Spouses NILO CHA and STELLA UY CHA, and UNITED INSURANCE CO., INC.

, petitioners,
vs.
COURT OF APPEALS and CKS DEVELOPMENT CORPORATION, respondents.

FACTS:

Petitioner-spouses Nilo Cha and Stella Uy-Cha, as lessees, entered into a lease contract with private respondent
CKS Development Corporation (hereinafter CKS), as lessor. One of the stipulations of the one (1) year lease
contract states that The LESSEE shall not insure against fire the chattels, merchandise, textiles, goods and effects
placed at any stall or store or space in the leased premises without first obtaining the written consent and approval
of the LESSOR. If the LESSEE obtain(s) the insurance thereof without the consent of the LESSOR then the policy is
deemed assigned and transferred to the LESSOR for its own benefit. Notwithstanding the above stipulation in the
lease contract, the Cha spouses insured against loss by fire the merchandise inside the leased premises for Five
Hundred Thousand (P500,000.00) with the United Insurance Co., Inc. (hereinafter United) without the written
consent of private respondent CKS. On the day that the lease contract was to expire, fire broke out inside the leased
premises. When CKS learned of the insurance earlier procured by the Cha spouses (without its consent), it wrote
the insurer (United) a demand letter asking that the proceeds of the insurance contract (between the Cha spouses
and United) be paid directly to CKS, based on its lease contract with the Cha spouses. United refused to pay CKS.
Hence, the latter filed a complaint against the Cha spouses and United. RTC, Manila, rendered a decision ordering
therein defendant United to pay CKS exemplary damages, attorney's fees and costs of suit. On appeal, CA
rendered a decision, affirming the trial court decision, deleting however the awards for exemplary damages and
attorney's fees.

ISSUE:

Whether the paragraph 18 of the lease contract entered into between CKS and the Cha spouses is valid insofar as it
provides that any fire insurance policy obtained

RULING:

It is, basic in the law on contracts that the stipulations contained in a contract cannot be contrary to law, morals,
good customs, public order or public policy. Sec. 18. Of insurance code provide that No contract or policy of
insurance on property shall be enforceable except for the benefit of some person having an insurable interest in the
property insured. In the present case, it cannot be denied that CKS has no insurable interest in the goods and
merchandise inside the leased premises. Therefore, respondent CKS cannot, under the Insurance Code — a
special law — be validly a beneficiary of the fire insurance policy taken by the petitioner-spouses over their
merchandise. This insurable interest over said merchandise remains with the insured, the Cha spouses. The
automatic assignment of the policy to CKS under the provision of the lease contract previously quoted is void for
being contrary to law and/or public policy. The liability of the Cha spouses to CKS for violating their lease contract in
that the Cha spouses obtained a fire insurance policy over their own merchandise, without the consent of CKS, is a
separate and distinct issue which we do not resolve in this case. WHEREFORE, the decision of the Court of
Appeals is SET ASIDE and a new decision is hereby entered, awarding the proceeds of the fire insurance policy to
petitioners.
SSS v Davac G.R. No. L-21642 July 30, 1966
J. Barrera

Facts:
The late Petronilo Davac, a former employee of Lianga Bay, became a member of the SSS. He designated
Candelaria Davac as his beneficiary and indicated his relationship to her as that of "wife". He died then each of the
respondents (Candelaria Davac and Lourdes Tuplano) filed their claims for death benefit with the SSS. The
deceased contracted two marriages, the first, with claimant Lourdes Tuplano and the second with Candelaria
Davac. The processing was withheld. The SSS filed this petition praying that the two parties be required to litigate
their claims.
The SSS issued the resolution naming Davac as the valid beneficiary. Not satisfied with the resolution, Lourdes
Tuplano brought the appeal.

Issue: Whether or not the Social Security Commission acted correctly in declaring respondent Candelaria Davac as
the person entitled to receive the death benefits in question.

Held: Yes. SSS resolution affirmed.

