INSURANCE LATEST CASESCONCEALMENT/REPRESENTATION1.Insular Life v. Feliciano 73 PHIL 201Facts:Evaristo Feliciano filed an application with Insular Life upon the solicitation of one of its agents. It appears that during that time, Evaristo was already suffering from tuberculosis. Such fact appeared during the medical exam, but the examiner and the companys agent ignored it. After that, Evaristo was made to sign an application form and thereafter the blank spaces were filled by the medical examiner and the agent making it appear that Evaristo was a fit subject of insurance. (Evaristo could not read and understand English) When Evaristo died, Insular life refused to pay the proceeds because of concealment.Issue: WON Insular Life was bound by their agents acts.Held: Yes. The insurance business has grown so vast and lucrative within the past century. Nowadays, even people of modest means enter into insurance contracts. Agents who solicit contracts are paid large commissions on the policies secured by them. They act as general representatives of insurance companies.IN the case at bar, the true state of health of the insured was concealed by the agents of the insurer. The insurers medical examiner approved the application knowing fully well that the applicant was sick. The situation is one in which of two innocent parties must bear a loss for his reliance upon a third person. In this case, it is the one who drafted and accepted the policy and consummated the contract. It seems reasonable that as between the two of them, the one who employed and gave character to the third person as its agent should be the one to bear the loss. Hence, Insular is liable to the beneficiaries.2. Insular life v. Feliciano 74 PHIL 4681Facts:Insular life filed a motion for reconsideration of the decision in the preceding case.Issue: WON Insular Life was bound by their agents acts.Held: NO There was collusion between Evaristo and the agent and the medical examiner in making it appear that Evaristo was a fit subject for insurance. When Evaristo authorized them to write the answers for him, he made them his own agents for that purpose and he was responsible for their acts in that connection.If they falsified the answers for him, he could not evade liability for the falsification. He was not supposed to sign the application in blank. He knew that his answers would be the basis for the policy, and was required with his signature to vouch for their truth. The judgment rendered therefore in the preceding case is thus reversed, and Insular Life is absolved from liability. (bakit kaya nagreverse?... the plot thickens Hmm.)3 Sun Life v. CA 245 SCRA 268 (1995)Facts: On April 15, 1986, Bacani procured a life insurance contract for himself from Sun Life. He was issued a life insurance policy with double indemnity in case of accidental death. The designated beneficiary was his mother, Bernarda. On June 26, 1987, the insured died in a plane crash. Bernarda Bacani filed a claim with Sun Life, seeking the benefits of the insurance. Sun Life conducted an investigation and its findings prompted it to reject the claim. Sun Life discovered that 2 weeks prior to his application, Bacani was examined and confined at the Lung Center of the Philippines, where he was diagnosed for renal failure. During his confinement, the deceased was subjected to urinalysis, ultra-sonography and hematology tests. He did not reveal such fact in his application. In its letter, Sun Life informed Bernarda, that the insured did not disclosed material facts relevant to the issuance of the policy, thus rendering the contract of insurance voidable. A check representing the total premiums paid in the amount of P10,172.00 was attached to said letter. Bernarda and her husband filed an action for specific performance against Sun Life. RTC ruled for Bernarda holding that the facts concealed by the insured were made in good faith and under the belief that they need not be disclosed. Moreover, it held that the health history of the insured was immaterial since the insurance policy was "non-medical." CA affirmed.Issue: WON the beneficiary can claim despite the concealment.Held: NOPE.Section 26 of the Insurance Code is explicit in requiring a party to a contract of insurance to communicate to the other, in good faith, all facts within his knowledge which are material to the contract and as to which he makes no warranty, and which the other has no means of ascertaining.Materiality is to be determined not by the event, but solely by the probable and reasonable influence of the facts upon the party to whom communication is due, in forming his estimate of the disadvantages of the proposed contract or in making his inquiries (The Insurance Code, Sec 31)The terms of the contract are clear. The insured is specifically required to disclose to the insurer matters relating to his health. The information which the insured failed to disclose was material and relevant to the approval and the issuance of the insurance policy. The matters concealed would have definitely affected petitioner's action on his application, either by approving it with the corresponding adjustment for a higher premium or rejecting the same. Moreover, a disclosure may have warranted a medical examination of the insured by petitioner in order for it to reasonably assess the risk involved in accepting the application.Thus, "good faith" is no defense in concealment. The insured's failure to disclose the fact that he was hospitalized for two weeks prior to filing his application for insurance, raises grave doubts about his bonafides. It appears that such concealment was deliberate on his part.4. Vda. De Canilang v. CA 223 SCRA 443 (1993)Facts: Canilang consulted Dr. Claudio and was diagnosed as suffering from "sinus tachycardia." Mr. Canilang consulted the same doctor again on 3 August 1982 and this time was found to have "acute bronchitis." On the next day, 4 August 1982, Canilang applied for a "non-medical" insurance policy with Grepalife naming his wife, as his beneficiary. Canilang was issued ordinary life insurance with the face value of P19,700. On 5 August 1983, Canilang died of "congestive heart failure," "anemia," and "chronic anemia." The wife as beneficiary, filed a claim with Grepalife which the insurer denied on the ground that the insured had concealed material information from it. Vda Canilang filed a complaint with the Insurance Commissioner against Grepalife contending that as far as she knows her husband was not suffering from any disorder and that he died of kidney disorder. Grepalife was ordered to pay the widow by the Insurance Commissioner holding that there was no intentional concealment on the Part of Canilang and that Grepalife had waived its right to inquire into the health condition of the applicant by the issuance of the policy despite the lack of answers to "some of the pertinent questions" in the insurance application. CA reversed.Issue: WON Grepalife is liable.Held:SC took note of the fact that Canilang failed to disclose that hat he had twice consulted Dr. Wilfredo B. Claudio who had found him to be suffering from "sinus tachycardia" and "acute bronchitis. Under the relevant provisions of the Insurance Code, the information concealed must be information which the concealing party knew and "ought to have communicated," that is to say, information which was "material to the contract.The information which Canilang failed to disclose was material to the ability of Grepalife to estimate the probable risk he presented as a subject of life insurance. Had Canilang disclosed his visits to his doctor, the diagnosis made and the medicines prescribed by such doctor, in the insurance application, it may be reasonably assumed that Grepalife would have made further inquiries and would have probably refused to issue a non-medical insurance policy or, at the very least, required a higher premium for the same coverage. The materiality of the information withheld by Canilang from Grepalife did not depend upon the state of mind of Jaime Canilang. A man's state of mind or subjective belief is not capable of proof in our judicial process, except through proof of external acts or failure to act from which inferences as to his subjective belief may be reasonably drawn. Neither does materiality depend upon the actual or physical events which ensue. Materiality relates rather to the "probable and reasonable influence of the facts" upon the party to whom the communication should have been made, in assessing the risk involved in making or omitting to make further inquiries and in accepting the application for insurance; that "probable and reasonable influence of the facts" concealed must, of course, be determined objectively, by the judge ultimately.SC found it difficult to take seriously the argument that Grepalife had waived inquiry into the concealment by issuing the insurance policy notwithstanding Canilang's failure to set out answers to some of the questions in the insurance application. Such failure precisely constituted concealment on the part of Canilang. Petitioner's argument, if accepted, would obviously erase Section 27 from the Insurance Code of 1978.5. Philamcare v. CAFacts: Ernani Trinos, applied for a health care coverage with Philamcare. 