Lucero vda. De Sindayen vs. Insular Life Assurance Co., 62 Phil.

9 (1935)

Facts:
Sindayen, employed in the Bureau of Printing at Manila went to Tarlac, to spend the Christmas
vacation with his aunt. There he applied for for life insurance in the sum of P1,000 and paid to the
agent P15 cash as part of the first premium. It was agreed with the agent that the policy, when and if
issued, should be delivered to his aunt with whom he left sum of P26.06 to complete the payment of
the first annual premium of P40.06. Sindayen returned to Manila and resumed his work a linotype
operator. The company accepted the risk after examining Sindayen and issued a policy and to the
same agent for delivery to the insured. Sindayen abruptly passed away.
The policy which the company issued was received by its agent in Tarlac. The agent delivered the
policy to Felicidad Estrada upon her payment of the balance of the first year’s annual premium. The
agent asked Felicidad Estrada if her nephew was in good health and she replied that she believed
so. He gave her the policy. The agent learned of the death of Arturo Sindayen and the aunt to return
the policy. He did not return or offer to return the premium paid. The aunt gave him the policy.
The company obtained from the beneficiary, the widow of Arturo Sindayen, her signature to a legal
document entitled “ACCORD, SATISFACTION AND RELEASE” In consideration of the sum of
P40.06 paid to her by a check of the company, she discharged the company for all claims . The said
check for P40.06 was never cashed but returned to the company. The widow brought action to
enforce payment of the policy. The first premium was already paid by the insured covering the period
from December 1, 1932. It is to December 1, 1933. Hence, this appeal.

Issue: WON the said policy took effect because of paragraph 3 of the application for at the time of its
delivery by the agent the insured was not in good health.

Held: YES. Petition granted.

Ratio:
The application which the insured signed in Tarlac, contained among others the following provisions:
3. That the said policy shall not take effect until the first premium has been paid and the policy has
been delivered to and accepted by me, while I am in good health.
There is one line of cases which holds that the stipulation contained in paragraph 3 is in the nature
of a condition precedent, that is to say, that there can be no valid delivery to the insured unless he is
in good health at the time. A number of these cases, on the other hand, go to the of holding that the
delivery of the policy by the agent to the insured consummates the contract even though the agent
knew that the insured was not in good health at the time, the theory being that his knowledge is the
company’s knowledge and his delivery of the policy is the company’s delivery.
We are inclined to the view that it is more consonant with the well known practice of life insurance
companies and the evidence in the present case to rest our decision on the proposition that
Mendoza was authorized by the company to make the delivery of the policy when he received the
payment of the first premium and he was satisfied that the insured was in good health.
In the case of MeLaurin vs. Mutual Life Insurance Co. -It is plain, therefore, that upon the facts it is
not necessarily a case of waiver or of estoppel, but a case where the local agents, in the exercise of
the powers lodged in them, accepted the premium and delivered the policy. That act binds their
principal, the defendant.
The evidence in the record shows that Mendoza had the authority, given him by the company, to
withhold the delivery of the policy to the insured “until the first premium has been paid and the policy
has been delivered to and accepted by me (the insured) while I am in good health. Mendoza’s
decision that the condition had been met by the insured and that it was proper to make a delivery of
the policy to him is just as binding on the company as if the decision had been made by its board of
directors.
It is the interest not only the applicant but of all insurance companies as well that there should be
some act which gives the applicant the definite assurance that the contract has been consummated.
A cloud will be thrown over the entire insurance business if the condition of health of the insured at
the time of delivery of the policy may be required into years afterwards with the view to avoiding the
policy on the ground that it never took effect because of an alleged lack of good health, at the time of
delivery.
When the policy is issued and delivered it is plainly not within the intention of the parties that there
should be any questions held in abeyance or reserved for future determination. It would be a most
serious handicap to business if the very existence of the contract remains in doubt even though the
policy has been issued and delivered with all the formalities required by the law. The delivery of the
policy to the insured by an agent is the final act which binds the company and insured in the
absence of fraud or other legal ground for rescission. The fact that the agent to whom it has
entrusted this duty is derelict or negligent or even dishonest in the performance of the duty which
has been entrusted to him would create a liability of the agent to the company but does not resolve
the company’s obligation based upon the authorized acts of the agent toward a third party who was
not in collusion with the agent.
“4. That the agent taking this application has no authority to make, modify or discharge contracts, or
to waive any of the Company’s right or requirements.”
Paragraph 4 of the application to the effect is not in point. Mendoza neither waived nor pretended to
waive any right or requirement of the company. In fact, his inquiry as to the state of health of the
insured discloses that he was endeavoring to assure himself that this requirement of the company
had been satisfied. In doing so, he acted within the authority conferred on him by his agency and his
acts within that authority bind the company. The company therefore having decided that all the
conditions precedent to the taking effect of the policy had been complied with, it is now estopped to
assert that it never intended that the policy should take effect. 

