In case there is no doubt as to the terms of an

insurance contract, the provision must be

construed liberally plain, ordinary and popular
sense. However, when the terms of the policy
are ambiguous, uncertain doubtful, they should
be interpreted strictly against the insurer and
liberally in favor of the insured , because the
insured has no voice in the selection of the
words used, and the language of the contract is
selected by legal advisers of the insurance
company.
They are prepared only by the insurer and
imposed upon parties dealing with it which may
not be changed, the latters participation in the
agreement being reduced to the alternative to
take it or leave it, in contrast to those entered
into by parties bargaining on an equal footing
and, therefore, any ambiguity thereon must be
resolved against the insurer, the party preparing
the contract. (Qua Chee Gan vs. Law Union Rock
Ins., Ltd., 52 O.G. 1982).
The loss was excluded by the policy because it
was caused by authorized representatives of the
insured. While both the driver and security guard
were only assigned by labor contractors, they
were both authorized representatives of the
insured. The terms of the contract are clear and
unambiguous and therefore, there is no room for
construction and such terms cannot be enlarged
or diminished by judicial construction. (Fortune
Insurance & Surety Co., Inc. vs Court of Appeals,
61 SCAD 297, 244 SCRA 308).

The insurer is not liable. The terms of the policies
are clear, express and specific that only
amputation of the hand should be considered as
a loss thereof. An interpretation that would
include a mere fracture or other temporary
disability not covered by the policies would be
unwarranted. (Ty vs First national Surety &
Assur. Co., Inc., 1 SCRA 1324; Also 17 SCRA 364).
The insurer was liable because loss of legs should include
the permanent and total paralysis of both legs. To exclude a
permanent total paralysis of both legs from the term loss of
legs would be contrary to public policy, public good and
sound morality. It would force a desperate man to cause an
amputation to be performed since his legs are no use for life,
in order to avail of the benefits of the policy. This is different
from the case of Ty cited above where the injuries sustained
only caused temporary total disability of his left hand. In this
case, the injury produced a total paralysis of both legs
resulting in the complete loss of the use of both legs.
(Panaton vs Malayan Ins. Co., 2 Court of appeals Report 783).
No. the clause containing the prohibition was
ambigous and must be constructed strictly
against the insurer and liberally in favor of the
insured. In ordinary parlance, oil means
lubricants and not gasoline or kerosene. There
was no reason why the prohibition against
keeping gasoline in the premises could not be
expressed clearly and in the language and terms
that the general public can readily understand.
(Qua Chee Gan vs Law Union and Rock Ins. Co.,
Ltd., 52 O.G. 1962).
Insurance is a contract
whereby one undertakes for a
consideration to indemnify
another against loss, damage
or liability arising from an
unknown or contingent event.
It is an aleatory and not a wagering contract because it
depends upon some contingent even against the occurrence
of which is intended to provide;
It is a contract of indemnity because recovery is
commensurate with the amount of the loss suffered.
However, life insurance is not a contract of indemnity except
one procured by a creditor on the life of the debtor.
It is a personal contract because an insurer contracts with
reference to the character of the insured for integrity and
prudence;
It is executory payment of premiums that is, executed on the
part of the insured upon payment of the premium and wholly
executory on the part of the insurer.
It is a conditional contract in the sense that the insurer is not
obligated to pay unless the loss arises from the specified
perils.
Suretyship is deemed to be an insurance
contract only if made by a surety who or
which, as such, is doing an insurance
business, i.e., making, or proposing to
make, as surety, any contract of
suretyship as a vocation and not merely
incidental to any other legitimate
business activity of the surety.
Any contingent or unknown
event, whether past or future,
which may indemnify a person
having an insurable interest, or
create a liability against him,
may be insured against?

A past event may be covered
by insurance provided the loss
is unknown to both parties
and they expressly stipulated
that prior loss is insured by the
policy.
A married woman may insure her
own life and that of her children
without the consent of the husband.
(Sec. 3). She may likewise insure her
separate property without the
consent of the husband. (Art. 145,
Family Code)
It is valid regardless of whether
the insurance is on property of
life because a person who is 18
years old or more is no longer a
minor but of majority age. (R.A.
No. 6809).
All rights, title and interest in
the policy shall automatically
vest in the minor unless
otherwise provided in the
policy. (Sec. 3. par. 5).
Gambling cannot be insured
because gambling may possibly
result in proofit, which is not true
in insurance which only seeks to
indemnify the insured against
losses. (Sec. 4)
(a) Every person, partnership,
association or corporation duly
authorized by the Insurance
Commission to transact insurance
business may be an insurer; and (b)
Anyone except a public enemy may
be insured. (Secs. 6 and 7).
Public enemy is a nation at war with the
Philippines and every citizen or subject of
such nation. Such term does not include
robbers, thieves and riotous mobs. A public
enemy cannot be insured because the
purposes of war is to cripple the power and
exhaust the resources of the enemy and
repay in insurance the value of what has been
so destroyed. (1 Joyce, 667.)
Both mortgagor and the mortgagee
take out separate policies with the same
or different insurance companies. The
mortgagor may insure the property
mortgaged to the full value of such
property while the mortgagee can
insure the same only to the extent of the
amount of his credit. (Cosio vs Panlilio.
17 SCRA 196).
Only the mortgagor may recover from the
insurer since the policy taken by the
mortgagor shall be applied exclusively to his
interest. However, the mortgage constituted
shall extend to the proceeds of the indemnity
paid by the insurer of the mortgaged
property upon the occurrence of the loss and
therefore, the mortgagee has a lien on the
proceeds of the policy. (Sec. 53; 46 C.J.S. 26;
Art. 2127, Civil Code).
The insurance still deemed to be upon the interest of the mortgagor who does
not cease to be a party to the original contract. Hence, if the policy is cancelled,
notice of cancellation must be given to the mortgagor and not to the mortgagee.
(Sec. 8; Saura Import & Export Co., Inc. v Philippine International Ins. Co., Inc., L-
15184, May 31, 1963).
Any act of the mortgagor, prior to the loss, which would otherwise avoid the
insurance, will have the same effect, although the property in the hands of the
mortgagee. Thus, violation by the mortgagor of the policy entitles the insurer to
rescind and will prevent the beneficiary (mortgagee) from recovering from the
insurer. (Sec. 8).
Any act, which under the contract of insurance, is to be performed by the
mortgagor, may be performed by the mortgagor. As for example, the policy
requires the insured to give notice and proof of loss without unnecessary delay.
Notice or proof of loss may be given by the mortgagee to whom the loss is made
payable with the same effect as if the same was given by the mortgagor. (sec 8;
45 C.J.S. 1254).
Upon the occurrence of the loss, the mortgagee
is entitled to recover to the extent of his credit
and the balance, if any, is payable to the
mortgagor since such policy is for the benefit of
both the mortgagor and mortgagee. (Sec. 8;
Filipinas Investment & Finance Corp. vs Empire
Ins. Co., CA-G.R. No. 3904-R, Sept. 28, 1972).
Upon recovery by the mortgagee to the extent
of his credit form the insurer, the mortgagor is
released from his indebtedness.

