#1 Insular Life Assurance Company vs.Khu The RTC also held that the reinstated insurance policy had already FACTS: become incontestable by the time of Felipe's death on September 22, 2001 since more than two years had already lapsed from the date of the March 1997, Felipe N. Khu, Sr. (Felipe) applied for a life insurance policy policy's reinstatement on June 22, 1999. with Insular Life under the latter's Diamond Jubilee Insurance Plan. Felipe accomplished the required medical questionnaire wherein he did not The RTC noted that' since it was Insular Life itself that supplied all the declare any illness or adverse medical condition. Insular Life thereafter pertinent forms relative to the reinstated policy, then it is barred from issued him Policy. taking advantage of any ambiguity/obscurity perceived therein particularly as regards the date when the reinstated insurance policy June 1999, Felipe's policy lapsed due to non-payment of the premium. became effective. September 1999, Felipe applied for the reinstatement of his policy. Except CA: for the change in his occupation of being self-employed to being the The CA upheld the RTC's ruling on the non-contestability of the reinstated Municipal Mayor of Binuangan, Misamis Oriental, all the other information insurance policy on the date the insured died. submitted by Felipe in his application for reinstatement was virtually identical to those mentioned in his original policy. ISSUE: Whether Felipe's reinstated life insurance policy is already incontestable September 2001, Felipe died. at the time of his death. Paz Y. Khu, Felipe Y. Khu, Jr. .and Frederick Y. Khu (collectively, Felipe's RULING: beneficiaries or respondents) filed with Insular Life a claim for benefit under the reinstated policy. This claim was denied. Instead, Insular Life The Insurance Code pertinently provides that: advised Felipe's beneficiaries that it had decided to rescind the reinstated policy on the grounds of concealment and misrepresentation by Felipe. Sec. 48. Whenever a right to rescind a contract of insurance is given to the insurer by any provision of this chapter, such right must be exercised Insular Life: Felipe did not disclose the ailments (viz., Type 2 Diabetes previous to the commencement of an action on the contract. Mellitus, Diabetes Nephropathy and Alcoholic Liver Cirrhosis with Ascites) that he already had prior to his application for reinstatement of his After a policy of life insurance made payable on the death of the insured insurance policy; and that it would not have reinstated the insurance shall have been in force during the lifetime of the insured for a period of policy had Felipe disclosed the material information on his adverse health two years from the date of its issue or of its last reinstatement, the condition. It contended that when Felipe died, the policy was still insurer cannot prove that the policy is void ab initio or is rescindible by contestable. reason of the fraudulent concealment or misrepresentation of the insured or his agent. RTC: In ordering Insular Life to pay Felipe's beneficiaries, the RTC agreed with The Court therefore agrees fully with the appellate court's pronouncement the latter's claim that the insurance policy was reinstated on June 22, that- 1999. 'The insurer is deemed to have the necessary facilities to discover such The RTC cited the ruling in Malayan Insurance Corporation v. Court of fraudulent concealment or misrepresentation within a period of two (2) Appeals that any ambiguity in a contract of insurance should be resolved years. It is not fair for the insurer to collect the premiums as long as the strictly against the insurer upon the principle that an insurance contract is insured is still alive, only to raise the issue of fraudulent concealment or a contract of adhesion. misrepresentation when the insured dies in order to defeat the right of Khu declared that he was accepting "the opened a "Platinum 2-in-1 Savings and Insurance" account with petitioner imposition of an extra/additional x x x premium of P5. 7. 9011992. to cover the remainder of the annual reinstatement. 1999. On the other hand. 1999. 1999. the obscurity is patent. In the instant case. Given the obscurity of the language. effective June 22. from the date of the last reinstatement'. But the Court notes that the reinstatement was conditioned upon the payment of additional premium At least two (2) years from the issuance of the policy or its last not only prospectively. in Malayan Insurance Corporation v. but insured and strictly against the insurer. Eulogio. any ambiguity therein should be resolved against the insurance policy be considered as reinstated on June 22. managed to file his Application for Reinstatement and Endorsement. par We find that the CA did not commit any error in holding that the subject excellence. approved. that is for the period starting policy when the insured dies. namely "the thereon with Malaluan. to preclude the insurer from noncompliance with its obligations. 