G.R. No.
L-2294 May 25, 1951
FILIPINAS COMPAIA DE SEGUROS, petitioner,
vs.
CHRISTERN, HUENEFELD and CO., INC., respondent
Fact:
1. On october 1, 1941, Respondent corporation
obtained a Fire insurance in the amount of
100K covering merchandise contained in a
building located in binondo, Manila.
2. On February 1942, the building and insured
merchandise was burned.
3. In due time the respondent submitted to the
petitioner its claim under the policy.
4. The petitioner refused to pay the claim on the
ground that the policy issued in favor of the
respondent had ceased to be inforce on the
date the US declared war against the germany.
5. Respondent corporation being controlled by the
german subjects and petitioner being a
company under american jurisdiction.
6. Petitioner, in pursuance of the order of the
Director of Bureau of Financing, paid the
respondents.
7. On August 6, 1946, the petitioner filed a
recovery case in CFI of Manila for the sum paid
to the respondents which CFI dismissed the
case.
8. CA affirmed the CFI decision hence this case.
Issue:
Whether the policy in question become null and
void upon the declaration of war between the US and
Germany.
Held:
1. Yes. The Philippine Insurance Law in section 8
provides that "anyone except a public enemy
may be insured." It stands to reason that an
insurance policy ceases to be allowable as
soon as an insured becomes a public enemy.
2. The respondent having become an enemy
corporation on December 10, 1941, the
insurance policy issued in its favor on October
1, 1941, by the petitioner had ceased to be valid
and enforceable, and since the insured goods
were burned after December 10, 1941, and
during the war, the respondent was not entitled
to any indemnity under said policy from the
petitioner.
3. However, elementary rules of justice (in the
absence of specific provision in the Insurance
Law) require that the premium paid by the
respondent for the period covered by its policy
from December 11, 1941, should be returned by
the petitioner.
4. Wherefore, the appealed decision is hereby
reversed and the respondent corporation is
ordered to pay to the petitioner the sum of
P77,208.33, Philippine currency, less the
amount of the premium, in Philippine currency,
that should be returned by the petitioner for the
unexpired term of the policy in question,
beginning December 11, 1941. Without costs.
So ordered.
G.R. No. L-1669 August 31, 1950
PAZ LOPEZ DE CONSTANTINO, plaintiff-appellant,
vs.
ASIA LIFE INSURANCE COMPANY, defendant-
appellee.
Fact:
1. On September 27, 1941, Asia Life Insurance
Company issued Policy no. 93912 for P3, 000
for the life of Arcadio Constantino for a term of
twenty years.
2. The 1st premium covers the period up to
September 26, 1942.
3. Plaintiff was regularly appointed as beneficiary.
4. After the 1st payment, no further premiums were
paid.
5. The insured died on September 22, 1944.
6. Beneficiary demanded for payment but was
refused on the ground of non-payment of the
premiums.
7. Plaintiff maintain that the non-payment of the
premiums was caused by the closing of
defendants offices in manila during the
Japanese occupation and the impossible
circumstances created by war.
8. Defendant on the other hand asserts that the
policy had lapsed for non-payment of
premiums, in accordance with the contract of
the parties and the law applicable to the
situation.
9. The lower court absolved the defendant. Hence
this appeal.
Issue:
Whether the respondent erred in absolving defendant
from all liability on the policy in question?
Ruling:
1. No. Because the policy in question expressly
stipulates that all premium payments are due in
advance and any unpunctuality in making any
such payment shall cause this policy to laps."
Wherefore, it would seem that pursuant to the
express terms of the policy, non-payment of
premium produces its avoidance.
2. In Glaraga vs. Sun Life Ass. Co., The court held
that a life policy was avoided because the
premium had not been paid within the time
fixed, since by its express terms, non-payment
 of any premium when due or within the thirty-
day period of grace, ipso facto caused the
policy to lapse
3. The United States rule declares that the
contract is not merely suspended, but is
abrogated by reason of non-payments is
peculiarly of the essence of the contract. It
additionally holds that it would be unjust to allow
the insurer to retain the reserve value of the
policy, which is the excess of the premiums
paid over the actual risk carried during the
years when the policy had been in force.