The mortgagee may collect from the insurer upon the
occurrence of the loss to the extent of his credit. (San
Miguel vs Law Union Rock Ins. Co., 40 Phil. 674, 678)
Unless otherwise stated in the policy, the mortgagor
has no right to collect the balance of the proceeds of
he policy after payment of the interest of the
mortgagee.
The insurer, upon payment to the mortgagee insured,
becomes subrogated to the rights of the mortgagee
against the mortgagor and may collect the debt of the
mortgagor to the extent of the amount paid to the
mortgagee. This principle applies only where the
policy obtained by the mortgagee covers his interest
alone. (Art. 2207, Civil Code).
The mortgagee-insured can no loner collect
the mortgagors indebtedness after receiving
full payment of his credit from the insurer
since the latter thereby acquires the right to
collect from the mortgagor by virtue of
subrogation. However, if the mortgagee-
insured is unable to collect the whole amount
of his credit from the insurer, he may still
charge the mortgagor for the deficiency.
(Palileo vs Cosio, 51 O.G. 6181).

Union Mortgage Clause creates the relation of
insured and insurer between the mortgagee and
the insurer independent of the contract with the
mortgagor. In such case, any act of the
mortgagor can no longer affect the rights of the
mortgagee (Sec. 9), since the purpose of the
union mortgage clause is to provide an
independent contract between the mortgagee
and the insurer so that the mortgagee will be
responsible only for his own acts. (Fidelity
Phoenix Ins. Co v Bronnan, 158 A. 124, 85 N.H.
291).
When he has such a relation or connection
with, or concern in, such subject-matter
that he will derive pecuniary benefit or
advantage from its preservation or will
suffer pecuniary loss or damage from its
destruction, termination, or injury by the
happening event insured against. (Sandins
Admx v Allen. 90 S.W. 350, 262)

If the person procuring insurance has no
insurable interest in the subject-matter of
the insurance, the contract is void. This is a
consequence of the principle that
insurance is a contract of indemnity. If the
insured has no insurable interest in the
subject-matter of the insurance, he will not
stand to suffer any loss or damage by the
happening of the event insured against.
Every person has insurable interest on the life
and health:
a. Of himself, of his spouse and of his
children;
b. Of any person on whom he depends wholly
or in part for education or support, or in whom
he has a pecuniary interest;
c. Of any person under a legal obligation to
him for the payment of money, or respecting
property or services, of which death or illness
might delay or prevent the performance; and
d. Of any person upon whose life any estate
or interest vested in him depends.
Insurable interest in life exits when
there is reasonable ground founded
on the relation of the parties, either
pecuniary or contractual or by blood
or affinity, to expect some benefit
from one another. (44 C.J.S. 903; 3
Couch 2d)
Insurable interest in life must exist at the time of
the effectivity of the policy and need not exist at
the time of death of the insured, as life insurance
is not a contract of indemnity. However,,
insurable interest of a creditor on the life of the
debtor must exist not only at the time the policy
takes effect but also at the time of the debtors
death, for such kind of life insurance is a contract
of indemnity. (3 Couch 2d., 230).
Anyone may be designated as beneficiary in life
insurance except those who are forbidden by law to
receive donation from the insured such as:
1. Those made between persons who are guilty
of adultery or concubinage at the time of the
designation.
2. Those made between persons found guilty of
the same criminal offense, in consideration thereof.
3. Those made to a public officer or his wife,
descendants and ascendants, by reason of his
office. (Art. 739, Civil Code)
Criminal conviction for the
disqualifying offense is not required.
The guilt of the insured and the
beneficiary may be proven by
preponderance of evidence in the
same action for declaration of nullity
of the designation. (Insular Life Assur.
CO., Ltd vs Ebrado 80 SCRA 161).
The disqualification of persons guilty of
adultery or concubinage does not extend to
the illegitimate children born out of illicit
relation between the parties to the adultery
or concubinage. As a matter of fact, both the
Civil Code and the Family Code recognize
certain successional rights of illegitimate
children. (Southern Luzon Employees
Association vs Golpeo, 95 Phil. 83, 87; Art.
287, Civil Code; Art. 176, Family Code).
The insured may name anyone he chooses as
beneficiary in his life insurance, even though he is a
stranger and has no insurable interest in the life of the
insured except those disqualified to receive donations
under Art. 739 of the Civil Code. (4 Couch 2d., 504).
However, such designation should be made in good
faith without fraud or intent to enter into a wagering
contract. Thus, the policy is not valid if it was procured
by the insured on the inducement of the beneficiary
for the purpose of enabling the latter to effect
insurance on the life of a person in whom he has no
insurable interest and thereby evade the law against
speculative and wagering insurance. (44 C.J.S. 901).
The policies were void for reasons of
public policy. Said policies belonged to
the wagering or speculative classes
designed to perpetrate a massive
fraud against the insurance
companies. (The Lincoln National Life
Ins. Co vs San Juan, CA-G.R. Nos.
34586-88-R, May 27, 1971).
The life insurance
proceeds should accrue to
the estate of the insured.
(Insular Life vs. Ebrado, 80
SCRA 181).
The insured shall have the right to
change the beneficiaries he
designated in the policy, unless he has
expressly waived this right in the
policy. (Sec. 11). If the right to change
the beneficiary has been waived, the
beneficiary becomes an irrevocable
beneficiary.
An irrevocable beneficiary has a vested interest in the policy
which can not be taken away from him without his consent.
Should the insured discontinue paying premiums, the
beneficiary may continue paying. In such case, the insured
may not even obtain a policy loan or cash surrender value on
the policy without the consent of the irrevocable beneficiary.
(Nario vs. Phil-Am Life Ins. Co., 20 SCRA 434). When a minor,
however, was designated as irrevocable beneficiary and the
interest of the minor in the policy does not exceed Twenty
thousand pesos (P 20, 000.00), his consent may be given by
his judicial guardian or in the absence of one, by his father or
mother. (Sec. 180, par. 3).
The petition should be denied. It
is only with the consent of all the
irrevocable beneficiaries that a
change of beneficiaries. (Phil-Am
Life Ins. Co vs Pineda, 175 SCRA
416).
The interest of the beneficiary in endowment
policy is a contingent one, and the benefits of
the policy will only accrue to such beneficiary
in case the assured dies before the end of the
period designated in the policy. If the insured
survives the endowment period, the benefits
are payable to him or his assignee,
notwithstanding, the designation of a
beneficiary in the policy. (Villanueva vs Oro,
81 Phil. 464).
It depends. If the beneficiary who predeceases
the insured is irrevocable, the legal
representatives of such beneficiary are entitled
to the proceeds of the insurance unless the
proceeds were made payable to the beneficiary
only if living. On the other hand, where the
beneficiary is revocable, the right to the
proceeds passes to the estate of the insured
where the proceeds were payable to the
beneficiary if living or if surviving, and he
died before the insured death. )4 Couch 2d.;
Vance, 2d., ed., 604).
All rights, title and interest
in the policy shall
automatically vest in the
minor. (Sec. 3, par. 5).
The interest of a beneficiary in a life
policy shall be forfeited when the
beneficiary is the principal, accomplice
or accessory in willfully bringing about
the death of the insured; in which event,
the nearest relative of the insured shall
receive the proceeds of said insurance if
not otherwise disqualified. (Sec. 12)
No. The killing of the insured by the
beneficiary must not only be willfully done
but it must likewise be felonious so that the
interest of the beneficiary in the policy would
not be forfeited. Hence, where the killing was
unintentional or not felonious, the
beneficiary will not be denied recovery by
reason of his act causing the death of the
insured. (Hull v Metropolitan Life Ins. CO., 26
Pa. Dist. 197)
The test is whether the insured has such
a right, title or interest in property
insured that he will be benefited by its
preservation and continued existence,
or suffer a direct pecuniary loss from its
destruction or injury be the peril insured
against. (Suter vs Union Surety & Ins.
Co., Inc., 51 O.G.).
Every interest in property, whether
real or personal any relation thereto,
or liability in respect thereof, of such
nature that a contemplated peril
might directly indemnify the
insured, is insurable interest. (Sec.
13).
An existing interest;
An inchoate interest founded on
an existing interest; or
An expectancy, coupled with an
existing interest in that of which
the expectancy arises. (Sec. 14).


