Filipinas Compania de Seguros v. Christern Huenefeld G.R. No.

L-2294, May 25, 1951 A corporation borrows its citizenship from the citizenship of majority of its stockholders, regardless of the country under whose laws it was organized and created. FACTS: Christern Huenefeld Corporation bought a fire insurance policy from Filipinas Compania de Seguros to cover merchandise contained in a building. During the Japanese military occupation, this same merchandise and the building were burned, so Huenefeld filed a claim under the policy. Filipinas Compania refused to pay, alleging that the policy had ceased to be in force when the US declared war against Germany. Filipinas Compania contended that Huenefeld, although organized and created under Philippine laws, is a German subject, and hence, a public enemy, since majority of its stockholders are Germans. On the other hand, Filipinas Compania is under American jurisdiction. However, the Director of Bureau of Financing, Philippine Executive Commission ordered Filipinas Compania to pay, so Filipinas Compania did pay. The case at bar is about the recovery of that sum paid. ISSUES: 1. W/N Christern Huenefeld is a German subject because majority of its stockholders are under German jurisdiction, despite the fact that it was organized and created under Philippine laws 2. If so, W/N the fire insurance policy is enforceable against an enemy state HELD: The Court of Appeals ruled that a private corporation is a citizen of the country or state by and under the laws of which it was created or organized. It rejected the theory that nationality of a private corporation is determined by the character or citizenship of its controlling stockholders. But the Supreme Court held that Christern Huenefeld is an enemy corporation since majority of its stockholders are German subjects. The two American cases relied up by the Court of Appeals have lost their force in view of a newer case where the control test was adopted. The Philippine Insurance Law provides that anyone, except a public enemy, may be insured. It stands to reason that an insurance policy ceases to be allowable as soon as the insured becomes a public enemy. Since Christern Huenefeld became a public enemy on Dec. 10, 1941, then the policy has ceased to be enforcible and therefore Huenefeld is not entitled to indemnity. However, elementary rules of justice require that the premium paid from Dec. 11, 1941 should be returned. Thus, Filipinas Compania is allowed to recover the sum paid but only its equivalent in actual Philippine currency, minus the premium that Huenefeld paid after Dec. 11.

Greater Pacific Life Assurance Corporation vs Court of Appeals on November 22, 2011 Insurance Law Concealment Insurance Contract as an Uberrima Fides Contract In March 1957, Ngo Hing filed an application for a 20-year endowment policy for the life of his one-year old daughter with the Great Pacific Life Assurance Corporation (Grepalife). Lapulapu Mondragon was the insurance agent who assisted Ngo Hing. The insurance policy was for P50,000.00. The proper form was filled out and Ngo Hing paid the insurance premium. He received a binding deposit receipt in return. Said receipt however was subject to certain conditions, among which is the acceptance of Grepalife. Grepalife eventually denied the insurance application because the endowment plan by Grepalife is not offered for minors below seven years old. Grepalife, instead made a counter-offer which Ngo Hing failed to accept because Mondragon, instead of communicating the said denial to Ngo Hing, wrote a letter to Grepalife trying to convince Grepalife to allow one-year olds to be covered by endowment plans. In May 1957, Ngo Hings one-year old daughter died. Ngo Hing tried to collect the insurance claim but Grepalife refused as it claimed that the insurance contract was never perfected sans their acceptance. ISSUE: Whether or not Grepalife should pay the insurance claim. HELD: No. As properly ruled by the lower court as well as the Court of Appeals, the insurance contract was never completed because Grepalife never accepted the insurance offer. The binding deposit receipt issued to Ngo Hing is only acknowledgement of his application and receipt of his payment for the insurance premium. The Supreme Court also noted that Ngo Hing failed to disclose the fact that his one-year old daughter was a mongoloid. Such congenital defect was withheld by Ngo Hing with bad faith and such risk to be assumed by the insurance company. The contract of insurance is one of perfect good faith uberrima fides meaning good faith, absolute and perfect candor or openness and honesty; the absence of any concealment or demotion, however slight not for the insured alone but equally so for the insurer. Concealment is a neglect to communicate that which a party knows and ought to communicate. Whether intentional or unintentional the concealment entitles the insurer to rescind the contract of insurance.