4. The case, therefore, is one in which time is
material and of the essence and of the essence
of the contract. Non-payment at the day
involves absolute forfeiture if such be the terms
of the contract, as is the case here. Courts
cannot with safety vary the stipulation of the
parties by introducing equities for the relief of
the insured against their own negligence.
5. For all the foregoing, the lower court's decision
absolving the defendant from all liability on the
policies in question, is hereby affirmed, without
costs.
G.R. No. L-4197 March 20, 1952
FIDELA SALES DE GONZAGA, plaintiff-appellant,
vs.
THE CROWN LIFE INSURANCE
COMPANY, defendant-appellee.
Fact:
1. On September 26, 1939 the Crown Life
Insurance Co., whose home office is in Toronto,
Canada, issued to Ramon Gonzaga through its
branch office in Manila a 20-year endowment
policy for P15, 000
2. The insured paid in due time the agreed yearly
premium, which was P591.00, for three
consecutive years, the last payment having
been effected on September 6, 1941.
3. On account of the outbreak of war, no
premiums were paid after that date, although
the policy was continued in force up to June 12,
1943, under its automatic premium loan clause.
4. Ramon Gonzaga died on June 27, 1945 from
an accident.
5. The beneficiary was unable to collect the
amount of the said policy, which began this suit
on December 1947.
6. The defendant set up the defense that the
policy had lapsed by non-payment of the
stipulated premiums of the stipulated dates.
And the trial court in a carefully written decision
ruled against the plaintiff.
7. Hence this appeal.
Issue:
Whether the Plaintiff was entitled to the amount
of the policy.
Ruling:
1. Since this action was decided by the court
below, several cases analogous to this one in
its main characteristics have come up before
this Court. (Paz Lopez de Constantino vs. Asia
Life Insurance Company,1 G.R. No. L-1669;
Agustina Peralta vs. Asia Life Insurance
Company,2 G.R. No. L-1670; James McGuire
vs. The Manufacturers Life Insurance Co;3 G.
R. No. L-3581; National Leather Co; Inc. vs.
The United States Life Insurance Co.,4 G.R. No.
L-2668; Victoria Hidalgo Vda. de Carrero, et al.,
vs. The Manufacturers Life Insurance Co.,5 G.
R. No. L-3032; and West Coast Life Insurance
Co. vs. Patricio H. Gubagaras,6 G. R. No. L-
2810) In Paz Lopez de Constantinos. Asia Life
Insurance Company, G. R. No. L-1669, the
leading case, the Court speaking through Mr.
Justice Bengzon, adopted this doctrine:
The case, therefore, is one in which time is
material and of the essence of the contract.
Non-payment at the day involves absolute
forfeiture is such be the terms of the contract,
as is the case here. Courts cannot with safety
vary the stipulation of the parties by introducing
equities for the relief of the insured against their
own negligence.
The aforecited decisions are decisive of the
proposition that non-payment of premiums by
reason of war puts an end to the contract.
2. Gonzaga could have taken advantage if he was
really intent on preserving his policy.
Uncontroverted or admitted is the fact that the
defendant's agent, through whom he had been
insured, lived in Malabon, Rizal, and was his
close acquaintance; and so were some of the
defendant's Filipino employees who handled
the insurance business of Hanson, Orth and
Stevenson during the occupation. And Gonzaga
admittedly come to Manila on a visit every now
and then, and could have, without difficulty,
contacted any of those people.
3.
4. In addition, the policy carried a clause providing
for its reinstatement under certain conditions
within three years from the date of lapse on
application of the insured. The present policy
lapsed on June 12, 1943, the Company's
Manila branch was reopened on May 1, 1945
and resumed regular business through the
same general agents at the Wilson Building on
 Juan Luna Street, Manila and Ramon Gonzaga
died on June 27, 1945. It is undoubted that
Gonzaga knew all that. It is not denied that he
was an employee in the United States Navy,
that the united States Navy had an office in the
same Wilson Building, and that he came at
least twice a month to that office for his salary.