The buyer, B has insurable interest to the
extent of the down-payment because in
case the house is destroyed he will suffer a
loss equivalent to the payment already
made. S, the seller who has a lien for the
balance unpaid has insurable interest to the
extent of the balance unpaid. (Robinson vs
Wade, 127 So. 170, 220 Ala. 693).
Inchoate interest is an interest in real estate which is
not a present interest, but which may ripen into a
vested interest, if not barred, extinguished or
divested. For example, a stockholder in a
corporation owning ship, cargo or other property
has an inchoate interest in such corporate property
which is founded on an existing interest which gives
him insurable interest in the said property to the
extent of hi shares. (Seamen v Enterprise Fire &
Marine Ins. Co., 21 F. 778)
Expectancy to be insurable
must be coupled with an
existing interest (Sec. 14) or
founded on an actual right to
the thing nor upon any valid
contract for it. (Sec. 16)
A son has no insurable interest in the
property of his father as his interest in such
property is a mere expectancy not founded
on an actual right or a valid contract for it.
(Baldwin v State Ins. Co., 15 N.W. 300);
The owner of a parcel of land has insurable
interest on expected crops even before they
are sown (3 Couch 2d);
The owner of a ship has insurable interest on
expected freightage (2 Joyce 2d).
Insurable interest in property is based on pecuniary interest while
in life, the interest need not necessarily be strictly and exclusively
a pecuniary one, as in case of consanguinity or affinity;
In property insurance, the interest must exist at the time the policy
takes effect and at the time of the loss, while in life insurance,
interest need exist only at the time the insurance takes effect,
(Sec. 15 and Sec. 19) except insurance taken by a creditor on the
life of the debtor wherein interest must also exist at the time of
the loss; and
Insurable interest in property is limited to the actual value of the
damage the insured may suffer, while in life there is no limit on the
amount of insurable interest unless it is based on creditor-debtor
relationship. (1 Couch 2d).
The measure of insurable interest in
property is the extent to which the
insured might be indemnified by loss
or injury thereof. Said principle
however, applies only to property
insurance and not to life insurance
which is not regarded as a contract of
indemnity.
Yes. No contract or policy of insurance
on property shall be enforceable except
for benefit of some person having an
insurable interest in the property
insured. (Sec. 18). This principle does not
apply to life insurance wherein insurable
interest on the part of the beneficiary is
not necessary.
B cannot enforce the insurance contract
since he has no insurable interest in the
property insured. A, the insured may
recover from the insurer because what is
unenforceable is only the designation as
beneficiary of a person who has no
insurable interest in the property, and
not the entire policy itself. (Sec. 18).
CKS had no insurable interest on the insured
merchandise and therefore, it cannot be
designated as beneficiary in the fire insurance
policy taken by Cha. Thus, the insurer cannot
be compelled to pay the proceeds of the
policy to CKS. The proceeds of the said
insurance rightfully belong to Cha. (Cha vs
Court of Appeals, 86 SCAD 102 [1998], 227
SCRA 690)
An interest in property insured must
exist when the insurance takes effect,
and when the loss occurs, but need not
exist in the meantime; while interest in
the life or health of a person insured
must exist when the insurance takes
effect, but need not exist thereafter or
when the loss occurs. (Sec. 19).
The policy is suspended to the extent of the interest in the insurance are vested in the
same person. (Sec. 20). The following are the exceptions:

when there is a prohibition against alienation or change of interest without the
consent of the insurer, in which case, the policy is not merely suspended but
avoided;
In cases of life, accident and health insurance;
A change of interest in any part of a thing insured, after the occurrence of an injury
which results in a loss;
A change of interest, by will or succession, on the death of the insured passes the
interest in the insurance to the person taking the interest in the thing insured;
A transfer of interest by one of several partners, joint owners in common, who are
jointly insured, to the others; and
When the policy is so framed that it will inure to the benefit of whomsoever, during
the continuance of the risk may become the owner of the interest insured. (Secs.
19-24).
No one may recover from the insurer
because when Gatchalian sold the
house insured to Garcia without
effecting the transfer of the policy, the
contract of insurance was thereby
suspended. Since the loss occurred
while the policy was suspended, the
insurer was not liable.
The change of interest contemplated
by law is an absolute transfer of the
insureds entire interest in the
property insured to one not previously
interested or insured. (45 C.J.S. 318,
343, citing Hoffman v. Atena Fire Ins.
Co., 32 N.Y. 405, 80 Am. D.0337).
The insured retains insurable interest in
the property insured and therefore, the
policy is not suspended. Thus, the policy
was not suspended by the execution of a
mortgage since the interest in the
property insured did not pass by mere
execution of a mortgage (Bachrach vs
British American Assur. Co., 17 Phil. 555);
The insured retains insurable interest in
the property insured and therefore, the
policy is not suspended. Thus, a lease of
the insured property is not a case of
alienation or change of title of interest in
the property insured (Krieg v Phoenix
Ins. Co. of Hartford, Conn. 185 A. 2125,
116 N.J. Law 467);
The insured retains insurable interest in
the property insured and therefore, the
policy is not suspended. Thus, a
judgment debtor whose property has
been sold on execution retains insurable
interest therein until the right to redeem
or have the sale set aside has been lost
(44 C.J.S. 881);
The insured retains insurable interest in the
property insured and therefore, the policy is
not suspended. Thus, a mortgagor whose
property has been foreclosed still has
insurable interest on such property for he
retains the equity or right of redemption.
Such interest is terminated only by a failure
to redeem within the specified time (44 C.J.S.
883);
The insured retains insurable interest in
the property insured and therefore, the
policy is not suspended. Thus, a vendor
who has a lien on the property sold until
the purchase price is paid or the
conditions of the sale are performed
retains insurable interest is such
property. (44 C.J.S. 886).
Insurance policies upon life, accident or
health are not regarded as contracts of
indemnity and therefore, insurable interest
need exist only at the time the insurance is
effected. (Secs. 19 and 20). Accordingly,
the loss of insurable interest at the time of
the happening of the event insured against
will affect the right of recovery from the
insurer.
The insurer was liable only for the loss of
house No. 12 since the sale of house No. 10
did not affect the insurance as to house
No. 12. however, the insurer was not liable
for the loss of house No.010 since the
policy was suspended insofar as No. 10
was concerned because the sale thereof
was not accompanied by a transfer of
interest in the policy.
The policy was not suspended
because transfer of interest by one of
the co-owners to another will not
suspend the policy. (Sec. 24).
However, if A sold his interest to X, a
third person, the policy is suspended
insofar as the interest sold is
concerned.
In the following cases, a transfer of interest in the thing insured
carries with it a transfer of the policy:

1. when by express stipulation of the parties, the policy is made to
run with the subject-matter, or the contract is so framed as to
attach the risk inseparably to the property, as where the insurance is
on account of the owners of for whom it may concern or where
the loss is payable to bearer (1 couch 2d., 35 & Sec. 57);
2. A change of interest, by will or succession, on the death of the
insured, passes the interest in the insurance to the person taking his
interest in the thing insured (Sec. 23);
3. Transfer of interest by one of several partners, joint owners, or
owners in common who are jointly insured, to the others. (Sec. 24).
The buyer may recover because the transfer
of the thing insured need not be
accompanied by the transfer of the policy, as
it was so framed that it will inure to the
benefit of whomsoever during the
continuance of the risk may become the
owner of the interest insured. (San Miguel
Brewery vs Law Union and Rock Insurance
Co., 40 Phil. 674).
Where a policy is suspended by the transfer of
interest in the thing insured unaccompanied by a
corresponding transfer of interest in the
insurance, the insurance is revived when the
interest in the thing and the interest in the
insurance are vested in the same person again.
(See Sec. 20). This may occur by the assignment
of the policy to the transferee of the property
insured or by the reacquisition by the insured of
the property previously transferred.
Void stipulations in an insurance contract:
a. for the payment of loss, whether the
person insured has or not any insurable
interest in the subject-matter of insurance,
or
b. that the policy shall be received as proof
of such interest, and
c. Every policy executed by way of gaming
or wagering is void. (Sec. 25).
Waiver could not validate the policy so
as to permit recovery, since the policy
was illegal as against public policy. Aside
therefrom, the policy was void for lack
of insurable interest and such ground of
objection cannot be waived. (Elmoro v
Life Ins. Co. of Virginia, 198 S.E. 5, 187
S.C. 504).
Concealment is a neglect
to communicate that
which a party knows and
ought to communicate.
(Sec. 26)
The party claiming the existence of concealment
must prove that there was knowledge of the fact
concealed on the part of the party charged with
concealment. Thus, where the insured stated
that there was no hereditary taint on either side
of the family to my knowledge, in order to
show concealment, the insurer must prove that
the hereditary taint alleged to exist was known
to the insured. (Northwestern Mut. L. Ins. Co. v
Griely, 100 U.S. 614).
To be guilty of concealment, a party must have knowledge
of the fact concealed at the time of the effectivity of the
policy. Even if a party did not know of the existence of a
material fact at the time of the application but acquired
knowledge thereof after the application but before the
effectivity of the policy, he is guilty of concealment should
he fail to communicate such fact to the other. There is a
continuing duty on the part of the applicant to disclose
newly discovered matters arising between the application
for, and the effectivity of the policy, where they come to
the applicants knowledge and render his former answers
n longer true. (9 Couch 2d., 346-347).
Failure to communicate information acquired
after the effectivity of the policy will not be a
ground to rescind the contract on the ground of
concealment. After the policy has taken effect,
information subsequently acquired could no
longer be material as it will not influence the
other party anymore to enter into such contract.
(9 Couch 2d., 352; Vance 2d., 349). However, in
case of reinstatement of a lapsed policy, facts
known after effectivity of the policy but before
its reinstatement must be revealed if material.
The insurer was not liable
because concealment of material
facts before reinstatement of a
lapsed policy entitled the other
to rescind the contract. (Henson
vs Philam Life Ins. Co., 56 O.G.
7329).
A concealment whether intentional or unintentional
entitles the injured party to rescind a contract of
insurance. (Sec. 27). If concealment must be
intentional to entitle the injured party to rescind,
the latter will be wholly at the mercy of anyone who
wished to apply for insurance, as it would be
impossible to show actual fraud except in extreme
cases. In such case, there would be no incentive to
an applicant to tell the truth. (Saturnino vs Phil-Am
Life Ins. Co., 7 SCRA 316,319).
The insurer is not liable. Had Ngo Hing
divulged that his daughter was a Mongoloid
child, the insurer would have disapproved the
application. His daughters physical defect
could not be disguised and Ngo Hings failure
to disclose the same was concealment which
relieved the insurer of any liability. (Great
Pacific Life Assurance Co. vs Court of Appeals,
89 SCRA 543).
Such facts must be within his
knowledge
Must be material to the contract
The other party has not the means
of ascertaining such fact; and
He makes no warranty as to such
facts. (Sec. 28).
It is not necessary to communicate or
disclose matters concerning which the
insured makes a warranty, express or implied.
The reason is that where a fact is covered by a
warranty, express or implied, it is superfluous
to require disclosure. (3 Joyce 2975).
However, when a fact proves or tends to
prove the falsity of a warranty, it must be
revealed to the other. (Sec. 29).
Neither party to a contract of insurance is bound to
communicate information of the matters following,
except in answer to the inquiries of the other:
a. Those which other knows;
b. Those which, in the exercise of ordinary care, the
other ought to know, and of which, the former has no
reason to suppose him ignorant;
c. Those which prove or tend to prove the existence
of a risks excluded by a warranty, and which are not
otherwise material; and
d. Those which relate to a risk excepted from the
policy and which are not otherwise material. (Sec. 30)
The insurer is liable because any information material to
the risk, either possessed by the agent at the time of the
transaction or acquired by him before its completion, is
deemed to be knowledge of the principal at least in so far
as the transaction is concerned even though the
information is not communicated to the principal at all.
(Leonor vs Filipinas Cia. de Seguros, CA-G.R. No. 3659-R,
January 10, 1950). Knowledge therefore, of the insurers
agent is knowledge of the insurer. (Insular Life vs
Feliciano, 73 Phil. 201). However, where the insurers agent
fraudulently conspired with the insured, knowledge of the
agent will not bind the insurer. When such conspiracy
exists, the insurer is not liable. (Insular Life Assur. Co. vs
Feliciano, 74 Phil. 468).
Such omission will not
avoid the policy for the
insurers agent knew the
fact that was not revealed.
(9 Couch 2d., 344-345).
(a) All the general causes which are
open to his inquiry, equally with that
of the other, and which may affect
either the political or material perils
contemplated, and
(b) all general usages of trade. (Sec.
32).
Information need not be revealed to the other
where communication thereof was waived.
Waiver of information may either be:
Express, when made by the terms of the
insurance or contained in the policy; or
When there was neglect to make inquiry as
to such facts distinctly implied from other
facts of which information is communicated.
(Sec. 33).
Where an application for insurance is made in writing, and the questions
therein as to material facts are unanswered or incompletely answered,
and the insurer without further inquiry issues the policy, it thereby
waives all right to a disclosure, or to a more complete answer with
respect to the fact which the unanswered question relates, and the policy
cannot be avoided on the ground of concealment. (Aranilla vs Insular Life
Ins. Co., Ltd., CA-G.R. No. 374-R, Dec. 22, 1971; 9 Couch 2d., 382-383).
However, where the answer of the applicant to a direct question of the
insurer purports to be a complete answer to the, any substantial
misstatement or omission to the answer avoids a policy issued on the
faith of the application. (Aranilla vs Insular Life Ins. Co., supra). For
example, if one applying for insurance upon a building against fire is
asked whether the property is encumbered, and for what amount, and
his answer discloses only one mortgage, when in fact there are two the
policy issued thereon is avoided. But if to the same question he merely
answers that the property is encumber, without stating the amount of
encumbrance, the issuance of the policy
The present law has expanded the coverage of
marine insurance so as to include risks that would,
otherwise, have been classified as some other form
of insurance .
Thus, the present law includes within the
coverage of marine insurance risks not connected
with marine navigation such as insurance of
aircraft, goods while being packed or assembled,
injury to passengers, precious stones, jewels,
jewelry whether in the course of transportation or
not. (Sec. 99).
Perils of the sea - all kinds of marine
casualties and damages done to the ship or
goods at sea by the violent action of the
winds or waves, one that could not be
foreseen and not attributable to the fault of
anybody.
Perils of the ship, on he other hand, are
losses or damages from:
(a) natural and inevitable action of the sea;
(b) ordinary wear and tear of the ship; or
(c) negligent failure of the ships owner to provide
the vessel with proper equipment to convey the
cargo under ordinary condition. (Go Tiaco y Hnos
vs Union Ins. Society of Canton, 40 Phil. 40).