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 peptic ulcer? (If Yes, give details) The application was approved for a period of one year from March 1, 1988 to March 1, 1989. He was issued Health Care Agreement, and under such, he was entitled to avail of hospitalization benefits, whether ordinary or emergency, listed therein. He was also entitled to avail of "out-patient benefits" such as annual physical examinations, preventive health care and other out-patient services. Upon the termination of the agreement, the same was extended for another year 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 P75,000.00 per disability. During the period of his coverage, Ernani suffered a heart attack and was confined at the Manila Medical Center (MMC) for one month beginning March 9, 1990. While her husband was in the hospital, Julita tried to claim the benefits under the health care agreement. However, Philamcare denied her claim saying that the Health Care Agreement was void. According to Philamcare, there was concealment regarding Ernani's medical history. Doctors at the MMC allegedly discovered at the time of Ernani's confinement that he was hypertensive, diabetic and asthmatic, contrary to his answer in the application form. Julita had no choice but to pay the hospitalization expenses herself, amounting to about P76,000.00 After her husband was discharged from the MMC, he was attended by a physical therapist at home. Later, he was admitted at the Chinese General Hospital (CGH). Due to financial difficulties, Julita brought her husband home again. In the morning of April 13, 1990, Ernani had fever and was feeling very weak. Julita was constrained to bring him back to the CGH where he died on the same day. Julita instituted, an action for damages against Philamcare. She asked for reimbursement of her expenses plus moral damages and attorney's fees. RTC decided in favor of Julita. CA affirmed.ISSUE: WON the health care agreement is not an insurance contract; hence the "incontestability clause" under the Insurance Code Title 6, Sec. 48 does not apply.RULING:SC held that in the case at bar, the insurable interest of respondent's 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 to the extent agreed upon under the contract. Under the title Claim procedures of expenses, Philamcare had 12 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 lies. Petitioner argues that respondent's husband concealed a material fact in his application. It appears that in the application for health coverage, petitioners required respondent's husband to sign an express authorization for any person, organization or entity that has any record or knowledge of his health to furnish any and all information relative to any hospitalization, consultation, treatment or any other medical advice or examination. Philamcare cannot rely on the stipulation regarding "Invalidation of agreement" which reads:Failure to disclose or misrepresentation of any material information by the member in the application or medical examination, whether intentional or unintentional, shall automatically invalidate the Agreement from the very beginning and liability of Philamcare shall be limited to return of all Membership Fees paid. Undisclosed or misrepresented information is deemed material if its revelation would have resulted in the declination of the applicant by Philamcare or the assessment of a higher Membership Fee for the benefit or benefits applied for.The answer assailed by petitioner was in response to the question relating to the medical history of the applicant. This largely depends on opinion rather than fact, especially coming from respondent's husband who was not a medical doctor. 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 untrue. The fraudulent intent on the part of the insured must be established to warrant rescission of the insurance contract. Concealment as a defense for the health care provider or insurer to avoid liability is an affirmative defense and the duty to establish such defense by satisfactory and convincing evidence rests upon the provider or insurer. In any case, with or without the authority to investigate, petitioner is liable for claims made under the contract. 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.Under Section 27 of the Insurance Code, "concealment entitles the injured party to rescind a contract of insurance." The right to rescind should be exercised previous to the commencement of an action on the contract. In this case, no rescission was made. Besides, the cancellation of health care agreements as in insurance policies requires the concurrence of the following 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 based. None of the above pre-conditions was fulfilled in this case. When the terms of insurance contract contain limitations on liability, courts should construe them in such a way as to preclude the insurer from non-compliance with his obligation. Being a contract of adhesion, the terms of an insurance contract are to be construed strictly against the party which prepared the contract the insurer. By reason of the exclusive control of the insurance company over the terms and phraseology of the insurance contract, ambiguity must be strictly interpreted against the insurer and liberally in favor of the insured, especially to avoid forfeiture. This is equally applicable to Health Care Agreements. The phraseology used in medical or hospital service contracts, such as the one at bar, must be liberally construed in favor of the subscriber, and if doubtful or reasonably susceptible of two interpretations the construction conferring coverage is to be adopted, and exclusionary clauses of doubtful import should be strictly construed against the provider.

PERSONS ENTITLED TO RECOVER UNDER THE POLICY6. Bonifacio Bros. v. Mora 20 SCRA 262Facts: Enrique Mora mortgaged his Odlsmobile sedan car to HS Reyes Inc. with the condition that Mora would insure the car with HS Reyes as beneficiary. The car was then insured with State Insurance Company and the policy delivered to Mora. During the effectivity of the insurance contract, the car figured in an accident. The company then assigned the accident to an insurance appraiser for investigation and appraisal of the damage. Mora without the knowledge and consent of HS Reyes, authorized Bonifacio Bros to fix the car, using materials supplied by the Ayala Auto Parts Company. For the cost of Labor and materials, Mora was billed P2,102.73. The bill was sent to the insurers appraiser. The insurance company drew a check in the amount of the insurance proceeds and entrusted the check to its appraiser for delivery to the proper party. The car was delivered to Mora without the consent of HS Reyes, and without payment to Bonifacio Bros and Ayala. Upon the theory that the insurance proceeds should be directly paid to them, Bonifacio and Ayala filed a complaint against Mora and the insurer with the municipal court for the collection of P2,102.73. The insurance company filed its answer with a counterclaim for interpleader, requiring Bonifacio and HS Reyes to interplead in order to determine who has a