Ratio:
Section 13, Republic Act No. 1161, provides:
1. SEC. 13. Upon the covered employee's death or total and permanent disability under such conditions as the
Commission may define his beneficiaries, shall be entitled to the following benefit…
The beneficiary "as recorded" by the employee's employer is the one entitled to the death benefits.
The appellant contends that the designation made in the person of the second and bigamous wife is null and void,
because (1) it contravenes the provisions of the Civil Code, and (2) it deprives the lawful wife of her share in
the conjugal property as well as of her own and her child's legitime in the inheritance.
As to the first point, appellant argues that a beneficiary under the Social Security System partakes of the nature of
a beneficiary in life insurance policy and, therefore, the same qualifications and disqualifications should be applied.
Article 739 and 2012 of the civil code prohibits persons whoi cannot receive donations from being beneficiaries of a
policy.
The provisions mentioned in Article 739 are not applicable to Candelaria Davac because she was not guilty of
concubinage, there being no proof that she had knowledge of the previous marriage of her husband Petronilo.
Regarding the second point raised by appellant, the benefits accruing from membership in the Social Security
System do not form part of the properties of the conjugal partnership of the covered member. They are disbursed
from a public special fund created by Congress in pursuance to the declared policy of the Republic "to develop,
establish gradually and perfect a social security system which ... shall provide protection against the hazards
of disability, sickness, old age and death."
The sources of this special fund are from salary contributions.
Under other provisions, if there is a named beneficiary and the designation is not invalid, it is not the heirs of the
employee who are entitled to receive the benefits (unless they are the designated beneficiaries themselves). It is
only when there is no designated beneficiaries or when the designation is void, that the laws of succession
are applicable. The Social Security Act is not a law of succession.
CASE DIGEST] Vda. de Consuerga v. GSIS (G.R. No. L-28093)
January 30, 1971

FACTS:

Jose Consuegra contracted two marriages in his lifetime, the first to respondent Rosario Diaz (with whom he had two
children) in July 1937 and the second to Basilia Berdin (with whom he had seven children) in May 1957.

The second marriage was said to bhave been contracted in good faith while the first was subsisting.

As a shop foreman of the office of the District Engineer in the province of Surigao del Norte, Consuegra was a member
of the Government Service Insurance System (GSIS). Upon his death in September 1965, the proceeds of his life
insurance were paid by the GSIS to petitioner Berdin and her children, who were the beneficiaries in the named policy.

As Consuegra did not designate any beneficiary who would receive the retirement benefits due him, Diaz filed a claim
for said retirement benefits, being the only legal heir of Consuegra.

Berdin and children opposed, asserting that being the beneficiaries named in the life insurance policy of Consuegra,
they are the only ones entitled to receive the retirement insurance benefits. GSIS ruled that both are legal heirs and
awarded Diaz half and Berdin and children the remaining half.

The Court of First Instance of Surigao upheld the GSIS decision.

Hence, the instant petition.

ISSUE:

Whether GSIS was correct in the allocation of the deceased's retirement insurance benefits. -- YES.

HELD:

The Supreme Court held that when two women innocently and in good faith are legally united in holy matrimony to the
same man, they and their children, born of said wedlock, will be regarded as legitimate children and each family be
entitled to one half of the estate.

Athough the second marriage can be presumed to be void ab initio as it was celebrated while the first marriage was
still subsisting, still there is need for judicial declaration of such nullity. And inasmuch as the conjugal partnership
formed by the second marriage was dissolved before judicial declaration of its nullity, "[t]he only lust and equitable
solution in this case would be to recognize the right of the second wife to her share of one-half in the property
acquired by her and her husband and consider the other half as pertaining to the conjugal partnership of the first
marriage.
 San Miguel Brewery v. Law Union Rock Insurance Company
- Insurance Proceeds
Facts:

>  On Jan. 12, 1918, Dunn mortgaged a parcel of land to SMB to secure a debt of 10T.

>  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.

  Brias, SMB’s general manager, approached Law Union for insurance to the extent of 15T upon the
property.  In the application, Brias stated that SMB’s interest in the property was merely that of a
mortgagee.

>  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.  Both policies were issued in the name
of SMB only and contained no reference to any other interests in the propty. Both policies required
assignments to be approved and noted on the policy.

>  Premiums were paid by SMB and charged to Dunn. A year later, the policies were renewed.

>  In 1917, Dunn sold the property to Harding, but no assignment of the policies was made to the
latter.

>  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 SMB’s name.

>  SMB sought to recover the proceeds to the extent of its mortgage credit with the balance to go to
Harding.