Cathay Ins., vs Court of Appeals
151 SCRA 710

Rusting of steel pipes in the course of a voyage is
a peril of the sea in view of the toll on the cargo of
wind, water and salt conditions.
Go Tioco y Hnos. vs Union Ins. Society of Canton
40 Phil. 40

Unless otherwise stated in the policy, loss due to
perils of the ship is not within the coverage of
marine insurance. A marine policy in the usual
form, therefore, includes only perils of the sea
and not perils of the ship, and accordingly, a
marine insurer upon a policy in the usual form is
not liable for a loss caused by a peril of the ship.
Go Tioco y Hnos. vs Union Ins. Society of Canton
40 Phil. 40

The insurer is not liable for the cause of the
loss was a peril of the ship and not peril of the
sea. The defect in the pipe was the result of
the ordinary use of the ship that was lacking
of necessary repairs.
Insured improperly loaded logs covered by marine insurance on
board a barge. The barge sank due to improper loading of the logs
and leaks because the barge was not provided with necessary
cover or tarpaulin so that ordinary splash of sea waves brought
more water inside the barge. Was the cause of the damage a peril
of the sea for which the insurer could be made liable?

The cause of the loss was a peril of the ship; therefore, the insurer
was not liable. A loss which, in the ordinary course of events, results
from the natural and inevitable action of the sea, from the ordinary
wear and tear of the ship, or from the negligent failure of the ships
owners to provide the vessel with proper equipment to convey the
cargo under ordinary conditions, is not peril of the sea.
Roque vs Intermediate Appeal Court, 139 SCRA
596

Since the law provides for an implied warranty of
seaworthiness in every contract of ordinary marine
insurance, it becomes the obligation of a cargo
owner or insured to look for a reliable common
carrier which keeps its vessels in seaworthy
condition. The insured may have no control over the
vessel but has full control in the choice of the
common carrier that will transport his goods.
Filipino Merchant Ins., Co., Inc. vs CA, 179 SCRA
638; ChoaTiek eng vs CA , 183 SCRA 223

A marine insurance policy providing that the insurance
was against all risks must be construed as creating a
special insurance and extending to other risks than
are usually contemplated, and covers all losses
except such as may arise from the fraud of the
insured, intentional misconduct on the part of the
insured or, otherwise, excluded in the policy. It covers
all losses during the voyage whether arising from a
marine peril or not, including pilferage losses during
war.
Insured imported lactose crystals which he insured against all risks. Upon
arrival of the cargo in Manila, out of 600 bags, 403 were in bad order due
to spillage. The insured filed a claim with the insurer which refused to pay
on the ground that the cause of the damage was not a peril of the sea but
a peril of the ship . Insurer further claimed that a loss under an insurance
against all risks will be covered by the policy only if caused by fortuitous
event which did not occur in this case.
Was the contention of the insurer correct?
HELD:
No. An insurance against all risks covers all losses during the voyage
whether arising from a marine peril or not, including pilferage losses
during war. The insurer can avoid coverage only upon demonstrating that
a specific provision expressly excludes the loss by pilferage from
coverage, otherwise, the insurer liable.

The insured cargo was loaded on a vessel that was
arrested and detained at an intermediate port by civil
authorities because of a lawsuit on a question of
ownership and possession of the ship. As a result, the
insured cargo had to be sold at a loss because of its
perishable nature. The policy included among the risks
covered seizure, arrest, restraint or detainment. The
insurer refused to pay the loss on the ground that the
arrests covered by the policy were those arising from
political or executive acts, and the arrest of the vessel by
judicial authorities was excluded.
Was the contention of the insurer correct?

HELD:

Wrong. If the risk of arrest occasioned by ordinary
judicial process was expressly indicated as an
exception in the policies, there would have been no
controversy with respect to the interpretation of the
subject clauses. Exceptions to the general coverage
are construed most strongly against the insurer. Since
the term arrest did not exclude an arrest ordered by
judicial authorities, then the policy must be construed
so as to include the same within the coverage.

The owner of a ship has in all cases an
insurable interest in it, even when it has been
chartered by one who covenants to pay him its
value in case of loss; provided, that in this case,
the insurer shall be liable for only that part of the
loss which the insured cannot recover from the
charterer. (Sec. 100).

Art. 719, Code of Commerce

A loan in which under any condition whatever, the
repayment of the sum loaned, and of the premium
stipulated, depends upon the safe arrival in port of
the goods on which it is made or of the price they
may receive in case of accident.

It is a loan on bottomry when the security is a
vessel, and respondentia when the security is
cargo.

Only the excess of its value over the amount
secured by bottomry is lost. (Sec. 101).

The reason is that when the vessel
hypothecated by bottomry is lost, the owner
need not pay the loan on bottomry and,
therefore, he is benefited to the extent of the
amount of the loan obtained and actually the
loss he suffers is only the difference between
the actual value of the vessel and the loan
on bottomry.

Cassa Maritima v Phoenix Ins. Co.,
N.E. 962, 129 N.Y. 490

Yes, to the extent of the amount of the loan
granted for the reason that the loss of the vessel
or cargo hypothecated by way of bottomry or
respondentia produces the extinguishment of
the loan and therefore, the lender stands to
suffer by the loss of the vessel or cargo.

In ordinary insurance, opinion or belief of a third person or the
own judgment of the insured is not material and need not be
communicated (Sec. 35), while in marine insurance
information of the belief or expectation of a third person in
reference to a material fact, is material and must be
communicated to the other party (Sec. 108);


In ordinary insurance, causal connection between the fact
concealed and the cause of the loss is not necessary to
entitle the other party to rescind the contract. (Henson vs
Phil. Am. Life Ins., Co., 56 O.G. 7328; Sec. 31)., while in
marine insurance, concealment of any of the matters
mentioned in Sec. 110 exonerates the insurer only if the loss
resulted the risk concealed.