PHILAMCARE V. CA- HEALTH CARE AGREEMENT 379 SCRA 356 (2002) Facts: > Ernani Trinos, applied for a health care coverage with Philamcare. In the standard application form, he answered NO to the following question: Have you or any of your family members ever consulted or been treated for high blood pressure, heart trouble, diabetes, cancer, liver disease, asthma or peptic ulcer? (If Yes, give details) > The application was approved for a period of one year from March 1, 1988 to March 1, 1989. He was a issued Health Care Agreement, and under such, he 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. > Upon the termination of the agreement, the same was extended for another year from March 1, 1989 to March 1, 1990, then from March 1, 1990 to June 1, 1990. The amount of coverage was increased to a maximum sum of P75,000.00 per disability. > During the period of his coverage, Ernani suffered a heart attack and was confined at the Manila Medical Center (MMC) for one month beginning March 9, 1990. > While her husband was in the hospital, Julita tried to claim the benefits under the health care agreement. However, Philamcare denied her claim saying that the Health Care Agreement was void. > According to Philamcare, there was concealment regarding Ernani's medical history. Doctors at the MMC allegedly discovered at the time of Ernani's confinement that he was hypertensive, diabetic and asthmatic, contrary to his answer in the application form. > Julita had no choice but to pay the hospitalization expenses herself, amounting to about P76,000.00 > After her husband was discharged from the MMC, he was attended by a physical therapist at home. Later, he was admitted at the Chinese General Hospital (CGH). Due to financial difficulties, Julita brought her husband home again. In the morning of April 13, 1990, Ernani had fever and was feeling very weak. Julita was constrained to bring him back to the CGH where he died on the same day. > Julita instituted, an action for damages against Philamcare. She asked for reimbursement of her expenses plus moral damages and attorney's fees. RTC decided in favor of Julita. CA affirmed. Issues and Resolutions: Philamcare brought the instant petition for review, raising the primary argument that a health care agreement is not an insurance contract; hence the "incontestability clause" under the Insurance Code Title 6, Sec. 48 does not apply. SC held that in the case at bar, the insurable interest of respondent's husband in obtaining the health care agreement was his own health. The health care agreement was 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.

Under the title Claim procedures of expenses, Philamcare. had 12 mos 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. Petitioner argues that respondent's husband concealed a material fact in his application. It appears that in the application for health coverage, petitioners required respondent's 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. Philamcare cannot rely on the stipulation regarding "Invalidation of agreement" which reads: Failure to disclose or misrepresentation of any material information by the member in the application or medical examination, whether intentional or unintentional, shall automatically invalidate the Agreement from the very beginning and liability of Philamcare shall be limited to return of all Membership Fees paid. An undisclosed or misrepresented information is deemed material if its revelation would have resulted in the declination of the applicant by Philamcare or the assessment of a higher Membership Fee for the benefit or benefits applied for. The answer assailed by petitioner was in response to the question relating to the medical history of the applicant. This largely depends on opinion rather than fact, especially coming from respondent's husband who was not a medical doctor. Where matters of opinion or judgment are called for, answers made in good faith and without intent to deceive will not avoid a policy even though they are untrue. Thus, (A)lthough false, a representation of the expectation, intention, belief, opinion, or judgment of the insured will not avoid the policy if there is no actual fraud in inducing the acceptance of the risk, or its acceptance at a lower rate of premium, and this is likewise the rule although the statement is material to the risk, if the statement is obviously of the foregoing character, since in such case the insurer is not justified in relying upon such statement, but is obligated to make further inquiry. There is a clear distinction between such a case and one in which the insured is fraudulently and intentionally states to be true, as a matter of expectation or belief, that which he then knows, to be actually untrue, or the impossibility of which is shown by the facts within his knowledge, since in such case the intent to deceive the insurer is obvious and amounts to actual fraud. The fraudulent intent on the part of the insured must be established to warrant rescission of the insurance contract. Concealment as a defense for the health care provider or insurer to avoid liability is an affirmative defense and the duty to establish such defense by satisfactory and convincing evidence rests upon the provider or insurer. In any case, with or without the authority to investigate, petitioner is liable for claims made under the contract. Having assumed a responsibility under the agreement, petitioner is bound to answer the same to the extent agreed upon. In the end, the liability of the health care provider attaches once the member is hospitalized for the disease or injury covered by the agreement or whenever he avails of the covered benefits which he has prepaid.

