WHITE GOLD MARINE SERVICES, INC., Petitioners, vs.

PIONEER INSURANCE AND SURETY CORPORATION AND THE

White Gold Marine Services, Inc. (White Gold) procured a protection and indemnity coverage for its vessels from The
Steamship Mutual Underwriting Association (Bermuda) Limited (Steamship Mutual) through Pioneer Insurance and Surety
Corporation (Pioneer) When White Gold failed to fully pay its accounts, Steamship Mutual refused to renew the coverage.

Steamship Mutual thereafter filed a case against White Gold for collection of sum of money to recover the latter’s unpaid
balance. White Gold on the other hand, filed a complaint before the Insurance Commission claiming that Steamship
Mutual violated Sections 1864 and 1875 of the Insurance Code, while Pioneer violated Sections 299,6 3007 and 3018 in
relation to Sections 302 and 303, thereof.

The Insurance Commission dismissed the complaint. It said that there was no need for Steamship Mutual to secure a
license because it was not engaged in the insurance business.

The Court of Appeals affirmed the decision of the Insurance Commissioner. In its decision, the appellate court
distinguished between P & I Clubs vis-à-vis conventional insurance. The appellate court also held that Pioneer merely
acted as a collection agent of Steamship Mutual.

ISSUE: Is Steamship Mutual, a P & I Club, engaged in the insurance business in the Philippines?

The parties admit that Steamship Mutual is a P & I Club. Steamship Mutual admits it does not have a license to do business
in the Philippines although Pioneer is its resident agent. It stresses that as a P & I Club, Steamship Mutual’s primary purpose
is to solicit and provide protection and indemnity coverage and for this purpose, it has engaged the services of Pioneer to
act as its agent. Respondents contend that although Steamship Mutual is a P & I Club, it is not engaged in the insurance
business in the Philippines. It is merely an association of vessel owners who have come together to provide mutual
protection against liabilities incidental to shipowning.

Section 2(2) of the Insurance Code enumerates what constitutes "doing an insurance business" or "transacting an
insurance business".

A P & I Club is "a form of insurance against third party liability, where the third party is anyone other than the P & I Club
and the members."19 By definition then, Steamship Mutual as a P & I Club is a mutual insurance association engaged in
the marine insurance business.

The records reveal Steamship Mutual is doing business in the country albeit without the requisite certificate of authority
mandated by Section 18720 of the Insurance Code. It maintains a resident agent in the Philippines to solicit insurance and
to collect payments in its behalf.

Although Pioneer is already licensed as an insurance company, it needs a separate license to act as insurance agent for
Steamship Mutual. Section 299 No person shall act as an insurance agent or as an insurance broker in the solicitation or
procurement of applications for insurance, or receive for services in obtaining insurance, any commission or other
compensation from any insurance company doing business in the Philippines or any agent thereof, without first procuring
a license so to act from the Commissioner, which must be renewed annually on the first day of January, or within six
months thereafter. . . WHEREFORE, the petition is PARTIALLY GRANTED

RAFAEL (REX) VERENDIA, petitioner, vs.

COURT OF APPEALS
Fidelity and Surety Insurance Company of the Philippines (Fidelity for short) of its Fire Insurance Policy No. F-18876
effective between June 23, 1980 and June 23, 1981 covering Rafael (Rex) Verendia's residential building located at Tulip
Drive, Beverly Hills, Antipolo, Rizal in the amount of P385,000.00. Designated as beneficiary was the Monte de Piedad &
Savings Bank. Verendia also insured the same building with two other companies, namely, The Country Bankers Insurance
for P56,000.00 under Policy No. PDB-80-1913 expiring on May 12, 1981, and The Development Insurance for P400,000.00
under Policy No. F-48867 expiring on June 30, 198l. While the three fire insurance policies were in force, the insured
property was completely destroyed by fire on the early morning of December 28, 1980. Fidelity was accordingly informed
of the loss and despite demands, refused payment under its policy, thus prompting Verendia to file a complaint with the
then Court of First Instance of Quezon City.

