Prats & Company vs. Phoenix Insurance CompanyFACTS: Prats & Co., a mercantile partnership instituted an action in the RTC of the City of Manila for recovery from the Phoenix Insurance Co. the sum of P117,800.60 with interest, by reason of a loss alleged to have been sustained by the plaintiff from a fire for said loss was covered by insurance issued by the defendant company. Phoenix Insurance admitted the insurance of the insurance but by way of special defense, alleged that the fire in question had been set by the plaintiff, or with its connivance, and the plaintiff had submitted under oath to the defendant a fraudulent claim of loss in contravention of the express terms of the policy. The trial court absolved the defendant from the complaint with respect to the obligation created by the policy but ordered the defendant to pay to the plaintiff the sum of P11, 731.93 with interest from the filing of the complaint, upon account of moneys received from salvage sales, conducted by the defendant, of remnants of the insured stock.ISSUE: Whether or not the petitioner caused the fire to be set or connived therein and submitted fraudulent proof as the trial judge found.RULING: YES. The proof submitted by the defendant tends to show that obscure manipulations were used by the plaintiff in the storing of merchandise at 95 Plaza Gardenia and in the removal of part of the contents of the bodega before the fire. It appears that cases of old stock were shipped to Manila before the fire but instead of being taken directly to the bodega they were housed for a time in the back part of the lower floor where the petitioner had office. Also, the manipulation of one of their people to attend to the alarm box not to allow others to touch it and reasoned out that he already have done it, when in fact the fire chief noticed that it was never touched and he himself turned on the alarm.The finding of the trial court in the effect that plaintiff had submitted false proof in the support of his claim is also well founded. First, the plaintiff had submitted a claim for jewelry lost in the fire as of a value of P 12,800 when the true value of the said jewelry was about P 600; and secondly, that the plaintiff had sought to recover from the insurance company the value of the goods which had been surreptitiously withdrawn by it from the bodega prior to the fire. As a conclusion, not only that the plaintiff caused the fire to be set, or connive therein, but also that it submitted fraudulent proof.

Malayan Insurance Co., Inc. V. Arnaldo (1987)Lessons Applicable:Authority to Receive Payment/Effect of Payment (Insurance)Laws Applicable:Article 64,Article 65,Section 77,Section 306of the Insurance CodeFACTS: June 7, 1981:Malayan insurance co., inc. (MICO)issued toCoronacionPinca, Fire Insurance Policy for her propertyeffective July 22, 1981, until July 22, 1982 October 15,1981:MICOallegedlycancelled the policy for non-payment, of the premium and sent the corresponding notice to Pinca December 24, 1981:payment of the premium for Pinca was received by DomingoAdora, agent of MICO January 15, 1982:Adoraremitted this payment to MICO,together with other payments January 18, 1982:Pinca's property was completely burned February 5, 1982: Pinca's payment was returned by MICO toAdoraon the ground that her policy had been cancelled earlier butAdorarefused to accept it and instead demanded for payment Under Section 416 of the Insurance Code, the period for appeal is thirty days from notice of the decision of the Insurance Commission. The petitioner filed its motion for reconsideration on April 25, 1981, or fifteen days such notice, and the reglementary period began to run again after June 13, 1981, date of its receipt of notice of the denial of the said motion for reconsideration. As the herein petition was filed on July 2, 1981, or nineteen days later, there is no question that it is tardy by four days. Insurance Commission: favored Pinca MICO appealedISSUE: W/N MICO should be liable because its agentAdorawas authorized to receive itHELD: YES.petition is DENIED SEC. 77. An insurer is entitled to payment of the premium as soon as the thing is exposed to the peril insured against. Notwithstanding any agreement to the contrary, no policy or contract of insurance issued by an insurance company is valid and binding unless and until the premium thereof has been paid, except in the case of a life or an industrial life policy whenever the grace period provision applies. SEC. 306. xxx xxx xxx