better right to the proceeds.Issue: WON there is privity of contract between Bonficacio and Ayala on one hand and State Insurance on the other.Held: NONE.It is fundamental that contracts take effect only between the parties thereto, except in some specific instance provided by law where the contract contains some stipulation in favor of a third person. Such stipulation is known as a stipulation pour autrui; or a provision in favor of a third person not a party to the contract.Under this doctrine, a third person is allowed to avail himself of a benefit granted to him by the terms of the contract, provided that the contracting parties have clearly and deliberately conferred a favor upon such person. Consequently, a third person NOT a party to the contract has NO action against the parties thereto, and cannot generally demand the enforcement of the same.The question of whether a third person has an enforceable interest in a contract must be settled by determining whether the contracting parties intended to tender him such an interest by deliberately inserting terms in their agreement with the avowed purpose of conferring favor upon such third person. IN this connection, this court has laid down the rule that the fairest test to determine whether the interest of a 3rd person in a contract is a stipulation pour autrui or merely an incidental interest, is to rely upon the intention of the parties as disclosed by their contract.In the instant case the insurance contract does not contain any words or clauses to disclose intent to give any benefit to any repairmen or material men in case of repair of the car in question. The parties to the insurance contract omitted such stipulation, which is a circumstance that supports the said conclusion. On the other hand, the "loss payable" clause of the insurance policy stipulates that "Loss, if any, is payable to H.S. Reyes, Inc." indicating that it was only the H.S. Reyes, Inc. which they intended to benefit.A policy of insurance is a distinct and independent contract between the insured and insurer, and third persons have no right either in a court of equity, or in a court of law, to the proceeds of it, unless there be some contract of trust, expressed or implied, by the insured and third person. In this case, no contract of trust, express or implied. In this case, no contract of trust, expressed or implied exists. We, therefore, agree with the trial court that no cause of action exists in favor of the appellants in so far as the proceeds of insurance are concerned. The appellant's claim, if at all, is merely equitable in nature and must be made effective through Enrique Mora who entered into a contract with the Bonifacio Bros Inc. This conclusion is deducible not only from the principle governing the operation and effect of insurance contracts in general, but is clearly covered by the express provisions of section 50 of the Insurance Act (now Sec. 53). The policy in question has been so framed that "Loss, if any, is payable to H. S. Reyes, Inc." which unmistakably shows the intention of the parties.7. FIRST INTEGRATED BONDING & INSURANCE COMPANY, INC.,petitioner,vs.HON. HAROLD M. HERNANDO, VICTORINO ADVINCULA, ROMANA ADVINCULA, SILVERIO BLANCO & THE SHERIFF OF MANILA and his DEPUTY SHERIFFS,respondents.FACTS:Silverio Blanco was the owner of a passenger jeepney which he insured against liabilities for death and injuries to third persons with First Integrated Bonding and Insurance Company, Inc. (First Insurance) under Motor Vehicle Policy No. V-0563751 with the face value of P30,000.00. On November 25, 1976, the said jeepney driven by Blanco himself bumped a five-year old child, Deogracias Advincula, causing the latter's death. A complaint for damages was brought by the child's parents, the Advincula spouses, against Silverio Blanco. First Insurance was also impleaded in the complaint as the insurer. Judgment was rendered by the trial court ordering the satisfaction of the damages claimed by the spouses independently now upon the defendant insurance company and to pay the costs of the proceedings. Petition for relief from the Order of execution and judgment with preliminary injunction was filed by First integrated Bonding and Insurance Co. which was denied. First Insurance filed a motion for reconsideration but the same was denied. Petitioner First Insurance filed this petition on the ground that the trial court erred in deciding for the respondent spouse(s) where there exists no cause of action against the herein petitioner.It is the contention of the petitioner that the Advincula spouses have no cause of action against it. As parents of the victim, they may proceed against the driver, Silverio Blanco on the basis of the provisions of the New Civil Code. However, they have no cause of action against First Insurance, because they are not parties to the insurance contract.ISSUE:WON the Advinculas spouses cannot recover against the insurance company on the ground that it is not a party to the contract. RULING:It is settled that where the insurance contract provides for indemnity against liability to a third party, such third party can directly sue the insurer. The liability of the insurer to such third person is based on contract while the liability of the insured to the third party is based on tort. The injured for whom the contract of insurance is intended can sue directly the insurer. The general purpose of statutes enabling an injured person to proceed directly against the insurer is to protect injured persons against the insolvency of the insured who causes such injury, and to give such injured person a certain beneficial interest in the proceeds of the policy, and statutes are to be liberally construed so that their intended purpose may be accomplished.It has even been held that such a provision creates a contractual relation which inures to the benefit of any and every person who may be negligently injured by the named insured as if such injured person were specifically named in the policy.First Insurance cannot evade its liability as insurer by hiding under the cloak of the insured. Its liability is primary and not dependent on the recovery of judgment from the insured.Compulsory Motor Vehicle Liability Insurance (third party liability, or TPL) is primarily intended to provide compensation for the death or bodily injuries suffered by innocent third parties or passengers as a result of a negligent operation and use of motor vehicles. The victims and/or their dependents are assured of immediate financial assistance, regardless of the financial capacity of the motor vehicle owners.The insurer's liability accrues immediately upon the occurrence of the injury or event upon which the liability depends,and does not depend on the recovery of judgment by the injured party against the insured8. SHERMAN SHAFER,petitioner,vs.HON. JUDGE, REGIONAL TRIAL COURT OF OLONGAPO CITY, BRANCH 75, and MAKATI INSURANCE COMPANY, INC.,respondents.FACTS:Petitioner Sherman Shafer obtained a private car policy over his Ford Laser car from Makati Insurance Company, Inc., for third party liability (TPL).During the effectivity of the policy informationfor reckless imprudence resulting in damage to property and serious physical injuries was filed against petitioner. The owner of the damaged Volkswagen car filed a separate civil action against petitioner for damages, while Jovencio Poblete, Sr., who was a passenger in the Volkswagen car when allegedly hit and bumped by the car driven by petitioner, did not reserve his right to file a separate civil action for damages. Instead, in the course of the trial in the criminal case, Poblete, Sr. testified on his claim for damages for the serious physical injuries which he claimed to have sustained as a result of the accident.Petitioner was granted to file a third party complaint against the herein private respondent, Makati Insurance Company, Inc. Said insurance company but the same was dismissed on the ground that it was premature, based on the premise that unless the accused (herein petitioner) is found guilty and sentenced to pay the offended party (Poblete Sr.) indemnity or damages, the third party complaint is without cause of action. The