Answering the complaint, Fidelity, among other things, averred that the policy was avoided by reason of over-insurance;
that Verendia maliciously represented that the building at the time of the fire was leased under a contract executed on
June 25, 1980 to a certain Roberto Garcia, when actually it was a Marcelo Garcia who was the lessee.

the trial court rendered a decision, Verendia in that the insured failed to inform Fidelity of his other insurance coverages
with Country Bankers Insurance and Development Insurance.

appellate court reversed for the following reasons: (a) there was no misrepresentation concerning the lease for the
contract was signed by Marcelo Garcia in the name of Roberto Garcia; and (b) Paragraph 3 of the policy contract requiring
Verendia to give notice to Fidelity of other contracts of insurance was waived by Fidelity as shown by its conduct in
attempting to settle the claim of Verendia.

ISSUE: whether or not the contract of lease submitted by Verendia to support his claim on the fire insurance policy
constitutes a false declaration which would forfeit his benefits under Section 13 of the policy.

HELD: When the rented residential building was razed to the ground on December 28, 1980, it appears that Robert Garcia
(or Roberto Garcia) was still within the premises. However, according to the investigation report prepared by Pat. Eleuterio
M. Buenviaje of the Antipolo police, the building appeared to have "no occupant" and that Mr. Roberto Garcia was "renting
on the otherside (sic) portion of said compound" These pieces of evidence belie Verendia's uncorroborated testimony that
Marcelo Garcia, whom he considered as the real lessee, was occupying the building when it was burned.

Verendia concocted the lease contract to deflect responsibility for the fire towards an alleged "lessee", inflated the value
of the property by the alleged monthly rental of P6,500 when in fact, the Provincial Assessor of Rizal had assessed the
property's fair market value to be only P40,300.00, insured the same property with two other insurance companies for a
total coverage of around P900,000, and created a dead-end for the adjuster by the disappearance of Robert Garcia.

an insurance contract should be liberally construed in favor of the insured and strictly against the insurer company which
usually prepares it. Considering, however, the foregoing discussion pointing to the fact that Verendia used a false lease
contract to support his claim under Fire Insurance Policy No. F-18876, the terms of the policy should be strictly construed
against the insured.

Verendia, having presented a false declaration to support his claim for benefits in the form of a fraudulent lease contract,
he forfeited all benefits therein by virtue of Section 13 of the policy in the absence of proof that Fidelity waived such
provision.

WHEREFORE, the petition in G.R. No. 75605 is DISMISSED.

RIZAL SURETY & INSURANCE COMPANY, petitioner, vs. COURT OF APPEALS and TRANSWORLD KNITTING MILLS, INC.,
respondents.
On March 13, 1980, Rizal Surety & Insurance Company (Rizal Insurance) issued Fire Insurance Policy No. 45727 in favor of
Transworld Knitting Mills, Inc. (Transworld), initially for One Million (P1,000,000.00) Pesos and eventually increased to
One Million Five Hundred Thousand (P1,500,000.00) Pesos, covering the period from August 14, 1980 to March 13, 1981.

The same pieces of property insured with the petitioner were also insured with New India Assurance Company, Ltd.,

On January 12, 1981, fire broke out in the compound of Transworld, razing the middle portion of its four-span building
and partly gutting the left and right sections thereof. A two-storey building (behind said four-span building) where fun and
amusement machines and spare parts were stored, was also destroyed by the fire. Transworld filed its insurance claims
with Rizal Surety & Insurance Company and New India Assurance Company but to no avail.

private respondent brought against the said insurance companies an action for collection of sum of money and damages.
Petitioner Rizal Insurance countered that its fire insurance policy sued upon covered only the contents of the four-span
building, which was partly burned, and not the damage caused by the fire on the two-storey annex building.

The trial court ruled in favor of Transworld.

Both the petitioner, Rizal Insurance Company, and private respondent, Transworld Knitting Mills, Inc., went to the Court
of Appeals, WHEREFORE, and upon all the foregoing, the decision of the court below is MODIFIED. Rizal filed motion for
reconsideration CA: is amended but only insofar as the imposition of legal interest is concerned.

ISSUE: that the fire insurance policy litigated upon protected only the contents of the main building (four-span),[12] and
did not include those stored in the two-storey annex building?