Enriquez v. Sun Life Assurance Co. of Canada

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

FACTS:

On Sept. 24 1917, Herrer made an application to SunLife through its office in Manila for life annuity. Two
(2) days later, he paid the sum of 6T to the company’s manager in its Manila office and was given a
receipt.

On Nov. 26, 1917, the head office gave notice of acceptance by cable to Manila. On the same date, the
Manila office prepared a letter notifying Herrer that his application has been accepted and this was
placed in the ordinary channels of transmission, but as far as known was never actually mailed and
never received by Herrer. Herrer died on Dec. 20, 1917. The plaintiff as administrator of Herrer’s estate
brought this action to recover the 6T paid by the deceased.

ISSUES:

Whether or not the insurance contract was perfected.

Ruling

No

Civil Code
Art. 1319 (formerly Art.1262)
Art. 1319. Consent is manifested by the meeting of the offer and the acceptance
upon the thing and the cause which are to constitute the contract. The offer must be
certain and the acceptance absolute. A qualified acceptance constitutes a counter-
offer.
Acceptance made by letter or telegram does not bind the offerer except from the
time it came to his knowledge. The contract, in such a case, is presumed to have
been entered into in the place where the offer was made.
The contract for life annuity was NOT perfected because it had NOT been proved satisfactorily
that the acceptance of the application ever came to the knowledge of the applicant.  An
acceptance of an offer of insurance NOT actually or constructively communicated to the
proposer does NOT make a contract of insurane, as the locus poenitentiae is ended when an
acceptance has passed beyond the control of the party.

Insular v Ebrado G.R. No. L-44059 October 28,

1977
Facts:
J. Martin:
Cristor Ebrado was issued by The Life Assurance Co., Ltd., a policy for P5,882.00 with a rider for
Accidental Death. He designated Carponia T. Ebrado as the revocable beneficiary in his policy. He
referred to her as his wife.
Cristor was killed when he was hit by a failing branch of a tree. Insular Life was made liable to pay
the coverage in the total amount of P11,745.73, representing the face value of the policy in the
amount of P5,882.00 plus the additional benefits for accidental death.
Carponia T. Ebrado filed with the insurer a claim for the proceeds as the designated beneficiary
therein, although she admited that she and the insured 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 deceased insured. She asserts
that she is the one entitled to the insurance proceeds.
Insular commenced an action for Interpleader before the trial court as to who should be given the
proceeds. The court declared Carponia as disqualified.

Issue: WON a common-law wife named as beneficiary in the life insurance policy of a legally married
man can claim the proceeds in case of death of the latter?

Held

No

A common-law wife named as a beneficiary in the life insurance policy of a legally married man cannot
claim the proceeds thereof in case the death of the latter.

The contract of insurance is govern by the provisions of the new civil code on matters not specifically
provided for in the insurance code. Article 2011 of the New Civil Code states: “The contract of insurance is
governed by special laws. Matters not expressly provided for in such special laws shall be regulated by this
Code.” When not otherwise specifically provided for by the Insurance Law, the contract of life insurance is
governed by the general rules of the civil law regulating contracts. And 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 life insurance policy by the person who cannot make a donation to him.

