such company satisfactory tothe Mortgagee, indorsing to the latter the corresponding policies; he shallkeep the mortgaged property in good condition, making repairs andprotecting walls that may be necessary; . . .
4. Erected on the land mortgaged, was a building of strong materials ownedby the mortgagor Saura Import & Export Co., Inc., which had always beencovered by insurance, many years prior to the mortgage contract.
5. Saura insured the building and its contents with the Philippine
International Surety, an insurance firm acceptable to mortgagee Bank,
for P29,000.00 against fire for the period of one year from October 2,
1954
a. the insurance policy was endorsed to the mortgageePNB, in a Memo which states
i. Loss if any, payable to the Philippine National Bank as theirinterest may appear, subject to the terms, conditions and warranties of thispolicy
6. On October 15, 1954, barely thirteen (13) days after the issuance of
the fire insurance policy, the insurer cancelled the same, effective as ofthe date of issue
a. Notice of the cancellation was given to appellee bank in
writing
7. On April 6, 1955, the building and its contents, worth P40,685.69 wereburned.
8. Saura filed a claim with the Insurer and mortgagee Bank.
9. Upon the presentation of notice of loss with the PNB, Saura learned forthe first time that the policy had previously been cancelled on October 2,
1954, by the insurer, when Saura's folder in the Bank's filed was opened andthe notice of cancellation (original and duplicate) sent by the Insurer to theBank, was found.
10. Upon refusal of the Insurer Philippine International Surety to pay theamount of the insurance, Civil Case No. 26847 was filed with the ManilaCFI against the Insurer, and the PNB was later included as party defendant,after it had refused to prosecute the case jointly with Saura Import & ExportCo., Inc.
11. At the trial, it was established that neither the Insurer nor the mortgageeBank informed the plaintiff Saura of the cancellation of the policy
12. Trial court dismissed the complaint
ISSUE: 1. Whether the notice of cancellation to the bank is notice to Sauraas well? NO
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HELD:her contracts of insurance upon property, in
addition to the common provision for cancellation of the policy uponrequest of the insured, generally provide for cancellation by the insurer bynotice to the insured for a prescribed period, which is usually 5 days, and
the return of the unearned portion of the premium paid by the insured
ions for notice to the insured, is toprevent the cancellation of the policy, without allowing the insured ampleopportunity to negotiate for other insurance in its stead.
o The form and sufficiency of a notice of cancellation is determined bypolicy provisions.
in any particular form, in the absence ofa statute or policy provision prescribing such form, and it is sufficient, solong as it positively and unequivocally indicates to the insured, that it is the
intention of the company that the policy shall cease to be binding.
certain number of daysnotice shall be given, a reasonable notice and opportunity to obtain otherinsurance must be given
o the insured is essential to a cancellation under aprovision for cancellation by notice.
o condition precedent to a cancellation of the policy by the insurer, andconsequently a letter containing notice of cancellation which is mailed bythe insurer but not received by the insured, is ineffective as cancellation
ide for the notice, its form or period.
a clear and unequivocal manner,preferably in writing, in view of the importance of an insurance contract,should be given by the insurer to the insured, so that the latter might begiven an opportunity to obtain other insurance for his own protection.
o The notice should be personal to the insured and not to and/or through anyunauthorized person by the policy.
he defendant-appellee insurance company to notify theinsured, but it did not.
April 6, 1955, at the time when the policy was enforced (October 2, 1954 toOctober 2, 1955); and that under the facts, as found by the trial court, towhich We are bound, it is evident that both the insurance company and theappellee bank failed, wittingly or unwittingly, to notify the insuredappellant Saura of the cancellation made.
to the bank, as far appellant herein is concerned, is not effectivenotice
t the property insured, and the policy
contains a clause stating that loss, if any, shall be payable to such mortgageeor the holder of such lien as interest may appear, notice of cancellation tothe mortgagee or lienholder alone is ineffective as a cancellation of thepolicy to the owner of the property.
DISPOSITION: WHEREFORE, the decision appealed from is herebyreversed, and another is entered, condemning the defendant-appelleePhilippine International Surety Co., Inc., to pay Saura Import & Export Co.,Inc., appellant herein, the sum of P29,000.00, the amount involved in PolicyNo. 429, subject-matter of the instant case. Without costs.
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[G.R. No. L-43766. February 26, 1988.]
PHILIPPINE NATIONAL BANK, petitioner, vs. THE HON. COURT OFAPPEALS (SPECIAL THIRD DIVISION), IGNACIO DESIDERIO ANDVICTORIA F. DESIDERIO, respondents.