HELD: It is petitioner's submission that the fire insurance policy litigated upon protected only the contents of the main
building (four-span),[12] and did not include those stored in the two-storey annex building. On the other hand, the private
respondent theorized that the so called "annex" was not an annex but was actually an integral part of the four-span
building[13] and therefore, the goods and items stored therein were covered by the same fire insurance policy.

both the trial court and the Court of Appeals found that the so called "annex " was not an annex building but an integral
and inseparable part of the four-span building described in the policy and consequently, the machines and spare parts
stored therein were covered by the fire insurance in dispute. So also, considering that the two-storey building
aforementioned was already existing when subject fire insurance policy contract was entered into on January 12, 1981,
having been constructed sometime in 1978,[18] petitioner should have specifically excluded the said two-storey building
from the coverage of the fire insurance if minded to exclude the same.

WHEREFORE, the Decision, dated July 15, 1993, and the Resolution, dated October 22, 1993, of the Court of Appeals in
CA-G.R. CV NO. 28779 are AFFIRMED in toto. No pronouncement as to costs.

PHILAMCARE HEALTH SYSTEMS, INC., petitioner, vs. COURT OF APPEALS and JULITA TRINOS,
Ernani Trinos, deceased husband of respondent Julita Trinos, applied for a health care coverage with petitioner Philamcare
Health Systems, Inc. Under the agreement, respondents husband was entitled to avail of hospitalization benefits, whether
ordinary or emergency, listed therein. He was also entitled to avail of out-patient benefits such as annual physical
examinations, preventive health care and other out-patient services.

During the period of his coverage, Ernani suffered a heart attack and was confined at the Manila Medical Center (MMC)
for one month. While her husband was in the hospital, respondent tried to claim the benefits under the health care
agreement. However, petitioner denied her claim saying that the Health Care Agreement was void. According to
petitioner, there was a concealment regarding Ernanis medical history. Thus, respondent paid the hospitalization expenses
herself, amounting to about P76,000.00.

Later, he was admitted at the Chinese General Hospital. Due to financial difficulties, however, respondent brought her
husband home again. Ernani had fever and was feeling very weak. Respondent was constrained to bring him back to the
Chinese General Hospital where he died on the same day.

Regional Trial Court of Manila ruled in favor of trinos. On appeal, the Court of Appeals affirmed the decision of the trial
court but deleted all awards fordamages and absolved petitioner Reverente.

ISSUE a health care agreement is not an insurance contract; hence the incontestability clause under the Insurance Code[6]
does not apply.

Petitioner further argues that it is not an insurance company, which is governed by the Insurance Commission, but a Health
Maintenance Organization under the authority of the Department of Health.

The health care agreement was in the nature of non-life insurance, which is primarily a contract of indemnity.[9] 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.

Petitioner argues that respondents husband concealed a material fact in his application. It appears that in the application
for health coverage, petitioners required respondents husband to sign an express authorization for any person,
organization or entity that has any record or knowledge of his health to furnish any and all information relative to any
hospitalization, consultation, treatment or any other medical advice or examination.

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.[20] By reason of the exclusive control of the insurance company over the terms and
phraseology of the insurance contract, ambiguity must be strictly interpreted against the insurer and liberally in favor of
the insured, especially to avoid forfeiture.[21] This is equally applicable to Health Care Agreements.

(U)nder the title Claim procedures of expenses, the defendant Philamcare Health Systems Inc. had twelve months from
the date of issuance of the Agreement within which to contest the membership of the patient if he had previous ailment
of asthma, and six months from the issuance of the agreement if the patient was sick of diabetes or hypertension. The
periods having expired, the defense of concealment or misrepresentation no longer lie.[
FORTUNE INSURANCE AND SURETY CO., INC., petitioner, vs.COURT OF APPEALS and PRODUCERS BANK OF THE
PHILIPPINES, respondents.

a complaint for recovery of the sum of P725,000.00 under the policy issued by Fortune. The sum was allegedly lost during
a robbery of Producer's armored vehicle while it was in transit to transfer the money from its Pasay City Branch to its head
office in Makati. After an investigation conducted by the Pasay police authorities, the driver Magalong and guard Atiga
were charged, together with Edelmer Bantigue Y Eulalio, Reynaldo Aquino and John Doe, with violation of P.D. 532 (Anti-
Highway Robbery Law) before the Fiscal of Pasay City. A copy of the complaint is hereto attached as Exhibit.

