Insurance(Third Set))Enriquez vs Sun Life Assurance Co

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1.)Enriquez vs Sun Life Assurance Co. Of Canada 41 Phil 269

Facts:: On September 24, 1917, Joaquin Herrer made an application to Sun Life Assurance Company of
Canada through its office in Manila for a life annuity. Two days later, he paid P6,000 to the manager of
the company's Manila office and was given a receipt. According to the provisional receipt, 3 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. The head office at Montreal, Canada gave notice of acceptance by cable to Manila but this
was not mailed. Thereafter, policy was issued at Montreal. Attorney Aurelio A. Torres wrote to the
Manila office of the company stating that Herrer desired to withdraw his application. The local office
replied to Mr. Torres, stating that the policy had been issued, and called attention to the notification of
November 26, 1917. In the morning of December 21, 1917, said policy was received by Mr. Torres but
Mr. Herrer already died the previous day. Rafael Enriquez, was appointed as administrator of the estate
of the late Joaquin Herrer and filed to recover from Sun Life Assurance Company of Canada through its
office in Manila for a life annuity. The trial court favored Sun Life Insurance
Issue: Whether or not Mr. Herrer received notice of acceptance of his application thereby perfecting his
life annuity.

Held: No. Judgment is reversed. An acceptance of an offer of insurance not actually or constructively
communicated to the proposer does not make a contract. Only the mailing of acceptance, it has been
said, completes the contract of insurance, Enriquez, as the appointed administrator of the estate of Mr.
Herrer has the right to recover from Sun Life the sum of P6,000 with legal interest from November 20,
1918, until paid, without special finding as to costs in either instance. Art. 1319 of the civil code provides
that 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.
Acceptance made by letter or telegram does not bind the offerer except from the time it came to his
knowledge. The contract, in such a case, is presumed to have been entered into in the place where the
offer was made. The contract was not perfected because it has not been proved satisfactorily that the
acceptance of the application ever came to the knowledge of the applicant.

2.)DBP vs CA 231 SCRA 370
Facts: Juan B. Dans, together with his family applied for a loan of P500k with DBP. As principal mortgagor,
Dans, then 76 years of age was advised by DBP to obtain a mortgage redemption insurance (MRI) with
DBP MRI pool. A loan in the reduced amount was approved and released by DBP. From the proceeds of
the loan, DBP deducted the payment for the MRI premium. The MRI premium of Dans, less the DBP
service fee of 10%, was credited by DBP to the savings account of DBP MRI-Pool. Accordingly, the DBP
MRI Pool was advised of the credit. Dans died of cardiac arrest. DBP MRI Pool notified DBP that Dans
was not eligible for MRI coverage, being over the acceptance age limit of 60 years at the time of
application. DBP apprised Candida Dans of the disapproval of her late husband MRI application. DBP
offered to refund the premium which the deceased had paid, but Candida Dans refused to accept the
same demanding payment of the face value of the MRI or an amount equivalent of the loan. She,
likewise, refused to accept an ex gratia settlement which DBP later offered. Hence the case at bar.
Issue: Whether or not the DBP MRI Pool should be held liable on the ground that the contract was
already perfected?

Held: No, it is not liable. The power to approve MRI application is lodged with the DBP MRI Pool. The
pool, however, did not approve the application. There is also no showing that it accepted the sum which
DBP credited to its account with full knowledge that it was payment for the premium. There was as a
result no perfected contract of insurance, hence the DBP MRI Pool cannot be held liable on a contract
that does not exist. In dealing with Dans, DBP was wearing 2 legal hats: the first as a lender and the
second as an insurance agent. As an insurance agent, DBP made Dans go through the motion of applying
for said insurance, thereby leading him and his family to believe that they had already fulfilled all the
requirements for the MRI and that the issuance of their policy was forthcoming. DBP had full knowledge
that the application was never going to be approved. The DBP is not authorized to accept applications
for MRI when its clients are more than 60 years of age

