B. Insurance - Is an agreement whereby one undertakes for a consideration to indemnify another against a loss, damage or liability arising from an unknown or contingent event.

C. Nature and Characteristics of Insurance Contracts

D. Requisities for validity in general Civil Code on validity of contracts

ESSENTIAL REQUISITES OF CONTRACTSGENERAL PROVISIONS

Art. 1318. There is no contract unless the following requisites concur:(1) Consent of the contracting parties;

(2) Object certain which is the subject matter of the contract;

(3) Cause of the obligation which is established. (1261)

SECTION 1. - Consent

Art. 1319. Consent is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. The offer must be certain and the acceptance absolute. A qualified acceptance constitutes a counter-offer.

Enriquez vs Sun Life Insurance

Facts: On Sept 24, 1917, Joaquin Herrer made an application to Assurance Company of Canada through its office in Manila for a life annuity. Two days later he paid the P 6000 to the manager of the companys Manila office and was given a receipt.

1. The application was forwarded to the head office of the company at Montreal Canada. The head office gave notice of acceptance by cable to manila. On Dec 4, 1917, The policy was issued in Montreal. On Dec 18, 1917, attorney Aurelio Torres wrote to the manila office of the company stating that Herrer desired to withdraw his application.

2. The company replied that it had already issued the policy. The letter was received by Mr. Torres on the morning of Dec 21, 1917.

3. Mr. Herrer died on Dec 20, 1917

Issue: WON THERE WAS VALID INSURANCE CONTRACT that was entered by Mr. Herrer and the company

Ratio: No, the law prevailing in this case Art 1262 of the C.C.

An acceptance made by letter shall not bind the person making the offer except from the time it came to his knowledge

The fact as to the letter of notification thus fails to concur with the essential elements of the general rule pertaining to the mailing and delivery of mail matter as announced by the American courts, namely, 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. For instance, 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. (See 22 C.J., 96, and 49 L. R. A. [N. S.], pp. 458, et seq., notes.)

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.lawph!l.net

The pertinent fact is, that according to the provisional receipt, three things had to be accomplished by the insurance company before there was a contract: (1) There had to be a medical examination of the applicant; (2) there had to be approval of the application by the head office of the company; and (3) this approval had in some way to be communicated by the company to the applicant.

Held: judgment Reversed: Recover the 6000 pesos

Perez vs CAFacts

Primitivo Perez has been insured with Bf Lifeman Insurance Corporation since 1980 for P 20,000. Sometime in Oct 1987, an agent of the insurance corporation Rodolfo Lalog visited the Perez.

Perez then accomplished an application form for the additional insurance coverage of 50,000 PESOS. On the same day, petitioner Virginia Perez Primitivos wife paid P 2,075.00 to Lalog.

The receipt issued by Lalog indicated the amount received was a deposit.

Lalog forwarded the application of Perez together with all of the supporting papers to the office of BF Lifeman Insurance Corporation at Gumaca Quezon City.

On Nov 25, 1987, Perez died in an accident. At the time of his death his application papers for the additional insurance of 50,000 pesos were still with the Gumaca Office.

Lalog testified that when he went to follow up the paopers he found them still in the Gumaca office and so he personally brough the papers to the manila office of BF Lifeman Insurance Corporation.

It was only on November 27, 1987 BF Lifeman Insurance Corporation approved the application and issued the corresponding policy on December 2, 1987.

Petitioner went to Manila to claim the benefits under the insurance policies. Was paid 40,000 for the first insurance policy The company refused to pay the claim under the additional insurance policy.Private respondent filed a complaint against Petitioner Virginia Perez seeking the rescission and declaration of nullity of the insurance contract in question.

Petitioner averred that the deceased had fulfilled all his prestations under the contract and all the elements of a valid contract are present. She then filed a counterclaim, against private respondent for collection of P 150,000 as actual damages.

TC Ruled in favor of petitioner

CA Reversed

Issue: WON THE CONTRACT OF INSURANCE WAS PERFECTED

RATIO: The husband of the petitioner was never able to receive the policy and accept it thus there was no perfection of contract.

A contract of insurance 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.

Held: Petition is Denied

De Lim vs Sun Life Assurance Co. of Canada

Nature of the Case: Appeal from an order of the CFI

Facts

Luis Lim y Garcia of Zamboanga made application to the Sun Life Assurance Company for a police of insurance on his life in the sum of P 5000..

Lim designated his wife, Pilar De Lim, the plaintiff herein, as beneficiary.