The plaintiff opposes the contention of the defendant and contends that Atiga and Magalong are not its "officer,
employee, . . . trustee or authorized representative . . . at the time of the robbery. the trial court rendered its decision in
favor of Producers. The trial court ruled that Magalong and Atiga were not employees or representatives of Producers
Neither is the Court prepared to accept the proposition that driver Magalong and guard Atiga were the "authorized
representatives" of plaintiff. They were merely an assigned armored car driver and security guard.

The Court of Appeals agreed with the conclusion of the trial court that Magalong and Atiga were neither employees nor
authorized representatives of Producers. Said driver and security guard cannot be considered as employees of plaintiff-
appellee bank because it has no power to hire or to dismiss said driver and security guard under the contracts (Exhs. 8 and
C) except only to ask for their replacements from the contractors.

Fortune filed this petition for review on certiorari.

ISSUE: whether the petitioner is liable under the Money, Security, and Payroll Robbery policy it issued to the private
respondent or whether recovery thereunder is precluded under the general exceptions clause.

HELD: It has been aptly observed that in burglary, robbery, and theft insurance, "the opportunity to defraud the insurer
— the moral hazard — is so great that insurers have found it necessary to fill up their policies with countless restrictions,
many designed to reduce this hazard.

Fortune claims that Producers' contracts with PRC Management Systems and Unicorn Security Services are "labor-only"
contracts.

Producers, however, insists that by the express terms thereof, it is not the employer of Magalong. Notwithstanding such
express assumption of PRC Management Systems and Unicorn Security Services that the drivers and the security guards
each shall supply to Producers are not the latter's employees, it may, in fact, be that it is because the contracts are, indeed,
"labor-only" contracts.

But even granting for the sake of argument that these contracts were not "labor-only" contracts, and PRC Management
Systems and Unicorn Security Services were truly independent contractors, we are satisfied that Magalong and Atiga were,
in respect of the transfer of Producer's money from its Pasay City branch to its head office in Makati, its "authorized
representatives" who served as such with its teller Maribeth Alampay. Howsoever viewed, Producers entrusted the three
with the specific duty to safely transfer the money to its head office, with Alampay to be responsible for its custody in
transit; Magalong to drive the armored vehicle which would carry the money; and Atiga to provide the needed security
for the money, the vehicle, and his two other companions. In short, for these particular tasks, the three acted as agents
of Producers. A "representative" is defined as one who represents or stands in the place of another; one who represents
others or another in a special capacity, as an agent, and is interchangeable with "agent."

In view of the foregoing, Fortune is exempt from liability under the general exceptions clause of the insurance policy.
GULF RESORTS, INC., petitioner, vs. PHILIPPINE CHARTER INSURANCE CORPORATION, respondent.

P]laintiff is the owner of the Plaza Resort situated at Agoo, La Union and had its properties in said resort insured originally
with the American Home Assurance Company. ; that on July 16, 1990 an earthquake struck Central Luzon and Northern
Luzon and plaintiffs properties covered by Policy No. 31944 issued by defendant, including the two swimming pools in its
Agoo Playa Resort were damaged.

After the earthquake, petitioner advised respondent that it would be making a claim under its Insurance Policy No. 31944
for damages on its properties. Respondent instructed petitioner to file a formal claim, then assigned the investigation of
the claim to an independent claims adjuster, Bayne Adjusters and Surveyors, Inc. Mr. de Leon stated that except for the
swimming pools, all affected items have no coverage for earthquake shocks. petitioner filed its formal demand[7] for
settlement of the damage to all its properties in the Agoo Playa Resort. On August 23, 1990, respondent denied petitioners
claim on the ground that its insurance policy only afforded earthquake shock coverage to the two swimming pools of the
resort.[8] Petitioner and respondent failed to arrive at a settlement.

the lower court after trial ruled in favor of the respondent. only the two swimming pools were insured against earthquake
shock.

the appellate court affirmed the decision of the trial court and ruled,

ISSUE: wether or not only the swimming pools are covered in the insurance.

Held: A careful examination of the premium recapitulation will show that it is the clear intent of the parties to extend
earthquake shock coverage only to the two swimming pools. Section 2(1) of the Insurance Code defines a contract of
insurance as an agreement whereby one undertakes for a consideration to indemnify another against loss, damage or
liability arising from an unknown or contingent event.

In sum, there is no ambiguity in the terms of the contract and its riders. Petitioner cannot rely on the general rule that
insurance contracts are contracts of adhesion which should be liberally construed in favor of the insured and strictly
against the insurer company which usually prepares it.