9011992 could only be considered reinstatement of this policy. this Court on June 22. The Platinum 2-in-1 Savings and thousand of insurance. True. by paying the amount of P3. Hence. reckoned from the date when the same was approved by the insurer. 1999. In the first sentence of the before his death. this circumstance has engendered a true lacuna. the parties differ as to when the reinstatement was actually Thus. A contract of insurance. 1999" refers to the subject of the sentence. that is. effectivity of the reinstatement. In the Letter of Acceptance.50 on December two-year period should commence in case the policy should lapse and is 27. 1999 that the reinstatement took effect. that is. 1999 in addition to the P25. the construction favorable to the Thus. Limitations of liability should be also because this is favorable to the insured who was not responsible for regarded with extreme jealousy and must be construed in such a way as causing the ambiguity or obscurity in the insurance contract.00 he had earlier paid on September reinstated. it should be construed liberally in favor of the finding must be upheld not only because it accords with the evidence. Insular Life claims that it approved the reinstatement only on December 27.020. held that: The resolution of this issue hinges on the following documents: Indemnity and liability insurance policies are construed in accordance 1) Letter of Acceptance. It is true that the phrase Insurance account is a savings account where depositors are as used in this particular paragraph does not refer explicitly to the automatically covered by an insurance policy against disability or death . In the Endorsement. In this case. the son of respondent Yolanda Laingo (Laingo). #2 BPI & FGU Insurance Corp.the beneficiary to recover under the policy. insured." and approved by Insular Life during Eulogio's lifetime and good health. This insurer. At the very least. 1999. Court of Appeals. it is settled that the reinstatement of an insurance policy should be insured will be adopted by the courts. Rheozel Laingo (Rheozel).054.00 a year per Bank of the Philippine Islands (BPI). the beneficiary is given the stability to recover under the period of coverage. vs. but also retroactively. in other words. The provision also makes clear when the June 22. and with the general rule of resolving any ambiguity therein in favor of the 2) the Endorsement." or to the subsequent phrase "changes are reinstated after the Application for Reinstatement had been processed made on the policy. The CA expounded on this point thus . Accordingly. Laingo The Court discerns a genuine ambiguity or obscurity in the language of FACTS: the two documents. where the contract or policy is prepared by the insurer. the subject policy is deemed reinstated as of June 22. but Policy No. the period of contestability has lapsed. Khu had paid for the insurance coverage starting June 22. being a contract of adhesion. 1999". Eulogio's death rendered impossible full compliance with the conditions for reinstatement of Policy No. 1999. respondents contend that it was Thus. it is not entirely clear whether the phrase "effective June deposit the amount for payment of his overdue premiums and interests 22. In this case. An insurance company month deadline for filing a written notice of claim upon the death of the has the duty to communicate with the beneficiary upon receipt of notice insured. BPI is expected not only to provide utmost customer satisfaction in terms of its own products and services but also to give assurance that BPI offered a deposit savings account with life and disability insurance its business concerns with its partner entities are implemented coverage to its customers called the Platinum 2-in-1 Savings and .issued by petitioner FGU Insurance Corporation (FGU Insurance). Rhealyn Laingo-Concepcion. an agent is one who binds himself to render some service More than two years later Rheozel's sister. Rheozel. Thus. Thus. The Court of Appeals ruled that who was BPI's depositor. the case must be dismissed. the death of the insured. should have fulfilled its duty. the purpose of agency is to extend the personality of the have filed the claim within three calendar months from the death of principal through the facility of the agent. of FGU Insurance with respect to the insurance feature of its own marketed product. or to do something in representation of another. with whom the agent interacts. is bound by the three calendar insurance coverage in Rheozel's savings account. BPI. BPI. BPI tied up with its affiliate. FGU Insurance stated that Laingo should Precisely. The appellate court added that Laingo was not a party to the insurance policy in order for the beneficiary to be able to properly and insurance contract entered into between Rheozel and petitioners. it was ruled that the prescriptive period of 90 