SYLLABUS1. REMEDIAL LAW; EVIDENCE; FINDINGS OF FACT OF THECOURT OF APPEALS, BINDING ON APPEAL. We find no cogentreasons to disturb the ruling of the Court of Appeals. Indeed, and as foundby the lower courts, the petitioner could have collected the insuranceproceeds if only it were not negligent. It had ample time and enough legalremedies, not to mention resources, to collect the insurance proceeds wherethe same became due, yet, it merely sent demand letters to the insurancecompany. And when the company did not act on the letters, the petitionerdid not pursue other remedies to press its claim. It did not even file a suit forthe recovery of the insurance proceeds against the insurance company
before and even during the liquidation of the company. It allowed sevenlong years to pass before finally deciding to file a collection case. Realizingthat it could no longer collect from the insurance company because thesame had already folded up, the petitioner directed the collection suitagainst the private respondents whose obligation with the petitioner hadlong been extinguished. For, indeed, under the facts obtaining, the privaterespondents cannot have been expected to initiate moves for the collectionof the insurance proceeds. It was the petitioner which was duty bound toenforce the claim for the insurance proceeds, being, as earlier mentioned,the attorney-in-fact of the private respondents and the beneficiary of theinsurance policy.
2. MERCANTILE LAW; INSURANCE; ATTORNEY-IN-FACTDESIGNATED AS BENEFICIARY OF AN INSURANCE POLICY HASTHE OBLIGATION TO COLLECT THE PROCEEDS THEREOF. Thepetitioner as the attorney-in-fact of the private respondents and as thebeneficiary of the insurance policy had the obligation to collect the proceedsof the policy. For "under the chattel mortgage covering the goods offered assecurity for payment of the loan, the private respondents as mortgagorsconstituted and appointed the petitioner as mortgagee their attorney-in-factwith full power and authority to collect and receive any interest, income orbenefits produced by the mortgaged property and apply such amountcollected and received in payment of the interest accruing and of the
principal obligation. The petitioner was itself the beneficiary of theinsurance policy to which it was duly indorsed and made payable, and wasin possession thereof."
D E C I S I O N
SARMIENTO, J p:In its resolve to recover the trifling sum of P3,855.60, petitioner PhilippineNational Bank (PNB), a premier banking institution, incredulous of theadverse decisions of three lower courts, to wit: the City Court ofZamboanga City which rendered a decision the dispositive portion of whichreads:WHEREFORE, this Court hereby renders judgment in the following tenor:That the complaint for the unpaid balance of the contractual loan of theDefendant Ignacio Desiderio and Victoria F. Desiderio filed by thePhilippine National Bank, is hereby ordered dismissed and that the amountof P1,089.60 which the Defendants paid as partial payment to the PlaintiffBank on account of the loss contracted, is here by declared unrecoverable
and the same shall inure to the benefit of the Philippine National Bank.That no pronouncement as to damages, costs and attorney's fees is herebymade, as the loss of the things mortgaged were presumed to be caused byaccident, no evidence having been presented to prove the contrary; 1
the then CFI of Zamboanga City which affirmed the above in a decision thedispositive portion of which reads:
IN VIEW OF THE FOREGOING, the appealed judgment of the City Courtis affirmed insofar as it dismisses the complaint as well as the counter-claimfiled in the above entitled case; 2
and the Court of Appeals which likewise affirmed the above in a decisionthe dispositive portion of which reads:
WHEREFORE, the appealed judgment, being in accordance with law andthe evidence, is hereby affirmed in toto, with costs against the petitioner; 3has elevated this case to the highest court of the land with the followingerrors assigned:
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ITHE COURT OF APPEALS ERRED IN HOLDING THAT PETITIONER,AS ATTORNEY-IN-FACT OF PRIVATE RESPONDENTS IS BOUNDTO SUCCESSFULLY COLLECT THE INSURANCE PROCEEDS OFTHE MORTGAGED PROPERTY OF THE LATTER
.IITHE COURT OF APPEALS ERRED IN EXONERATING PRIVATERESPONDENTS, BY WAY OF IMPLIED OFF-SETTING, FROM ITSLOAN ACCOUNT WITH PETITIONER, THERE BEING NOCOUNTERCLAIM FOR DAMAGES FILED BASED ON BREACH OFDUTY.