It is true that there was variance in some terms, specifically in the replacement cost endorsement, but the principal
provisions of the policy remained essentially similar to AHAC-AIUs policy. Consequently, we cannot apply the "fine print"
or "contract of adhesion" rule in this case as the parties intent to limit the coverage of the policy to the two swimming
pools only is not ambiguous.
MANILA MAHOGANY MANUFACTURING CORPORATION, petitioner, vs. COURT OF APPEALS AND ZENITH INSURANCE
CORPORATION, respondents.

From 6 March 1970 to 6 March 1971, petitioner insured its Mercedes Benz 4-door sedan with respondent insurance
company. On 4 May 1970 the insured vehicle was bumped and damaged by a truck owned by San Miguel Corporation.
For the damage caused, respondent company paid petitioner five thousand pesos (P5,000.00) in amicable settlement.
Petitioner's general manager executed a Release of Claim, subrogating respondent company to all its right to action
against San Miguel Corporation.

company wrote Insurance Adjusters, Inc. to demand reimbursement from San Miguel Corporation of the amount it had
paid petitioner. Insurance Adjusters, Inc. refused reimbursement, alleging that San Miguel Corporation had already paid
petitioner P4,500.00 for the damages to petitioner's motor vehicle, discharging San Miguel Corporation from "all actions,
claims, demands the rights of action that now exist or hereafter [sic] develop arising out of or as a consequence of the
accident."

respondent company filed suit in the City Court of Manila for the recovery of P4,500.00. The City Court ordered petitioner
to pay respondent P4,500.00. On appeal the Court of First Instance of Manila affirmed the City Court's decision in toto,
which CFI decision was affirmed by the Court of Appeals, with the modification that petitioner was to pay respondent the
total amount of P5,000.00 that it had earlier received from the respondent insurance company.

ISSUE:

Held: In the absence of any other evidence to support its allegation that a gentlemen's agreement existed between it and
respondent, not embodied in the Release of Claim, such ease of Claim must be taken as the best evidence of the intent
and purpose of the parties.

If a property is insured and the owner receives the indemnity from the insurer, it is provided in [Article 2207 of the New
Civil Code] that the insurer is deemed subrogated to the rights of the insured against the wrongdoer and if the amount
paid by the insurer does not fully cover the loss, then the aggrieved party is the one entitled to recover the deficiency.

... petitioner is entitled to keep the sum of P4,500.00 paid by San Miguel Corporation under its clear right to file a deficiency
claim for damages incurred, against the wrongdoer, should the insurance company not fully pay for the injury caused
(Article 2207, New Civil Code). However, when petitioner released San Miguel Corporation from any liability, petitioner's
right to retain the sum of P5,000.00 no longer existed, thereby entitling private respondent to recover the same.

The right of subrogation can only exist after the insurer has paid the otherwise the insured will be deprived of his right to
full indemnity.

WHEREFORE, premises considered, the petition is DENIED.

On January 26, 1994, SMITHKLINE Beecham (SMITHKLINE for brevity) of Nebraska, USA delivered to Burlington Air Express
(BURLINGTON), an agent of [Petitioner] Federal Express Corporation, a shipment of 109 cartons of veterinary biologicals
for delivery to consignee SMITHKLINE and French Overseas Company in Makati City, Metro Manila. The shipment was
covered by Burlington Airway Bill No. 11263825 with the words, REFRIGERATE WHEN NOT IN TRANSIT and PERISHABLE
stamp marked on its face. That same day, Burlington insured the cargoes in the amount of $39,339.00 with American
Home Assurance Company (AHAC). The following day, Burlington turned over the custody of said cargoes to Federal
Express which transported the same to Manila. The first shipment, consisting of 92 cartons arrived in Manila on January
29, 1994 in Flight No. 0071-28NRT and was immediately stored at [Cargohaus Inc.s] warehouse. While the second,
consisting of 17 cartons, came in two (2) days later, or on January 31, 1994, in Flight No. 0071-30NRT which was likewise
immediately stored at Cargohaus warehouse. Prior to the arrival of the cargoes, Federal Express informed GETC Cargo
International Corporation, the customs broker hired by the consignee to facilitate the release of its cargoes from the
Bureau of Customs, of the impending arrival of its clients cargoes.