>  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.

>  SMB eventually reached a settlement with the insurance companies and was paid the balance of
it’s mortgage credit.  Harding was left to fend for himself.  Trial court ruled against Harding.  Hence
the appeal.

Issue:

Whether or not the insurance companies are liable to Harding for the balance of the proceeds of the 2
policies.

Held:

NOPE.

Under the Insurance Act, the measure of insurable interest in the property is the extent to which the
insured might be daminified by the loss or injury thereof.  Also it is provided in the IA that the
insurance shall be applied exclusively to the proper interest of the person in whose name it is made. 
Undoubtedly, SMB as the mortgagee of the property, had an insurable interest therein; but it could
NOT, an any event, recover upon the two policies an amount in excess of its mortgage credit.

By virtue of the Insurance Act, neither Dunn nor Harding could have recovered from the two policies. 
With respect to Harding, when he acquired the property, no change or assignment of the policies had
been undertaken.  The policies might have been worded differently so as to protect the owner, but
this was not done.
 Great Pacific Life Assurance Company vs. Court of Appeals 89 SCRA 543
(Insurance Law)
Great Pacific Life Assurance Company vs. Court of Appeals
89 SCRA 543 (G.R. No. L-31845 and L-31878)
April 30, 1979

     Great Pacific Life Assurance Company (G.R. No. L-31845), Lapulapu Mondragon (G.R. No. L-31878)

    Court of Appeals (both in G.R. No. L-31845 and L-31878), Ngo Hing (G.R. No. L-31878)

On March 4, 1957 respondent Ngo Hing filed an application with the Great Pacific Life Assurance
Company for twenty-year endowment policy for ₱50,000.00 on the life of his one-year old Helen Go.

Upon payment of the insurance premium, a binding deposit receipt was issued to Hing by the
branch manager of the insurer in Cebu.

On May 28, 1957, the child died of influenza with complication of broncho pneumonia.

ISSUE:

Whether the binding deposit receipt constituted a temporary contract of the life insurance in
question.

HELD:

No. The provisions printed on the Binding Receipt show that the binding deposit receipt is intended
to be merely a provisional or temporary insurance contract and only upon compliance of the
following conditions:

1.  That the company shall be satisfied that the applicant was insurable on standard rates;

2.  That if the company does not accept the application and offers to issue a policy for different plan, the
insurance contract shall not be binding until the applicant accepts the policy offered; otherwise the
deposit shall be refunded; and

3.  That if the applicant is not insurable according to the standard rates, and the company disapproves
the application, the insurance applied for shall not be in force at any time, and the premium paid
shall be returned to the applicant;

Clearly implied from the aforesaid conditions is that the binding deposit receipt in question is
merely acknowledgment on behalf of the company, that the latter’s branch office had received from
the applicant the insurance premium and had accepted the application subject for processing by
the insurance premium and had accepted the application subject for processing by the insurance
company; and that the latter will either approve or reject the same on the basis of whether or not
the applicant is “insurable on standard rates.”

Since Pacific Life disapproved the insurance application of Hing, the binding deposit receipt in
question had never become in force at any time.

Upon this premise, the binding deposit receipt is, manifestly, merely conditional and does not
insure outright. As held by this court, where an agreement is made between the applicant and the
agent no liability shall attach until the principal approves the risk and receipt is given by the agent.
The acceptance is merely conditional and is subordinated to the act of the company in approving or
rejecting the application. Thus, in life insurance, “a binding slip” or “binding receipt” does not
insure by itself. (De Lim vs. Sun Life Assurance Company of Canada, 41 Phil. 264)

It bears repeating that through the intra-company communication of April 30, 1957, Pacific Life
disapproved the insurance application in question on the ground that it is not offering the twenty-
year endowment insurance policy to children less than seven years of age. What it offered instead is
another plan known as the Juvenile Triple Action, which private respondent failed to accept.

