1. Enriquez vs Sunlife

FACTS: 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. The application was immediately forwarded to the head office of the company at Montreal, Canada. On November 26, 1917, the head office gave notice of acceptance by cable to Manila. On December 4, 1917, the policy was issued at Montreal. On December 18, 1917, attorney Aurelio A. Torres wrote to the Manila office of the company stating that Herrer desired to withdraw his application. The following day the local office replied to Mr. Torres, stating that the policy had been issued, and called attention to the notification of November 26, 1917. This letter was received by Mr. Torres on the morning of December 21, 1917. Mr. Herrer died on December 20, 1917. An action brought by the 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.

ISSUE: Whether or not Herrer received notice of acceptance of his application.

HELD: No. Our deduction from the evidence on this issue must be that the letter of November 26, 1917, notifying Mr. Herrer that his application had been accepted, was never actually mailed and thus was never received by the applicant. The law applicable to the case is found to be the second paragraph of article 1262 of the Civil Code providing that an acceptance made by letter shall not bind the person making the offer except from the time it came to his knowledge. 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. We hold that 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.

2. GREAT PACIFIC LIFE ASSURANCE vs CA

FACTS: Ngo Hing, a duly authorized agent of Pacific Life, applied for a 20-year endowment policy on the life of his one-year old daughter, a mongoloid. He did not divulge each physical defect of his daughter. He paid the premium and was issued a binding deposit receipt. However, despite the branch manager's favorable recommendation, the Company disapproved the application, because a 20-year endowment plan is not available for minors. Instead, it offered the Juvenile Triple Action Plan. The manager wrote back and again strongly recommended the approval of the application. At this point, the child died of influenza with complication of broncho-pneumonia.

ISSUE: whether the binding deposit receipt constituted a temporary contract of the life insurance in question.

HELD: Where the binding deposit receipt is intended to be merely a provisional or temporary insurance contract, and that the receipt merely acknowledged, on behalf of the insurance company, 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, such binding deposit receipt does not become in force until the application is approved. A binding deposit receipt which is merely conditional does not insure outright. Thus, where an agreement is made between the applicant and the agent, no liability will attack until the principal approves the risk and a receipt is given by the agent. The

acceptance is merely conditional, and is subordinated to the act of the company in approving or rejecting the application.

3. DBP vs CA

FACTS: Juan B. Dans, together with his family applied for a loan of P500,000 with DBP. As principal mortgagor, Dans, then 76 years of age was advised by DBP to obtain a mortgage redemption insurance (MRI) with DBP MRI pool. A loan in the reduced amount was approved and released by DBP. From the proceeds of the loan, DBP deducted the payment for the MRI premium. The MRI premium of Dans, less the DBP service fee of 10%, was credited by DBP to the savings account of DBP MRI-Pool. Accordingly, the DBP MRI Pool was advised of the credit. Dans died of cardiac arrest. 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. DBP apprised Candida Dans of the disapproval of her late husband’s MRI application. DBP offered to refund the premium which the deceased had paid, but Candida Dans refused to accept the same demanding payment of the face value of the MRI or an amount equivalent of the loan. She, likewise, refused to accept an ex gratia settlement which DBP later offered. Hence, the case at bar.

ISSUE: Whether or not the DBP MRI application was perfected.

HELD: No. Under the provisions of the MRI, the coverage shall take effect: (1) when the application shall be approved by the insurance pool; and (2) when the full premium is paid during the continued good health of the applicant. These two conditions, being joined conjunctively, must concur. Undisputably, the power to approve MRI applications is lodged with the DBP MRI Pool. The pool, however, did not approve the application of Dans. There is also no showing that it accepted the sum of P1,476.00, which DBP credited to its account with full knowledge that it was payment for Dan's premium. There was, as a result, no perfected contract of insurance; hence, the DBP MRI Pool cannot be held liable on a contract that does not exist. The liability of DBP is another matter.