The facts of the case are as follows:More than a quarter century ago, on January 10, 1963, the privaterespondents-spouses applied for a retailers' loan with the petitioner. Theloan which was subsequently approved was secured by a chattel mortgage
consisting of the verified inventory of stocks in the store of the privaterespondents, located at Marahui Street, Zamboanga City. In addition to this,the goods and merchandise, subject matter of the mortgage, were insuredwith the Cosmopolitan Insurance Co. in the amount of P4,000.00 with thepetitioner as the beneficiary pursuant to the requirements of the latter.
On August 1, 1964, while the insurance and the chattel mortgage were stillin force, and after the private respondents had paid the petitioner the amountof P1,089.60 as partial payment of the loan in accordance with the loanagreement, the insured building and merchandise of the private respondentswere totally destroyed by fire.
The petitioner sent several letters to the insurance company for the purposeof recovering the proceeds of the insurance but to no avail. Sometime in1966, the said insurance company became the subject of liquidation. Sevenyears after the insured chattels mortgaged were burned, the petitioner filed acomplaint for collection against the private respondents.
We find no cogent reasons to disturb the ruling of the Court of Appeals.The petitioner as the attorney-in-fact of the private respondents and as thebeneficiary of the insurance policy had the obligation to collect the proceedsof the policy. The argument of the petitioner to the effect that there is noexpress provision in the Chattel Mortgage Contract which compels the
petitioner to collect the proceeds of the insurance in case of loss is a mererationalization of one trying hard to put the blame on another for its ownfault or negligence. For "under the chattel mortgage covering the goodsoffered as security for payment of the loan, the private respondents asmortgagors constituted and appointed the petitioner as mortgagee their
attorney-in-fact with full power and authority to collect and receive anyinterest, income or benefits produced by the mortgaged property and applysuch amount collected and received in payment of the interest accruing andof the principal obligation. The petitioner was itself the beneficiary of theinsurance policy to which it was duly indorsed and made payable, and wasin possession thereof." 5
Indeed, and as found by the lower courts, the petitioner could have collectedthe insurance proceeds if only it were not negligent. It had ample time andenough legal remedies, not to mention resources, to collect the insuranceproceeds where the same became due, yet, it merely sent demand letters tothe insurance company. And when the company did not act on the letters,
the petitioner did not pursue other remedies to press its claim. It did noteven file a suit for the recovery of the insurance proceeds against theinsurance company before and even during the liquidation of the company.It allowed seven long years to pass before finally deciding to file acollection case. Realizing that it could no longer collect from the insurancecompany because the same had already folded up, the petitioner directed thecollection suit against the private respondents whose obligation with thepetitioner had long been extinguished.
For, indeed, under the facts obtaining, the private respondents cannot havebeen expected to initiate moves for the collection of the insurance proceeds.It was the petitioner which was duty bound to enforce the claim for the
insurance proceeds, being, as earlier mentioned, the attorney-in-fact of theprivate respondents and the beneficiary of the insurance policy.
It is sad that the private respondents, small time sari-sari store keepers, hadto be dragged into this suit if only because of the petitioner's resoluteness torecover what, to our minds, is too measly an amount, not really worthlitigating upon, in fact, not even worth wasting the time of this Court.
WHEREFORE, the petition is hereby DISMISSED and the appealedjudgment AFFIRMED, in toto, with triple costs against the petitioner.SO ORDERED.
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Insurable Interest
Insurance Code
Sec. 18. No contract or policy of insurance on property shall be enforceableexcept for the benefit of some person having an insurable interest in the
property insured.
Sec. 25. Every stipulation in a policy of insurance for the payment of loss
whether the person insured has or has not any interest in the property
insured, or that the policy shall be received as proof of such interest, and
every policy executed by way of gaming or wagering, is void.
Violeta R. Lalican v. Insular Life Assurance Co. Ltd.
Facts:
Eulogio Lalican applied for an insurance policy with the Insular
Life amounting to Php 1,500,000. Under the terms of the policy, Eulogio
was to pay the premiums on a quarterly basis, having a grace period of 31
days, for the payment of each premium subsequent to the first. If any
premium was not paid on or before the due date, the policy would be in
default and if the premium remained unpaid until the end of the grace
period, the policy would automatically lapse and become void.
Eulogio paid the premiums due on the first two succeeding
payment dates but failed to pay subsequent premiums even after the lapse o f
the grace period thereby rendering the policy void. He submitted an
application for reinstatement of policy through Josephine Malaluan, an
agent of Insular Life, together with the payment of the unpaid premiums.
However, the Insular Life notified him that his application could not be
processed because he failed to pay the overdue interest of the unpaid
premiums.