days shall commence from the incumbent upon BPI to give proper notice of the existence of the time of death of the insured and not from the knowledge of the insurance coverage and the stipulation in the insurance contract for filing beneficiary. Any customer interested to open a deposit account under this 2-in-1 product. of the death of the insured. known as BPI/MS Insurance Corporation. Thus. BPI acted as agent Insurance in the name of Rheozel with Laingo as his named beneficiary. not only of the existence of the insurance Laingo could not be expected to do an obligation which she did not know contract but also the accompanying terms and conditions of the existed. as named beneficiary who had no knowledge of Insurance. Upon Rheozel's death. This notification is how a good father of a family should have acted within the scope of its business dealings with its RULING: clients. The law in fact contemplates impersonal dealings where the principal need not personally know or meet the third Laingo sent two letters to BPI and FGU Insurance requesting them to person with whom the agent transacts: process her claim as beneficiary of Rheozel's insurance policy. Rheozel died due to a vehicular. As the main proponent of the 2-in-1 deposit account. as agent of FGU Insurance. FGU Insurance. as its partner. as Rheozel's beneficiary. which was properly communicated to BPI by his ISSUE: mother Laingo. upon the latter's death. as agent of FGU Whether or not Laingo. after BPI issued Passbook to Rheozel corresponding to Savings Account. Under the law. in turn. Personal Accident Insurance Coverage Certificate was also issued by FGU will automatically be given insurance coverage. of advising Laingo that there was an added benefit of the existence of the insurance contract. she could not be bound by the 90-day stipulation. who appeared before BPI to withdraw funds of the insured Reversed the ruling of the trial court. now Insurance account. A submitting all the required documents to BPI and obtaining BPI's approval. The trial court the parties concerned. For an agency to arise. Since the insurance claim was filed more than 90 days from a claim to Laingo. particularly the beneficiaries. it found the Personal Accident Insurance Coverage Certificate issued by FGU is not necessary that the principal personally encounter the third person Insurance. BPI had the obligation to carry out the agency by informing CA: the beneficiary. FGU Insurance denied her claim. had the primary responsibility to ensure RTC: that the 2-in-1 account be reasonably carried out with full disclosure to The trial court decided the case in favor of respondents. timely claim the benefit. as agent of FGU Insurance. Typhoon Biring.accordingly. an employee of BPI visited Rheozel's wake and submitted documents for Laingo to sign in order to process the withdrawal request. 88/085 and filed out of time when notice of death had been communicated to its 88/086 for land development and for the construction of housing units. First. 1990. namely. then such notice of death any automatic annual reduction. for being . which caused considerable The records show that BPI had ample opportunity to inform Laingo. Here. petitioner filed several claims for whether verbally or in writing. the reinsurer. August 25. policies. In turn. fell short in notifying Laingo of the September 27. finding that no also allowed by BPI's Claveria. Rheozel's death was 18. Typhoon Huaning and Typhoon Saling. 1988. Laingo had no means to ascertain that Damages which was opposed by the GSIS through a Motion to Dismiss on she was entitled to the insurance claim. not only was Laingo. Second. it appearing communicate with Laingo regarding the existence of the insurance from its records that the policies were not renewed before the onset of contract. the said typhoon. able to inquire about April 26. petitioner secured 2 CAR Policies. 1989. Since BPI.. It held that: (a) the average whereby the latter undertook the development of a GSIS housing project clause provision in the policies which did not contain the assent or known as Modesta Village Section B (Project). 3 typhoons hit the country. GSIS similarly rejected petitioner’s indemnity claim for circumstances show that despite being given many opportunities to damages wrought by Typhoon Saling on a “no loss” basis. respectively. It would be unfair for Laingo to the ground that the causes of action stated therein are barred by the shoulder the burden of loss when BPI was remiss in its duty to properly twelve-month limitation provided under the policies. the GSIS filed a Third Party Complaint 31 for indemnification against Pool. headlined in a daily major newspaper a day after his death. upon the execution of the Agreement under a Contractors’ "doctrine of representation. 