In the absence of a meeting of the minds between Pacific Life and Hing over the 20 year endowment
life insurance in the amount of ₱50,000.00 in favor of the latter’s one year old daughter, and with
non-compliance of the above-quoted conditions stated in the disputed binding deposit receipt, there
could have been no insurance contract duly perfected between them. Accordingly, the deposit paid
by private respondent shall have to be refunded by Pacific Life.
Oriental v CA G.R. No. 94052 August 9, 1991
J. Melencio-Herrera

Facts:
Panama Sawmill shipped 1208 pieces of apitog logs to Manila and insured the logs with Oriental for the value of
Php 1 million. Two barges were loaded with 610 and 598 logs. At sea, typhoons ravaged one of the barges,
resulting in the loss of 497 of 598 of the logs. 
The Insurance contract provided for indemnity under the following conditions:
Warranted that this Insurance is against TOTAL LOSS ONLY. Subject to the following clauses:
— Civil Code Article 1250 Waiver clause
— Typhoon warranty clause
— Omnibus clause.
Oriental didn’t give an indemnity because there wasn’t total loss of the shipment.
The sawmill filed a civil case against Oriental and the court ordered it to pay 410,000 as value for the missing logs.
The CA affirmed the lower court judgment but reduced the legal interest.  Hence this appeal by Oriental.

Issue:
Whether or not Oriental Assurance can be held liable under its marine insurance policy based on the theory of a
divisible contract of insurance and, consequently, a constructive total loss.

Held: No. Petition granted.

Ratio:
Perla v CA-  The terms of the contract constitute the measure of the insurer liability and compliance therewith is a
condition precedent to the insured's right to recovery from the insurer.
“Whether a contract is entire or severable is a question of intention to be determined by the language employed by
the parties. The policy in question shows that the subject matter insured was the entire shipment of
2,000 cubic meters of apitong logs. The fact that the logs were loaded on two different barges did not make
the contract several and divisible as to the items insured. The logs on the two barges were not separately valued
or separately insured. Only one premium was paid for the entire shipment, making for only one cause or
consideration. The insurance contract must, therefore, be considered indivisible.”
Also, the insurer's liability was for "total loss only" as stipulated. A total loss may be either actual or constructive. An
actual total loss under Sec 130 of the Insurance Code is caused by:
(a) A total destruction of the thing insured;
(b) The irretrievable loss of the thing by sinking, or by being broken up;
(c) Any damage to the thing which renders it valueless to the owner for the purpose for which he held it; or
(d) Any other event which effectively deprives the owner of the possession, at the port of destination, of the thing
insured.
A constructive total loss, gives to a person insured a right to abandon and it means:
SECTION 139.     A person insured by a contract of marine insurance may abandon the thing insured, or any
particular portion thereof separately valued by the policy, or otherwise separately insured, and recover for a total
loss thereof, when the cause of the loss is a peril injured against,
(a) If more than three-fourths thereof in value is actually lost, or would have to be expended to recover it from the
peril;
(b) If it is injured to such an extent as to reduce its value more than three-fourths
The appellate court considered the cargo in one barge as separate from the other and ruled that 497 of 598 was
more than ¾ of the amount lost, showing a constructive total loss.
The SC, however, said that although the logs were placed in two barges, they were not separately valued by the
policy, nor separately insured. Of the entirety of 1,208, pieces of logs, only 497 pieces thereof were lost or 41.45%
of the entire shipment. Since the cost of those 497 pieces does not exceed 75% of the value of all 1,208 pieces of
logs, the shipment can not be said to have sustained a constructive total loss under Section 139(a) of the
Insurance Code. 
DELFIN NARIO vs. PHILIPPINE AMERICAN LIFE
INSURANCE COMPANY
G.R. No. L-22796, June 26, 1967, EN BANC (REYES J.B.L., J.)

FACTS:

Mrs. Alejandra Santos-Mario was, upon application, issued, on June 12, 1959, by the Philippine American Life Insurance
Co., a life insurance policy under a 20-year endowment plan, with a face value of P5,000.00. She designated thereon her
husband, Delfin Nario, and their unemancipated minor son, Ernesto Nario, as her irrevocable beneficiaries. About the
middle of June, 1963, She then applied for a loan on the above policy with PHILAMLIFE w/c she is entitled to as policy
holder, after the policy has been in force for 3 years. The purpose of such loan was for the school expenses of Ernesto.The
application bore the written signature and consent of Delfin Nario in two capacities first, as one of the irrevocable
beneficiaries of the policy; and the other, as the father-guardian of said minor son and irrevocable beneficiary, Ernesto
Nario, and as the legal administrator of the minor’s properties, pursuant to Article 320 of the Civil Code of the Philippines.
PHILAMLIFE denied the loan application contending that written consent of the minor son must not only be given by his
father as legal guardian but it must also be authorized by the court in a competent guardianship proceeding. Mrs. Nario
then signified her decision to surrender her policy and demand its cash value which then amounted to P 520. The
Insurance Company also denied the surrender of the policy on the same ground as that given in disapproving the loan
application. Mrs. Nario sued PHILAMLIFE praying that the latter grant their loan application and/or accept the surrender of
said policy in exchange for its cash value. On September 10, 1963, Mrs. Nario and her husband, Delfin, sued PHILAMLIFE
praying that the latter grant their loan application and/or accept the surrender of said policy in exchange for its cash
value. Defendant PHILAMLIFE contends that the loan application and the surrender of the policy involved acts of disposition
and alienation of the property rights of the minor, said acts are not within the power of administrator granted under Art.
320 in relation to art. 326 CC, hence, mere written consent given by the father-guardian, for and in behalf of the minor
son, without any court authority therefor, was not a sufficient compliance of the law. The lower court ruled agreeing with
defendant’s contention, sustained defendant’s affirmative defense, and rendered, on January 28, 1964, its decision
dismissing plaintiffs’ complaint. Unable to secure reconsideration of the trial Court’s ruling, petitioner appealed directly to
this Court, contending that the minor’s interest amounted to only one-half of the policy’s cash surrender value of P520.00;
that under Rule 96, Section 2 of the Revised Rules of Court, payment of the ward’s debts is within the powers of the
guardian, where no realty is involved; hence, there is no reason why the father may not validly agree to the proposed
transaction on behalf of the minor without need of court authority.

ISSUE:

Whether or not PHILAMLIFE was justified in refusing to grant the loan application and the surrender of the policy.

HELD:

YES. The decision appealed from is affirmed. Costs against appellants Nario. The appeal is unmeritorious.

SC agreed with the lower court that the vested interest or right of the beneficiaries in the policy should be measured on its
full face value and not on its cash surrender value, for in case of death of the insured, said beneficiaries are paid on the
basis of its face value and in case the insured should discontinue paying premiums, the beneficiaries may continue paying
it and are entitled to automatic extended term or paid-up insurance options, etc. and that said vested right under the
policy cannot be divisible at any given time. SC likewise agreed with the conclusion of the lower court that the proposed
transactions in question constitute acts of disposition or alienation of property rights and not merely of management or
administration because they involve the incurring or termination of contractual obligations. The full face value of the policy
is P5,000.00 and the minor’s vested interest therein, as one of the two (2) irrevocable beneficiaries, consists of one-half
(½) of said amount or P2,500.00. Applying laws (CC and rules of Court),the father a must file a petition for guardianship
and post a guardianship bond.

In the case at bar, the father did not file any petition for guardianship nor post a guardianship bond, and as such cannot
possibly exercise the powers vested on him as legal administrator of the minor’s property. The consent gives for and in
behalf of the son without prior court authorization to the loan application and the surrender was insufficient and
ineffective and PHILAMLIFE was justified in disapproving the said applications. Assuming that the property of the ward was
less than P2,000, the effect would be the same, since the parents would only be exempted from filing a bond and judicial
authorization, but their acts as legal administrators are only limited to acts of management or administration and not to
acts of encumbrance or disposition.
nsurance Case Digst: Sales De Gonzaga V. Crown
Life Insurance Co. (1952)

G.R. No. L-4197    March 20, 1952

Lessons Applicable: Effect of Non-Payment (Insurance)

Laws Applicable: 

FACTS:

 September 26, 1939: Crown Life Insurance Co. whose home office is based in Toronto, Canada
issued to Ramon Gonzaga through its branch office in Manila a 20-year endowment policy for P15,000
which had an annual premium of P591. 
 Payment was only until September 6, 1941 because of the outbreak of the war since Crown
is an enemy corp. order to be closed during the Japanese occupation.  However, despite that
it offered a privilege to accept premium payments in the place of its employee in Ermita but
of which Gonzaga did not avail.
 Through the automatic premium loan clause, it continued until June 12, 1943
 May 1, 1945: It reopened but still Gonzaga did not pay although there was a
reinstatement clause providing certain conditions within three years from the date of lapse on
application of the insured
 June 27, 1945: Gonzaga died from an accident
 Crown refused to pay because of the lapse of premium payment
 RTC: against Gonzaga
ISSUE: W/N Gonzaga's widow can claim despite the absence of premium payment during the
outbreak of the war