On Sept. 17, 1998, Eulogio submitted to Malaluans house a
second application for reinstatement including the payment for the overdue
interest as well as for the premiums due for April and July of that year,
which was received by Malaluans husband on her behalf and was thereby
issued a receipt for the amount Eulogio deposited. However, on that same
day, Eulogio died of cardio-respiratory arrest secondary to electrocution.
Violeta, Eulogios widow filed with the Insular Life a claim for
payment of the full proceeds of the policy but the latter informed her that
the claim could not be granted since at the time of Eulogios death, his
policy has already lapsed and he failed to reinstate the same. Violeta
requested a reconsideration of her claim but the same was also rejected.
Therefore, she filed a complaint for death claim benefits with the RTC
alleging the unfair claim settlement practice of Insular Life and its
deliberate failure to act with reasonable promptness on her insurance claim.
The trial court rendered a decision in favour of Insular Life and after theformer denied her motion for reconsideration, she directly elevated her case
to the Supreme Court via the petition for review on Certiorari.
Issue:
Whether or not the policy of Eulogio was reinstated before his death.
Ruling:
To reinstate a policy means to restore the same to preium-paying
status after it has been permitted to lapse. Both the policy contract and
application for reinstatement provide for specific conditions for the
reinstatement of a lapsed policy.
According to the Application for Reinstatement, the policy would
only be considered reinstated upon the approval of the application by
Insular Life during the applicants lifetime and good health and whatever
amount the application paid in connection was considered to be a deposit
only until approval of said application.
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Eulogios death rendered impossible full compliance with the
conditions for reinstatement of policy even though, before his death, he
managed to file his application for reinstatement and deposit the amount for
payment of his overdue premiums and interest thereon with Malaluan. As
expressly provided on the policy contract, agents of Insular Life have no
authority to approve any application for reinstatement. They still had to turn
over to Insular Life the application for reinstatement and accompanying
deposit, for processing and approval of the latter.
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El Oriente Fabrica de Tabacos, Inc. vs. Juan Posadas, Collector of
Internal Revenue
[G.R. No. 34774, September 21, 1931]
Facts:
Insurer: Manufacturers Life Insurance Co., of Toronto, Canada, thru its
local agent E.E. Elser
Insured: A. Velhagen (manager of El Oriente)
Beneficiary: El Oriente Fabrica de Tabacos, Inc.
El Oriente, in order to protect itself against the loss that it might
suffer by reason of the death of its manager, whose death would be a serious
loss to El Oriente procured from the Insurer an insurance policy on the life
of the said manager for the sum of 50,000 USD with El Oriente as the
designated sole beneficiary. The insured has no interest or participation in
the proceeds of said life insurance policy.
El Oriente charged as expenses of its business all the said
premiums and deducted the same from its gross incomes as reported in its
annual income tax returns, which deductions were allowed by Posadas
(Collector of Internal Revenue) upon showing by El Oriente that such
premiums were legitimate expenses of the business.
Upon the death of the manager, El Oriente received all the
proceeds of the life insurance policy together with the interest and the
dividends accruing thereon, aggregating P104,957.88. Posadas assessed
and levied the sum of P3,148.74 as income tax on the proceeds of the
insurance policy, which was paid by El Oriente under protest. El Oriente
claiming exemption under Section 4 of the Income Tax Law.
Issue:
Whether or not the proceeds of insurance taken by a corporation on the life
of an important official to indemnify it against loss in case of his death, are
taxable as income under the Philippine Income Tax Law?
Ruling:
The Income Tax Law for the Philippines is Act No. 2833, as
amended. In chapter I On Individuals, is to be found section 4 which
provides that, "The following incomes shall be exempt from the provisions
of this law: (a) The proceeds of life insurance policies paid to beneficiaries
upon the death of the insured ... ." The Chapter on Corporationsdoes not
provide as above. It is certain that the proceeds of life insurance policies
are exempt. It is not so certain that the proceeds of life insurance policiespaid to corporate beneficiaries upon the death of the insured are likewise
exempt.
The situation will be better elucidated by a brief reference to laws
on the same subject in the United States. The Income Tax Law of 1916
extended to the Philippine Legislature, when it came to enact Act No. 2833,
to copy the American statute. Subsequently, the Congress of the United
States enacted its Income Tax Law of 1919, in which certain doubtful
subjects were clarified. Thus, as to the point before us, it was made clear,
when not only in the part of the law concerning individuals were
exemptions provided for beneficiaries, but also in the part concerning
corporations, specific reference was made to the exemptions in favor of
individuals, thereby making the same applicable to corporations. This was
authoritatively pointed out and decided by the United States Supreme Court
in the case of United States vs. Supplee-Biddle Hardware Co. ( [1924], 265
U.S., 189), which involved facts quite similar to those before us.