1988. damage to the Project. GSIS & Pool of Machinery Insurers Subsequently." that notice to the agent is notice to the All Risks (CAR) Insurance with the GSIS General Insurance Department for principal.Lastly. to BPI is considered as notice to FGU Insurance as well. FGU Insurance cannot now justify the denial of a beneficiary's insurance claim for being Pursuant to its undertaking. 1990. the GSIS reinsured CAR Policy 88/085 with there was timely notice of Rheozel's death given to FGU Insurance within respondent Pool of Machinery Insurers (Pool). agent within a few days after the death of the depositor-insured. BPI neglected to carry out its duty. three months from Rheozel's death as required by the insurance company. which shall not be subject to family. FACTS: RTC: GSIS and petitioner entered into a Project Agreement (Agreement) RTC granted petitioner’s indemnity claims. Davao City branch to withdraw from the amount is recoverable pursuant to the average clause provision under the funds in order to help defray Rheozel's funeral and burial expenses. signature of the petitioner cannot limit the GSIS’ liability. through her representative. which flows from the improvements. #3 HH Hollero Construction Inc vs. These June 21. BPI had been informed of Rheozel's death by the latter's an amount equal to its cost or sound value. During the construction. i. was filed more than one (1) year from the rejection of the indemnity claims. In short. the complaint notify her that she was a beneficiary.e. 1991. Accordingly. regarding the existence of the insurance indemnity with the GSIS on June 30. petitioner filed a Complaint for Sum of Money and existence of the insurance policy. GSIS rejected petitioner’s indemnity claims for the Rheozel's deposit account with BPI two days after his death but she was damages wrought by Typhoons Biring and Huaning. respectively. and October policy attached to the deposit account. Since BPI is the agent of FGU Insurance. Petitioner obligated itself to insure the Project. including all the There is a rationale in the contract of agency. like other contracts. considering too the inaction of the GSIS used. are to be construed according the said typhoon. vs. within In support of private respondent’s view. are used by the Insured or anyone acting on his behalf to obtain any benefit under this Policy. 88/086 was deemed renewed when the GSIS withheld rejection” of the claim. While the complaint. 1991. at best. 1990. However. Lest it cause any CA set aside and reversed the RTC Judgment. case law illumines that the prescriptive period for the that the damages it sustained were due to the peril insured against. in case of arbitration taking place as provided herein. mere “tentative resolution. reckoned from the final GSIS’s rejection. petitioner admitted in its pleadings44 that the GSIS indeed denied its claim through ISSUE: the aforementioned letter. from the retentions it released to petitioner. namely. and popular sense.” In fact. The 10. despite its disavowals. neither of the parties pursued any further action on the matter. or if any fraudulent means or devices instance. 1990 and June 21. having been commenced beyond the twelve. “final rejection” simply means denial by commonly read: the insurer of the claims of the insured and not the rejection or denial by the insurer of the insured’s motion or request for reconsideration. Chia Yu their award. A perusal of the letter dated April 26.inefficacious and contrary to public policy. GSIS gave petitioner the opportunity to dispute its findings. (b) petitioner has established In this relation. If such terms are clear and unambiguous. (Emphases supplied) The right of the insured to the payment of his loss accrues from the happening of the loss. as in the two instances above-discussed. and insured’s action for indemnity should be reckoned from the “final (c) CAR Policy No. all benefit under this Policy shall be ([supra note 41]). 1990 letter was also a final understood in their plain. ordinary. It ruled that the complaint filed on September 27. they must be taken and on the same similarly shows that the June 21. The fact that petitioner filed a letter 46 of reconsideration to the sense and meaning of the terms which the parties themselves have therefrom dated April 18. where the Court held: forfeited. 1990 denying RULING: petitioner’s indemnity claim caused by Typhoon Saling on a “no loss” basis due to the non-renewal of the policies therefor before the onset of Contracts of insurance. 