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;

Common-law spouses are, definitely, barred from receiving donations from each other. Also conviction for
adultery or concubinage is not required as only preponderance of evidence is necessary.
“In essence, a life insurance policy is no different from a civil donation insofar as the beneficiary is
concerned. Both are founded upon the same consideration: liberality. A beneficiary is like a donee,
because the premiums of the policy which the insured pays out of liberality, the beneficiary will receive the
proceeds or profits of said insurance.”

As a consequence, the proscription in Article 739 of the new Civil Code should equally operate in life
insurance contracts. The mandate of Article 2012 cannot be laid aside: any person who cannot receive a
donation cannot be named as beneficiary in the life insurance policy of the person who cannot make the
donation.

Heirs of Maramag vs Marag

Facts

Petitioners are the legitimate heirs of the deceased loreto

Loreto took an insurance policy and named his concubine EVA and illegintimate children as beneficiaries

Petitioners claim that Eva is disqualified for being the suspect in the killing

They further claim that The Illegitimate Children are entitled only to a lesser share in the proceeds

Thus, they pary that the share of Eva and portions of the share of the ILC should be awarded to them
with respect to their legitimes

Issue

Whether the members of the legitimate family is entitled to the insurance proceeds

RULING

NO

It is evident from the face of the complaint that petitioners are not entitled to a favorable judgment in
light of Article 2011 of the Civil Code which expressly provides that insurance contracts shall be
governed by special laws, i.e., the Insurance Code. Section 53 of the Insurance Code states—

SECTION 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.

Pursuant thereto, it is obvious that 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.20 The exception to this rule is a situation 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.
In such a case, third parties may directly sue and claim from the insurer.21

Petitioners are third parties to the insurance contracts and, thus, are not entitled to the proceeds
thereof. The disqualification of Eva as a beneficiary is of no moment considering that the designation of
the illegitimate children as beneficiaries in Loreto’s insurance policies remains valid. Because no legal
proscription exists in naming as beneficiaries the children of illicit relationships by the insured,22 the
shares of Eva in the insurance proceeds, whether forfeited by the court in view of the prohibition on
donations under Article 739 of the Civil Code or by the insurers themselves for reasons based on the
insurance contracts, must be awarded to the said illegitimate children, the designated beneficiaries, to
the exclusion of petitioners. It is only in cases where the insured has not designated any beneficiary,23
or when the designated beneficiary is disqualified by law to receive the proceeds,24 that the insurance
policy proceeds shall redound to the benefit of the estate of the insured.

Sun Insurance Office, Ltd. Vs. Court of Appeals

Facts

On August 15, 1983, herein private respondent Emilio Tan took from herein petitioner a P300,000.00
property insurance policy to cover his interest in the electrical supply store of his brother housed in a
building in Iloilo City. Four (4) days after the issuance of the policy, the building was burned including
the insured store.

On August 20, 1983, Tan filed his claim for fire loss with petitioner, but on February 29, 1984,
petitioner wrote Tan denying the latter's claim. On April 3, 1984, Tan wrote petitioner, seeking
reconsideration of the denial of his claim. On September 3, 1985, Tan's counsel wrote the Insurer
inquiring about the status of his April 3, 1984 request for reconsideration. Petitioner answered the
letter on October 11, 1985, advising Tan's counsel that the Insurer's denial of Tan's claim remained
unchanged, enclosing copies of petitioners' letters of February 29, 1984 and May 17, 1985
(response to petition for reconsideration). On November 20, 1985, Tan filed Civil Case No. 16817
with the Regional Trial Court of Iloilo, Branch 27 but petitioner filed a motion to dismiss on the
alleged ground that the action had already prescribed. Said motion was denied in an order dated
November 3, 1987; and petitioner's motion for reconsideration was also denied in an order dated
January 14, 1988.

ISSUE

WHETHER OR NOT THE FILING OF A MOTION FOR RECONSIDERATION INTERRUPTS

THE TWELVE (12) MONTHS PRESCRIPTIVE PERIOD TO CONTEST THE DENIAL OF
THE INSURANCE CLAIM; and

II

WHETHER OR NOT THE REJECTION OF THE CLAIM SHALL BE DEEMED FINAL ONLY
IF IT CONTAINS WORDS TO THE EFFECT THAT THE DENIAL IS FINAL.