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To quote the exact words in the cited case of Chief Justice Taft
delivering the opinion of the court:
It is earnestly pressed upon us that proceeds of life insurance paid
on the death of the insured are in fact capital, and cannot be taxed as income
that proceeds of a life insurance policy paid on the death of the insured
are not usually classed as income.
Considering, therefore, the purport of the stipulated facts,
considering the uncertainty of Philippine law, and considering the lack of
express legislative intention to tax the proceeds of life insurance policies
paid to corporate beneficiaries, particularly when in the exemption in favor
of individual beneficiaries in the chapter on this subject, the clause is
inserted "exempt from the provisions of this law," we deem it reasonable to
hold the proceeds of the life insurance policy in question as representing an
indemnity and not taxable income.
The foregoing pronouncement will result in the judgment being
reversed and in another judgment being rendered in favor of El Oriente.
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Beneficiaries
New Civil Code
Article 2012. Any person who is forbidden from receiving any donation
under article 739 cannot be named beneficiary of a life insurance policy bythe person who cannot make any donation to him, according to said article
Article 739.The following donations shall be void:
(1) Those made between persons who were guilty of adultery or
concubinage at the time of the donation;
(2) Those made between persons found guilty of the same criminal offense,
in consideration thereof;
(3) Those made to a public officer or his wife, descendants and ascendants,
by reason of his office.
In the case referred to in No. 1, the action for declaration of nullity may be
brought by the spouse of the donor or donee; and the guilt of the donor and
donee may be proved by preponderance of evidence in the same action.
Insurance Code:
Sec. 11. The insured shall have the right to change the beneficiary he
designated in the policy, unless he has expressly waived this right in said
policy.
Sec. 12. The interest of a beneficiary in a life insurance policy shall be
forfeited when the beneficiary is the principal, accomplice, or accessory in
willfully bringing about the death of the insured; in which event, the nearest
relative of the insured shall receive the proceeds of said insurance if not
otherwise disqualified.
THE INSULAR LIFE ASSURANCE COMPANY, LTD. vs.
CARPONIA T. EBRADO and PASCUALA VDA. DE EBRADO
[G.R. No. L-44059 October 28, 1977]
Facts of the Case:
On September 1, 1968, Buenaventura Cristor Ebrado was issued by The
Life Assurance Co., Ltd., Policy No. 009929 on a whole-life for P5,882.00
with a, rider for Accidental Death for the same amount Buenaventura C.
Ebrado designated Carpponia T. Ebrado as the revocable beneficiary in his
policy. He to her as his wife.
On October 21, 1969, Buenaventura C. Ebrado died when he was hit by a
failing branch of a tree. As the policy was in force, The Insular Life
Assurance Co., Ltd. liable to pay the coverage in the total amount of
P11,745.73, representing the face value of the policy in the amount ofP5,882.00 plus the additional benefits for accidental death also in the
amount of P5,882.00 and the refund of P18.00 paid for the premium due
November, 1969, minus the unpaid premiums and interest thereon due for
January and February, 1969, in the sum of P36.27.
Carponia T. Ebrado filed with the insurer a claim for the proceeds of the
Policy as the designated beneficiary therein, although she admits that she
and the insured Buenaventura C. Ebrado were merely living as husband and
wife without the benefit of marriage.
Pascuala Vda. de Ebrado also filed her claim as the widow of the deceasedinsured. She asserts that she is the one entitled to the insurance proceeds,
not the common-law wife, Carponia T. Ebrado.
In doubt as to whom the insurance proceeds shall be paid, the insurer, The
Insular Life Assurance Co., Ltd. commenced an action for Interpleader
before the Court of First Instance of Rizal on April 29, 1970.
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Term, AY 2014 -2015
CLASS READER
After the issues have been joined, a pre-trial conference was held. In the
pre-trial conference the parties submits evidence and make admissions.xxx;
8) that the beneficiary designated by the insured in the policy is Carponia
Ebrado and the insured made reservation to change the beneficiary but
although the insured made the option to change the beneficiary, same was
never changed up to the time of his death and the wife did not have any
opportunity to write the company that there was reservation to change the
designation of the parties it agreed that a decision be rendered based on and
stipulation of facts as to who among the two claimants is entitled to the
policy.