1990 shows that the GSIS denied petitioner’s indemnity claims wrought by Typhoons Biring and Huaning. to the former that it had the opportunity to seek reconsideration of the month limitation provided under the policies. or if any false declaration is rejection referred to should be construed as the rejection in the first made or used in support thereof. rejection of petitioner’s indemnity claim. The same conclusion obtains for the letter 45 dated June 21. the statement in that letter pertaining to any queries petitioner complaint. the cause of action in an insurance contract does not accrue until the insured’s claim is finally rejected by the . or if a claim is made and rejected and no The crucial issue in this case is: When does the cause of action accrue? action or suit is commenced within twelve months after such rejection or. complaint on the ground of prescription. as a form of notice barred by prescription. it It further dismissed for lack of merit GSIS’s counterclaim and third party appearing that no amount was recoverable under the policies. petitioner cannot construe the said letter to be a rejection of the indemnity claims on April 26. but tarried in commencing the necessary Whether or not the CA committed reversible error in dismissing the action in court. 1991 was may have on the denial should be construed. Section 10 of the General Conditions of the subject CAR Policies As correctly observed by the CA. two rulings of this Court have twelve months after the Arbitrator or Arbitrators or Umpire have made been cited. this logically shows that CA: they deemed the said letter as a rejection of the claims. the case of Eagle Star Insurance Co. thereby dismissing the confusion. the amount corresponding to the premium payable. If a claim is in any respect fraudulent. Surely. 1991. Amorin (Amorin) was a cardholder/member of Fortune insurance contracts. Alpha Insurance & Surety Co.151. This is because before such final rejection there is no real While on vacation in Honolulu. #4 Fortune Medicare Inc vs. respectively. CA pointed out that. the Court In light of the foregoing.36 already paid by Fortune Care to Amorin on September 27. holding that: He attempted to recover from Fortune Care the full amount thereof upon Since “cause of action” requires as essential elements not only a legal his return to Manila.777.242. where Amorin was a permanent employee. to comply performed in an accredited hospital in Metro Manila. being like David Robert U. health care agreements such as the subject Health Care Contract. expressly or impliedly. a corporation engaged in providing health Second. the trial court considered the (12) months to lapse before filing the necessary complaint before the RTC amount of P12.151. April 26. the cause of action does not accrue until appendectomy. its causes of action had already prescribed. net of medicare deduction. Fortune Care argued that the Health Care Contract did not cover hospitalization costs and professional But as pointed out by the petitioner insurance company. 1990. considering that the emergency procedure either in the Insurance Commission or in a court of competent jurisdiction occurred in the U. ISSUE: . an amount that was based on the average cost of violation of the said legal right. House of Representatives. reconsideration. Medicare. given that it allowed more than twelve In the absence of evidence to the contrary.insurer. Inc. emergency surgery. [as in this case] commences from the time of the denial of his claim by the Insurer. if the procedure were the party obligated (surety) refuses. the fees incurred in foreign countries. Further. or the date the GSIS rejected its claims in the first instance. as equivalent to 80% of the hospitalization and professional fees payable to the latter had he been treated in an affiliated hospital. in the confined to Philippine territory. for if what is being referred to is a reiterated Amorin was extinguished upon the latter’s acceptance from the company rejection conveyed in a resolution of a petition for of the amount of P12. RTC: Dismissed Amorin’s complaint. must be liberally construed in favor of the subscriber.36. and eighty percent (80%) of the approved standard charges based to mean that the insured’s cause of action or his right to file a claim on “American standard”. it is thus clear that petitioner’s causes of action is convinced that the parties intended to use the Philippine standard as for indemnity respectively accrued from its receipt of the letters dated basis.S.79. causing him to incur professional and hospitalization expenses of US$7. Inc. the above-cited pronouncements of this Court may be taken paid. Amorin CA: FACTS: Reversed and set aside RTC’s decision. with its duty (in this case to pay the amount of the bond). such should have been expressly stipulated.. Consequently. Hawaii in May 1999. (24 SCRA and US$1.35 and the case of ACCFA vs. Fortune Care denied Amorin’s request. first. 151 [1968]. (Fortune Care). it argued that its liability to first instance. but asked for its adjustment to cover the total amount of professional fees which he had Indisputably. 