The answer to the first issue is in the negative.

While it is a cardinal principle of insurance law that a policy or contract of insurance is to be

construed liberally in favor of the insured and strictly against the insurer company, yet, contracts of
insurance, like other contracts, are to be construed according to the sense and meaning of the terms
which the parties themselves have used. If such terms are clear and unambiguous, they must be
taken and understood in their plain, ordinary and popular sense (Pacific Banking Corp. v. Court of
Appeals, 168 SCRA 1 [1988]).

Condition 27 of the Insurance Policy, which is the subject of the conflicting contentions of the parties,
reads:

27. Action or suit clause — If a claim be made and rejected and an action or suit be not
commenced either in the Insurance Commission or in any court of competent jurisdiction
within twelve (12) months from receipt of notice of such rejection, or in case of arbitration
taking place as provided herein, within twelve (12) months after due notice of the award
 made by the arbitrator or arbitrators or umpire, then the claim shall for all purposes be
deemed to have been abandoned and shall not thereafter be recoverable hereunder.

As the terms are very clear and free from any doubt or ambiguity whatsoever, it must be taken and
understood in its plain, ordinary and popular sense pursuant to the above-cited principle laid down
by this Court.

Respondent Tan, in his letter addressed to the petitioner insurance company dated April 3, 1984
(Rollo, pp. 50-52), admitted that he received a copy of the letter of rejection on April 2, 1984. Thus,
the 12-month prescriptive period started to run from the said date of April 2, 1984, for such is the
plain meaning and intention of Section 27 of the insurance policy.

While the question of whether or not the insured was definitely advised of the rejection of his claim
through the letter (Rollo, pp. 48-49) of petitioner dated February 29, 1984, may arise, the certainty of
the denial of Tan's claim was clearly manifested in said letter, the pertinent portion of which reads:

We refer to your claim for fire loss of 20th August, 1983 at Huervana St., La Paz, Iloilo City.

We now have the report of our adjusters and after a thorough and careful review of the same
and the accompanying documents at hand, we are rejecting, much to our regrets, liability for
the claim under our policies for one or more of the following reasons:

1. xxx xxx xxx

2. xxx xxx xxx

For your information, we have referred all these matters to our lawyers for their opinion as to
the compensability of your claim, particularly referring to the above violations. It is their
opinion and in fact their strong recomendation to us to deny your claim. By this letter, we do
not intend to waive or relinquish any of our rights or defenses under our policies of
insurance.

It is also important to note the principle laid down by this Court in the case of Ang v. Fulton Fire
Insurance Co., (2 SCRA 945 [1961]), to wit:

The condition contained in an insurance policy that claims must be presented within one
year after rejection is not merely a procedural requirement but an important matter essential
to a prompt settlement of claims against insurance companies as it demands that insurance
suits be brought by the insured while the evidence as to the origin and cause of destruction
have not yet disappeared.

In enunciating the above-cited principle, this Court had definitely settled the rationale for the
necessity of bringing suits against the Insurer within one year from the rejection of the claim. The
contention of the respondents that the one-year prescriptive period does not start to run until the
petition for reconsideration had been resolved by the insurer, runs counter to the declared purpose
for requiting that an action or suit be filed in the Insurance Commission or in a court of competent
jurisdiction from the denial of the claim. To uphold respondents' contention would contradict and
defeat the very principle which this Court had laid down. Moreover, it can easily be used by insured
persons as a scheme or device to waste time until any evidence which may be considered against
them is destroyed.

It is apparent that Section 27 of the insurance policy was stipulated pursuant to Section 63 of the
Insurance Code, which states that:

Sec. 63. A condition, stipulation or agreement in any policy of insurance, limiting the time for
commencing an action thereunder to a period of less than one year from the time when the
cause of action accrues, is void.

The crucial issue in this case is: When does the cause of action accrue?