court further stated that the better procedure is for the accused (petitioner) to wait for the outcome of the criminal aspect of the case to determine whether or not the accused, also the third party plaintiff, has a cause of action against the third party defendant for the enforcement of its third party liability (TPL) under the insurance contract.Petitioner moved for reconsideration of said order, but the motion was denied;hence, this petition.Petitioner raises the legal question of whether the accused in a criminal action for reckless imprudence, where the civil action is jointly prosecuted, can legally implead the insurance company as third party defendant under its private car insurance policy, as one of his modes of defense in the civil aspect of said proceedings. The insurance company further contends that the contract of motor vehicle insurance, the damages and attorney's fees claimed by accused/third party plaintiff are matters entirely different from his criminal liability in the reckless imprudence case, and that petitioner has no cause of action against the insurer until petitioner's liability shall have been determined by final judgment, as stipulated in the contract of insurance.ISSUE:Whether the accused in a criminal action for reckless imprudence, where the civil action is jointly prosecuted, can legally implead the insurance company as third party defendant under its private car insurance policy.RULING:Compulsory Motor Vehicle Liability Insurance (third party liability, or TPL) is primarily intended to provide compensation for the death or bodily injuries suffered by innocent third parties or passengers as a result of a negligent operation and use of motor vehicles.The victims and/or their dependents are assured of immediate financial assistance, regardless of the financial capacity of motor vehicle owners.The liability of the insurance company under the Compulsory Motor Vehicle Liability Insurance is for loss or damage. Where an insurance policy insures directly against liability, the insurer's liability accrues immediately upon the occurrence of the injury or event upon which the liability depends, and does not depend on the recovery of judgment by the injured party against the insured.The injured for whom the contract of insurance is intended can sue directly the insurer. The general purpose of statutes enabling an injured person to proceed directly against the insurer is to protect injured persons against the insolvency of the insured who causes such injury, and to give such injured person a certain beneficial interest in the proceeds of the policy, and statutes are to be liberally construed so that their intended purpose may be accomplished. It has even been held that such a provision creates a contractual relation which inures to the benefit of any and every person who may be negligently injured by the named insured as if such injured person were specifically named in the policy.WHEREFORE, the instant petition is GRANTED.INCONTESTABILITY CLAUSE9. Tan v. CA 174 SCRA 403Facts: Tan Lee Siong was issued a policy by Philamlife on Nov. 6, 1973. On Aprl 26, 1975, Tan died of hepatoma. His beneficiaries then filed a claim with Philamlife for the proceeds of the insurance. Philamlife wrote the beneficiaries in Sep. 1975 denying their claim and rescinding the contract on the ground of misrepresentation. The beneficiaries contend that Philamlife can no longer rescind the contract on the ground of misrepresentation as rescission must allegedly be done during the lifetime of the insured within two years and prior to the commencement of the action following the wording of Sec. 48, par. 2.Issue: WON Philamlife can rescind the contract.Held: YES.The phrase during the lifetime found in Sec. 48 simply means that the policy is no longer in force after the insured has died. The key phrase in the second paragraph is for a period of two years.What is a simpler illustration of the ruling in Tan v. CA?The period to consider in a life insurance poiicy is two years from the date of issue or of the last reinstatement. So if for example the policy was issued/reinstated on Jan 1, 2000, the insurer can still exercise his right to rescind up to Jan. 1, 2003 or two years from the date of issue/reinstatement, REGARDLESS of whether the insured died before or after Jan. 1, 2003.PRESCRIPTION OF ACTION12. JACQUELINE JIMENEZ VDA. DE GABRIEL,petitioner,vs.HON. COURT OF APPEALS and FORTUNE INSURANCE & SURETY COMPANY, INC.,respondents.FACTS:Marcelino Gabriel, the insured, was employed by Emerald Construction & Development Corporation ("ECDC") at its construction project in Iraq. He was covered by a personal accident insurance in the amount of P100,000.00 under a group policyprocured from private respondent by ECDC for its overseas workers. The insured risk was for bodily injury caused by violent accidental external and visible means which injury would solely and independently of any other cause result in death or disability. On 22 May 1982, within the life of the policy, Gabriel died in Iraq. A year later ECDC reported Gabriel's death to private respondent by telephone.Among the documents thereafter submitted to private respondent was copy of the death certificateissued by the Ministry of Health of the Republic of Iraq which stated that the reason of death is not yet known.Following a series of communications between petitioner and private respondent, the latter, on 22 September 1983, ultimately denied the claim of ECDC on the ground of prescription. Petitioner went to the RTC, in her complaint against ECDC and private respondent, she averred that her husband died of electrocution while in the performance of his work and prayed for the recovery of P100,000.00 for insurance indemnification and of various other sums by way of actual, moral, and exemplary damages, plus attorney's fees and costs of suit. Private respondent raised the defense of "prescription," invoking Section 384of the Insurance Code. The trial court rendered its decisionin favor of petitioner's claim. With regard to the defense of prescription, the court considered the complaint to have been timely filed or within one (1) year from private respondent's denial of the claim.Petitioner and private respondent both appealed to the Court of Appeals. Petitioner contended that the lower court should have awarded all the claims she had asked for. Private respondent asserted, on its part, that the lower court erred in ruling that the cause of action had not prescribed. The appellate court held that petitioner had failed to substantiate her allegation that her husband's death was caused by a risk insured against. ISSUE:WON the cause of action had already prescribed.RULING:Private respondent correctly invoked Section 384 of the Insurance Code:Sec. 384. Any person having any claim upon the policy issued pursuant to this chapter shall, without any unnecessary delay, present to the insurance company concerned a written notice of claim setting forth the nature, extent and duration of the injuries sustained as certified by a duly licensed physician. Notice of claim must be filed within six months from date of the accident, otherwise, the claim shall be deemed waived. Action or suit for recovery of damage due to loss or injury must be brought, in proper cases, with the Commissioner or the Courts within one year from denial of the claim, otherwise, the claimant's right of action shall prescribe.The notice of death was given to private respondent, concededly, more than a year after the death of petitioner's husband. Private respondent, in invoking prescription, was not referring to the one-year period from the denial of the claim within which to file an action against an insurer but obviously to the written notice of claim that had to be submitted within six months from the time of the accident.PREMIUM PAYMENTS13. MALAYAN INSURANCE CO., INC. (MICO),petitioner,vs.GREGORIA CRUZ ARNALDO, in her capacity as the INSURANCE COMMISSIONER, and CORONACION PINCA,respondents.FACTS:Petitioner (MICO) issued to the private respondent, Coronacion Pinca, Fire Insurance Policy on her property for the amount of P14,000.00 effective July 22, 1981, until July 22, 1982. On