3.) Virginia Perez vs CA 323 SCRA 613

Facts: Primitivo Perez had been insured with the BF Lifeman Insurance Corporation since 1980 for P20k.
In October 1987, an agent of Lifeman, Rodolfo Lalog, visited Perez in Quezon and convinced him to apply
for additional insurance coverage of P50k, to avail of the ongoing promotional discount of P400.00 if the
premium were paid annually. Primitivo B. Perez accomplished an application form for the additional
insurance coverage. Virginia A. Perez, his wife, paid P2,075.00 to Lalog. The receipt issued by Lalog
indicated the amount received was a deposit. Unfortunately, Lalog lost the application form
accomplished by Perez and so, he asked the latter to fill up another application form. Perez was made
to undergo the required medical examination, which he passed. Lalog forwarded the application for
additional insurance of Perez, together with all its supporting papers, to the office of BF Lifeman
Insurance Corporationn in Quezon which office was supposed to forward the papers to the Manila
office. Perez died while he was riding a banca which capsized during a storm. At the time of his death,
his application papers for the additional insurance were still with the Quezon office. Lalog testified that
when he went to follow up the papers, he found them still in the Quezon office and so he personally
brought the papers to the Manila office of BF Lifeman Insurance Corporation. It was only on November
27, 1987 that said papers were received in Manila. Without knowing that Perez died on November 25,
1987, BF Lifeman Insurance Corporation approved the application and issued the corresponding policy
for the P50k on December 2, 1987. Virginia went to Manila to claim the benefits under the insurance
policies of the deceased. She was paid P40k under the first insurance policy for P20,000.00 (double
indemnity in case of accident) but the insurance company refused to pay the claim under the additional
policy coverage of P50k, the proceeds of which amount to P150k in view of a triple indemnity rider on
the insurance policy. In its letter to Virginia A. Perez, the insurance company maintained that the
insurance for P50k had not been perfected at the time of the death of Primitivo Perez. Consequently,
the insurance company refunded the amount of P2,075.00 which Virginia Perez had paid. Lifeman filed
for the rescission and the declaration of nullity. Perez, on the other hand, averred that the deceased
had fulfilled all his prestations under the contract and all the elements of a valid contract are present.
The trial court ruled in favor of Perez but appellate court reversed the same.

Issue: Whether or not there was a perfected additional insurance contract.

Held: No. The contract was not perfected. Insurance is a contract whereby, for a stipulated
consideration, one party undertakes to compensate the other for loss on a specified subject by specified
perils. A contract, on the other hand, is a meeting of the minds between two persons whereby one
binds himself, with respect to the other to give something or to render some service. Consent must be
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. When Primitivo filed an
application for insurance, paid P2,075.00 and submitted the results of his medical examination, his
application was subject to the acceptance of private respondent BF Lifeman Insurance Corporation. The
perfection of the contract of insurance between the deceased and respondent corporation was further
conditioned upon compliance with the following requisites stated in the application form which provides
"there shall be no contract of insurance unless and until a policy is issued on this application and that
the said policy shall not take effect until the premium has been paid and the policy delivered to and
accepted by me/us in person while I/We, am/are in good health”. The assent of private respondent BF
Lifeman Insurance Corporation therefore was not given when it merely received the application form
and all the requisite supporting papers of the applicant. Its assent was given when it issues a
corresponding policy to the applicant. Under the abovementioned provision, it is only when the
applicant pays the premium and receives and accepts the policy while he is in good health that the
contract of insurance is deemed to have been perfected. It is not disputed, however, that when
Primitivo died on November 25, 1987, his application papers for additional insurance coverage were still
with the branch office of respondent corporation in Gumaca and it was only two days later, or on
November 27, 1987, when Lalog personally delivered the application papers to the head office in
Manila. Consequently, there was absolutely no way the acceptance of the application could have been
communicated to the applicant for the latter to accept inasmuch as the applicant at the time was
already dead.

4.) Guingon vs Del Monte 20 SCRA 1043 (1967)

Facts: Julio Aguilar owner and operator of several jeepneys insured them with Capital Insurance &
Surety Co., Inc. February 20, 1961: Along the intersection of Juan Luna and Moro streets, City of Manila,
the jeepneys operated by Aguilar driven by Iluminado del Monte and Gervacio Guingon bumped and
Guingon died some days after. Iluminado del Monte was charged with homicide thru reckless
imprudence and was penalized 4 months imprisonment . The heirs of Gervacio Guingon filed an action
for damages praying that P82,771.80 be paid to them jointly and severally by the driver del Monte,
owner and operator Aguilar, and the Capital Insurance & Surety Co., Inc. The trial court found Iluminado
del Monte and Julio Aguilar jointly and severally to pay plaintiffs the sum of P8,572.95 as damages for
the death of their father, plus P1,000.00 for attorney's fees plus costs. Capital Insurance and Surety Co.,
Inc. is hereby sentenced to pay P5k plus P500 as attorney's fees and costs to be applied in partial
satisfaction of the judgment rendered against Iluminado del Monte and Julio Aguilar in this case

Issue: 1. Whether or not there is a stipulation pour autriu that will enable the heirs to sue
against Capital Insurance and Surety Co., Inc.
2. Whether or not the heirs can sue the insurer and insured jointly.