In support of private respondent's view, two rulings of this Court have been cited, namely, the case
of Eagle Star Insurance Co. vs. Chia Yu (96 Phil. 696 (1955]), where the Court held:
 The right of the insured to the payment of his loss accrues from the happening of the loss.
However, the cause of action in an insurance contract does not accrue until the insured's
claim is finally rejected by the insurer. This is because before such final rejection there is no
real necessity for bringing suit.

and the case of ACCFA vs. Alpha Insurance & Surety Co., Inc. (24 SCRA 151 [1968], holding that:

Since "cause of action" requires as essential elements not only a legal right of the plaintiff
and a correlated obligation of the defendant in violation of the said legal right, the cause of
action does not accrue until the party obligated (surety) refuses, expressly or impliedly, to
comply with its duty (in this case to pay the amount of the bond).

Indisputably, the above-cited pronouncements of this Court may be taken to mean that the insured's
cause of action or his right to file a claim either in the Insurance Commission or in a court of
competent jurisdiction commences from the time of the denial of his claim by the Insurer, either
expressly or impliedly.

But as pointed out by the petitioner insurance company, the rejection referred to should be
construed as the rejection, in the first instance, for if what is being referred to is a reiterated rejection
conveyed in a resolution of a petition for reconsideration, such should have been expressly
stipulated.

Thus, to allow the filing of a motion for reconsideration to suspend the running of the prescriptive
period of twelve months, a whole new body of rules on the matter should be promulgated so as to
avoid any conflict that may be brought by it, such as:

a) whether the mere filing of a plea for reconsideration of a denial is sufficient or must it be
supported by arguments/affidavits/material evidence;

b) how many petitions for reconsideration should be permitted?

While in the Eagle Star case (96 Phil. 701), this Court uses the phrase "final rejection", the same
cannot be taken to mean the rejection of a petition for reconsideration as insisted by respondents.
Such was clearly not the meaning contemplated by this Court. The Insurance policy in said case
provides that the insured should file his claim, first, with the carrier and then with the insurer. The
"final rejection" being referred to in said case is the rejection by the insurance company.

PREMISES CONSIDERED, the questioned decision of the Court of Appeals is REVERSED and
SET ASIDE, and Civil Case No. 16817 filed with the Regional Trial Court is hereby DISMISSED.

SO ORDERED.

Fortune Medicare vs Amorin

G.R. No. 195872, March 12, 2014       

FACTS:

David Robert U. Amorin was a cardholder/member of Fortune Medicare,

Inc., a corporation engaged in providing health maintenance services to
its members.  The terms of Amorin’s medical coverage were provided in
a Corporate Health Program Contract.
While on vacation in Honolulu, Hawaii, Amorin underwent an emergency
surgery, specifically appendectomy, at the St. Francis Medical Center,
causing him to incur professional and hospitalization expenses of
US$7,242.35 and US$1,777.79, respectively.  He attempted to recover
from Fortune Care the full amount thereof upon his return to Manila, but
the company merely approved a reimbursement of P12,151.36, an
amount that was based on the average cost of appendectomy, net of
medicare deduction, if the procedure were performed in an accredited
hospital in Metro Manila.Amorin received under protest the approved
amount, but asked for its adjustment to cover the total amount of
professional fees which he had paid, and eighty percent (80%) of the
approved standard charges based on “American standard”, considering
that the emergency procedure occurred in the U.S.A.

To support his claim, Amorin cited Section 3, Article V on Benefits and

Coverages of the Health Care Contract, part of it states:

“Whether as an in-patient or out-patient, FortuneCare shall reimburse

the total hospitalization cost including the professional fee (based on the
total approved charges) to a member who receives emergency care in a
non-accredited hospital.  The above coverage applies only to
Emergency confinement within Philippine Territory.  However, if the
emergency confinement occurs in a foreign territory, Fortune Care
will be obligated to reimburse or pay eighty (80%) percent of the
approved standard charges which shall cover the hospitalization
costs and professional fees.”