On February 10, 1994, DARIO C. DIONEDA (DIONEDA), twelve (12) days after the cargoes arrived in Manila, a non-licensed
customs broker who was assigned by GETC to facilitate the release of the subject cargoes, found out, while he was about
to cause the release of the said cargoes, that the same [were] stored only in a room with two (2) air conditioners running,
to cool the place instead of a refrigerator.

As a consequence of the foregoing result of the veterinary biologics test, SMITHKLINE abandoned the shipment and,
declaring total loss for the unusable shipment, filed a claim with AHAC through its representative in the Philippines, the
Philam Insurance Co., Inc. (PHILAM) which recompensed SMITHKLINE for the whole insured amount of THIRTY NINE
THOUSAND THREE HUNDRED THIRTY NINE DOLLARS ($39,339.00). Thereafter, [respondents] filed an action for damages
against the [petitioner] imputing negligence on either or both of them in the handling of the cargo.

ISSUE: Is Federal Express liable for damage to or loss of the insured goods?

HELD:

Since the Certificate was in the possession of Smithkline, the latter had the right of collecting or of being indemnified for
loss of or damage to the insured shipment, as fully as if the property were covered by a special policy in the name of the
holder. Hence, being the holder of the Certificate and having an insurable interest in the goods, Smithkline was the proper
payee of the insurance proceeds.

We note that respondents are not without recourse. Cargohaus, Inc. -- petitioners co-defendant in respondents Complaint
below -- has been adjudged by the trial court as liable for, inter alia, actual damages in the amount of the peso equivalent
of US $39,339.[25] This judgment was affirmed by the Court of Appeals and is already final and executory.[26]

WHEREFORE, the Petition is GRANTED, and the assailed Decision REVERSED insofar as it pertains to Petitioner Federal
Express Corporation.
ETERNAL GARDENS MEMORIAL vs. THE PHILIPPINE AMERICAN LIFE INSURANCE COMPANY,

On December 10, 1980, respondent Philippine American Life Insurance Company (Philamlife) entered into an agreement
denominated as Creditor Group Life Policy No. P-1920[2] with petitioner Eternal Gardens Memorial Park Corporation
(Eternal). Under the policy, the clients of Eternal who purchased burial lots from it on installment basis would be insured
by Philamlife.

Eternal was required under the policy to submit to Philamlife a list of all new lot purchasers, together with a copy of the
application of each purchaser, and the amounts of the respective unpaid balances of all insured lot purchasers. Eternal
complied by submitting a letter dated December 29, 1982, containing a list of insurable balances of its lot buyers for
October 1982. One of those included in the list as “new business” was a certain John Chuang. His balance of payments
was 100K. on August 2, 1984, Chuang died.

Eternal sent a letter dated to Philamlife, which served as an insurance claim for Chuang’s death. Attached to the claim
were certain documents. In reply, Philamlife wrote Eternal a letter requiring Eternal to submit the additional documents
relative to its insurance claim for Chuang’s death. Eternal transmitted the required documents through a letter which was
received by Philamlife.

After more than a year, Philamlife had not furnished Eternal with any reply to the latter’s insurance claim. This prompted
Eternal to demand from Philamlife the payment of the claim for PhP 100,000.
In response to Eternal’s demand, Philamlife denied Eternal’s insurance claim in a letter a portion of which reads:

The deceased was 59 years old when he entered into Contract #9558 and 9529 with Eternal Gardens Memorial Park in
October 1982 for the total maximum insurable amount of P100,000.00 each. No application for Group Insurance was
submitted in our office prior to his death on August 2, 1984. Eternal filed a case with the RTC for a sum of money against
Philamlife, which decided in favor of Eternal, ordering Philamlife to pay the former 100K representing the proceeds of the
policy.CA reversed. Hence this petition.

ISSUE: WON Philamlife should pay the 100K insurance proceeds

HELD: An examination of the provision of the POLICY under effective date of benefit, would show ambiguity between its
two sentences. The first sentence appears to state that the insurance coverage of the clients of Eternal already became
effective upon contracting a loan with Eternal while the second sentence appears to require Philamlife to approve the
insurance contract before the same can become effective.