October 15,1981, MICO allegedly cancelled the policy for non-payment, of the premium and sent the corresponding notice to Pinca.On December 24, 1981, payment of the premium for Pinca was received by DomingoAdora, agent of MICO.On January 15, 1982, Adora remitted this payment to MICO,together with other payments. On January 18, 1982, Pinca's property was completely burned.On February 5, 1982, Pinca's payment was returned by MICO to Adora on the ground that her policy had been cancelled earlier. But Adora refused to accept it.Pinca made the requisite demands for payment which MICO rejected. She then went to the Insurance Commission. It is because she was ultimately sustained by the public respondent that the petitioner has come to us for relief. On the merits, it must also fail. MICO's arguments that there was no payment of premium and that the policy had been cancelled before the occurrence of the loss are not acceptable. Its contention that the claim was allowed without proof of loss is also untenable.The petitioner relies heavily on Section 77 of the Insurance Code providing that: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.ISSUE:WON no payment of premium had been made and that the policy had been cancelled before the occurrence of the loss hence the insurance is not liable.RULING:The above provision is not applicable because payment of the premium was in fact eventually made in this case. Notably, the premium invoice issued to Pinca at the time of the delivery of the policy on June 7, 1981 was stamped "Payment Received" of the amount of P930.60 on "12-24-81" by Domingo Adora.This is important because it suggests an understanding between MICO and the insured that such payment could be made later, as agent Adora had assured Pinca. In any event, it is not denied that this payment was actually made by Pinca to Adora, who remitted the same to MICO.The payment was made on December 24, 1981, and the fire occured on January 18, 1982.It would seem from MICO's own theory, that the policy would have become effective only upon payment, if accepted and so would have been valid only from December 24, 1981m but only up to July 22, 1981, according to the original terms. In others words, the policy would have run for only eight months although the premium paid was for one whole year.It is not disputed that the premium was actually paid by Pinca to Adora on December 24, 1981, who received it on behalf of MICO, to which it was remitted on January 15, 1982. What is questioned is the validity of Pinca's payment and of Adora's authority to receive it.MICO's acknowledgment of Adora as its agent defeats its contention that he was not authorized to receive the premium payment on its behalf. It is clearly provided in Section 306 of the Insurance Code that:SEC. 306. xxx xxx xxxAny insurance company which delivers to an insurance agent or insurance broker a policy or contract of insurance shall be deemed to have authorized such agent or broker to receive on its behalf payment of any premium which is due on such policy or contract of insurance at the time of its issuance or delivery or which becomes due thereon.WHEREFORE, the petition is DENIED.14. MAKATI TUSCANY CONDOMINIUM CORPORATION,petitioner,vs.THE COURT OF APPEALS, AMERICAN HOME ASSURANCE CO., represented by American International Underwriters (Phils.), Inc.,respondent.FACTS:Private respondent American Home Assurance Co. (AHAC), represented by American International Underwriters (Phils.), Inc., issued in favor of petitioner Makati Tuscany Condominium Corporation (TUSCANY) Insurance Policy on the latter's building and premises, for a period beginning 1 March 1982 and ending 1 March 1983, with a total premium of P466,103.05. The premium was paid on installments. On 10 February 1983, private respondent issued to petitioner Insurance Policy which replaced and renewed the previous policy. The premium in the amount of P466,103.05 was again paid on installments. All payments were likewise accepted by private respondent. On 20 January 1984, the policy was again renewed and private respondent issued to petitioner Insurance Policy. On this renewed policy, petitioner made two installment payments, both accepted by private respondent. Thereafter, petitioner refused to pay the balance of the premium. Consequently, private respondent filed an action to recover the unpaid balance of P314,103.05 In its answer with counterclaim, petitioner admitted the issuance of Insurance Policy No. AH-CPP-9210651. It explained that it discontinued the payment of premiums because the policy did not contain a credit clause in its favor and the receipts for the installment payments covering the policy for 1984-85, as well as the two (2) previous policies, stated the following reservations:Acceptance of this payment shall not waive any of the company rights to deny liability on any claim under the policy arising before such payments or after the expiration of the credit clause of the policy; andSubject to no loss prior to premium payment if there be any loss such is not covered.Petitioner further claimed that the policy was never binding and valid, and no risk attached to the policy. It then pleaded a counterclaim for P152,000.00 for the premiums already paid for 1984-85, and sought the refund of P924,206.10 representing the premium payments for 1982-85.The trial court dismissed the complaint and the counterclaim upon the findings that payment of the premiums being sought to be refunded were made during the lifetime or term of said policies, hence, it could not be said, inspite of the reservations, that no risk attached under the policies. Consequently, defendant's counterclaim for refund is not justified.As regards the unpaid premiums on Insurance Policy No. AH-CPP-9210651, in view of the reservation in the receipts ordinarily issued by the plaintiff on premium payments the only plausible conclusion is that plaintiff has no right to demand their payment after the lapse of the term of said policy on March 1, 1985. Therefore, the defendant was justified in refusing to pay the same.Both parties appealed from the judgment of the trial court. Thereafter, the Court of Appeals rendered a decision ordering the petitioner to pay the balance of the premiums due on Policy No. AH-CPP-921-651, or P314,103.05 plus legal interest until fully paid. Petitioner now asserts that its payment by installment of the premiums for the insurance policies for 1982, 1983 and 1984 invalidated said policies because of the provisions of Sec. 77 of the Insurance Code, as amended, and by the conditions stipulated by the insurer in its receipts, disclaiming liability for loss for occurring before payment of premiums. It argues that where the premiums are not actually paid in full, the policy would only be effective if there is an acknowledgment in the policy of the receipt of premium pursuant to Sec. 78 of the Insurance Code. The absence of an express acknowledgment in the policies of such receipt of the corresponding premium payments, and petitioner's failure to pay said premiums on or before the effective dates of said policies rendered them invalid. Petitioner thus concludes that there cannot be a perfected contract of insurance upon mere partial payment of the premiums because under Sec. 77 of the Insurance Code, no contract of insurance is valid and binding unless the premium thereof has been paid, notwithstanding any agreement to the contrary. As a consequence, petitioner seeks a refund of all premium payments made on the alleged invalid insurance policies.ISSUE:WON payment by installment of the premiums due on an insurance policy invalidates the contract of insurance, in view of Sec. 77 of P.D. 612.RULING:We hold that the subject policies are valid even if the premiums were paid on installments. The records clearly show that petitioner and private respondent intended subject insurance policies to be binding and effective notwithstanding the staggered payment of the premiums.While the import of Section 77 is that prepayment of premiums is strictly required as a condition to the validity of the contract, We are not prepared to rule that the request to make installment payments duly approved by the insurer, would