4. PEREZ vs CA

FACTS: Primitivo B. Perez had been insured with BF Lifeman Insurance Corporation since 1980 for P20,000.00. He was convinced to increase the coverage to P50,000.00 and avail of its promotional discount. However, delay took place in processing the application form. Perez died in an accident. At the time of his death, the applications for the increased coverage were still in the provincial office. Without knowing that Perez had died, BF Lifeman approved the application form and issued the corresponding policy a few days after his death. His widow, Virginia Perez, claimed the benefits under the insurance policies of the deceased. She was paid under the first insurance policy but was refused of the claim under the increased coverage. The insurance company maintained that the insurance had not been perfected at the time of death of the insured. BF Lifeman filed a complaint for rescission of contract. Meanwhile Virginia filed a counterclaim for collection of the amount under the increased policy. The trial court ruled in favor of Virginia. The Court of Appeals, however, reversed the decision saying that the insurance contract for the increased indemnity could not have been perfected since at the time the policy was issued, Primitivo was already dead. The instant petition was filed on the ground that there was a consummated contract because the condition of the policy was potestative, being dependent upon the will of the insurance company only and was therefore null and void.

ISSUE: Whether or not Virginia Perez is entitled to the proceeds of the insurance policy under the

increased indemnity.

HELD: No. A contract of insurance, like other contracts, must be assented to by both parties either in person or by their agents. So long as an application for insurance has not been either accepted or rejected, it is merely an offer or proposal to make a contract. The contract, to be binding from the date of application, must have been a completed contract, one that leaves nothing to be done, nothing to be completed, nothing to be passed upon, or determined, before it shall take effect. There can be no contract of insurance unless the minds of the parties have met in agreement. When Primitivo filed an application for insurance, paid P2,075.00 and submitted the results of his medical examination, his application was subject to the acceptance of private respondent BF Lifeman Insurance Corporation. The assent of private respondent BF Lifeman Insurance Corporation therefore was not given when it merely received the application form and all the requisite supporting papers of the applicant . Its assent was given when it issues a corresponding policy to the applicant. Under the abovementioned provision, it is only when the applicant pays the premium and receives and accepts the policy while he is in good health that the contract of insurance is deemed to have been perfected. It is not disputed, however, that when Primitivo died on November 25, 1987, his application papers for additional insurance coverage were still with the branch office of respondent corporation in Gumaca and it was only two days later, or on November 27, 1987, when Lalog personally delivered the application papers to the head office in Manila. Consequently, there was absolutely no way the acceptance of the application could have been communicated to the applicant for the latter to accept inasmuch as the applicant at the time was already dead.

5. Philamcare v CA G.R. No. 125678. March 18, 2002

Facts:Ernani Trinos applied for a health care coverage with Philam. He answered no to a question asking if he or his family members were treated to heart trouble, asthma, diabetes, etc.The application was approved for 1 year. He was also given hospitalization benefits and out-patient benefits. After the period expired, he was given an expanded coverage for Php 75,000. During the period, he suffered from heart attack and was confined at MMC. The wife tried to claim the benefits but the petitioner denied it saying that he concealed his medical history by answering no to the aforementioned question. She had to pay for the hospital bills amounting to 76,000. Her husband subsequently passed away. She filed a case in the trial court for the collection of the amount plus damages. She was awarded 76,000 for the bills and 40,000 for damages. The CA affirmed but deleted awards for damages. Hence, this appeal.

Issue: WON a health care agreement is not an insurance contract; hence the “incontestability clause” under the Insurance Code does not apply.

Held: No. Petition dismissed.

Ratio: Petitioner claimed that it granted benefits only when the insured is alive during the one-year duration. It contended that there was no indemnification unlike in insurance contracts. It supported this claim by saying that it is a health maintenance organization covered by the DOH and not the Insurance Commission. Lastly, it claimed that the Incontestability clause didn’t apply because two-year and not one-year effectivity periods were required.  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.”