5. Both in law and in reason, the action was
properly dismissed and the appealed decision is
hereby affirmed, with costs
G.R. No. L-7667 November 28, 1955
CHERIE PALILEO, plaintiff-appellee,
vs.
BEATRIZ COSIO, defendant-appellant.
Fact:
G.R. No. L-14300 January 19, 1920
SAN MIGUEL BREWERY, ETC., plaintiff-appellee,
vs.
LAW UNION AND ROCK INSURANCE CO., (LTD.) ET
AL., defendants-appellees.
HENRY HARDING, defendant-appellant.
Fact:
1. On Jan. 12, 1918, Dunn mortgaged a parcel of
land to SMB to secure a debt of 10k.
2. Mortgage contract stated that Dunn was to have
the property insured at his own expense,
authorizing SMB to choose the insurers and to
receive the proceeds thereof and retain so
much of the proceeds as would cover the
mortgage debt.
3. Dunn likewise authorized SMB to take out the
insurance policy for him.
4. Brias, SMBs general manager, approached
Law Union for insurance to the extent of 15k
upon the property.
5. In the application, Brias stated that SMBs
interest in the property was merely that of a
mortgagee.
6. Law Union, not wanting to issue a policy for the
entire amount, issued one for P7,500 and
procured another policy of equal amount from
Filipinas Cia de Seguros.
7. Both policies were issued in the name of SMB
only and contained no reference to any other
interests in the propty.
8. Both policies required assignments to be
approved and noted on the policy.
9. Premiums were paid by SMB and charged to
Dunn. A year later, the policies were renewed.
10. In 1917, Dunn sold the property to Harding, but
no assignment of the policies was made to the
latter.
11. Property was destroyed by fire. SMB filed an
action in court to recover on the policies.
Harding was made a defendant because by
virtue of the sale, he became the owner of the
property, although the policies were issued in
SMBs name.
12. SMB sought to recover the proceeds to the
extent of its mortgage credit with the balance to
go to Harding.
13. Insurance Companies contended that they were
not liable to Harding because their liability under
the policies was limited to the insurable
interests of SMB only.
14. SMB eventually reached a settlement with the
insurance companies and was paid the balance
of its mortgage credit.
15. Harding was left to fend for himself. Trial court
ruled against Harding.
16. Hence the appeal.
Issue:
Whether or not the insurance companies are
liable to Harding for the balance of the proceeds of the
2 policies.
Ruling:
1. No. Under the Insurance Act, the measure of
insurable interest in the property is the extent to
which the insured might be damnified by the
loss or injury thereof. S16
2. Also it is provided that the insurance shall be
applied exclusively to the proper interest of the
person in whose name it is made. S50
3. Undoubtedly, SMB as the mortgagee of the
property, had an insurable interest therein; but it
could NOT, in any event, recover upon the two
policies an amount in excess of its mortgage
credit.
4. Under S19 and S55 of the Insurance Act,
neither Dunn nor Harding could have recovered
from the two policies.
A change of interest in any part of a thing
insured unaccompanied by a corresponding
change of interest in the insurance, suspends
the insurance to an equivalent extent, until the
interest in the thing and the interest in the
insurance are vested in the same person S19
The mere transfer of a thing insured does not
transfer the policy, but suspends it until the
same person becomes the owner of both the
policy and the thing insured S55
5. With respect to Harding, when he acquired the
property, no change or assignment of the
policies had been undertaken.
6. The policies might have been worded differently
so as to protect the owner, but this was not
done.
7. The judgment is therefore affirmed, with costs
against the appellant. So ordered.

G.R. No. L-15184 May 31, 1963
SAURA IMPORT & EXPORT CO., INC., plaintiff-
appellant,
vs.
PHILIPPINE INTERNATIONAL SURETY CO., INC.,
and PHILIPPINE NATIONAL BANK, defendants-
appellees.
Fact:
1. On Dec. 26, 1952, Saura mortgaged to PNB its
registered parcel of land in Davao to secure the
payment of a promissory note of P27T.
2. A building of strong materials which was also
owned by Saura, was erected on the parcel of
land and the building had always been covered
by insurance even before the execution of the
mortgage contract.