The first premiums of P 433 pesos was paid by LIM and upon such payment the company issued a provisional policy.

Luis Lim died on Aug 23, 1917 after the issuance of the provisional policy but before the approval of the application by the home office of the insurance company.

Case was brought by the beneficiary.

ISSUE: WON the contract of Insurance was perfected

Ratio: NO, the contract of insurance was not consummated by the parties and that consequently, the widow of the deceased cannot recover the amount of the unsrance from the insurance company

There was no meeting of the minds because upon reading the provisional receipt there was a need for the insurance company to approval of the application through the issuance of the policy before the contract is perfected.

Musngi vs West Coast Life Insurance Co.

Facts

Arsenio T. Garcia was insured by West Coast life Inusrance Company in the sum of P 5000.

Arsenio T. Garcia was again insured by the defendant company in the sum of P 10,000.

The two policies were valid and subsiting at the time of the death of the insured on Dec 30, 1932.

A demand was made upon the defendant by the beneficiaries.

In both application, the insured had to answer inquiries as to his state of health and that of his family whiche he did voluntarily

The answers to these policites were one of the considerations for the issuance of the policies.

After the death of the insured and as a result of the demand made by the beneficiaries upon the defendant to pay the value of the policies and they so positively

It was found that on May 13 and 19 1929, the insured had entered the General Hospital in Manila and was treared for peptic ulcer and chronic catarhhal naso phyryngitis

The defendants contended that the two policies did not create any valid obligations

ISSUE: WON there was valid INSURANCE Contract?

Ratio: No, the insured knew that he had suffered from a number of ailments, including incipient pulmonary tuberculosis before subscribing the application yet he concealed them and omitted the hospital where he was confined as well the name of the physician whop treatment

That acts of concealment and false statements constituted fraud is likewise clear because the defendant by reason thereof accepted the rish which it would otherwise have flatly refused.

Art 1276 Provides that the statement of a false consideration shall render the contract void.

The two answers being the consideration of the policies and it appearing that they are false and fraudulent it is evident that insurance contract is null and void

One ground for rescission is a concealment Sec 25. Insurance Code - A neglect to communicate that which a party knows and ought to communicateEssential Elements

Gulf Resorts Inc. vs Philippine Charter Insurance Corporation

Nature of the Case: Petition for Certiorari

Facts Plaintiff is the owner of the Plaza Resor situated in La Union and had its properties in said resort insured originally with (AHAC-AIU) The first four insurance policies was extend only to plaintiffs swimming pool

Petitioners avers to its earthquake shock endorsement rider (INSURANCE POLICY) covers all DAMAGES TO THE PROPERTIES within its resor caused by the earthquake.

Respondent contends that rider limits its liability for loss to the two swimming pools of petitionerPlaintiff 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-AIU).2. In the first four insurance policies issued by AHAC-AIU, the risk of loss from earthquake shock was extended only to plaintiffs two swimming pools, thus, earthquake shock endt.3. 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.4. 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.5. After the earthquake, petitioner advised respondent that it would be making a claim under its Insurance Policy No. 31944 for damages on its properties.6. 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.7. On July 30, 1990, respondent, through its adjuster, requested petitioner to submit various documents in support of its claim.8. On August 7, 1990, Bayne Adjusters and Surveyors, Inc., through its Vice-President A.R. de Leon,4 rendered a preliminary report finding extensive damage caused by the earthquake to the clubhouse and to the two swimming pools.9. Mr. de Leon stated that except for the swimming pools, all affected items have no coverage for earthquake shocks.10. On August 11, 1990, petitioner filed its formal demand for settlement of the damage to all its properties in the Agoo Playa Resort.11. 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.12. Petitioner and respondent failed to arrive at a settlement.13. Petitioner contends the followinga. First, that the policys earthquake shock endorsement clearly covers all of the properties insured and not only the swimming pools. It used the words any property insured by this policy, and it should be interpreted as all inclusive.

b. Second, the unqualified and unrestricted nature of the earthquake shock endorsement is confirmed in the body of the insurance policy itself, which states that it is [s]ubject to: Other Insurance Clause, Typhoon Endorsement, Earthquake Shock Endt., Extended Coverage Endt., FEA Warranty & Annual Payment Agreement On Long Term Policies.

c. Third, that the qualification referring to the two swimming pools had already been deleted in the earthquake shock endorsement.

