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    Yes, a contract of insurance can be rescinded under certain circumstances: 1) Manila Bankers Life Insurance Corporation sought to rescind a life insurance policy it issued on the grounds of alleged fraud, claiming the insured did not personally apply and did not sign the application. 2) However, both the trial court and appellate court found that the insured did take out the policy herself, rejecting allegations of fraud. 3) For a contract of insurance to be rescinded on grounds of fraud, fraudulent intent on the part of the insured must be proven, which was not established in this case. 4) The insurer is also prevented from rescinding a policy by Section 48 of the Insurance Code if it

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    Yes, a contract of insurance can be rescinded under certain circumstances: 1) Manila Bankers Life Insurance Corporation sought to rescind a life insurance policy it issued on the grounds of alleged fraud, claiming the insured did not personally apply and did not sign the application. 2) However, both the trial court and appellate court found that the insured did take out the policy herself, rejecting allegations of fraud. 3) For a contract of insurance to be rescinded on grounds of fraud, fraudulent intent on the part of the insured must be proven, which was not established in this case. 4) The insurer is also prevented from rescinding a policy by Section 48 of the Insurance Code if it

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    47 views3 pages

    CommRev Digest

    Uploaded by

    Greggy Law
    Yes, a contract of insurance can be rescinded under certain circumstances: 1) Manila Bankers Life Insurance Corporation sought to rescind a life insurance policy it issued on the grounds of alleged fraud, claiming the insured did not personally apply and did not sign the application. 2) However, both the trial court and appellate court found that the insured did take out the policy herself, rejecting allegations of fraud. 3) For a contract of insurance to be rescinded on grounds of fraud, fraudulent intent on the part of the insured must be proven, which was not established in this case. 4) The insurer is also prevented from rescinding a policy by Section 48 of the Insurance Code if it

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    of 3

    6. Industrial Personnel and Management Service, Inc. v.

    Country Bankers Insurance Corp


    G.R. No. 194216. October 17, 2018
    J. Caguioa
    By: Bravo, Lawrence Greghill R.

    Topic: Suppletory application of Civil Code

    Questions:

    IPAMS executed a Memorandum of Agreement with Country Bankers which provided that the
    requirements for claims are as follows: 1st demand letter requiring his/her to submit complete
    documents, 2nd Demand letter, Affidavit stating reason of any violation to be executed by
    responsible office of Recruitment Agency, Statement of Account (detailed expenses), and
    Transmittal Claim Letter.

    The former is in the business of recruiting medical personnel to be deployed overseas and they
    made several cash advances to facilitate immigration processes. Due to cash involved, the
    medical personnel were required to post bonds, which were guaranteed by Country Bankers
    Insurance Corp.

    IPAMS filed a complaint with the Insurance Commission (IC) for payment of the claims. The IC
    granted these claims. The IC ruling was affirmed by both the Department of Finance and the
    Office of the President. However, the Court of Appeals reversed the decision and ruled that
    Country Bankers was justified in delaying payment due to lack of official receipts from IPAMS.
    The CA applied article 2199 of the Civil Code which provides that: “...one is entitled to an
    adequate compensation only for such pecuniary loss suffered by him as he has duly proved.”

    Is the Civil Code applicable in this case?

    Answer:

    No, the Civil Code only applies suppletorily.


    The subject agreement of the parties contemplates a surety agreement, which is governed
    mainly by the Insurance Code, considering that a contract of suretyship shall be deemed an
    insurance contract within the contemplation of the Insurance Code if made by a surety which is
    doing an insurance business. In this case, the surety, i.e., respondent Country Bankers, is
    admittedly an insurance company engaged in the business of insurance.

    The Insurance Code specifically provides applicable provisions on suretyship, stating that
    pertinent provisions of the Civil Code shall only apply suppletorily whenever necessary in
    interpreting the provisions of a contract of suretyship. Jurisprudence also holds that a specific
    law should prevail over a law of general character. Hence, the CA erred in not considering the
    applicable provisions under the Insurance Code on the required proof of loss and when such
    requirement is waivable.
    Manila Bankers Life Insurance Corp. v. Aban
    G.R. No. 175666, July 29, 2013
    J. Del Castillo
    By: Lawrence Greghill R. Bravo

    Question:

    Mrs. Sotero took out a life insurance policy from Manila Bankers Life Insurance Corporation
    designating respondent Cresencia P. Aban (Aban), her niece, as her beneficiary. Petitioner
    issued the policy with a face value of P100,000.00, in Sotero's favor on August 30, 1993, after
    the requisite medical examination and payment of the insurance premium.

    Respondent filed a claim for the insurance proceeds on July 9, 1996. Petitioner conducted an
    investigation into the claim and found that Sotero did not personally apply for insurance
    coverage, as she was illiterate; Sotero was sickly since 1990;c Sotero did not have the financial
    capability to pay the insurance premiums; Sotero did not sign the July 3, 1993 application for
    insurance; Respondent was the one who filed the insurance application, and x x x designated
    herself as the beneficiary. For the above reasons, petitioner denied respondent's claim on April
    16, 1997 and refunded the premiums paid on the policy.

    On April 24, 1997, petitioner filed a civil case for rescission and/or annulment of the policy,
    which was docketed as Civil Case No. 97-867 and assigned to Branch 134 of the Makati Regional
    Trial Court. The trial court issued an Order granting respondent's Motion to Dismiss. Upon
    appeal, the CA sustained the decision of the trial court.

    Can contract of insurance be rescinded?

    Answer:

    Yes. Allegations of fraud, which are predicated on respondent's alleged posing asSotero and
    forgery of her signature in the insurance application, are at once belied by thetrial and
    appellate courts' finding that Sotero herself took out the insurance for herself."[Fraudulent
    intent on the part of the insured must be established to entitle the insurer torescind the
    contract" In the absence of proof of such fraudulent intent, no right to rescind arises.

    Section 48 prevents a situation where the insurer knowingly continues to accept annual
    premium payments on life insurance, only to later on deny a claim on the policy on specious
    claims of fraudulent concealment and misrepresentation, such as what obtains in the instant
    case. Thus, instead of conducting at the first instance an investigation into the circumstances
    surrounding the issuance of insurance Policy No. 747411 which would have timely exposed the
    supposed flaws and irregularities attending it as it now professes, petitioner appears to have
    turned a blind eye and opted instead to continue collecting the premiums on the policy. For
    nearly three years, petitioner collected the premiums and devoted the same to its own profit.
    It cannot now deny the claim when it is called to account. Section 48 must be applied to it with
    full force and effect.

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