3. Pursuant to the mortgage agreement which
required Saura to insure the building and its
contents, it obtained a fire insurance for P29T
from PISC for a period of 1 year starting Oct. 2,
1954.
4. The mortgage also required Saura to endorse
the insurance policy to PNB. The memo
stated: Loss if any, payable to PNB as their
interest may appear, subject to the terms,
conditions and warranties of this policy.
5. The policy was delivered to PNB by Saura.
6. On Oct. 15, 1954, barely 13 days after the
issuance of the fire insurance, PISC canceled
the same, effective as of the date of
issue. Notice of the cancellation was sent to
PNB in writing and was received by the bank on
Nov. 8, 1954.
7. On Apr. 6, 1955, the building and its contents
worth P4,685 were burned. On April 11, 1985,
Saura filed a claim with PISC and mortgagee
bank.
8. Upon presentation of notice of loss with PNB,
Saura learned for the first time that the policy
had been previously canceled by PISC, when
Sauras folder in the banks file was opened and
the notice of the cancellation by PISC was
found.
9. PISC refused to pay the amount of the
insurance. In view of the said refusal, Petitioner
filed a complaint against insurer.
10. CFI dismissed the complaint. Hence this
petition.
Issue:
Whether there was a proper cancellation of the said
policy
Ruling:
1. No. Actual notice of cancellation in a clear
and unequivocal manner, preferably in
writing should be given by the insurer to
the insured so that the latter might be given
an opportunity to obtain other insurance for
his own protection. The notice should be
personal to the insurer and not to and/or
through any unauthorized person by the
policy. Both the PSIC and the PNB failed,
wittingly or unwittingly to notify Saura of the
cancellation made.
2. If a mortgage or lien exists against the property
insured, and the policy contains a clause stating
that loss, if any, shall be payable to such
mortgagee or the holder of such lien as interest
may appear, notice of cancellation to the
mortgagee or lienholder alone is ineffective as a
cancellation of the policy to the owner of the
property. (Connecticut Ins. Co. v. Caumisar,
218 Ky. 378, 391 SW 776, cited in 29 Am. Jur.
p. 743).
3. The insurer contends that it gave notice to
PNB, as mortgagee of the property and that
was already substantial compliance with its
duty to notify the insured of the cancellation
of the policy. But notice to the bank, as far
as Saura herein is concerned, is not
effective notice.
4. WHEREFORE, the decision appealed from is
hereby reversed, and another is entered,
condemning the defendant-appellee Philippine
International Surety Co., Inc., to pay Saura
Import & Export Co., Inc., appellant herein, the
sum of P29,000.00, the amount involved in
Policy No. 429, subject-matter of the instant
case. Without costs.
VIOLETA R. LALICAN,
Petitioner,
- versus -
THE INSULAR LIFE ASSURANCE COMPANY
LIMITED, AS REPRESENTED BY THE PRESIDENT
VICENTE R. AVILON,
Respondent.
Facts:
1. During his lifetime, Eulogio applied for an
insurance policy with Insular Life.
2. On 24 April 1997, Insular Life, through Josephine
Malaluan (Malaluan), its agent in GapanCity,
issued in favor of Eulogio Policy No. 9011992
3. Violeta was named as the primary beneficiary.
4. Under the terms of Policy No. 9011992, Eulogio
was to pay the premiums on a quarterly basis in
the amount of P8, 062.00.
5. According to the Policy Contract, there was a
grace period of 31 days for the payment of each
premium. If any premium was not paid on or
before the due date, the policy would be in
default, and if the premium remained unpaid until
the end of the grace period, the policy would
 automatically lapse and become void.
6. Eulogio failed to pay the premium due on 24
January 1998, even after the lapse of the grace
period of 31 days. Policy No. 9011992, therefore,
lapsed and became void.
7. Eulogio submitted to the Cabanatuan District
Office of Insular Life, through Malaluan, on 26
May 1998, an Application for Reinstatement of
Policy No. 9011992.
8. Insular Life notified Eulogio that his Application
for Reinstatement could not be fully processed
because he left unpaid the overdue interest.