Section 3 states: every person has an insurable interest in the life and health:(1)     of himself, of his spouse and of his children.In this case, the husband’s health was the insurable interest. The health care agreement was in the nature of non-life insurance, which is primarily a contract of indemnity. The provider must pay for the medical expenses resulting from sickness or injury.While petitioner contended that the husband concealed materialfact of his sickness, the contract stated that:“that any physician is, by these presents, expressly authorized to disclose or give testimony at anytime relative to any information acquired by him in his professional capacity upon any question affecting the eligibility for health care coverage of the Proposed Members.”This meant that the petitioners required him to sign authorization to furnish reports about his medical condition. The contract also authorized Philam to inquire directly to his medical history.Hence, the contention of concealment isn’t valid.They can’t also invoke the “Invalidation of agreement” clause where failure of the insured to disclose information was a grounds for revocation simply because the answer assailed by the company was the heart condition question based on the insured’s opinion. He wasn’t a medical doctor, so he can’t accurately gauge his condition.Henrick v Fire-  “in such case the insurer is not justified in relying upon such statement, but is obligated to make further inquiry.”Fraudulent intent must be proven to rescind the contract. This was incumbent upon the provider.“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.”Section 27 of the Insurance Code- “a concealment entitles the injured party to rescind a contract of insurance.”As to cancellation procedure- Cancellation requires certain conditions:1.       Prior notice of cancellation to insured;2.       Notice must be based on the occurrence after effective date of the policy of one or more of the grounds mentioned;3.       Must be in writing, mailed or delivered to the insured at the address shown in the policy;4.       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 basedNone were fulfilled by the provider.As to incontestability- The trial court said that “under 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.”

6. Gulf Resorts Inc. vs. Philippine Charter Insurance Corporation [G.R. No. 156167 May 16, 2005]

Facts: Gulf Resorts 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 (AHAC). In the first 4 policies issued, the risks of loss from earthquake shock was extended only to petitioner’s two swimming pools. Gulf Resorts agreed to insure with Phil Charter the properties covered by the AHAC policy provided that the policy wording and rates in said policy be copied in the policy to be issued by Phil Charter. Phil Charter issued Policy No. 31944 to Gulf Resorts covering the period of March 14, 1990 to March 14, 1991 for P10,700,600.00 for a total

premium of P45,159.92. the break-down of premiums shows that Gulf Resorts paid only P393.00 as premium against earthquake shock (ES). In Policy No. 31944 issued by defendant, the shock endorsement provided that “In consideration of the payment by the insured to the company of the sum included additional premium the Company agrees, notwithstanding what is stated in the printed conditions of this policy due to the contrary, that this insurance covers loss or damage to shock to any of the property insured by this Policy occasioned by or through or in consequence of earthquake (Exhs. "1-D", "2-D", "3-A", "4-B", "5-A", "6-D" and "7-C"). In Exhibit "7-C" the word "included" above the underlined portion was deleted. On July 16, 1990 an earthquake struck Central Luzon and Northern Luzon and plaintiff’s properties covered by Policy No. 31944 issued by defendant, including the two swimming pools in its Agoo Playa Resort were damaged. 

Petitioner advised respondent that it would be making a claim under its Insurance Policy 31944 for damages on its properties. Respondent denied petitioner’s claim on the ground that its insurance policy only afforded earthquake shock coverage to the two swimming pools of the resort. The trial court ruled in favor of respondent. In its ruling, the schedule clearly shows that petitioner paid only a premium of P393.00 against the peril of earthquake shock, the same premium it had paid against earthquake shock only on the two swimming pools in all the policies issued by AHAC. 

Issue: Whether or not the policy covers only the two swimming pools owned by Gulf Resorts and does not extend to all properties damaged therein

Held: YES. All the provisions and riders taken and interpreted together, indubitably show the intention of the parties to extend earthquake shock coverage to the two swimming pools only. An insurance premium is the consideration paid an insurer for undertaking to indemnify the insured against a specified peril. In fire, casualty and marine insurance, the premium becomes a debt as soon as the risk attaches. In the subject policy, no premium payments were made with regard to earthquake shock coverage except on the two swimming pools. There is no mention of any premium payable for the other resort properties with regard to earthquake shock. This is consistent with the history of petitioner’s insurance policies with AHAC.