prevent the entire contract of insurance from going into effect despite payment and acceptance of the initial premium or first installment. Section 78 of the Insurance Code in effect allows waiver by the insurer of the condition of prepayment by making an acknowledgment in the insurance policy of receipt of premium as conclusive evidence of payment so far as to make the policy binding despite the fact that premium is actually unpaid. Section 77 merely precludes the parties from stipulating that the policy is valid even if premiums are not paid, but does not expressly prohibit an agreement granting credit extension, and such an agreement is not contrary to morals, good customs, public order or public policy. So is an understanding to allow insured to pay premiums in installments not so proscribed. At the very least, both parties should be deemed in estoppel to question the arrangement they have voluntarily accepted.DOUBLE INSURANCE20. PIONEER INSURANCES AND SURETY CORP. VS OLIVIA YAPFACTS:Respondent Oliva Yap was the owner of a store in a two-storey building. On April 19, 1962, respondent Yap took out Fire Insurance Policy No. 4216 from petitioner Pioneer Insurance & Surety Corporation with a face value of P25,000.00 covering her stocks, office furniture, fixtures and fittings of every kind and description. One of the conditions in the policy executed by the parties is that the Insured shall give notice to the Company of any insurance or insurances already effected, or which may subsequently be effected, covering any of the property hereby insured, and unless such notice be given and the particulars of such insurance or insurances be 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.At the time of the insurance on April 19, 1962 of Policy No. 4219 in favor of respondent Yap, an insurance policy for P20,000.00 issued by the Great American Insurance Company covering the same properties was noted on said policy as co-insurance. Still later, respondent Oliva Yap took out another fire insurance policy for P20,000.00 covering the same properties, this time from the Federal Insurance Company, Inc., which new policy was, however, procured without notice to and the written consent of petitioner Pioneer Insurance & Surety Corporation and, therefore, was not noted as a co-insurance in Policy No. 4219.On December 19, 1962, a fire broke out in the building housing respondent and the said store was burned. Respondent Yap filed an insurance claim, but the same was denied on the ground of "breach and/or violation of any and/or all terms and conditions" of Policy No. 4219. The trial court decided for plaintiff Oliva Yap; and its judgment was affirmed in full by the Court of Appeals.ISSUE:WON petitioner should be absolved from liability on Fire Insurance Policy No. 4219 on account of any violation by respondent Yap of the co-insurance clause therein.RULING:There was a violation by respondent Oliva Yap of the co-insurance clause contained in Policy No. 4219 that resulted in the avoidance of petitioner's liability. The insurance policy for P20,000.00 issued by the Great American Insurance Company covering the same properties of respondent Yap and duly noted on Policy No. 4219 as c-insurance, ceased, by agreement of the parties to be recognized by them as a co-insurance policy. The Court of Appeals says that the Great American Insurance policy was substituted by the Federal Insurance policy for the same amount, and because it was a mere case of substitution, there was no necessity for its endorsement on Policy No. 4219. There is no evidence to establish and prove such a substitution. If anything was substituted for the Great American Insurance policy, it could only be the Northwest Insurance policy for the same amount of P20,000.00. The endorsement quoted above shows the clear intention of the parties to recognize on the date the endorsement was made (August 29, 1962), the existence of only one co-insurance, and that is the Northwest Insurance policy, which according to the stipulation of the parties during the hearing, was issued on August 20, 1962 and endorsed only on August 20, 1962. The finding of the Court of Appeals that the Great American Insurance policy was substituted by the Federal Insurance policy is unsubstantiated by the evidence of record and indeed contrary to said stipulation and admission of respondent, and is grounded entirely on speculation, surmises or conjectures, hence, not binding on the Supreme Court.The obvious purpose of the aforesaid requirement in the policy is to prevent over-insurance and thus avert the perpetration of fraud. The public, as well as the insurer, is interested in preventing the situation in which a fire would be profitable to the insured.21. UNION MANUFACTURING CO., INC. and the REPUBLIC BANK, plaintiffs, REPUBLIC BANK, plaintiff-appellant,vs.PHILIPPINE GUARANTY CO., INC., defendant-appellee.FACTS:Union Manufacturing Co., Inc. obtained certain loans, overdrafts and other credit accommodations from the Republic Bank to secure the payment thereof, said Union Manufacturing Co., Inc. executed a real and chattel mortgages on certain properties, that as additional condition of the mortgage contract, it undertook to secure insurance coverage over the mortgaged properties for the same amount of P415,000.00. That as Union Manufacturing Co., Inc. failed to secure insurance coverage on the mortgaged properties since January 12, 1962, despite the fact that Cua Tok, its general manager, was reminded of said requirement, the Republic Bank procured from the defendant, Philippine Guaranty Co., Inc. an insurance coverage on loss against fire for P500,000.00 over the properties of the Union Manufacturing Co., Inc., as described in defendant's 'Cover Note' dated September 25, 1962, with the annotation that loss or damage, if any, under said Cover Note is payable to Republic Bank on September 27, 1962, Fire Insurance Policy No. 43170 was issued for the sum of P500,000.00 in favor of the assured, Union Manufacturing Co., Inc., for which the corresponding premium in the sum of P8,328.12, which was reduced to P6,688.12, was paid by the Republic Bank to the defendant, Philippine Guaranty Co., Inc. that upon the expiration of said fire policy on September 25, 1963, the same was renewed by the Republic Bank upon payment of the corresponding premium as of September, 1962, when the defendant Philippine Guaranty Co., issued Fire Insurance Policy No. 43170 in the sum of P500,000.00 to cover the properties of the Union Manufacturing Co., Inc., the same properties were already covered by Fire Policy No. 1533 of the Sincere Insurance Company for P25,000.00 for the period from October 7, 1961 to October 7, 1962 and by insurance policies Nos. F-2314 and F-2590 of the Oceanic Insurance Agency for the total sum of P300,000.00 and for periods respectively, from January 27, 1962 to January 27, 1963, and from June 1, 1962 to June 1, 1963; and that when said defendant's Fire Insurance Policy No. 43170 was already in full force and effect, the Union Manufacturing Co., Inc. without the consent of the defendant, Philippine Guaranty Co., Inc., obtained other insurance policies totaling P305,000.00 over the same properties prior to the fire, to wit: (1) Fire Policy No. 250 of New India Assurance Co., Ltd Manila Insurance Co. Hence, as noted at the outset, the appeal cannot prosper. ISSUE:WON Philippine Guaranty Co., Inc., cannot be held liable upon proof that there was a violation of a warranty by union manufacturing co., inc. by procuring several insurances on the same properties secured by said PGC hence Republic Bank as mortgagee of union properties secured cannot recover on such policy by virtue of the cover note in the insurance policy providing that it is entitled to the payment of loss or damages as its interest.RULING:It is admitted that the policy before us was accepted by the plaintiff. The receipt of this policy by the insured without objection binds both the acceptor and the insured to the terms thereof. The insured may not thereafter be heard to say that he did not read the policy or know its terms, since it is his duty to read his policy and it will be assumed that he did so.The insurance contract may be rather onerous ('one sided', as the lower court put it), but that in itself does not justify the abrogation of its express terms, terms which the insured accepted or adhered to and which is the law between the contracting parties."LIFE INSURANCE27. Del Val v. Del Val 29 Phil 535Facts:> Petitioners and private respondents are brothers and Sisters and are the only heirs and next of kin of Gregorio del Val who died intestate.