It must be remembered that an insurance contract is a contract of adhesion which must be construed liberally in favor of
the insured and strictly against the insurer in order to safeguard the latter’s interest

On the other hand, the seemingly conflicting provisions must be harmonized to mean that upon a party’s purchase of a
memorial lot on installment from Eternal, an insurance contract covering the lot purchaser is created and the same is
effective, valid, and binding until terminated by Philamlife by disapproving the insurance application. The second sentence
of the Creditor Group Life Policy on the Effective Date of Benefit is in the nature of a resolutory condition which would
lead to the cessation of the insurance contract. Moreover, the mere inaction of the insurer on the insurance application
must not work to prejudice the insured; it cannot be interpreted as a termination of the insurance contract. The
termination of the insurance contract by the insurer must be explicit and unambiguous.
DEVELOPMENT BANK OF THE PHILIPPINES, petitioner, vs. COURT OF APPEALS

In May 1987, Juan B. Dans, together with his wife Candida, his son and daughter-in-law, applied for a loan of P500,000.00
with the Development Bank of the Philippines (DBP), Basilan Branch. As the principal mortgagor, Dans, then 76 years of
age, was advised by DBP to obtain a mortgage redemption insurance (MRI) with the DBP Mortgage Redemption Insurance
Pool (DBP MRI Pool).

A loan, in the reduced amount of P300,000.00, was approved by DBP on August 4, 1987 and released on August 11, 1987.
From the proceeds of the loan, DBP deducted the amount of P1,476.00 as payment for the MRI premium. On August 15,
1987, Dans accomplished and submitted the "MRI Application for Insurance" and the "Health Statement for DBP MRI
Pool." On August 20, 1987, the MRI premium of Dans, less the DBP service fee of 10 percent, was credited by DBP to the
savings account of the DBP MRI Pool. Accordingly, the DBP MRI Pool was advised of the credit. On September 3, 1987,
Dans died of cardiac arrest. The DBP, upon notice, relayed this information to the DBP MRI Pool. On September 23, 1987,
the DBP MRI Pool notified DBP that Dans was not eligible for MRI coverage, being over the acceptance age limit of 60
years at the time of application.

Respondent Estate alleged that Dans became insured by the DBP MRI Pool when DBP, with full knowledge of Dans' age at
the time of application, required him to apply for MRI, and later collected the insurance premium thereon. The trial court
declared DBP in estoppel for having led Dans into applying for MRI and actually collecting the premium and the service
fee, despite knowledge of his age ineligibility.

The DBP appealed to the Court of Appeals. In a decision dated September 7, 1992, the appellate court affirmed in toto the
decision of the trial court.

ISSUE: WON Dans was entitled to reimbursement

HELD: It was DBP, as a matter of policy and practice, that required Dans, the borrower, to secure MRI coverage. Instead
of allowing Dans to look for his own insurance carrier or some other form of insurance policy, DBP compelled him to apply
with the DBP MRI Pool for MRI coverage. When Dan's loan was released on August 11, 1987, DBP already deducted from
the proceeds thereof the MRI premium. Four days latter, DBP made Dans fill up and sign his application for MRI, as well
as his health statement.

As an insurance agent, DBP made Dans go through the motion of applying for said insurance, thereby leading him and his
family to believe that they had already fulfilled all the requirements for the MRI and that the issuance of their policy was
forthcoming. Apparently, DBP had full knowledge that Dan's application was never going to be approved. The maximum
age for MRI acceptance is 60 years.

The rule that the agent is liable when he acts without authority is founded upon the supposition that there has been some
wrong or omission on his part either in misrepresenting, or in affirming, or concealing the authority under which he
assumes to act.

The DBP's liability, however, cannot be for the entire value of the insurance policy. To assume that were it not for DBP's
concealment of the limits of its authority, Dans would have secured an MRI from another insurance company, and
therefore would have been fully insured by the time he died, is highly speculative.

Wherefore is MODIFIED and petitioner DBP is ORDERED: (1) to REIMBURSE respondent Estate of Juan B. Dans the amount
of P1,476.00 with legal interest from the date of the filing of the complaint until fully paid; and (2) to PAY said Estate the
amount of Fifty Thousand Pesos (P50,000.00) as moral damages and the amount of Ten Thousand Pesos (P10,000.00) as
attorney's fees. With costs against petitioner.
GREAT PACIFIC LIFE ASSURANCE COMPANY, petitioner, vs. HONORABLE COURT OF APPEALS, respondents.