Held: 1. YES. The policy provides that the insurer agreed to indemnify the insured "against all sums
which the Insured shall become legally liable to pay in respect of: a. death of or bodily injury to any
person - indemnity against liability. Where the contract provides for indemnity against liability to third
persons, then third persons to whom the insured is liable, CAN sue the insurer. Where the contract is for
indemnity against actual loss or payment, then third persons CANNOT proceed against the insurer, the
contract being solely to reimburse the insured for liability actually discharged by him thru payment to
third persons, said third persons' recourse being thus limited to the insured alone.
2. YES. The policy expressly disallows suing the insurer as a co-defendant of the insured in a suit to
determine the latter's liability. The No action clause in the policy which provides that suit and final
judgment be first obtained against the insured and that only "thereafter" can the person injured recover
on the policy is of no avail because Sec. 5 of Rule 2 on "Joinder of causes of action" and Sec. 6 of Rule 3
on "Permissive joinder of parties" of the Rules of Court cannot be superseded, at least with respect to
third persons not a party to the contract, as herein, by a "no action" clause in the contract of insurance.

5.) Phil. Refining Co. v Palomar 148 SCRA 313(1987)
Facts: This is an appeal from the decision of the Court of First Instance of Manila in Civil Case No. 72498,
1 entitled "Philippine Refining Company v. Hon. Enrico Palomar," finding that plaintiff-appellee's
promotion schemes ("Breeze Easy Money" and "CAMIA Lucky-Key Hunt") were not in the nature of a
lottery and enjoining appellant from issuing a "fraud order" on the aforementioned schemes of
appellee. It appears that the Philippine Refining Company, herein appellee, resorted to two schemes to
promote the sale of its products: Breeze Easy Money and CAMIA Lucky-Key Hunt, both of which
envisioned the giving away for free of certain prizes (without additional consideration) for the purchase
of Breeze soap and CAMIA cooking oil. In other words, the participants would get the exact value of the
price for the goods plus the chance of winning in the scheme. No one would be required to pay more
than the usual price of the products.

Issue: Whether or not the promotional schemes employed were in the nature of a lottery.

Held: This Court has consistently ruled that a plan whereby prizes can be obtained without any
additional consideration (when a product is purchased) is not a lottery. It is thus clear that the schemes
in the case at bar are not lotteries. The allegation that the prohibition by the Postmaster General should
have first been appealed to the Department Secretary concerned in view of the doctrine denominated
as "the exhaustion of administrative remedies" has no application here because one recognized
exception to the doctrine is when the issue raised is purely a legal one. In view of the foregoing, the
Court RESOLVED to DISMISS this appeal and to AFFIRM the assailed decision of the Court of First