On September 25, 1972, the trial court rendered judgment declaring among
others, Carponia T. Ebrado disqualified from becoming beneficiary of the
insured Buenaventura Cristor Ebrado and directing the payment of the
insurance proceeds to the estate of the deceased insured. The trial court held
that.It is patent from the last paragraph of Art. 739 of the Civil Code that acriminal conviction for adultery or concubinage is not essential in order to
establish the disqualification mentioned therein. Neither is it also necessary
that a finding of such guilt or commission of those acts be made in a
separate independent action brought for the purpose. The guilt of the donee
(beneficiary) may be proved by preponderance of evidence in the same
proceeding (the action brought to declare the nullity of the donation).
Since it is agreed in their stipulation during the pre-trial that the deceased
insured and defendant Carponia T. Ebrado were living together as husband
and wife without being legally married and that the marriage of the insured
with the other defendant Pascuala Vda. de Ebrado was valid and stillexisting at the time the insurance in question was purchased there is no
question that defendant Carponia T. Ebrado is disqualified from becoming
the beneficiary of the policy in question and as such she is not entitled to the
proceeds of the insurance upon the death of the insured.
Issue of the Case:
Can a common-law wife named as beneficiary in the life insurance policy of
a legally married man claim the proceeds thereof in case of death of the
latter?
Ruling:
The SC affirmed the decision of the trial court.
under Article 2012 of the same Code, "any person who is forbidden from
receiving any donation under Article 739 cannot be named beneficiary of a
fife insurance policy by the person who cannot make a donation to him.
Common-law spouses are, definitely, barred from receiving donations from
each other. Article 739 of the new Civil Code provides: The following
donations shall be void:
1. Those made between persons who were guilty of adultery or concubinage
at the time of donation;
2. Those made between persons found guilty of the same criminal offense,
in consideration thereof;
3. Those made to a public officer or his wife, descendants or ascendants by
reason of his office.
In the case referred to in No. 1, the action for declaration of nullity may be
brought by the spouse of the donor or donee; and the guilt of the donee may
be proved by preponderance of evidence in the same action.
The underscored clause neatly conveys that no criminal conviction for the
offense is a condition precedent. In fact, it cannot even be from the
aforequoted provision that a prosecution is needed. On the contrary, the law
plainly sta tes that the guilt of the party may be proved " in the same acting
for declaration of nullity of donation. And, it would be sufficient if evidence
preponderates upon the guilt of the consort for the offense indicated. The
quantum of proof in criminal cases is not demanded.
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INSURANCE | ATTY. MIGALLOS 1ST
Term, AY 2014 -2015
CLASS READER
In the caw before Us, the requisite proof of common-law relationship
between the insured and the beneficiary has been conveniently supplied by
the stipulations between the parties in the pre-trial conference of the case. It
case agreed upon and stipulated therein that the deceased insured
Buenaventura C. Ebrado was married to Pascuala Ebrado with whom she
has six legitimate children; that during his lifetime, the deceased insured
was living with his common-law wife, Carponia Ebrado, with whom he has
two children. These stipulations are nothing less than judicial admissions
which, as a consequence, no longer require proof and cannot be
contradicted. Afortiori, on the basis of these admissions, a judgment may
be validly rendered without going through the rigors of a trial for the sole
purpose of proving the illicit liaison between the insured and the
beneficiary. In fact, in that pretrial, the parties even agreed "that a decision
be rendered based on this agreement and stipulation of facts as to who
among the two claimants is entitled to the policy."
ACCORDINGLY, the appealed judgment of the lower court is hereby
affirmed. Carponia T. Ebrado is hereby declared disqualified to be the
beneficiary of the late Buenaventura C. Ebrado in his life insurance policy.
As a consequence, the proceeds of the policy are hereby held payable to the
estate of the deceased insured. Costs against Carponia T. Ebrado.
SO ORDERED.
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INSURANCE | ATTY. MIGALLOS 1ST
Term, AY 2014 -2015
CLASS READER
Vda. De Consuegra v. GSIS
Facts:
Appeal on purely questions of law from the decision of the Court of First
Instance of Surigao del Norte, dated March 7, 1967, in its SpecialProceeding No. 1720.
The late Jose Consuegra was employed as a shop foreman in the province of
Surigao del Norte. He contracted two marriages, the first with Rosario Diaz
and the second, which was contracted in good faith while the first marriage
was subsisting, with Basilia Berdin.
Consuegra died, while the proceeds of his GSIS life insurance were paid to
petitioner Basilia Berdin and her children who were the beneficiaries named
in the policy. They received Php 6,000.
Consuegra did not designate any beneficiary who would receive the
retirement insurance benefits due to him. Respondent Rosario Diaz, the
widow by the first marriage, filed a claim with the GSIS asking that the
retirement insurance benefits be paid to her as the only legal heir of
Consuegra, considering that the deceased did not designate any beneficiary
with respect to his retirement insurance benefits.