Any insurance company which delivers to an insurance agant or insurancebrokera policy or contract of insurance shall be demmed to have authorized such agent orbrokerto receive on its behalf payment of any premium which is due on such policy or contract of insurance at the time of its issuance ordeliveryor which becomes due thereon. Payment to an agent having authority to receive orcollect paymentis equivalent to payment to the principal himself; such payment is complete when the money delivered is into the agent's hands and is a discharge of the indebtedness owing to the principal. SEC. 64. No policy of insurance other than life shall be cancelled by the insurer except upon prior notice thereof to the insured, and no notice of cancellation shall be effective unless it is based on the occurrence, after the effective date of the policy, of one or more of the following:(a) non-payment of premium;(b) conviction of a crime arising out of acts increasing the hazard insured against;(c) discovery of fraud or material misrepresentation;(d) discovery of willful, or reckless acts or commissions increasing the hazard insured against;(e) physical changes in the property insured which result in the property becoming uninsurable;or(f) a determination by the Commissioner that the continuation of the policy would violate or would place the insurer in violation of this Code.

As for themethodof cancellation, Section 65 provides as follows: SEC. 65. All notices of cancellation mentioned in the preceding section shall be in writing, mailed or delivered to the named insured at the address shown in the policy, and shall state (a) which of the grounds set forth in section sixty-four is relied upon and (b) that, upon written request of the named insured, the insurer will furnish the facts on which the cancellation is based. A valid cancellation must, therefore, requireconcurrenceof the following conditions:

(1) There must be prior notice of cancellation to the insured;(2) The notice must be based on the occurrence, after the effective date of the policy, of one or more of the grounds mentioned;(3) The notice must be (a) in writing, (b) mailed, or delivered to the named insured, (c) at the address shown in the policy;(4) It must state (a) which of the grounds mentioned in Section 64 is relied upon and (b) that upon written request of the insured, the insurer will furnish the facts on which the cancellation is based. All MICO's offers to show that the cancellation was communicated to the insured is its employee's testimony that the said cancellation was sent "by mail through our mailing section." without more It stands to reason that if Pinca had really received the said notice, she would not have made payment on the original policy on December 24, 1981.Instead, she would have asked for a new insurance, effective on that date and until one year later, and so taken advantage of the extended period. Incidentally,Adorahad not been informed of the cancellation either and saw no reason not to accept the said payment Although Pinca's payment was remitted to MICO's by its agent on January 15, 1982, MICO sought to return it toAdoraonly on February 5, 1982, after it presumably had learned of the occurrence of the loss insured against on January 18, 1982 make the motives of MICO highly suspicious

Pioneer v Yap G.R. No. L-36232 December 19, 1974Facts: Respondent Oliva Yap was the owner of a store in a two-storey building where she sold shopping bags and footwear. Chua Soon Poon, her son-in-law, was in charge of the store. Yap took out a Fire Insurance Policy No. 4216 from Pioneer Insurance with a value of P25,000.00 covering her stocks,office furniture, fixtures and fittings. Among the conditions in the policy executed by the parties are the following: unless such notice be given and theparticularsof such insurance orinsurancesbe stated in, or endorsed on this Policy by or on behalf of the Company before the occurrence of any loss or damage, all benefits under this Policy shall be forfeited Any false declaration or breach or this condition will render this policy null and void. Another insurance policy forP20,000.00 issued by Great American covering the same properties. The endorsement recognized co-insurance by Northwest for the same value. Oliva Yap took out another fire insurance policy forP20,000.00 covering the same properties from the Federal Insurance Company, Inc., which was procured without notice to and the written consent of Pioneer. A fire broke out in the building, and the store was burned. Yap filed an insuranceclaim, but the same was denied for a breach. Oliva Yap filed a case for payment of theface valueof her fire insurance policy. The insurance company refused to pay because she never informed Pioneer of anotherinsurer. The trial court decided in favor of Yap. The CA affirmed.Issue: Whether or not petitioner should be absolved from liability on the Pioneeer policy on account of any violation of the co-insurance clauseHeld: No. Petition dismissed.Ratio:There was a violation. The insurance policy forP20,000.00 issued by the Great American, ceased to be recognized by them as a co-insurance policy.The endorsement shows the clear intention of the parties to recognize on the date the endorsement was made, the existence of only one co-insurance, the Northwest one. The finding of the Court of Appeals that the GreatAmerican Insurancepolicy was substituted by the Federal Insurance policy is indeed contrary to said stipulation.Other insurance without the consent of Pioneer would avoid the contract. It required no affirmative act of election on the part of the company to make operative the clause avoiding the contract, wherever the specified conditions should occur. Its obligations ceased, unless, being informed of the fact, it consented to the additional insurance.The validity of a clause in a fire insurance policy to the effect that the procurement of additional insurance without the consent of theinsurerrenders the policy void is in American jurisprudence.Milwaukee Mechanids' Lumber Co., vs. Gibson- "The rule in this state and practically all of the states is to the effect that a clause in a policy to the effect that the procurement of additional insurance without the consent of theinsurerrenders the policy void is a valid provision.In this jurisdiction, General Insurance & Surety Corporation vs. Ng Hua- The annotation then, must be deemed to be a warranty that the property was not insured by any other policy. Violation thereof entitled theinsurerto rescind. Furthermore, even if the annotations were overlooked the defendantinsurerwould still be free from liability because there isno questionthat the policy issued by GeneralIndemnityhas not been stated in nor endorsed on Policy No. 471 of defendant. The obvious purpose of the aforesaidrequirementin the policy is to prevent over-insurance and thus avert the perpetration of fraud where a fire would be profitable to the insured.

