Insurance Case Digests (Part 3)

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Case digests in Life Insurance



John Alexander S. Belderol

Insurance Case Digests – Life Insurance

G.R. No. 16475

November 8, 1921

Life Insurance – Insolvency of the Insured

Facts: Sun Life issued a policy of insurance on the life of one Dy Poco, payable to the said assured or his assigns on the 21st day
of February, 1938, and if he should die before that date, then to his legal representatives. On June 23, 1919, the assured, Dy Poco,
was adjudged an involuntary insolvent by the Court of First Instance of Manila, and the defendant Frank B. Ingersoll, was
appointed assignee of his estate. On July 10, 1919, the said Dy Poco died, and thereafter on August 21, 1919, the defendant, Tan
Sit, was duly appointed by the Court of First Instance of Manila as the administratrix of his intestate estate. Sun Life, unsure of
to whom it should pay the proceeds of the life insurance, filed an interpleader action against both Ingersoll and Tan Sit. The
defendants Frank B. Ingersoll and Tan Sit, both answered, each asserting a claim to the proceeds of said policy, the first in the
character of assignee in insolvency of Dy Poco, and the second as the administratrix of his estate.
Issue: Between the assignee in insolvency and the administrator of the insured’s insolvent estate, who has the right to receive
the proceeds of life insurance?
Held: The assignee acquires no beneficial interest in insurance effected on the life of the insolvent, except to the extent that
such insurance contains assets which can be realized upon as of the date when the petition of insolvency is filed. The destruction
of a contract of life insurance is not only highly prejudicial to the insured and those dependent upon him, but is inimical to the
interests of society. Insurance is a species of property that should be conserved and not dissipated. Insolvency is a disaster likely
to overtake men in mature life; and one who has gone through the process of bankruptcy usually finds himself in his declining
years with the accumulated savings of years swept away and earning power diminished. The courts are therefore practically
unanimous in refusing to permit the assignee in insolvency to wrest from the insolvent a policy of insurance which contains in it
no present realizable assets. The assignee in bankruptcy had no right to keep the estate unsettled for an indefinite period, for the
mere purpose of speculating upon the chances of the bankrupt's death. Life insurance proceeds are not liable for any of the debts
provable against the insolvent in the pending insolvency proceedings, and therefore said proceeds should therefore be delivered to
his administratrix.

G.R. No. 103883

November 14, 1996

Life Insurance – Group Life Policy: Burden of Proof

Facts: Marcelino Gabriel, the insured, was employed by ECDC at its construction project in Iraq. He was covered by a personal
accident insurance under a group policy procured from private respondent by ECDC for its overseas workers. The insured risk
was for "(b)odily 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 investigated the death of insured.
ECDC’s report states that due to advanced state of decomposition, cause of death could not be determined. Since both the death
certificate issued by the Iraqi Ministry of Health and the autopsy report of the NBI failed to disclose the cause of Gabriel's death,
Fortune denied liability under the policy. In her complaint against ECDC and private respondent, petitioner-spouse averred that
her husband died of electrocution while in the performance of his work.

Who has the burden of proving the cause of death of insured in a group life policy?

Held: The insurance policy expressly provided that to be compensable, the injury or death should be caused by "violent
accidental external and visible means." Neither the death certificate issued by the health authorities in Iraq nor the NBI autopsy
report provide any clue on the cause of death. All that appeared to be clear was the fact of Gabriel's demise. Evidence, in fine, is
utterly wanting to establish that the insured suffered from an accidental death, the risk covered by the policy.
In an accident insurance, the insured's beneficiary has the burden of proof in demonstrating that the cause of death is
due to the covered peril. Once that fact is established, the burden then shifts to the insurer to show any excepted peril that may
have been stipulated by the parties. An "accident insurance" is not thus to be likened to an ordinary life insurance where the
insured's death, regardless of the cause thereof, would normally be compensable. The latter is akin in property insurance to an
"all risk" coverage where the insured, on the aspect of burden of proof, has merely to show the condition of the property insured
when the policy attaches and the fact of loss or damage during the period of the policy and where, thereafter, the burden would be
on the insurer to show any "excluded peril." When, however, the insured risk is specified, like in the case before us, it lies with the
claimant of the insurance proceeds to initially prove that the loss is caused by the covered peril.

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