> It was found out that the deceased took out insurance on his life for the sum of 40T and made it payable to private respondents as sole beneficiary.> After Gregorios death, Andres collected the proceeds of the policy.> Of the said policy, Andres paid 18T to redeem some real property which Gregorio had sold to third persons during his lifetime.> Said redemption of the property was made by Andres laywer in the name of Andres and the petitioners. (Accdg to Andres, said redemption in the name of Petitioners and himself was without his knowledge and that since the redemption, petitioners have been in possession of the property)> Petitioners now contend that the amount of the insurance policy belonged to the estate of the deceased and not to Andres personally.> Pet filed a complaint for partition of property including the insurance proceeds> Andress claims that he is the sole owner of the proceeds and prayed that he be declared:> Sole owner of the real property, redeemed with the use of the insurance proceeds and its remainder;> Petitioners to account for the use and occupation of the premises.Issue: Whether or not the petitioners have a right to the insurance proceeds?Held: NOPE.The contract of life insurance is a special contract and the destination of the proceeds thereof is determined by special laws which deal exclusively with the subject. Our civil code has no provisions which relate directly and specifically to life-insurance contracts of to the destination of life-insurance proceeds that subject is regulated exclusively by the Code of Commerce. Thus, contention of petitioners that proceeds should be considered as a donation or gift and should be included in the estate of the deceased is UNTENABLE.Since the repurchase have been made n the names of all the heirs instead of the defendant alone, petitioners claim that the property belongs to the heirs in common and not to the defendant alone. The SC held that if it is established by evidence that that was his intention and that the real estate was delivered to the plaintiffs with that understanding, then it is probable that their contention is correct and that they are entitled to share equally with the defendant. HOWEVER, it appears from the evidence that the conveyances were taken in the name of the plaintiffs without the knowledge and consent of Andres, or that it was not his intention to make a gift to them of real estate, when it belongs to him.

28. BPI vs. Posadas GR No. 34583, October 22, 1931FACTS:BPI, as administrator of the estate of deceased Adolphe Schuetze, appealed to CFI Manila absolving defendant, Collector of Internal Revenue, from the complaint filed against him in recovering the inheritance tax amounting to P1209 paid by the plaintiff, Rosario Gelano Vda de Schuetze, under protest, and sum of P20,150 representing the proceeds of the insurance policy of the deceased.Rosario and Adolphe were married in January 1914. The wife was actually residing and living in Germany when Adolphe died in December 1927. The latter while in Germany, executed a will in March 1926, pursuant with its law wherein plaintiff was named his universal heir. The deceased possessed not only real property situated in the Philippines but also personal property consisting of shares of stocks in 19 domestic corporations. Included in the personal property is a life insurance policy issued at Manila on January 1913 for the sum of $10,000 by the Sun Life Assurance Company of Canada, Manila Branch. In the insurance policy, the estate of the deceased was named the beneficiary without any qualification. Rosario is the sole and only heir of the deceased. BPI, as administrator of the decedents estate and attorney in fact of the plaintiff, having been demanded by Posadas to pay the inheritance tax, paid under protest. Notwithstanding various demands made by plaintiff, Posadas refused to refund such amount.ISSUE:WON the plaintiff is entitled to the proceeds of the insurance.HELD:SC ruled that(1)the proceeds of a life-insurance policy payable to the insured's estate, on which the premiums were paid by the conjugal partnership, constitute community property, and belong one-half to the husband and the other half to the wife, exclusively; (2)if the premiums were paid partly with paraphernal and partly conjugal funds, the proceeds are likewise in like proportion paraphernal in part and conjugal in part; and (3)the proceeds of a life-insurance policy payable to the insured's estate as the beneficiary, if delivered to the testamentary administrator of the former as part of the assets of said estate under probate administration, are subject to the inheritance tax according to the law on the matter, if they belong to the assured exclusively, and it is immaterial that the insured was domiciled in these Islands or outside.Hence, the defendant was ordered to return to the plaintiff one-half of the tax collected upon the amount of P20,150, being the proceeds of the insurance policy on the life of the late Adolphe Oscar Schuetze, after deducting the proportional part corresponding to the first premium.29. Insular v Ebrado G.R. No. L-44059 October 28, 1977 Facts:Cristor Ebrado was issued by The Life Assurance Co., Ltd., a policy for P5,882.00 with a rider for Accidental Death. He designated Carponia T. Ebrado as the revocable beneficiary in his policy. He referred to her as his wife.Cristor was killed when he was hit by a failing branch of a tree. Insular Life was made liable to pay the coverage in the total amount of P11,745.73, representing the face value of the policy in the amount of P5,882.00 plus the additional benefits for accidental death.Carponia T. Ebrado filed with the insurer a claim for the proceeds as the designated beneficiary therein, although she admited 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.Insular commenced an action for Interpleader before the trial court as to who should be given the proceeds. The court declared Carponia as disqualified.Issue: WON a common-law wife named as beneficiary in the life insurance policy of a legally married man can claim the proceeds in case of death of the latter?Held: No. PetitionSection 50 of the Insurance Act which provides that "the insurance shall be applied exclusively to the proper interest of the person in whose name it is made" The word "interest" highly suggests that the provision refers only to the "insured" and not to the beneficiary, since a contract of insurance is personal in character. Otherwise, the prohibitory laws against illicit relationships especially on property and descent will be rendered nugatory, as the same could easily be circumvented by modes of insurance. When not otherwise specifically provided for by the Insurance Law, the contract of life insurance is governed by the general rules of the civil law regulating contracts. 