Petitioner Berdin and her children, likewise, filed a similar claim with the
GSIS, asserting that being the beneficiaries named in the life insurance
policy of Consuegra, they are the only ones entitled to receive the
retirement insurance benefits due the deceased Consuegra.
The GSIS ruled that the legal heirs of the late Jose Consuegra were Rosario
Diaz, his widow by his first marriage who is entitled to one-half, or 8/16, of
the retirement insurance benefits, on the one hand; and Basilia Berdin, his
widow by the second marriage and their seven children, on the other hand,
who are entitled to the remaining one-half, or 8/16.
Basilia Berdin didnt agree. She filed a petition de claring her and her
children to be the legal heirs and exclusive beneficiaries of the retirement
insurance.
The trial court affirmed stating that: "when two women innocently and in
good faith are legally united in holy matrimony to the same man, they andtheir children, born of said wedlock, will be regarded as legitimate children
and each family be entitled to one half of the estate.
Hence the present appeal by Basilia Berdin and her children.
Issue: To whom should this retirement insurance benefits of Jose
Consuegra be paid, because he did not designate the beneficiary of his
retirement insurance?
Held: Both
Ratio:
Berdin averred that because the deceased Jose Consuegra failed to designate
the beneficiaries in his retirement insurance, the appellants who were the
beneficiaries named in the life insurance should automatically be considered
the beneficiaries to receive the retirement insurance benefits.
The GSIS offers two separate and distinct systems of benefits to its
members one is the life insurance and the other is the retirement
insurance. These two distinct systems of benefits are paid out from two
distinct and separate funds that are maintained by the GSIS.
In the case of the proceeds of a life insurance, the same are paid to whoever
is named the beneficiary in the life insurance policy. As in the case of a life
insurance provided for in the Insurance Act, the beneficiary in a life
insurance under the GSIS may not necessarily be a heir of the insured. The
insured in a life insurance may designate any person as beneficiary unless
disqualified to be so under the provisions of the Civil Code. And in the
absence of any beneficiary named in the life insurance policy, the proceeds
of the insurance will go to the estate of the insured.
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INSURANCE | ATTY. MIGALLOS 1ST
Term, AY 2014 -2015
CLASS READER
Retirement insurance is primarily intended for the benefit of the employee,
to provide for his old age, or incapacity, after rendering service in the
government for a required number of years. If the employee reaches the age
of retirement, he gets the retirement benefits even to the exclusion of the
beneficiary or beneficiaries named in his application for retirement
insurance. The beneficiary of the retirement insurance can only claim the
proceeds of the retirement insurance if the employee dies before retirement.
If the employee failed or overlooked to state the beneficiary of his
retirement insurance, the retirement benefits will accrue to his estate and
will be given to his legal heirs in accordance with law, as in the case of a
life insurance if no beneficiary is named in the insurance policy.
GSIS had correctly acted when it ruled that the proceeds should be divided
equally between his first living wife and his second. The lower court has
correctly applied the ruling of this Court in the case of Lao v Dee.
Gomez vs. Lipana- in construing the rights of two women who were married
to the same man, held "that since the defendant's first marriage has not been
dissolved or declared void the conjugal partnership established by that
marriage has not ceased. Nor has the first wife lost or relinquished her
status as putative heir of her husband under the new Civil Code, entitled to
share in his estate upon his death should she survive him. Consequently,
whether as conjugal partner in a still subsisting marriage or as such putative
heir she has an interest in the husband's share in the property here in
dispute....
With respect to the right of the second wife, although the second marriagecan be presumed to be void ab initio as it was celebrated while the first
marriage was still subsisting, still there is need for judicial declaration of
such nullity. And inasmuch as the conjugal partnership formed by the
second marriage was dissolved before judicial declaration of its nullity, "the
only lust and equitable solution in this case would be to recognize the right
of the second wife to her share of one-half in the property acquired by her
and her husband and consider the other half as pertaining to the conjugal
partnership of the first marriage."
7/13/2019 Insurance Class
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INSURANCE | ATTY. MIGALLOS 1ST
Term, AY 2014 -2015
CLASS READER
SOUTHERN LUZON EMPLOYEES ASSN. V. GOLPEO
Note:
A common law wife of the insured who has a legal wife is disqualified as
beneficiary. It is not required that there be a previous conviction foradultery or concubinage for the prohibition to apply. However, in an earlier
case (such as the present case), the common-law wife designated prevailed
over the legal wife because the case took place while the Old Civil Code
was still applicable, under which there was no provision similar to
Art.2012.