ISSUE:

Whether or not Fortune Care is liable to pay the total amount of

professional fees which Amorin had paid, and eighty percent (80%) of
the approved standard charges based on “American standard”

RULING:

Yes, Fortune Care is liable to the total amount of professional fees which
Amorin had paid, and eighty percent (80%) of the approved standard
charges based on “American standard”.

The Supreme Court emphasized that for purposes of determining the

liability of a health care provider to its members, jurisprudence holds that
a health care agreement is in the nature of non-life insurance, which is
primarily a contract of indemnity.  Once the member incurs hospital,
medical or any other expense arising from sickness, injury or other
stipulated contingent, the health care provider must pay for the same to
the extent agreed upon under the contract.
To aid in the interpretation of health care agreements, the Court laid
down the following guidelines in Philamcare Health Systems v. CA:

When the terms of insurance contract contain limitations on liability,

courts should construe them in such a way as to preclude the insurer
from non-compliance with his obligation.  Being a contract of adhesion,
the terms of an insurance contract are to be construed strictly against
the party which prepared the contract – the insurer.

In this case, the Court agrees with the CA that as may be gleaned from
the Health Care Contract, the parties thereto contemplated the possibility
of emergency care in a foreign country.  As the contract recognized
Fortune Care’s liability for emergency treatments even in foreign
territories, it expressly limited its liability only insofar as the percentage of
hospitalization and professional fees that must be paid or reimbursed
was concerned, pegged at a mere 80% of the approved standard
charges.

The word “standard” as used in the cited stipulation was vague and
ambiguous, as it could be susceptible of different meanings. Settled is
the rule that ambiguities in a contract are interpreted against the party
that caused the ambiguity. 

DBP Pool Accredited Insurance Company v. Radio

Mindanao Network Inc.
G.R. NO. 147039, 27 January 2006, 480 SCRA 314

FACTS:

In the evening of July 27, 1988, the radio station of Radio Mindanao Network located at the SSS
Building in Bacolod City was burned down causing damage in the amount of over one million pesos.
Respondent sought to recover under two insurance policies but the claims were denied on the basis
that the case of the loss was an excepted risk under condition no. 6 (c) and (d), to wit:

6. This insurance does not cover any loss or damage occasioned by or through or in
consequence, directly or indirectly, of any of the following consequences, namely:

(c) War, invasion, act of foreign enemies, hostilities, or warlike operations (whether war be
declared or not), civic war.

(d) Mutiny, riot, military or popular uprising, insurrection, rebellion, revolution, military or
usurped power.
The insurers maintained that based on witnesses and evidence gathered at the site, the fire was
caused by the members of the Communist Party of the Philippines/New People’s Army. Hence the
refusal to honor their obligations.
The trial court and the CA found in favor of the respondent. In its findings, both courts mentioned the
fact that there was no credible evidence presented that the CCP/NPA did in fact cause the fire that
gutted the radio station in Bacolod.

ISSUE:

WON the insurance companies are liable to pay Radio Mindanao Network under the insurance
policies?

HELD:

Yes.

An insurance contract, being a contract of adhesion, should be so interpreted as to carry out the
purpose for which the parties entered into the contract which is to insure against risks of loss or
damage to the goods. Limitations of liability should be regarded with extreme jealousy and must be
construed in such a way as to preclude the insurer from noncompliance with its obligations.

Particularly in cases of insurance disputes with regard to excepted risks, it is the insurance
companies which have the burden to prove that the loss comes within the purview of the exception
or limitation set up. It is sufficient for the insured to prove the fact of damage or loss. Once the
insured makes out a prima facie case in its favor, the duty or burden of evidence shifts to the insurer
to controvert said prima facie case.

In this case, since petitioner alleged an excepted risk, then the burden of evidence shifted to
petitioner to prove such exception. It is only when petitioner has sufficiently proven that the damage
or loss was caused by an excepted risk does the burden of evidence shift back to respondent who is
then under a duty of producing evidence to show why such excepted risk does not release petitioner
from any liability. Unfortunately for petitioner, it failed to discharge its primordial burden of proving
that the damage or loss was caused by an excepted risk.