HELD: NO. Affirmed

 Non-payment at the day involves absolute forfeiture is such be the terms of the contract
 failure to notify the postal address during the war is not an excuse
 There is no duty when the law forbids and there is no obligation without corresponding right enjoyed
by another
 opening of an interim office partook of the nature of the privilege to the policy holders to keep their policies operative
rather than a duty to them under the contract
Insurance Case Digest: Valenzuela V. CA (1990)

G.R. No. 83122   October 19, 1990

Lessons Applicable: Effect of Non-Payment (Insurance)

Laws Applicable: Art. 19,Art. 20,Art. 21, Art. 2200 of the new Civil Code;Section 77 of the
Insurance Code

FACTS:

 Valenzuela, General Agent of Philippine American General Insurance Company, Inc authorized to sell in behalf
of Philamgen solicited marine insurance from Delta Motors, Inc. amounting to P4.4M  entitling him to a 32%
commission or P1.6M
 1976-1978: premium payments of P1,946,886 were paid directly to Philamgen.  Philamgen wanted a 50% share of
Valenzuela's commission but Valenzuela refused.
 Because of his refusal, the officers of Philamgen reversed his commission due him, placed agency transactions on a
cash and carry basis thus removing the 60-day credit for premiums due, threatened to cancel policies issued by his
agency and leaked out the news that he has substantial accounts with Philamgen.
 December 27, 1978: His agency with Philamgen was terminated
 Valenzuela sought relief from the RTC
 RTC: favored Valenzuela with reinstatement, commission with interest, monthly compensatory damages, moral
damages, attorney's fees and cost of suit
 CA modified by holding Philamgen and Valenzuela jointly and severally liable for the premium
ISSUE: W/N Valuenuela should be NOT be held liable since non-payment of the premium renders the
policy invalid

HELD: YES. petition is GRANTED. RTC reinstated with modification that upon satisfaction of the
judgment, contractual relationship is terminated

 The principal may not defeat the agent's right to indemnification by a termination of the contract of agency. Where
the principal terminates or repudiates the agent's employment in violation of the contract of employment and without
cause ... the agent is entitled to receive either the amount of net losses caused and gains prevented by the breach, or
the reasonable value of the services rendered. Thus, the agent is entitled to prospective profits which he would have
made except for such wrongful termination provided that such profits are not conjectural, or speculative but are
capable of determination upon some fairly reliable basis. 
 If a principal violates a contractual or quasi-contractual duty which he owes his agent, the agent may as a rule bring
an appropriate action for the breach of that duty. The agent may in a proper case maintain an action at law for
compensation or damages 
 question of whether or not the agency agreement is coupled with interest is helpful to the petitioners' cause but is not
the primary and compelling reason 
 Section 77 of the Insurance Code, the remedy for the non-payment of premiums is to put an
end to and render the insurance policy not binding
 unless premium is paid, an insurance contract does not take effect
 since admittedly the premiums have not been paid, the policies issued have lapsed
 to sue Valenzuela for the unpaid premiums would be the height of injustice and unfair dealing
 Under Article 2200 of the new Civil Code, "indemnification for damages shall comprehend not only the value of the
loss suffered, but also that of the profits which the obligee failed to obtain."
Insurance Case Digest: Tai Tong Chuache & Co.
V. Insurance Commission (1988)

G.R. No. L-55397    February 29, 1988

Lessons Applicable: When Insurable Interest Must Exist (Insurance)

Laws Applicable: 

FACTS:

 Azucena Palomo bought a parcel of land and building from Rolando Gonzales and assumed a mortgage
of the building in favor of S.S.S. which was insured with S.S.S. Accredited Group of Insurers
 April 19, 1975: Azucena Palomo obtained a loan from Tai Tong Chuache Inc. in the amount of
P100,000 and to secure it, the land and building was mortgaged
 June 11, 1975: Pedro Palomo secured a Fire Insurance Policy covering the building for P50,000
with Zenith Insurance Corporation
 July 16, 1975: another Fire Insurance policy was procured from  Philippine British Assurance
Company, covering the same building for P50,000 and the contents thereof for P70,000
 Before the occurrence of the peril insured against the Palomos had already paid their credit due the
 July 31, 1975: building and the contents were totally razed by fire
 Palomo was able to claim P41,546.79 from Philippine British Assurance Co., P11,877.14 from
Zenith Insurance Corporation and P5,936.57 from S.S.S. Group of Accredited Insurers
but Travellers Multi-Indemnity refused so it demanded the balance from the other three but
they refused so they filed against them
 Insurance Commission, CFI: absolved Travellers on the basis that Arsenio Cua was claiming
and NOT Tai Tong Chuache
 Palomo Appealed
 Travellers reasoned that the policy is endorsed to Arsenio Chua,  mortgage creditor
 Tai Tong Chuache & Co. filed a complaint in intervention claiming the proceeds of the fire Insurance Policy issued
by travellers
 affirmative defense of lack of insurable interest that before the occurrence of the peril insured against
the Palomos had already paid their credit due the petitioner
ISSUE: W/N Tai Tong Chuache & Co. has insurable interest

HELD: YES. Travellers Multi-Indemnity Corporation to pay Tai Tong Chuache & Co.