Philamlife vs. Auditor General [GR. 19255 January 18, 1968]Facts: On January 1950, PhilippineAmerican Life InsuranceCo.(PHILAM) and, foreign corporation,American InternationalReinsuranceCo.(AIRCO) entered into areinsurancetreatywhere PHILAM agreed to reinsure with AIRCO theexcessof life insurance on the lives of persons written by PHILAM. In their agreement it is also stipulated that even though PHILAM is already on a risk for its maximum retention under policies previously issued, when new policies are applied for and issued they can cede automatically any amount, within the limits specified. No questionever arose with respect to the remittances made by Philamlife to Airco before July 16, 1959, the date of approval of the Margin Law. Subsequently, the Central Bank of the Philippines collected the sum of P268,747.48 as foreign exchange margin on Philamlife remittances to Airco made subsequent to July 16, 1959. PHILAM then filed with the CB aclaim for refundfor the same amount arguing that thereinsurancepremiums remitted were paid on January 1950 and is therefore exempt from the 25% foreign exchange margin fee. The Acting legal counsel of the Monetary board resolved thatreinsurancecontracts entered into and approved by the Central Bank before July 17, 1959 are exempt from the payment of the 25% foreign exchange margin, even if remittances thereof are made after July 17, 1959. Still the Auditor of the CB denied PHILAMsclaim for refundand reconsideration was denied, hence the petition.Issue:Whether PHILAMs claim was covered by theexemption

Held: The Court held in the negative stating that for anexemptionto come into play, there must be areinsurancepolicy or, as in thereinsurancetreatyprovided, a "reinsurancecession" which may be automatic or facultative. To distinguish, areinsurancepolicy is a contract ofindemnityone insurer makes with another to protect the first insurer from a risk it has already assumed. On the other hand, areinsurancetreatyis merely an agreement between two insurance companies whereby one agrees to surrender and the other to acceptreinsurancebusiness pursuant to provisions specified in thetreaty.Treatiesare contracts for insurance;reinsurancepolicies or cessions are contracts of insurance. Although thereinsurancetreatyprecedes the Margin Law by over nine years nothing in thattreatyobligates PHILAM to remit to AIRCO a fixed, certain, and obligatory sum by way ofreinsurancepremiums. All that thereinsurancetreatyprovides on this point is that PHILAM "agrees to reinsure." Thetreatyspeaks of a probability; not a reality. PHILAMs obligation to remitreinsurancepremiums becomes fixed and definite upon the execution of thereinsurancecession. Because, for every life insurance policy surrendered to AIRCO, PHILAM agrees to pay premium. It is only after areinsurancecession is made that payment ofreinsurancepremium may be exacted, as it is only after PHILAM seeks to remit thatreinsurancepremium that the obligation to pay the margin fee arises.