Under Section 27 of the Insurance Code, "a concealment entitles the injured party to rescind a contract of insurance." The right to rescind should be exercised previous to the commencement of an action on the contract. In this case, no rescission was made. Besides, the cancellation of health care agreements as in insurance policies require the concurrence of the following conditions: Prior notice of cancellation to insured; Notice must be based on the occurrence after effective date of the policy of one or more of the grounds mentioned; Must be in writing, mailed or delivered to the insured at the address shown in the policy; Must state the grounds relied upon provided in Section 64 of the Insurance Code and upon request of insured, to furnish facts on which cancellation is based. None of the above pre-conditions was fulfilled in this case. 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. 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. This is equally applicable to Health Care Agreements. The phraseology used in medical or hospital service contracts, such as the one at bar, must be liberally construed in favor of the subscriber, and if doubtful or reasonably susceptible of two interpretations the construction conferring coverage is to be adopted, and exclusionary clauses of doubtful import should be strictly construed against the provider.

Ong Lim Sing vs. FEB leasing FACTS: FEB Leasing and Finance Corporation (FEB) leased equipment and motor vehicles to JVL Food Products with a monthly rental of P170,494 At the same date, Vicente Ong Lim Sing, Jr. (Lim) an executed an Individual Guaranty Agreement with FEB to guarantee the prompt and faithful performance of the terms and conditions of the lease agreement JVL defaulted in the payment of the monthly rentals resulting to arrears of P3,414,468.75 and refused to pay despite demands FEB filed a complaint for damages and replevin against JVL, Lim and John Doe JVL and Lim admitted the existence of the lease agreement but asserted that it is in reality a sale of equipment on installment basis, with FEB acting as the financier RTC: Sale on installment and the FEB elected full payment of the obligation so for the unreturned units and machineries the JVL and Lim are jointly and severally liable to pay CA: granted FEB appeal that it is a financial lease agreement under Republic Act (R.A.) No. 8556 and ordered JVL and Lim jointly and severally to pay P3,414,468.75 ISSUE: W/N JVL and Lim should jointly and severally be liable for the insured financial lease HELD: YES. CA affirmed. Contract of adhesion is as binding as any ordinary contract The Lease Contract with corresponding Lease Schedules with Delivery and Acceptance Certificates is, in point of fact, a financial lease within the purview of R.A. No. 8556 FEB leased the subject equipment and motor vehicles to JVL in consideration of a monthly periodic payment of P170,494.00. The periodic payment by petitioner is sufficient to amortize at least 70% of the purchase price or acquisition cost of the said movables in accordance with the Lease Schedules with Delivery and Acceptance Certificates. JVL entered into the lease contract with full knowledge of its terms and conditions. Lim, as a lessee, has an insurable interest in the equipment and motor vehicles leased. In the financial lease agreement, FEB did not assume responsibility as to the quality, merchantability, or capacity of the equipment. This stipulation provides that, in case of defect of any kind that will be found by the lessee in any of the equipment, recourse should be made to the manufacturer. The financial lessor, being a financing company, i.e., an extender of credit rather than an ordinary equipment rental company, does not extend a warranty of the fitness of the equipment for any particular use. Thus, the financial lessee was precisely in a position to enforce such warranty directly against the supplier of the equipment and not against the financial lessor. We find nothing contra legem or contrary to public policy in such a contractual arrangement.

Gaisano Cagayan, Inc. V. Insurance Company Of North America FACTS: Intercapitol Marketing Corporation (IMC) is the maker of Wrangler Blue Jeans. while Levi Strauss (Phils.) Inc. (LSPI) is the local distributor of products bearing trademarks owned by Levi Strauss & Co IMC and LSPI separately obtained from Insurance Company of North America fire insurance policies for their book debt endorsements related to their ready-made clothing materials which have been sold or delivered to various customers and dealers of the Insured anywhere in the Philippines which are unpaid 45 days after the time of the loss February 25, 1991: Gaisano Superstore Complex in Cagayan de Oro City, owned by Gaisano Cagayan, Inc., containing the ready-made clothing materials sold and delivered by IMC and LSPI was consumed by fire. February 4, 1992: Insurance Company of North America filed a complaint for damages against Gaisano Cagayan, Inc. alleges that IMC and LSPI filed their claims under their respective fire insurance policies which it paid thus it was subrogated to their rights Gaisano Cagayan, Inc: not be held liable because it was destroyed due to fortuities event or force majeure RTC: IMC and LSPI retained ownership of the delivered goods until fully paid, it must bear the loss (res perit domino) CA: Reversed - sales invoices is an exception under Article 1504 (1) of the Civil Code to res perit domino ISSUE: W/N Insurance Company of North America can claim against Gaisano Cagayan for the debt that was isnured HELD: YES. petition is partly GRANTED. order to pay P535,613 is DELETED insurance policy is clear that the subject of the insurance is the book debts and NOT goods sold and delivered to the customers and dealers of the insured ART. 1504. Unless otherwise agreed, the goods remain at the seller's risk until the ownership therein is transferred to the buyer, but when the ownership therein is transferred to the buyer the goods are at the buyer's risk whether actual delivery has been made or not, except that: (1) Where delivery of the goods has been made to the buyer or to a bailee for the buyer, in pursuance of the contract and the ownership in the goods has been retained by the seller merely to secure performance by the buyer of his obligations under the contract, the goods are at the buyer's risk from the time of such delivery; IMC and LSPI did not lose complete interest over the goods. They have an insurable interest until full payment of the value of the delivered goods. Unlike the civil law concept of res perit domino, where ownership is the basis for consideration of who bears the risk of loss, in property insurance, one's interest is not determined by concept of title, but whether insured has substantial economic interest in the property