1990 and June 21. either expressly or impliedly.A.36.15[1]. as the contract’s operation was rejection referred to should be construed as the rejection.” Amorin received under protest the approved amount. The terms of Amorin's the Health Care Contract which provided that the Philippine standard medical coverage were provided in a Corporate Health Program Contract should be used even in the event of an emergency confinement in a (Health Care Contract) which was executed by Fortune Care and the foreign territory. Amorin underwent an necessity for bringing suit. the CA explained that there was nothing under Article V of maintenance services to its members. Taking the contract as a whole. but the company merely approved a reimbursement right of the plaintiff and a correlated obligation of the defendant in of P12. specifically appendectomy. e. As the appellate court however held. considering that Amorin’s case fell under the second qualified as an emergency care. as to do so would result in the clear disadvantage of its be interpreted in light of the provisions of Section 3(A). a non-accredited determination of Philippine or American standards. the term “standard charges” could be read as referring to the In Philamcare Health Systems. FortuneCare non-accredited hospitals. v.. Inc. It is an established rule as compensable even when incurred in a foreign country.. they should be construed strictly against the insurer. i. this cited clause declared the standard in the shall reimburse the total hospitalization cost including the determination of the amount to be paid. In the instant case. For above coverage applies only to Emergency confinement within treatments in foreign territories. If. or 80% of that payable for treatments performed in non- in foreign territory. for emergency care in 1.. However. emergency care in a non-accredited hospital. the amount payable by Fortune Care should not be limited to the cost of treatment in The trial court ruled that the phrase “approved standard charges”. we ruled that a health care “hospitalization costs and professional fees” which were specifically cited agreement is in the nature of a non-life insurance.S.A. This medical services were performed in an accredited hospital situated in the doctrine is equally applicable to health care agreements. U. Article V of the subject Health Care Contract. as Fortune Care argued. this must under Philippine cost and. the first part of hospital. from nowhere in the Health Care Contract could on liability. the only qualification was only as to the Philippine Territory. Philippines. guided by the rule that any ambiguity charges” is subject to interpretation. if the emergency confinement occurs percentage. Thus.” Amorin. and that it did not automatically shall be strictly construed against Fortune Care. to the extent member. in the absence of any qualifying word that clearly limited Fortune (Emphasis supplied) Care's liability to costs that are applicable in the Philippines. should the Philippines. that the American cost standard or any foreign . Whether as an in-patient or out-patient. CA. The was done by an affiliated physician or in an affiliated hospital. Contrary to in insurance contracts that when their terms contain limitations Fortune Care’s argument. x x x All told. be correlated with and reasonably inferred from the other provisions of considering that the appendectomy which the member had to undergo Section 3(B). These it be reasonably deduced that these “standard charges” referred to the are contracts of adhesion the terms of which must be interpreted and “Philippine standard”. pay eighty (80%) percent of the approved standard charges which shall cover the hospitalization costs and professional fees. RULING: The Court agrees with the CA. or that cost which would have been incurred if the enforced stringently against the insurer which prepared the contract.The CA gravely erred in concluding that the phrase “approved standard be interpreted in its literal sense. the extent of Fortune Care’s liability to Amorin was The proper interpretation of the phrase “standard charges” could instead governed by Section 3(B). but the treatment was performed at St. the premium and other charges in that may be allowed for treatments performed by accredited physicians the Health Care Contract were merely computed on assumption and risk in accredited hospitals.e. Hawaii. and liberally in favor of mean “Philippine Standard. Plainly. EMERGENCY CARE IN NON-ACCREDITED HOSPITAL approved charges) to a member who receives emergency care in a non- accredited hospital” within the Philippines. case. without any reference to and professional fee (based on the total approved charges) to a member regardless of the amounts that would have been payable if the treatment who receives emergency care in a non-accredited hospital. We restate the pertinent portions of Section 3(B): the provision speaks of the full reimbursement of “the total hospitalization cost including the professional fee (based on the total B. Fortune Care will be obligated to reimburse or accredited hospital. Rather than a Francis Medical Center in Honolulu. i. country's cost was never considered. . such limitations should have been distinctly specified and clearly reflected in the extent of coverage which the company voluntarily assumed.