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 barred from receiving donations from each other. Article 739 provides that void donations are those made between persons who were guilty of adultery or concubinage at the time of donation.There is every reason to hold that the bar in donations between legitimate spouses and those between illegitimate ones should be enforced in life insurance policies since the same are based on similar consideration. So long as marriage remains the threshold of family laws, reason and morality dictate that the impediments imposed upon married couple should likewise be imposed upon extra-marital relationship. A conviction for adultery or concubinage isnt required exacted before the disabilities mentioned in Article 739 may effectuate. The article says that 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 guilty of the donee may be proved by preponderance of evidence in the same action.The underscored clause neatly conveys that no criminal conviction for the offense is a condition precedent. The law plainly states that the guilt of the party may be proved in the same acting for declaration of nullity of donation. And, it would be sufficient if evidence preponderates.The insured was married to Pascuala Ebrado with whom she has six legitimate children. He was also living in with his common-law wife with whom he has two children.CASH SURRENDER VALUE30. Manufacturers v Meer G.R. No. L-2910 June 29, 1951 Facts:Manufacturer Life Insurance Company was engaged in such business in the Philippines for more than five years before and including the year 1941. But due to war it closed the branch office at Manila during 1942 up to 1945.Plaintiff issued a number of life insurance policies in the Philippines containing stipulations known as non-forfeiture clauses.Since the insured failed to pay from 1942 to 1946, the company applied the provision of the automatic premium loan clauses; and the net amount of premiums so advanced or loaned totaled P1,069,254.98. On this sum the defendant Collector of Internal Revenue assessed P17,917.12. The assessment was made pursuant to section 255 of the NIRC which put taxes on insurance premiums paid by money, notes, credits or any substitutes for money.Manufacturer contended that when it made premium loans or premium advances by virtue of the non-forfeiture clauses, it did not collect premiums within the meaning of the above sections of the law, and therefore it is not amendable to the tax provided.Issues:1. Whether or not premium advances made by plaintiff-appellant under the automatic premium loan clause of its policies are "premium collected" by the Company are subject to tax2. Whether or not, in the application of the automatic premium loan clause of plaintiff-appellant's policies, there is "payment in money, notes, credit, or any substitutes for money"3. Whether or not the collection of the alleged deficiency premium taxes constitutes double taxation4. Whether the making of premium advances, granting for the sake of argument that it amounted to collection of premiums, were done in Toronto, Canada, or in the Philippines5. Whether or not the fact that plaintiff-appellant was not doing business in the Philippines during the period from January 1, 1942 to September 30, 1945, inclusive, exempts it from payment of premium taxes corresponding to said periodHeld: Yes. Yes. No. No. No. Petition dismissed.1. A person secures a 20-years endowment policy for P5,000 from Manufacturers and pays an annual premium of P250. He pays the first ten yearly premiums amounting to P2,500 and on this amount plaintiff-appellant pays the taxes. Also, the cash value of said policy after the payment of the 10th annual premium amounts to P1,000." When on the eleventh year the annual premium fell due and the insured remitted no money within the grace period, the insurer treated the premium then overdue as paid from the cash value, the amount being loan to the policyholder who could discharge it at any time with interest at 6 per cent. The insurance contract, therefore, continued in force for the eleventh year.Under the circumstances described, did the insurer collect the amount of P250 as the annual premium for the eleventh year on the said policy? In effect the Manufacturers Life Insurance Co. loaned to the person P250 and the latter in turn paid with that sum the annual premium on his policy. The Company therefore collected the premium for the eleventh year."How could there be such a collection when insurer becomes a creditor, acquires a lien on the policy and is entitled to collect interest on the amount of the unpaid premiums?".Wittingly, the "premium" and the "loan" have been interchanged in the argument. The insurer "became a creditor" of the loan, but not of the premium that had already been paid. And it is entitled to collect interest on the loan, not on the premium.The insured paid the premium for the eleventh; but in turn he became a debtor of the company for the sum of P250. This debt he could repay either by later remitting the money to the insurer or by letting the cash value compensate for it. The debt may also be deducted from the amount of the policy should he die thereafter during the continuance of the policy.There was new credit for the advances made. True, the company could not sue the insured to enforce that credit. But it has means of satisfaction out of the cash surrender value.Here again it may be urged that if the credit is paid out of the cash surrender value, there were no new funds added to the company's assets. Cash surrender value "as applied to life insurance policy, is the amount of money the company agrees to pay to the holder of the policy if he surrenders it and releases his claims upon it. The more premiums the insured has paid the greater will be the surrender value; but the surrender value is always a lesser sum than the total amount of premiums paid." The cash value or cash surrender value is therefore an amount which the insurance company holds in trust for the insured to be delivered to him upon demand. It is therefore a liability of the company to the insured. Now then, when the company's credit for advances is paid out of the cash value or cash surrender value, that value and the company's liability is thereby dismissed. Consequently, the net assets of the insurance company increase.2. The insurer agreed to consider the premium paid on the strength of the automatic loan. The premium was paid by means of a "note" or "credit" or "other substitute for money" and the taxes due because section 255 above quoted levies taxes according to the total premiums collected by the insurer "whether such premiums are paid in money, notes, credits or any substitutes for money.3. There is no constitutional prohibition against double taxation.The total amount advanced worth 1 million pesos had P158,666.63 which was repaid at the time of assessment notice. Besides, the premiums paid and on which taxes had already been collected were those for the ten years. The tax demanded is on the premium for the eleventh year.4. Since the advances were done internationally, the petitioner contended that those payments were not subject to local taxation. This cant be sustained because the loans were made to policyholders in the Philippines, who pay the premium in the Manila branch.Approving this point would allow foreign insurers to evade the tax by requiring that premium payments shall be made at their head offices. It is enough that the insurer is doing insurance business in the Philippines, irrespective of the place of its establishment.5. Even if its office was closed, it was operating by collecting premiums on its outstanding policies, incurring the risks and/or enjoying the benefits, without withdrawing in economic activity. Before the BIR, it never asserted that that it was not engaged in business in this country during those years.COMPULSORY MOTOR VEHICLE LIABILITY INSURANCE35. First Quezon City v CA GR. 98414 Feb 8, 1993 Facts: One Jose del Rosario was injured while boarding a bus owned by DMTC in the Manila International Airport. He was hospitalized for forty days. He filed suit against the bus company and the court granted him of over 100,000 pesos in damages. The appellate court reduced damages to 55,090 pesos. The insurance companys liability was limited to 12,000. The amount for insurance was made Php 50,000 in the appellate courts decision. First Quezon City, the insurer of DTMC, filed a motion for reconsideration to limit the damages back to 12,000 pesos, the amount stipulated in the contract. This was denied hence this petition for review.Issue: Can the amount of the insurance companys liability be limited to Php 12,000? Held: YesRatio: The contract stipulated liability at Php 12,000 per passenger and at Php 50,000 as the maximum liability per accident. This means that the insurers liability for a single accident will not exceed 50,000 pesos. The court gave the example of 10 persons injured leaving a total of Php 120,000 in insurance liability payments. But with the Php 50,000 limit, only such value was to be paid by the company to the insured.