LAPULAPU D. MONDRAGON, petitioner, vs.HON. COURT OF APPEALS and NGO HING, respondents.

It appears that on March 14, 1957, private respondent Ngo Hing filed an application with the Great Pacific Life Assurance
Company (hereinafter referred to as Pacific Life) for a twenty-year endownment policy in the amount of P50,000.00 on
the life of his one-year old daughter Helen Go. Said respondent supplied the essential data which petitioner Lapulapu D.
Mondragon, Branch Manager of the Pacific Life in Cebu City wrote on the corresponding form in his own handwriting. ).
The letter stated that the said life insurance application for 20-year endowment plan is not available for minors below
seven years old, but Pacific Life can consider the same under the Juvenile Triple Action Plan, and advised that if the offer
is acceptable, the Juvenile Non-Medical Declaration be sent to the company.

The non-acceptance of the insurance plan by Pacific Life was allegedly not communicated by petitioner Mondragon to
private respondent Ngo Hing. Helen Go died of influenza with complication of bronchopneumonia. Thereupon, private
respondent sought the payment of the proceeds of the insurance, but having failed in his effort, he filed the action for the
recovery of the same before the Court of First Instance of Cebu.

Issues:
1. Whether the binding deposit receipt constituted a temporary contract of the life insurance in question

HELD: The receipt was intended to be merely a provisional insurance contract. Its perfection was subject to compliance of
the following conditions: (1) that the company shall be satisfied that the applicant was insurable on standard rates; (2)
that if the company does not accept the application and offers to issue a policy for a different plan, the insurance contract
shall not be binding until the applicant accepts the policy offered; otherwise, the deposit shall be refunded; and (3) that if
the company disapproves the application, the insurance applied for shall not be in force at any time, and the premium
paid shall be returned to the applicant.

The receipt is merely an acknowledgment that the latter's branch office had received from the applicant the insurance
premium and had accepted the application subject for processing by the insurance company. There was still approval or
rejection the same on the basis of whether or not the applicant is "insurable on standard rates." Since Pacific Life
disapproved the insurance application of respondent Ngo Hing, the binding deposit receipt in question had never become
in force at any time. The binding deposit receipt is conditional and does not insure outright. This was held in Lim v Sun.
The deposit paid by private respondent shall have to be refunded by Pacific Life.
RAFAEL ENRIQUEZ, as administrator of the estate of the late Joaquin Ma. Herrer, plaintiff-appellant, vs.
SUN LIFE ASSURANCE COMPANY OF CANADA,

On September 24, 1917, Joaquin Herrer made application to the Sun Life Assurance Company of Canada through its office
in Manila for a life annuity. Two days later he paid the sum of P6,000 to the manager of the company's Manila office and
was given a provisional receipt.

The application was forwarded to the head office of the company at Montreal, Canada and on November 26, 1917 a notice
of acceptance was sent by cable to Manila. (There is no evidence however, whether on the same day the cable was received
notice was sent by the Manila office of Herrer that the application had been accepted)

On December 4, 1917, the policy was issued. On December 18, 1917, Herrer communicated his desire to withdraw his
application through his lawyer.

The local office replied to Mr. Torres, stating that the policy had been issued, and called attention to the notification of
November 26, 1917. The reply was received by Herrer's council a day after the latter died.

Plaintiff ad administrator of the estate of the late Joaquin Ma. Herrer to recover from the defendant life insurance
company the sum of pesos 6,000 paid by the deceased for a life annuity. The trial court gave judgment for the defendant.

ISSUE:
Whether or not the insurance contract between Sun Life and Herrer has been perfected

RULING:
No, the contract for a life annuity in the case at bar was not perfected because it has 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. Only the mailing of acceptance, it has been said, completes the contract of insurance, as the locus poenitentiae
is ended when the acceptance has passed beyond the control of the party.

An acceptance made by letter shall not bind the person making the offer except from the time it came to his knowledge
(Civil Code Art. 1262). When a letter or other mail matter is addressed and mailed with postage prepaid there is
a rebuttable presumption of fact that it was received by the addressee as soon as it could have been transmitted to him
in the ordinary course of the mails. But if any one of these elemental facts fails to appear, it is fatal to the presumption. A
letter will not be presumed to have been received by the addressee unless it is shown that it was deposited in the post-
office, properly addressed and stamped.