1. INSULAR LIFE v. KHU | G.R. No.
195176 | April uncovered, deterring them from venturing into
18, 2016
ISSUES INVOLVED:
1. Incontestability of reinstated insurance policy;
its reckoning period
2. Misrepresentation of the insured
3. Construction of an insurance contract
FACTS:
Felipe Khu applied for a life insurance policy with
Insular Life. In the medical questionnaire he did not
declare any illness of adverse condition. Thus, he was
issued an insurance policy. Felipe’s policy lapsed for
non-payment of premium. It was thereafter reinstated
upon endorsement which requires him additional
premium and waiver of some riders therein. This has
become effective June 22, 1999 but he was only able to
pay on December 27, 1999.
Felipe died and beneficiaries asked for the payment of
the insurance proceeds. Insular Life denied claiming that
Felipe misrepresented his ailment when he asked for a
reinstatement. The two year period has not elapsed since
he was only able to pay it on December. The
beneficiaries argued that the two year period has not yet
elapsed because the period of incontestability is
reckoned from June 22, 1999.
RULING:
Incontestability of insurance is reckoned June 22, 1999,
hence, the denial of Insular Life cannot be upheld.
WHEN IS THE PROPER PERIOD TO RESCIND
AN INSURANCE CONTRACT?
-before commencement of the action.
If a right to rescind the insurance contract arises, such
right must be exercised before the commencement of an
action on the contract.
INCONTESTABILITY
The insurer cannot prove that the policy is void ab initio
by reason of
1) Fraudulent concealment or
2) Rescindable by reason of the fraudulent
concealment or misrepresentation
of the insured or his agent after the policy has been in
force during the lifetime of the insured for a period of
two years from the date of its issue or of its last
reinstatement
PURPOSE OF THE PERIOD:
1. It gives insurers enough time to inquire
whether the policy was obtained by fraud,
concealment, or misrepresentation;
2. It forewarns scheming individuals that their
attempts at insurance fraud would be timely
such nefarious enterprise.
3. Legitimate policy holders are absolutely
protected from unwarranted denial of their
claims or delay in the collection of insurance
proceeds occasioned by allegations of fraud,
concealment, or misrepresentation.
The two year period commence from the date of the last
reinstatement, meaning from the date when the
application was processed and approved by the insurer.
INSURANCE CONTRACTS must be liberally
construed in favor of the insured and against the insurer.
Reason:
1. Insurance contracts are contract of adhesion
containing technical terms and conditions of
the industry which is confusing to a lay person.
2. 2. It is imbued with public interest – to protect
the interest of insurance applicants.
2. BPI and FGU INSURANCE CORP. V. LAINGO |
G.R. No. 205206, March 16, 2016 (liability agency)
ISSUE INVOLVED:
1. An insurance agent is bound to communicate to
its beneficiaries their right to claim upon the
insurance policy.
FACTS:
Rheozel applied for a 2 in 1 premium savings account
with BPI which grants death or disability insurance
coverage to its depositors through its partner insurance
company - FGU. Thus, Rheozel was issued a policy.
Rheozel died and two years after his death it was only
when Rheozel’s family learned of the said insurance
coverage. Thus they filed a claim before the FGU but
was only denied contending that the terms in the policy
indicates that notice of claim shall only be made within
three months from death or disability.
RULING:
BPI acted as agent of FGU Insurance with respect to the
insurance feature of its own marketed product. An agent
is one who binds himself to render some service or to do
something in representation of another. Agency is
created from intention of the parties to it. BPI facilitated
for the collection of necessary documents for the
endorsement for prompt approval in the FGU. Rheozel
did not interact with FGU directly, every transaction is
coursed through BPI.
BPI as agent of FGU had the primary responsibility to
give proper notice of the existence of the insurance
coverage and the stipulation in the insurance contract for
filing a claim on Rheozel’s death.
 Relationship of agency and principal is a fiduciary one.
Thus, BPI had the obligation to carry out the agency by
informing the beneficiary not only the existence of the
insurance contract but also the accompanying terms and
conditions thereof. BPI had all the opportunities to
inform the family of the existence of the insurance
policy when the family caused the withdrawal of the
savings account of the deceased.
3. HH HOLLERO CONSTRUCTION INC. V. GSIS
| G.R. NO. 152334 | September 24, 2014
ISSUES INVOLVED
1. Prescription reckons from the date of denial of
first instance and not denial of motion for
reconsideration.
FACTS:
HH Hollero undertook a housing project with the GSIS.
Pursuant to this, they insured the projects with GSIS.
During the construction of the project several typhoons
passed which caused damage to the pending
construction. Hollero filed for a claim in their insurance
policy before the GSIS, but the latter denied it. Hollero
asked for another reconsideration of its claim, but was
again denied by the GSIS. On appeal, the CA dismissed
the complaint on account of prescription. Hollero
contends that the decision of the denial is merely a
tentative resolution or rejection which would not start
the counting of the claim period.
ISSUE: Whether prescription barred Hollero’s claims.
RULING:
The rejection referred to should be construed as the
rejection in the first instance. 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. Cause of action will only arise when the
party obligated refuses to comply with its duty.
4. FORTUNE MEDICARE INC V. AMORIN | G.R.
No. 195872 | March 12, 2014
ISSUES INVOLVED:
1. Interpretation of insurance contracts.
FACTS:
Amorin was a member of Fortune Medicare, INc. His
medical coverage were provided in a Corporate Health
Program Contract. While he was on vacation in Hawaii,
he underwent an emergency surgery, specifically
appendectomy where he spent $7,000 for professional
fees and $1,000 for hospital expenses. He attempted to
recover from Fortune but was merely approved of
reimbursement of ₱12,151.36 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.
ISSUE: Whether Amorin can be reimbursed of the full
amount of the hospital expenses he incurred abroad
RULING:
Yes. He can recover the full amount. Fortune’s liability
should be based on the expenses for hospital and
professional fees which he actually incurred, and should
not be limited by the amount that he would have
incurred had his emergency treatment been performed in
an accredited hospital in the Philippines.
A health care agreement is in the nature of non-life
insurance, which is primarily a contract of indemnity.
HOW CONTRACTS OF INSURANCE ARE
CONSTRUED?
- When the terms of insurance contract contain
limitations on liability, construe them in such a
way as to preclude the insurer from non-
compliance with his obligation.
- If insurance is f doubtful interpretation, it must
be construed in favor of the insured and against
the insurer
Reason:
o Insurance contracts are contracts of
adhesion, it is strictly construed
against the party who prepared it;
o The party who prepared it has the
exclusive control over the terms and
phraseology of the insurance contract;
In the case: it must be interpreted to mean that the
“approved standard charges” as contemplated in the
insurance contract must be read in conjunction to the
provision reimbursing 80% of the expenses actually
incurred outside the country.
5. EASTERN SHIPPING LINES V. BPI/MS
INSURANCE CORP & MITSUI SUM TOMO | G.R.
No. 193986 | JANUARY 15, 2014
6. ALPHA INSURANCE AND SURETY CO. V.
CASTOR | G.R. No. 198174 | September 2, 2013