FACTS:
Southern Luzon Employees' Association is composed of laborers and
employees of Laguna tayabas Bus Co., and Batangas Transportation
Company, and one of its purposes is mutual aid of its members and theirdefendants in case of death.
Roman A. Concepcion was a member until his death on December 13,
1950. In the form required by the association to be accomplished by its
members, with reference to the death benefit, Roman A. Concepcion listed
as his beneficiaries Aquilina Maloles, Roman M. Concepcion, Jr., Estela M.
Concepcion, Rolando M. Concepcion and Robin M. Concepcion.
After the death of Roman A. Concepcion, the association was able to collect
voluntary contributions from its members amounting to P2,505. Three sets
of claimants presented themselves, namely, (1) Juanita Golpeo, legal wifeof Roman A. Concepcion, and her children; (2) Aquilina Maloles, common
law wife of Roman A. Concepcion, and her children, named beneficiaries
by the deceased; and (3) Elsie Hicban, another common law wife of Roman
A. Concepcion, and her child.
The court rendered a decision, declaring the defendants Aquiliana Malolos
and her children the sole beneficiaries of the sum of P2,505.00 and ordering
the plaintiff to deliver said amount to them.
ISSUE:
WHETHER OR NOT THE COURT COMMITED ERROR IN
DESIGNATING A COMMON LAW WIFE OF AN INSURED AS THE
BENEFICIARY INSTEAD OF THE LEGAL WIFE.
Remember: This case took place while the Old Civil Code was still
applicable.
HELD: Judgment affirmed.
The decision is based mainly on the theory that the contract between the
plaintiff and the deceased Roman A. Concepcion partook of the nature of aninsurance and that, therefore, the amount in question belonged exclusively
to the beneficiaries, invoking the following pronouncements of this Court in
the case ofDel Val vs. Del Val, 29 Phil., 534:
With the finding of the trial court that the proceeds of the life-insurance
policy belongs exclusively to the defendant as his individual and separate
property, we agree. That the proceeds of an insurance policy belong
exclusively to the beneficiary and not to the estate of the person whose life
was insured, and that such proceeds are the separate and individual property
of the beneficiary, and not of the heirs of the person whose life was insured,
is the doctrine in America. We believe that the same doctrine obtains inthese Islands by virtue of section 428 of the Code of Commerce, which
reads:
"The amounts which the underwriter must deliver to the person insured, in
fulfillment of the contract, shall be the property creditors of any kind
whatsoever of the person who effected the insurance in favor of the
formers."
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INSURANCE | ATTY. MIGALLOS 1ST
Term, AY 2014 -2015
CLASS READER
AS TO THE CONTENTION OF THE COUNSELS PLAINTIFF THAT
THE PROCEEDS OF THE INSURANCE POLICY WERE DONATION
OR GIFT MADE BY THE FATHER DURING HIS LIFETIME, SUCH
THAT UNDER THE CIVIL CODE ARE NOT BETTERMENTS AND
SHALL BE CONSIDERED AS PART OF THE LEGAL PORTION.
The court disagrees with this contention. The contract of life insurance is a
special contract and the destination of the proceeds thereof is determined by
special laws which deal exclusively with that subject. The Civil Code has
no provisions which relate directly and specifically to life-insurance
contract or to the destination of life-insurance proceeds. That subject is
regulate exclusively by the Code of Commerce which provides for the terms
of the contract, the relations of the parties and the destination of the
proceeds of the policy.
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INSURANCE | ATTY. MIGALLOS 1ST
Term, AY 2014 -2015
CLASS READER
HEIRS OF LORETO C. MARAMAG, represented by surviving spouse
VICENTA PANGILINAN MARAMAG, petitioners,vs. EVA VERNA DE
GUZMAN MARAMAG, ODESSA DE GUZMAN MARAMAG, KARL
BRIAN DE GUZMAN MARAMAG, TRISHA ANGELIE MARAMAG,
THE INSULAR LIFE ASSURANCE COMPANY, LTD., and GREAT
PACIFIC LIFE ASSURANCE CORPORATION, respondents.
G.R. No. 181132. June 5, 2009. J.Nachura
Doctrine: The only persons entitled to claim the insurance proceeds are
either the insured, if still alive or the beneficiary if the insured is already
deceased upon the maturation of the policy; Exception is where the
insurance contract was intended to benefit third persons who are not
parties to the same in the form of favorable stipulations or indemnity
Tickler: The petition alleged that petitioners being the legitimate wife and
children of Loreto Maramag (L
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