Section 13 of our Insurance Code defines insurable interest as "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." Parenthetically, under Section 14 of the same Code, an insurable interest in property may consist in: (a) an existing interest; (b) an inchoate interest founded on existing interest; or (c) an expectancy, coupled with an existing interest in that out of which the expectancy arises. Anyone has an insurable interest in property who derives a benefit from its existence or would suffer loss from its destruction. it is sufficient that the insured is so situated with reference to the property that he would be liable to loss should it be injured or destroyed by the peril against which it is insured an insurable interest in property does not necessarily imply a property interest in, or a lien upon, or possession of, the subject matter of the insurance, and neither the title nor a beneficial interest is requisite to the existence of such an interest insurance in this case is not for loss of goods by fire but for petitioner's accounts with IMC and LSPI that remained unpaid 45 days after the fire - obligation is pecuniary in nature obligor should be held exempt from liability when the loss occurs thru a fortuitous event only holds true when the obligation consists in the delivery of a determinate thing and there is no stipulation holding him liable even in case of fortuitous event Article 1263 of the Civil Code in an obligation to deliver a generic thing, the loss or destruction of anything of the same kind does not extinguish the obligation (Genus nunquan perit) The subrogation receipt, by itself, is sufficient to establish not only the relationship of respondent as insurer and IMC as the insured, but also the amount paid to settle the insurance claim Art. 2207. If the plaintiff's property has been insured, and he has received indemnity from the insurance company for the injury or loss arising out of the wrong or breach of contract complained of, the insurance company shall be subrogated to the rights of the insured against the wrongdoer or the person who has violated the contract. As to LSPI, no subrogation receipt was offered in evidence. Failure to substantiate the claim of subrogation is fatal to petitioner's case for recovery of the amount of P535,613

Lampano vs. Jose FACTS: Mariano R. Barretto, constructed a house for Placida A. Jose sold the house to Antonina Lampano for P6,000 The house was destroyed by fire during which Lampano still owed Jose P2,000 as evidenced by a promissory note. Jose also owed Barretto P2,000 for the construction. After the completion of the house and before it was destroyed, Mariano R. Barretto took out an insurance policy upon it in his own name, with the consent of Placida A. Jose, for the sum of P4,000. After its destruction, he collected P3,600 from the insurance company, having paid in premiums the sum of P301.50 Lampano filed a complaint against Barreto and Jose alleging that Jose in a verbal agreement told her that the policy will be delivered to her so she should collected P3,600 from each of them RTC: favored Jose ordering Barreto to pay him P1,298.50 and offsetting the P2,000 Barreto alone appealed ISSUE: W/N Barreto had insurable interest in the house and could insure it for his it for his own protection HELD: YES. reversed and Barretto is absolved Where different persons have different interests in the same property, the insurance taken by one in his own right and in his own interest does not in any way insure to the benefit of another A contract of insurance made for the insurer's (insured) indemnity only, as where there is no agreement, express or implied, that it shall be for the benefit of a third person, does not attach to or run with the title to the insured property on a transfer thereof personal as between the insurer and the insured. Barretto had an insurable interest in the house. He construed the building, furnishing all the materials and supplies, and insured it after it had been completed.