6.) Palomar vs CFI of Manila 165 SCRA 162
Facts: Sometime in August 1968, the private respondent started a sales promotion scheme designated
as "Grand Slam" for its "Breeze", "Rinso", "Lifebuoy" and "Lux" products wherein any person who
submits to it matching left and right halves of pictures of any article wins that article as his prize. Half-
pictures were found in the labels of the products promoted. In the advertisements for said scheme
which were published in newspapers, it was also announced that free half-photos of prizes might also be
obtained by writing to J. Cunanan & Co., Inc. P.O. Box 2288, Manila. Only one free half-photo was given
for every request which should be accompanied with a self-addressed stamped envelope. The prizes
were P1.00, P10.00, transistor radios, wrist watches, sewing machines, TV sets, refrigerators and
Volkswagen 1200. On October 7, 1968, the petitioner in his official capacity as Postmaster General,
issued "Fraud Order No. 2" against the private respondent declaring the latter's "Grand Slam"
promotion to be a lottery within the purview of the Postal Law and directed all postmasters and
employees of the Bureau of Posts to return to the sender any mail matter mailed by or addressed to the
private respondent and J. Cunanan & Co., Inc. or any of their agents or representatives, with the
notation "Fraudulent" plainly written or stamped on the cover of such matter. Private respondent filed a
complaint for mandatory injunction with preliminary mandatory injunction against the petitioner before
the Court of First Instance of Manila, alleging that in the promotional scheme of "Grand Slam", there
was no consideration involved, hence it was not a lottery, and that "Fraud Order No. 2" was improper,
and praying that petitioner be enjoined from implementing the said order. The respondent Court of First
Instance issued an Order allowing a writ of preliminary injunction, upon the filing of a bond in the sum of
P1k and ordered the petitioner, his agent or representative to desist and refrain from enforcing or
implementing "Fraud Order No. 2".
On October 17, 1968, the petitioner submitted his answer to the complaint with a prayer to lift the writ
of preliminary prohibitory injunction and opposition to application for a writ of preliminary mandatory
injunction. The trial court rendered its judgment holding, among others, that private respondent's
promotional scheme known as "Grand Slam" was not a lottery as the element of consideration was
lacking. The petitioner, through the Solicitor General filed a notice of appeal with the High Court.
Issue: Whether or not the element of consideration is present in the Grand Slam promotion of the
respondent company, which, together with the elements of prize and chance, constitute the "lottery"
prohibited by the Postal Law.
Held: The issue in this case has already been settled by this Court; the latest case on the matter
is Philippine Refining Company vs. Palomar, G.R. No. L-29062, 148 SCRA 313, [1987] wherein this Court
ruled: It appears that the Philippine Refining Company, herein appellee, resorted to two schemes to
promote the sale of its products: Breeze Easy Money and CAMIA Lucky-Key Hunt; both of which
envisioned the giving away for free of certain prizes (without additional consideration) for the purchase
of Breeze soap and CAMIA cooking oil. In other words, the participants would get the exact value of the
prize for the goods plus the chance of winning in the scheme. No one would be required to pay more
than the usual price of the products. This Court has consistently ruled that a plan whereby prizes can be
obtained without any additional consideration (when a product is purchased) is not a lottery. It is thus
clear that the schemes in the case at bar are not lotteries. The petition is DENIED for lack of merit, and
the assailed decision of the Court of First Instance of Manila, is AFFIRMED.
7.) Geagonia vs CA 241 SCRA 153;
Facts: Geagonia, owner of a store, obtained from Country Bankers fire insurance policy for P100k. The 1
year policy covered the stock trading of dry goods. Condition no. 3 of the policy provides 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 or properties consisting of stocks in trade,
goods in process and/or inventories only hereby insured, and unless notice be given and the particulars
of such insurance or insurances be stated therein or endorsed in this policy pursuant to Section 50 of the
Insurance Code, by or on behalf of the Company before the occurrence of any loss or damage, all
benefits under this policy shall be deemed forfeited, provided however, that this condition shall not
apply when the total insurance or insurances in force at the time of the loss or damage is not more than
P200k. The petitioners’ stocks were destroyed by fire. He then filed a claim which was subsequently
denied because the petitioner’s stocks were covered by two other fire insurance policies for P200k
issued by PFIC. The basis of the private respondent's denial was the petitioner's alleged violation of
Condition 3 of the policy. Geagonia then filed a complaint against the private respondent in the
Insurance Commission for the recovery of P100k under fire insurance policy and damages. He claimed
that he knew the existence of the other two policies. But, he said that he had no knowledge of the
provision in the private respondent's policy requiring him to inform it of the prior policies and this
requirement was not mentioned to him by the private respondent's agent. The Insurance Commission
found that the petitioner did not violate Condition 3 as he had no knowledge of the existence of the
two fire insurance policies obtained from the PFIC; that it was Cebu Tesing Textiles w/c procured the
PFIC policies w/o informing him or securing his consent; and that Cebu Tesing Textile, as his creditor,
had insurable interest on the stocks. The Insurance Commission then ordered the respondent company
to pay complainant the sum of P100k with interest and attorney’s fees. CA reversed the decision of the
Insurance Commission because it found that the petitioner knew of the existence of the two other
policies issued by the PFIC.

Issues: 1. Whether or not the petitioner had not disclosed the two insurance policies when he obtained
the fire insurance and thereby violated Condition 3 of the policy.
2. Whether or not he is prohibited from recovering.

Held: 1.Yes. The court agreed with the CA that the petitioner knew of the prior policies issued by the
PFIC. His letter to the private respondent conclusively proves this knowledge. His testimony to the
contrary before the Insurance Commissioner and which the latter relied upon cannot prevail over a
written admission made ante litem motam. It was, indeed, incredible that he did not know about the
prior policies since these policies were not new or original.
2. No. Stated differently, provisions, conditions or exceptions in policies which tend to work a forfeiture
of insurance policies should be construed most strictly against those for whose benefits they are
inserted, and most favorably toward those against whom they are intended to operate. With these
principles in mind, Condition 3 of the subject policy is not totally free from ambiguity and must be
meticulously analyzed. Such analysis leads us to conclude that (a) the prohibition applies only to double
insurance, and (b) the nullity of the policy shall only be to the extent exceeding P200k of the total
policies obtained. Furthermore, by stating within Condition 3 itself that such condition shall not apply if
the total insurance in force at the time of loss does not exceed P200k, the private respondent was
amenable to assume a co-insurer's liability up to a loss not exceeding P200k. What it had in mind was to
discourage over-insurance. Indeed, the rationale behind the incorporation of "other insurance" clause in
fire policies is to prevent over-insurance and thus avert the perpetration of fraud. When a property
owner obtains insurance policies from two or more insurers in a total amount that exceeds the
property's value, the insured may have an inducement to destroy the property for the purpose of
collecting the insurance. The public as well as the insurer is interested in preventing a situation in which
a fire would be profitable to the insured.

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