d. Fourth, it is unbelievable for respondent to claim that it only made an inadvertent omission when it deleted the said qualification.)e. Fifth, that the earthquake shock endorsement rider should be given precedence over the wording of the insurance policy, because the rider is the more deliberate expression of the agreement of the contracting parties.f. Sixth, that in their previous insurance policies, limits were placed on the endorsements/warranties enumerated at the time of issue.g. Seventh, any ambiguity in the earthquake shock endorsement should be resolved in favor of petitioner and against respondent. It was respondent which caused the ambiguity when it made the policy in issue.h. Eighth, the qualification of the endorsement limiting the earthquake shock endorsement should be interpreted as a caveat on the standard fire insurance policy, such as to remove the two swimming pools from the coverage for the risk of fire. It should not be used to limit the respondents liability for earthquake shock to the two swimming pools only.i. Ninth, there is no basis for the appellate court to hold that the additional premium was not paid under the extended coverage. The premium for the earthquake shock coverage was already included in the premium paid for the policy.j. Tenth, the parties contemporaneous and subsequent acts show that they intended to extend earthquake shock coverage to all insured propertiesIssue:Should the insurer be liable of the damages due to earthquake?Held:NO- 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. Thus, an insurance contract exists where the following elements concur:1. The insured has an insurable interest;2. The insured is subject to a risk of loss by the happening of thedesignated peril;3. The insurer assumes the risk4. Such assumption of risk is part of a general scheme todistribute actual losses among a large group of personsbearing a similar risk; and5. In consideration of the insurers promise, the insured pays apremium.26 (Emphasis ours)- An insurance premium is the consideration paid an insurer for undertaking to indemnify the insured against a specified peril.while the other party merely affixes his signature or hisadhesion thereto.- We cannot apply the general rule on contracts of adhesion tothe case at bar. Petitioner cannot claim it did not know theprovisions of the policy.- From the inception of the policy, petitioner had required therespondent to copy verbatim the provisions and terms of itslatest insurance policy from AHAC-AIU- Respondent, in compliance with the condition set by thepetitioner, copied AIU Policy No. 206-4568061-9 in drafting its Insurance Policy No. 31944. 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.Decision: IN VIEW WHEREOF, the judgment of the Court of Appeals is affirmed. The petition for certiorari is dismissedIn fire, casualty, and marine insurance, the premium payable becomes a debt as soon as the risk attachesIn 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 petitioners previous insurance policies from AHAC-AIU. As borne out by petitioners witnesses.- No significance can be placed on the deletion of the qualification limiting the coverage to the two swimming pools. The earthquake shock endorsement cannot stand alone.- The Court also rejects petitioners contention that respondents contemporaneous and subsequent acts to the issuance of the insurance policy falsely gave the petitioner assurance that the coverage of the earthquake shock endorsement included all its properties in the resort.General Rule on Contract of Adhesion not applicable- 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. A contract of adhesion is one wherein a party, usually a corporation, prepares the stipulations in the contract,

Philamcare Health Systems Inc vs CA

Facts

Ernani Trinos , deceased husband of respondent Julita Trinos applied for a health care coverage with petitioner Philamcare Health Systems Inc. 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 petic ulcer?

The application was approived for a period of one year from March 1, 1998 to March 1, 1989.

Under the agreement, respondents husband was entitled to avail of hospitalization benefits whether ordinary or emergency is listed therein . He was also entitled to avail of out patients benefits such as annual physical examination preventive health care and other out of patient services.

The same was extended 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 P 75,000.

During the period of his coverage, Ernani suffered a heart attack and was confined at MMC for one month beginning March 9, 1990 .

While her husband was in the hospital respondent tried to claim the benefits under the health care agreement.

Petitioner denied her claim saying that the Health Care Agreement was void. Thus respondent paid the hospitalization expenses herself amounting to about P 76,000.

After her husband was discharged from the MMC he was attended by a physical therapist at home

Her husband died on April 13, 1990.

RTC ruled in favor of RespondentCA: AFFIRMED

ISSUE: WON THE HEATLCARE AGREEMENT is a Insurance Contract?