Sec. 110 , Insurance Code

The national character of the insured;

The liability of the thing insured to capture and detention;

The liability to seizure from breach of foreign laws of trade;

The want of necessary documents; and

The use of false and simulated papers.
If a representation by a person insured by
a contract of marine insurance is
intentionally false in any material respect,
or in respect of any fact on which the
character and nature of the risk depends,
the insurer may rescind the entire
contract. (Sec. 11).
The ship is seaworthy;

No improper deviation from the voyage will be made;

The vessel will not engage in illegal venture; and

Where nationality or neutrality of a ship or cargo
expressly warranted, it is implied that the ship will carry
the requested documents to show such nationality or
neutrality and will not carry any document which cats
reasonable suspicion thereon. (Secs. 113, 120, 123, and
125).
A ship is seaworthy, when reasonable fit to
perform the services, and to encounter the
ordinary perils of the voyage
contemplated by the parties to the policy.
(Sec. 114).
Richelieu & O. Nav. Co. v Boston M. Ins.
Co., 136 U.S. 408, 10 Sup. Ct. Rep., 934

Whenever the vessel is unseaworthy, the
insurer will not be liable for a loss
occasioned thereby whether such fact
was known or unknown to the insured.
The insured loaded on board a vessel 7,500 cases of soft
drink bottles to be transported from Zamboanga to Cebu City.
Said cargo was covered by marine insurance. The vessel
was top-heavy as 2,500 cases of soft drink bottles were
improperly stowed on deck. The inordinate loading of cargo
on deck resulted in the decrease of the vessels metacentric
height, thus, making it unstable.

As a result, the vessel sank bringing down the entire cargo.
The insurer refused to pay on the ground that the vessel was
unseaworthy for purposes of carrying its cargo. The insured
on the other hand, claimed that he had no control as to how
his cargo would be loaded on the vessel. Was the insurer
liable?

Insurer not liable. In every marine insurance, the
insured impliedly warrants to the insurer that the
vessel is seaworthy and such warranty is as much
a term of the contract as if expressly written on
the face of the policy.

It is the obligation of the cargo owner who insures
his cargo to look for a reliable common carrier
which keeps its vessel but he has full control in
the selection of the common carrier that will
transport his goods. Hence, the insurer can not be
made liable unless there is a waiver of
seaworthiness of the vessel.

As a general rule, seaworthiness of the vessel required
only at the commencement of the risk, except in the
following cases:

a) When the insurance made for a specific period, in
which case, the vessel must be seaworthy at the
commencement of every voyage she may undertake
during such period;

a) When the insurance is upon cargo required to be
transhipped at the intermediate port, in which case,
each vessel upon which the cargo is shipped, or
transhipped, must be seaworthy at the commencement
of each particular voyage; and

a) Where different portions of the voyage
contemplated by the policy differ in respect to
things to make the sip seaworthy, in which
case the ship must be seaworthy at the
commencement of each portion with reference
to that portions. (Secs. 115 and 117).

As a general rule, seaworthiness of the vessel is
necessary only at the commencement of the
risk, and therefore, the insured does not warrant
that the ship will be seaworthy during the entire
voyage or throughout the life of the policy.
Accordingly, if a vessel is seaworthy at the
inception of the voyage, subsequent
unseaworthiness does not avoid the policy. (9
Couch 2d., 242).

When a ship becomes unseaworthy during the
voyage to which an insurance relates, an
unreasonable delay in repairing the defect
exonerates the insurer from liability from any
loss arising therefrom. (Sec. 118).
A ship is seaworthy for the purpose of an
insurance upon the ship may, nevertheless, by
reason of being unfitted to receive the cargo be
unseaworthy for the purpose of insurance upon
the cargo. (Sec. 119)
When the voyage contemplated by a marine
insurance policy is described by the places of
beginning and ending, the course of the voyage
insured is:

The one agreed upon by the parties;

In the absence of agreement, the course of sailing is
not fixed by mercantile usage; and

If the course of sailing is not fixed by mercantile
usage, one which to a master of ordinary skill and
direction would seem the most natural, direct and
advantageous. (Secs. 121 and 122).


A departure from the course of the voyage
insured;

An unreasonable delay in pursuing the
voyage; or

The commencement of an entirely
different voyage. (Sec 123).
An insurer is not liable for any loss
happening to a thing insured subsequent
to an improper deviation (Sec. 126), even
if the risk has not increased or even it has
been apparently diminished.
Total loss may either be:
Actual total loss which is caused by:
A total destruction of the thing insured;
The irretrievable loss of the thing by sinking, being
broken up;
Any damage to the thing which renders it valueless
to the owner for the purpose for which he held it; or
Any other event which effectively deprives the
owner of the possession, at the port of destination,
of the thing insured. (Sec. 130).

Constructive total loss is one which gives to a
person insured a right to abandon. (Sec. 131).

Partial loss which is a loss other than a
total loss. (Sec. 128).

Pan Malayan Insurance Corporation
201 SCRA 282

There was actual total loss as the palay was
rendered valueless to the owner. Where a cargo
by the process of decomposition or other chemical
agency no longer remains the same kind of thing
as before, an actual total loss has been suffered.
A constructive total loss is actually a partial loss. However,
by making an abandonment in the cases provided by law,
the loss is thereby converted to a total loss.

Illustration:
A vessel valued at P100 million was insured for the said
amount. The vessel suffered damage amounting to P80
million. Although the loss was partial, upon making an
abandonment, the insured was entitled to recover to recover
the full value of the vessel, P100 million which was equivalent
to a total loss. In such case, the insurer becomes the owner
of whatever may remain of the vessel. But if no abandonment
was made, the insured may recover only P80 million.
Oriental Assurance Corporation vs C A
200 SCRA 459

In case the contract of marine insurance covers a single
shipment under one policy and one premium, the
contract of insurance is one and indivisible, and the fact
that the subject matter of insurance is loaded on board
different vessels will not alter the situation. In such case,
the constructive total loss will be determined loaded on
one vessel alone.
Simple or particular average
includes all expenses and damages caused to the
vessel or to her cargo which have not inured to
the common benefit and profit of all the persons
interested in the vessel and her cargo (Sec. 809,
Code of Commerce); or

General or gross average
includes all the damages and expenses which are
deliberately caused in order to save the vessel, its
cargo, or both at the same time, from real and
known risk. (Sec. 811, Code of Commerce).
The right to contribution arising from a general or gross
average could not be claimed unless the formal
requirements of the law are complied with. (Art. 811,
Code of Commerce).

In order to incur the expenses and cause the damage
corresponding to gross average, there must be a
resolution of the captain, adopted after deliberation with
the sailing mate and other officers of the vessels, and
after hearing the persons interested in the cargo who
may by present. The said resolution must be entered I
the log book. (Secs. 813 [par. 1], 814 [par. 1].
A Company loaded its vessel with various cargoes which
were insured. While the vessel was off Okinawa, Japan, a
small flame was detected on the acetylene cylinder located
near the engine room. The acetylene cylinder exploded
causing the death and injuries to the crew and instantly
setting fire to the vessel. The master and the crew
abandoned the ship. The cargoes which were saved were
loaded on another vessel for delivery to their ports of
destination. The formal requirements of a general or gross
average were not met.
Should the owners of the cargoes saved or their
insurance contribute to the general average?