9. Insular Life instructed Eulogio to pay the amount
of interest and to file another application for
reinstatement. Eulogio was likewise advised by
Malaluan to pay the premiums that subsequently
became due, plus interest.
10. On 17 September 1998, Eulogio went to
Malaluans house and submitted a second
Application for Reinstatement of Policy
No. 9011992, including the amount
of P17,500.00, representing payments for the
overdue interest and the premiums which
became due. As Malaluan was away on a
business errand, her husband received Eulogios
second Application for Reinstatement and issued
a receipt for the amount Eulogio deposited.
11. A while later, on the same day, 17 September
1998, Eulogio died of cardio-respiratory arrest
secondary to electrocution.
12. Without knowing of Eulogios death, Malaluan
forwarded to the Insular Life Regional Office in
the City of San Fernando, on 18 September
1998, Eulogios second Application for
Reinstatement of Policy No. 9011992
and P17,500.00 deposit. However, Insular Life no
longer acted upon Eulogios second Application
for Reinstatement, as the former was informed
on 21 September 1998 that Eulogio had already
passed away.
13. Violeta filed with Insular Life a claim for payment
of the full proceeds of Policy No. 9011992.
14. Insular Life informed Violeta that her claim could
not be granted since, at the time of Eulogios
death, Policy No. 9011992 had already lapsed,
and Eulogio failed to reinstate the same.
15. According to the Application for Reinstatement,
the policy would only be considered reinstated
upon approval of the application by Insular Life
during the applicants lifetime and good health,
and whatever amount the applicant paid in
connection thereto was considered to be a
deposit only until approval of said application.
16. DBP Check No. 0000309734, for the amount
of P25,417.00, drawn in Violetas favor,
representing the full refund of the payments made
by Eulogio on Policy No. 9011992.
17. Violetas counsel subsequently sent a
letter dated 8 July 1999 to Insular Life,
demanding payment of the full proceeds of Policy
No. 9011992. On 11 August 1999, Insular Life
responded to the said demand letter by agreeing
to conduct a re-evaluation of Violetas claim.
18. Without waiting for the result of the re-evaluation
by Insular Life, Violeta filed with the RTC, on 11
October 1999, a Complaint for Death Claim
Benefit,
19. The RTC dismissed the case. Hence this petition
Issue:
Whether Eulogio was able to reinstate the lapsed
insurance policy on his life before his death on 17
September 1998.
Ruling:
1. No. The Court rules in the negative.
2. That Policy No. 9011992 had already lapsed is a
fact beyond dispute. Eulogios filing of his first
Application for Reinstatement with Insular Life,
through Malaluan, on 26 May 1998, constitutes
an admission that Policy No. 9011992 had lapsed
by then.
3. To reinstate a policy means to restore the same
to premium-paying status after it has been
permitted to lapse.
4. Both the Policy Contract and the Application for
Reinstatement provide for specific conditions for
the reinstatement of a lapsed policy.
5. In the instant case, Eulogios death rendered
impossible full compliance with the
conditions for reinstatement of Policy
No. 9011992. True, Eulogio, before his death,
managed to file his Application for
Reinstatement and deposit the amount for
payment of his overdue premiums and
interests thereon with Malaluan; but Policy
No. 9011992 could only be considered
reinstated after the Application for
Reinstatement had been processed and
approved by Insular Life during Eulogios
lifetime and good health.
6. Policy No. 9011992 remained lapsed and void,
not having been reinstated in accordance with
the Policy Contract and Application for
Reinstatement before Eulogios death. Violeta,
therefore, cannot claim any death benefits
from Insular Life on the basis of Policy
No. 9011992; but she is entitled to receive the full
refund of the payments made by Eulogio thereon.
7. WHEREFORE, premises considered, the
Court DENIES the instant Petition for Review
on Certiorari under Rule 45 of the Rules of
Court. The Court AFFIRMS the Orders dated 10
April 2008 and 3 July 2008 of the RTC of Gapan
City, Branch 34, in Civil Case No. 2177, denying
petitioner Violeta R. Lalicans Notice of Appeal, on
the ground that the Decision dated 30 August
2007 subject thereof, was already final and
executory. No costs.