ISSUE: WON THE THE CONTRACT OF INSURANCE was invalidated due to the wrong opinion given by the husband of the respondent

RATIO: YES, The following requisites of insurance contract

1. The insured has an insurable interest 2. The insured is subject to a risk of loss by the happening of the designated peril3. The insurer assumes the risk4. Such assumption of risk is part of a general scheme to distribute the actual losses among a large group of persons bering a similar risk;

5. In consideration of the insurers promise the insured pays a premium.

WHAT MAY BE INSUREDSec. 3. Any contingent or unknown event, whether past or future, which may damnify a person having an insurable interest, or create a liability against him, may be insured against, subject to the provisions of this chapter.The consent of the husband is not necessary for the validity of an insurance policy taken out by a married woman on her life or that of her children.Any minor of the age of eighteen years or more, may, notwithstanding such minority, contract for life, health and accident insurance, with any insurance company duly authorized to do business in the Philippines, provided the insurance is taken on his own life and the beneficiary appointed is the minor's estate or the minor's father, mother, husband, wife, child, brother or sister.The married woman or the minor herein allowed to take out an insurance policy may exercise all the rights and privileges of an owner under a policy.All rights, title and interest in the policy of insurance taken out by an original owner on the life or health of a minor shall automatically vest in the minor upon the death of the original owner, unless otherwise provided for in the policy.

In the case at bar , the insurable interest of respondent 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.

NO! 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 not untrue..

Held: PETITION IS DENIED

F. Applicability of the Civil Code

Art. 739. The following donations shall be void:

(1) Those made between persons who were guilty of adultery or concubinage at the time of the donation;

(2) Those made between persons found guilty of the same criminal offense, in consideration thereof;

(3) Those made to a public officer or his wife, descedants and ascendants, by reason of his office.

In the case referred to in No. 1, the action for declaration of nullity may be brought by the spouse of the donor or donee; and the guilt of the donor and donee may be proved by preponderance of evidence in the same action.

INSURANCE

Art. 2011. The contract of insurance is governed by special laws. Matters not expressly provided for in such special laws shall be regulated by this Code. (n)Art. 2012. Any person who is forbidden from receiving any donation under Article 739 cannot be named beneficiary of a life insurance policy by the person who cannot make any donation to him, according to said article. (n)

Zenith Insurance Corporation vs CA

Private respondent insured his car for own damage under private car Policy with Petitioner Zenith Insurance Corporation.

The car figured in an accident and suffered actual damages in the amount of P 3640.

Fernandez filed a complaint with the RTC for sum of money and Damages resulting from the refusal of Zenith to pay the amount claimed.

TC: ruled in favor of respondent CA: affirmed the decision of the RTC

ISSUE: WON THE AWARD OF DAMAGES by THE RTC is correct

Ratio NO

It is clear that under the Insurance Code, in case of unreasonable delay in the payment of the proceeds of an insurance policy, the damages that may be awarded are: 1) attorney's fees; 2) other expenses incurred by the insured person by reason of such unreasonable denial or withholding of payment; 3) interest at twice the ceiling prescribed by the Monetary Board of the amount of the claim due the injured; and 4) the amount of the claim

As regards the award of moral and exemplary damages, the rules under the Civil Code of the Philippines shall govern.

"The purpose of moral damages is essentially indemnity or reparation, not punishment or correction. Moral damages are emphatically not intended to enrich a complainant at the expense of a defendant, they are awarded only to enable the injured party to obtain means, diversions or amusements that will serve to alleviate the moral suffering he has undergone by reason of the defendant's culpable action."

It is equally true that in awarding moral damages in case of breach of contract, there must be a showing that the breach was wanton and deliberately injurious or the one responsible acted fraudently or in bad faith (Perez v. Court of Appeals, G.R. No. L-20238, January 30,1965; 13 SCRA 137; Solis v. Salvador, G.R. No. L-17022, August 14, 1965; 14 SCRA 887).

In the instant case, there was a finding that private respondent was given a "run-around" for two months, which is the basis for the award of the damages granted under the Insurance Code for unreasonable delay in the payment of the claim.

However, the act of petitioner of delaying payment for two months cannot be considered as so wanton or malevolent to justify an award of P20,000.00 as moral damages, taking into consideration also the fact that the actual damage on the car was only P3,460. In the pre-trial of the case, it was shown that there was no total disclaimer by respondent.

The reason for petitioner's failure to indemnify private respondent within the two-month period was that the parties could not come to an agreement as regards the amount of the actual damage on the car.

On the other hand, exemplary or corrective damages are imposed by way of example or correction for the public good (Art. 2229, New Civil Code of the Philippines).

In the case of Noda v. Cruz-Arnaldo, G.R. No. 57322, June 22,1987; 151 SCRA 227, exemplary damages were not awarded as the insurance company had not acted in wanton, oppressive or malevolent manner. The same is true in the case at bar.

Held: The amount of P10,000.00 prayed for by private respondent as moral damages is equitable.

Exemplary damages is deleted

Insular vs Ebrado