HELD: NO.

Since the formalities of the law were not
complied with, there was no right to claim
contribution for a general or gross average loss.
If the damage to the thing insured is a particular
average, the insurer shall not be liable unless the loss
suffered is total, i.e., the insured is deprived of the whole
of such thing;

If the damage to the thing insured is a general average,
the insurer shall be liable whether the loss is partial or
total or for the contribution of the insured for his
proportion of all general average losses assessed upon
the thing insured which was saved. (Secs. 136, 164 and
165).
Abandonment, in marine insurance is the
act of the insured by which after a
constructive total loss, he declares the
relinquishment to the insurer of his
interest in the thing insured. (Sec. 138).
a partial loss becomes a total loss. (Sec. 131.);

insured is surrendering to the insurer whatever
is left of the property insured, and resorting to
the policy for indemnity; and

insurer then becomes the owner of whatever
may remain of the insured thing and the insured
may recover a total loss. (Sec. 139).
more than of the value of the thing insured is
actually lost;

more than of the value of the thing insured
would have to be expended to recover it from
the peril;

injured to such an extent as to reduce its value
by more than ;

If the thing insured a ship and the
contemplated voyage cannot be lawfully
performed without an expense to the
insured of more than of the value of the
thing abandoned;

If the thing insured, is a ship and the
contemplated voyage cannot be lawfully
performed without incurring risk which a
prudent man would not take under the
circumstances;


If the thing insured, being cargo or freightage,
and the voyage cannot be performed nor
another ship procured by the master, within
reasonable time and with reasonable diligence,
to forward the cargo, without incurring an
expense of more than of the value of the thing
or without incurring a risk which a prudent man
would not under take under the circumstances.

When abandonment is properly made, the
insured may recover a total loss, and the insurer
acquires all the interests of the insured in the
thing with all chances of recovery and indemnity.

But if the insured omits to abandon, he may
recover only his actual loss. (Secs. 146 and
155).
A valuation in a policy of marine insurance is conclusive between
the parties thereto in the adjustment of either a partial or total loss,
provided:

(a) the insured has some interest at the
risk and

(b) there is no fraud on his part. In such case, the insured
does not have to prove the value of the thing insured at
the time of the loss except when it has been
hypothecated by bottomry or respondentia before its
insurance, and without the knowledge of the person
actually procuring the insurance, in which case the real
value thereof must be shown. (Sec. 156)
Co Teng vs Goodyear Ins. Co.,
CA-G.R. No. 37777-R, October 12, 1973

If overvaluation is fraudulent, it entirely
avoids the insurance whether done at the
time of making the contract or at the time of
submitting proof of loss.

But the mere fact of overvaluation, even
though great, is not alone sufficient proof of
fraud.
It must be alleged and clearly proved by the
insurer that the insured, in overvaluing his
property, did so knowingly and with fraudulent
intent.

Overvaluation may be due to a perfectly honest,
though mistaken, estimate as to the real value
of the property insured. (Vance on Insurance, 3
rd

ed., Hornbook Series, pp.838-839)
Co-insurance is a form of insurance in which the
person who insures the property for less than
the entire value is understood to be his own
insurer for the difference which exists between
the true value of the property and the amount of
insurance. (44 C.J.S.).
In marine insurance, there is always co-
insurance (Sec. 157) while in fire insurance,
there is no co-insurance unless expressly
stipulated in the policy. (Secs. 171 and 172).

In life insurance there is no co-insurance since
the measure of indemnity under a policy of
insurance upon life or health is the sum fixed in
the policy. (Sec. 183).
Whenever co-insurance exists, the insurer is
liable upon a partial loss only for such portion of
the amount insured by him as the loss bears to
the value of the whole interest of the insured in
the property insured. (Sec. 157). It results in a
proportionate division of risk between the
insured and the insurer with the following
formula:

Loss x Insurance = Liability of Insurer
Value
Development Insurance Corp. vs IAC
143 SCRA 62

In order that the principle of co-insurance can apply,
the insurer must prove that the value of the property
insured is more than the amount of the policy obtained
or stated, otherwise, the property must be under-
insured. In case the insurer should fail to do so, there
can not be any pro rata sharing of the loss under the
policy can not exceed the face value of the policy.
The insurer is liable for P508, 867 since
that amount was proven to be actual loss
suffered by the insured. Co-insurance can
not apply as the insurer failed to prove
that the amount of insurance taken was
less than the value of the thing insured
and there, a pro rata sharing of the loss
can not apply.
Development Insurance Corp. vs IAC
143 SCRA 62).
Canson vs Phoenix Ins. Co.., 110 Ga. 583, 35 S.F.
775, 78 Am. SR. 124

The insured is entitled to recover the loss suffered
where the cause of the damage is a hostile fire, that
is, one which burns at a place where it is not
intended to be, or breaks out from where the fire
caused the loss is a friendly fire, that is, one which is
confined within the place where it was intended to
be and employed for the ordinary purpose of
lighting, heating or manufactured, recovery cannot
be had for loss or damaged caused thereby.
One which burns at a place where it is not
intended to be, or

breaks out from where the fire caused the
loss is a friendly fire, that is, one which is
confined within the place where it was
intended to be and employed for the ordinary
purpose of lighting, heating or manufactured,
recovery cannot be had for loss or damaged
caused thereby.

Damages were caused by a fire that remained at the
place where it was intended to be and accordingly,
such fire was a friendly fire for which there was no
recovery for the damage caused thereby;

Damage caused by smoke from a lamp when no
ignition occurred outside of the lamp; and

Damage done to sugar by the heat of the usual fires
employed for refining, being accumulated by the
mismanagement of the insured, who inadvertently
kept the top of their chimney closed
Alteration in the use or condition of the thing insured will entitle
the insurer to rescind the contract of insurance provided the
following requisites are present, to wit:

(a) there must be a violation of the provisions of the policy;

(b) the alteration was made without the consent of the
insurer;

(c) the alteration was made by means within the control of the
insured; and

(d) the alteration increased the risk of loss. (Secs. 168 and
169).
No. There must be a corresponding violation
of the provision of the policy otherwise there
is no right to rescind the policy.

A contract of fire insurance is not affected by
any act of the insured subsequent to the
execution of the policy, which (act) does not
violate its provisions, even though it
increases the risk and is the cause of the
loss. (Sec. 170).
Young vs Midland Textile Ins., Co., 30 Phil. 617

The right of the insurer to rescind a contract of
insurance is premised on the fact that an insured
paid premium based upon the risk at the time the
policy was issued, and when the insured does not
pay premium upon the increased risk, the insurer
is entitled to rescind the contract.
The alteration in the use or condition of the thing
insured in violation of the provision of the policy
must increase the risk of loss, otherwise, the
policy is not affected thereby.

