4) G.R. No.

L-44059 October 28, 1977

THE INSULAR LIFE vs CARPONIA T. EBRADO

Facts: Buenaventura Cristor Ebrado was issued by The Life Assurance Co., Ltd. a Policy on a whole-life
with a rider for Accidental Death. Carpiona Ebrado was designated as the revocable beneficiary in his
policy. Buenaventura C. Ebrado died and Carponia filed with the insurer a claim for the proceeds of the
Policy as the designated beneficiary therein, although she admits that she and the insured 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,
not the common-law wife, Carponia.

Hence, the insurer commenced an action for Interpleader before the Court of First Instance.

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

Ruling: NO. The general rules of civil law should be applied. 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." 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 fife insurance
policy by the person who cannot make a donation to him. Common-law spouses are, definitely, barred
from receiving donations from each other. Article 739 of the new Civil Code provides that a donation is
void when made between persons who were guilty of adultery or concubinage at the time of donation.

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 from 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.

5) G.R. No. L-4611 December 17, 1955

QUA CHEE GAN vs LAW UNION AND ROCK INSURANCE CO., LTD

Facts: Qua Chee Gan, a merchant of Albay, owned four warehouses or bodegas used for the storage of
stocks of copra and of hemp. Said warehouses had been, with their contents, insured with Law Union and
Rock Insurance Co. since 1937, and the lose made payable to the Philippine National Bank as mortgage
of the hemp and crops, to the extent of its interest.

Bodegas Nos. 1, 2 and 4, with the merchandise stored therein, were destroyed by fire on 1940. Qua
Chee Gan informed the insurer and submitted the corresponding fire claims which were later reduced to
the full amount of the insurance, P370,000. The Insurance Company resisted payment, claiming violation
of warranties and conditions, filing of fraudulent claims, and that the fire had been deliberately caused by
the insured or by other persons in connivance with him.

Issues: 1) Whether the policies should be avoided for breach of warranty; 2) Whether the insured
violated the "Hemp Warranty" provisions of the Policy against the storage of gasoline since Qua Chee
Gan admitted that there were 36 cans (latas) of gasoline in the building designated as Bodega No. 2.

Ruling: 1) NO. The Memorandum of Warranty provides that there should be no less than one hydrant for
each 150 feet of external wall measurements of the building, and since the bodegas insured had an
external wall perimeter of 500 meters or 1,640 feet, the appellee should have eleven (11) fire hydrants in
the compound, and that he actually had only two (2), with a further pair nearby, belonging to the
municipality of Tabaco.

Here, the insurer is barred by waiver (or rather estoppel) to claim violation of the so-called fire hydrants
warranty, for the reason that knowing fully all that the number of hydrants demanded therein never
existed from the very beginning, it nevertheless issued the policies in question subject to such warranty,
and received the corresponding premiums. The insurance company was aware, even before the policies
were issued, that in the premises insured there were only two fire hydrants installed by Qua Chee Gan
and two others nearby, owned by the municipality of TAbaco, contrary to the requirements of the warranty
in question. Such fact appears from positive testimony for the insured that insurer's agents inspected the
premises; and the simple denials of insurer's representative cannot overcome that proof.

The law, supported by a long line of cases, is expressed by American Jurisprudence to be as follows:

It is usually held that where the insurer, at the time of the issuance of a policy of insurance, has
knowledge of existing facts which, if insisted on, would invalidate the contract from its very inception, such
knowledge constitutes a waiver of conditions in the contract inconsistent with the facts, and the insurer is
stopped thereafter from asserting the breach of such conditions.

Moreover, taking into account the well known rule that ambiguities or obscurities must be strictly
interpreted against the party that caused them, the "memo of warranty" invoked by appellant bars the
latter from questioning the existence of the appliances called for in the insured premises, since its initial
expression, "the undernoted appliances for the extinction of fire being kept on the premises insured
hereby, . . . it is hereby warranted . . .", admits of interpretation as an admission of the existence of such
appliances which appellant cannot now contradict, should the parol evidence rule apply.

2) NO. It is well to note that gasoline is not specifically mentioned among the prohibited articles listed in
the so-called "hemp warranty." The cause relied upon by the insurer speaks of "oils (animal and/or
vegetable and/or mineral and/or their liquid products having a flash point below 300 deg Fahrenheit", and
is decidedly ambiguous and uncertain; for in ordinary parlance, "Oils" mean "lubricants" and not gasoline
or kerosene. By reason of the exclusive control of the insurance company over the terms and
phraseology of the contract, the ambiguity must be held strictly against the insurer and liberally in favor of
the insured, especially to avoid forfeiture.

If the insurer intended to include keeping of gasoline among the prohibited articles, it should have plainly
expressed in the policy in the language and terms that the general public can readily understand

The contract of insurance is one of perfect good faith (uferrimal fidei) not for the insured alone, but equally
so for the insurer.

Also, the gasoline kept in Bodega No. 2 was only incidental to the insured’s business, being no more than
a customary two day's supply for the five or six motor vehicles used for transporting of the stored
merchandise. It is well settled that the keeping of inflammable oils on the premises though prohibited by
the policy does not void it if such keeping is incidental to the business. It should also be noted that the
"Hemp Warranty" forbade storage only "in the building to which this insurance applies and/or in any
building communicating therewith", and it is undisputed that no gasoline was stored in the burned
bodegas, and that "Bodega No. 2" which was not burned and where the gasoline was found, stood
isolated from the other insured bodegas.