 when the creditor is in possession of the document of credit, he need not prove non-payment for it is presumed
 The validity of the insurance policy taken b petitioner was not assailed by private respondent. Moreover, petitioner's
claim that the loan extended to the Palomos has not yet been paid was corroborated by Azucena Palomo who testified
that they are still indebted to herein petitioner
 Chua being a partner of petitioner Tai Tong Chuache & Company is an agent of the partnership. Being an agent, it is
understood that he acted for and in behalf of the firm
 Upon its failure to prove the allegation of lack of insurable interest on the part of the petitioner, Travellers must be
held liable
ommissioner of Internal Revenue vs.
Manila Bankers' Life Insurance
Corporation
G.R. No. 169103 March 16, 2011
Facts:
Respondent Manila Bankers’ Life
Insurance Corporation is a duly
organized
domestic corporation primarily
engaged in the life insurance
business. Petitioner
Commissioner of Internal Revenue
ordered the examination of books of
accounts
and other accounting records of
respondents for taxable year "1997 &
unverified
prior years." Petitioner found
deficiency on which the
respondent agreed to its
assessment except the deficiency
on documentary stamp taxes on
its policy
premiums and penalties. Petitioner
issued demand including the
documentary stamp
taxes due on respondent’s
policy premiums. Manila
Bankers protest on the
assessment for deficiency
documentary stamp tax which was
not acted upon by the
BIR. Respondent petitioned for the
cancellation of assessment before the
CTA. The
latter granted the petition which was
later upheld by the CA.
Issue:
Whether or not it is valid to impose
documentary stamp tax on increases
in
the coverage or sum assured by
existing life insurance policies, even
without the
issuance of new policies.
Ruling:
Yes. The Court is clear to
uphold the assessment for the
deficiency of
documentary stamp tax. It is not
because the additional premium
payments or an
agreement to change the sum assured
during the effectiveness of an
insurance plan
are subject to documentary stamp
tax, but because documentary stamp
tax is levied
on every document which establishes
that insurance was made or renewed
upon a
life. Hence, the petition was granted
and the CA decision was set aside.
ommissioner of Internal Revenue vs.
Manila Bankers' Life Insurance
Corporation
G.R. No. 169103 March 16, 2011
Facts:
Respondent Manila Bankers’ Life
Insurance Corporation is a duly
organized
domestic corporation primarily
engaged in the life insurance
business. Petitioner
Commissioner of Internal Revenue
ordered the examination of books of
accounts
and other accounting records of
respondents for taxable year "1997 &
unverified
prior years." Petitioner found
deficiency on which the
respondent agreed to its
assessment except the deficiency
on documentary stamp taxes on
its policy
premiums and penalties. Petitioner
issued demand including the
documentary stamp
taxes due on respondent’s
policy premiums. Manila
Bankers protest on the
assessment for deficiency
documentary stamp tax which was
not acted upon by the
BIR. Respondent petitioned for the
cancellation of assessment before the
CTA. The
latter granted the petition which was
later upheld by the CA.
Issue:
Whether or not it is valid to impose
documentary stamp tax on increases
in
the coverage or sum assured by
existing life insurance policies, even
without the
issuance of new policies.
Ruling:
Yes. The Court is clear to
uphold the assessment for the
deficiency of
documentary stamp tax. It is not
because the additional premium
payments or an
agreement to change the sum assured
during the effectiveness of an
insurance plan
are subject to documentary stamp
tax, but because documentary stamp
tax is levied
on every document which establishes
that insurance was made or renewed
upon a
life. Hence, the petition was granted
and the CA decision was set aside.
ommissioner of Internal Revenue vs.
Manila Bankers' Life Insurance
Corporation
G.R. No. 169103 March 16, 2011
Facts:
Respondent Manila Bankers’ Life
Insurance Corporation is a duly
organized
domestic corporation primarily
engaged in the life insurance
business. Petitioner
Commissioner of Internal Revenue
ordered the examination of books of
accounts
and other accounting records of
respondents for taxable year "1997 &
unverified
prior years." Petitioner found
deficiency on which the
respondent agreed to its
assessment except the deficiency
on documentary stamp taxes on
its policy
premiums and penalties. Petitioner
issued demand including the
documentary stamp
taxes due on respondent’s
policy premiums. Manila
Bankers protest on the
assessment for deficiency
documentary stamp tax which was
not acted upon by the
BIR. Respondent petitioned for the
cancellation of assessment before the
CTA. The
latter granted the petition which was
later upheld by the CA.
Issue:
Whether or not it is valid to impose
documentary stamp tax on increases
in
the coverage or sum assured by
existing life insurance policies, even
without the
issuance of new policies.
Ruling:
Yes. The Court is clear to
uphold the assessment for the
deficiency of
documentary stamp tax. It is not
because the additional premium
payments or an
agreement to change the sum assured
during the effectiveness of an
insurance plan
are subject to documentary stamp
tax, but because documentary stamp
tax is levied
on every document which establishes
that insurance was made or renewed
upon a
life. Hence, the petition was granted
and the CA decision was set aside.
ommissioner of Internal Revenue vs.
Manila Bankers' Life Insurance
Corporation
G.R. No. 169103 March 16, 2011
Facts:
Respondent Manila Bankers’ Life
Insurance Corporation is a duly
organized
domestic corporation primarily
engaged in the life insurance
business. Petitioner
Commissioner of Internal Revenue
ordered the examination of books of
accounts
and other accounting records of
respondents for taxable year "1997 &
unverified
prior years." Petitioner found
deficiency on which the
respondent agreed to its
assessment except the deficiency
on documentary stamp taxes on
its policy
premiums and penalties. Petitioner
issued demand including the
documentary stamp
taxes due on respondent’s
policy premiums. Manila
Bankers protest on the
assessment for deficiency
documentary stamp tax which was
not acted upon by the
BIR. Respondent petitioned for the
cancellation of assessment before the
CTA. The
latter granted the petition which was
later upheld by the CA.
Issue:
Whether or not it is valid to impose
documentary stamp tax on increases
in
the coverage or sum assured by
existing life insurance policies, even
without the
issuance of new policies.
Ruling:
Yes. The Court is clear to
uphold the assessment for the
deficiency of
documentary stamp tax. It is not
because the additional premium
payments or an
agreement to change the sum assured
during the effectiveness of an
insurance plan
are subject to documentary stamp
tax, but because documentary stamp
tax is levied
on every document which establishes
that insurance was made or renewed
upon a
life. Hence, the petition was granted
and the CA decision was set aside.
Commissioner of Internal Revenue
vs. Manila Bankers' Life Insurance
Corporation
G.R. No. 169103 March 16, 2011
Commissioner of Internal Revenue
vs. Manila Bankers' Life Insurance
Corporation
G.R. No. 169103 March 16, 2011
Commissioner of Internal Revenue
vs. Manila Bankers' Life Insurance
Corporation
G.R. No. 169103 March 16, 2011
Commissioner of Internal Revenue
vs. Manila Bankers' Life Insurance
Corporation
G.R. No. 169103 March 16, 2011