However, although increase in the risk of loss, as
a rule is necessary, when the policy provides that
a violation of specified provisions shall avoid it,
increase in the risk of loss is not necessary to
enable the insurer to escape liability. (Sec. 75)
An alteration in the use or condition of the thing
insured must be by means within the control of
the insured so as to entitle the insurer to rescind
the contract. Thus, where the alterations were
made by a tenant of the insured without the
consent of the insured, the policy was not
thereby avoided. (Nebraska & I. Ins., Co. vs
Christienson, 45 N.W. 924, 29 Neb. 572). But a
material alteration made by a tenant with the
knowledge of the insured will forfeit the policy.
(Lyman vs State Mut. Fire Ins., Co., 14 Allen 329).
In case of open or unvalued policy, the measure
of indemnity in fire insurance is the expense it
would be to the injured to replace the thing lost
or insured in the condition in which it was not at
the time of the injury. (Sec. 171).

In case of valued policy, the valuation agreed
upon shall be conclusive between the parties in
the adjustment of the loss. (Sec. 156).
If the building or property is insured for
substantially more than its actual value at
the time of the issuance of the policy;

If during the lifetime of the corresponding
fire insurance policy more than two fires
have occurred in the same or other
premises owned or under the control of
the offender and/ or insured;

If shortly before the fire, a substantial portion
of the effects insured on a building or
property had been withdrawn from the
premises except in the ordinary course of
business; and

If a demand for money or other valuable
consideration was made before the fire in
exchange for the desistance of the offender
or for the safety of the person or property of
the victim.

is insurance covering the loss or liability
arising from accident or mishap, excluding
certain types of loss which by law or
custom are considered as falling
exclusively within the scope of other types
of insurance such as fire or marine. (Sec.
174).
A contract of suretyship is an agreement
whereby a party called the principal or obligor of
an obligation or undertaking in favor of a third
party called the obligee. (Sec. 175)
The liability of the surety shall
be joint and several with the
obligor and shall be limited to
the amount of the bond. (Sec.
176).
NASSCO vs TORRENTO, 20 SCRA 427).
No. Torrentos bound herself together
with the surety, solidarily for the
payment of the obligation and therefore,
the creditor may bring an action against
anyone of them. The surety may be
sued either alone or together with the
principal debtor.
NASSCO vs TORRENTO, 20 SCRA 427).
Generally, payment of premium is a
condition precedent for the validity of
suretyship contract or bond and therefore
unless and until the premium is pad, the
suretyship contract or bond is not valid.
However, when a bond or suretyship
contact is issued and accepted by the
oblige or creditor, said bond or suretyship
contract shall be valid and binding
notwithstanding the non-payment of
premium. (Sec. 177).

Life insurance is insurance on human
lives and insurance appertaining thereto
or connected therewith. (Sec. 179).
Is a contract to pay the insured, or a
named person or persons, a sum
periodically during life or a certain
period.
Annuity is payable during the lifetime of the
annuitant while life insurance is usually payable
upon the death of the insured;

The annuitant pays a single premium while the
insured in life insurance pays premiums by
instalments;

In annuity, the insurer undertakes to pay annuities
until the death of the annuitant, while in life
insurance, the insurer pays a lump sum upon the
death of the insured.
In a life insurance policy where death by the insured by
assault or murder, or intentional killing is excepted
from its coverage, the mere fact that the insured
suffered a violent death by the hands of another person
will not necessarily relieve the insurer of liability. The
insurers liability in such case will depend on whether
the insureds death was intended or not.
If the insured was killed by another person
intentionally the insurer is not liable.

But where the insured was not an
intended victim of a felonious assault, the
insurer is still liable.
Ojeda then sought help from a policeman
who prompted Basilio to come along. While
they were standing in front of the main gate
of Ojedas residence, a robber fired a shot
that hit Basilios abdomen and caused his
death. The insurer refused to pay proceeds
of the policy on the ground that Basilios
death was caused by murder or assault and
therefore, excepted from the policy.
Was the insurer liable?

Yes. There was no proof that Basilios death
was caused by murder or assault nor can it be
said that the killing was intentional for there was
possibility that the robber fired the shot merely
to scare away the people around and not
necessarily to kill the victim. It cannot be
pretended that the robber aimed at the
deceased precisely because he wanted to take
his life.

Burt vs Union Cent. L. Ins. Co.,
187 U.S. 362, 23 Sup. Ct. 139

A policy of life insurance does not insure against
the legal execution of the insured for crime even
though he may in fact have been innocent, and,
therefore, unjustly convicted and executed.
YES, but only when it is committed after
the policy has been in force for a period of
two years from the date of its issue or of
its last reinstatement, unless the policy
provides a shorter period; provided,
however, that SUICIDE committed in the
state of insanity shall be compensable
regardless of the date of commission.
(Sec. 180-A).
Edralin vs Insular Life Co., Ltd., [CA] 73
O.G. 976

The basic instinct of self-preservation
militates against the commission of
suicide. Hence, it is incumbent upon a
party alleging suicide as a defense,
especially in actions involving insurance
policies to prove it by clear and
convincing proof.
However, where the proceeds are payable
to an irrevocable beneficiary and not to
the conjugal estate of the person whose
life was insured although the premiums
were paid out of conjugal funds.
Industrial life insurance shall not lapse for non-
payment of premiums if such non-payment was due
to failure of the insurer to send its representative or
agent to the insured at the residence of the insured
or some other place indicated by him for the
purpose of collecting such premium. However, this
does not apply when the premium on the policy
remains unpaid for a period of three months or
twelve weeks after the grace period has expired.
(Sec. 229, par.2).
A policy insurance upon life or health
may pass by transfer, will or
succession to any person, whether
he has an insurable interest or not,
and such person may recover upon it
whatever the insured might have
recovered. (Sec. 181).
Notice to an insurer of a transfer or
bequest thereof is not necessary to
preserve the validity of a policy of
insurance upon life of health, unless
thereby expressly required. (Sec.
182).
If the designation of the beneficiary is irrevocable, the
consent of such beneficiary to the assignment of the
policy must be obtained since the beneficiary in such
case has a vested right on the policy that cannot be
defeated by an assignment or transfer without his
consent. (Morgan vs Penn. Mut. Life Ins., Co. 94 F.
2d., 129).

On the other hand, the consent of the beneficiary to
an assignment of the policy is not necessary where
the beneficiary is revocable for such case the
beneficiary has no vested right as the insured may still
change him. (Aetna Life Ins., Co. vs Philipps, 39 F.
2d., 901; Sec. 11).


He need not have. (Sec. 181).

However, assignment of a policy should not be used
to circumvent the provision of the law prohibiting
insurance without insurable interest.

An assignment of a policy of life insurance to one
without insurable interest on the life of the insured
may invalidate the policy where the assignment is
substantially contemporaneous with the issuance of
the policy and made with intent to evade the rule
against wagering contracts, but where the assignment
is made in good faith, the fact that it is made its
inception.

Unless the interest of a person insured is
susceptible of exact pecuniary
measurement, the measure of indemnity
under a policy of insurance upon life or
health is the sum fixed in the policy. (Sec.
183).
By reason of this rule it has been said that
life insurance contract is a valued policy.
(1 Joyce, 133).

However, when the insurable interest is
susceptible of pecuniary estimation, then
the amount of the loss suffered should be
the basis of payment as in the case of
insurance procured by a creditor on the
life of the debtor, for then, life insurance of
such nature is a contract of indemnity. (1
Joyce, 134).