CHA vs. CA G.R. No. 124520 August 18, 1997 Lessons Applicable: Effect of Lack of Insurable Interest (Insurance) Laws Applicable: Sec. 17, Sec. 18, Sec. 25 of the Insurance Code FACTS: Spouses Nilo Cha and Stella Uy-Cha and CKS Development Corporation entered a 1 year lease contract with a stipulation not to insure against fire the chattels, merchandise, textiles, goods and effects placed at any stall or store or space in the leased premises without first obtaining the written consent and approval of the lessor. But it insured against loss by fire their merchandise inside the leased premises for P500,000 with the United Insurance Co., Inc. without the written consent of CKS On the day the lease contract was to expire, fire broke out inside the leased premises and CKS learning that the spouses procured an insurance wrote to United to have the proceeds be paid directly to them. But United refused so CKS filed against Spouses Cha and United. RTC: United to pay CKS the amount of P335,063.11 and Spouses Cha to pay P50,000 as exemplary damages, P20,000 as attorneys fees and costs of suit CA: deleted exemplary damages and attorneys fees ISSUE: W/N the CKS has insurable interest because the spouses Cha violated the stipulation HELD: NO. CA set aside. Awarding the proceeds to spouses Cha. Sec. 18. No contract or policy of insurance on property shall be enforceable except for the benefit of some person having an insurable interest in the property insured A non-life insurance policy such as the fire insurance policy taken by petitioner-spouses over their merchandise is primarily a contract of indemnity. Insurable interest in the property insured must exist a t the time the insurance takes effect and at the time the loss occurs. The basis of such requirement of insurable interest in property insured is based on sound public policy: to prevent a person from taking out an insurance policy on property upon which he has no insurable interest and collecting the proceeds of said policy in case of loss of the property. In such a case, the contract of insurance is a mere wager which is void under Section 25 of the Insurance Code. SECTION 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 Section 17. The measure of an insurable interest in property is the extent to which the insured might be damnified by loss of injury thereof The automatic assignment of the policy to CKS under the provision of the lease contract previously quoted is void for being contrary to law and/or public policy. The proceeds of the fire insurance policy thus rightfully belong to the spouses. The liability of the Cha spouses to CKS for violating their lease contract in that Cha spouses obtained a fire insurance policy over their own merchandise, without the consent of CKS, is a separate and distinct issue which we do not resolve in this case.

Tai Tong Chua Che vs. Ins. Commission G.R. No. L-55397 February 29, 1988 Lessons Applicable: When Insurable Interest Must Exist (Insurance) Laws Applicable: FACTS: Azucena Palomo bought a parcel of land and building from Rolando Gonzales and assumed a mortgage of the building in favor of S.S.S. which was insured with S.S.S. Accredited Group of Insurers April 19, 1975: Azucena Palomo obtained a loan from Tai Tong Chuache Inc. in the amount of P100,000 and to secure it, the land and building was mortgaged June 11, 1975: Pedro Palomo secured a Fire Insurance Policy covering the building for P50,000 with Zenith Insurance Corporation July 16, 1975: another Fire Insurance policy was procured from Philippine British Assurance Company, covering the same building for P50,000 and the contents thereof for P70,000 Before the occurrence of the peril insured against the Palomos had already paid their credit due the July 31, 1975: building and the contents were totally razed by fire Palomo was able to claim P41,546.79 from Philippine British Assurance Co., P11,877.14 from Zenith Insurance Corporation and P5,936.57 from S.S.S. Group of Accredited Insurers but Travellers MultiIndemnity refused so it demanded the balance from the other three but they refused so they filed against them Insurance Commission, CFI: absolved Travellers on the basis that Arsenio Cua was claiming and NOT Tai Tong Chuache Palomo Appealed Travellers reasoned that the policy is endorsed to Arsenio Chua, mortgage creditor Tai Tong Chuache & Co. filed a complaint in intervention claiming the proceeds of the fire Insurance Policy issued by travellers affirmative defense of lack of insurable interest that before the occurrence of the peril insured against the Palomos had already paid their credit due the petitioner ISSUE: W/N Tai Tong Chuache & Co. has insurable interest HELD: YES. Travellers Multi-Indemnity Corporation to pay Tai Tong Chuache & Co. when the creditor is in possession of the document of credit, he need not prove non-payment for it is presumed The validity of the insurance policy taken b petitioner was not assailed by private respondent. Moreover, petitioner's claim that the loan extended to the Palomos has not yet been paid was corroborated by Azucena Palomo who testified that they are still indebted to herein petitioner Chua being a partner of petitioner Tai Tong Chuache & Company is an agent of the partnership. Being an agent, it is understood that he acted for and in behalf of the firm Upon its failure to prove the allegation of lack of insurable interest on the part of the petitioner, Travellers must be held liable.