I.

PROPERTY INSURANCE v. LIFE INSURANCE

LIFE INSURANCE There is no specific value because ou canno! place a value in !he life of a hu"an bein# Insurable in!eres! "us! e%is! a! !he !i"e of !he perfec!ion of !he con!rac! The beneficiar nee& no! have an insurable in!eres! over !he life of !he insure&.

PROPERTY INSURANCE The a"oun! of insurable in!eres! is e$uivalen! !o !he value of !he proper! . Insurable in!eres! "us! e%is! a! !he !i"e of !he perfec!ion of !he con!rac! an& a! !he !i"e of !he loss The beneficiar &esi#na!e& shoul& have insurable in!eres! over !he proper! insure&.

II.

INSURA'LE INTEREST

A. (ESI)NATION OF 'ENEFICIARIES SEC. *+. The insurance procee&s shall be applie& e%clusivel !o !he proper in!eres! of !he person in ,hose na"e or for ,hose benefi! i! is "a&e unless o!her,ise specifie& in !he polic . The &esi#na!ion of !he beneficiar is #enerall revocable. If !he insure ,an!s !he &esi#na!ion !o be irrevocable- !he irrevocable na!ure shoul& be e%pressl provi&e& for in !he polic . 'asis. SEC. //. The insure& shall have !he ri#h! !o chan#e !he beneficiar he &esi#na!e& in !he polic - unless he has e%pressl ,aive& !his ri#h! in sai& polic . No!,i!hs!an&in# !he fore#oin#- in !he even! !he insure& &oes no! chan#e !he beneficiar &urin# his life!i"e- !he &esi#na!ion shall be &ee"e& irrevocable. FOREFEITURE OF RI)0TS OF 'ENEFICIARY. SEC. /1. The in!eres! of a beneficiar in a life insurance polic shall be forfei!e& ,hen !he beneficiar is !he principal- acco"plice- or accessor in ,illfull brin#in# abou! !he &ea!h of !he insure&. In such a case- !he share forfei!e& shall pass on !o !he o!her beneficiaries- unless o!her,ise &is$ualifie&. In !he absence of o!her beneficiaries- !he procee&s shall be pai& in accor&ance ,i!h !he polic con!rac!. If !he polic con!rac! is silen!- !he procee&s shall be pai& !o !he es!a!e of !he insure&. (IS2UALIFICATION OF 'ENEFICIARY.

An person ,ho is forbi&&en fro" receivin# an &ona!ion un&er Ar!. 3+4 canno! be na"e& beneficiar of a life insurance polic an& canno! "a5e an &ona!ion !o hi" accor&in# !o sai& ar!icle. RATIONALE. A beneficiar is li5e a &one- because fro" !he pre"iu"s of !he polic ,hich !he insure& pa s ou! of liberali! - !he beneficiar ,ill receive !he procee&s or profi!s of sai& insurance. I! is foun&e& upon !he sa"e consi&era!ion ,hich is- Liberali! . (IS2UALIFIE( 'ENEFICIARIES. /. Those "a&e be!,een persons ,ho ,ere #uil! of a&ul!er or concubina#e a! !he !i"e of !he &ona!ion6 1. Those "a&e be!,een persons foun& #uil! of !he sa"e cri"inal offense in consi&era!ion !hereof6 +. Those "a&e !o a public officer or his ,ife- &escen&an!s an& ascen&an!s b reason !hereof. 7Convic!ion is no! necessar in or&er for one !o be &is$ualifie& &ue !o a&ul!er or concubina#e. 0EIRS OF 8ARA8A) v. 8ARA8A). ).R. The onl persons en!i!le& !o clai" !he insurance procee&s are ei!her. !he insure&- if s!ill alive6 or !he beneficiar - if !he insure& is alrea& &ecease&- upon !he "a!ura!ion of !he polic . E9CEPTION. :here !he insurance con!rac! ,as in!en&e& !o benefi! !hir& persons ,ho are no! par!ies !o !he sa"e in !he for" of favorable s!ipula!ions or in&e"ni! . In such a case- !hir& par!ies "a &irec!l sue an& clai" fro" !he insurer. Pe!i!ioners- as le#i!i"a!e chil&ren- are !hir& par!ies !o !he insurance con!rac!s ,i!h Insular an& )repalife an&- !hus- are no! en!i!le& !o !he procee&s !hereof. Accor&in#l - respon&en!s Insular an& )repalife have no le#al obli#a!ion !o !urn over !he insurance procee&s !o pe!i!ioners. The revoca!ion of Eva as a beneficiar in one polic an& her &is$ualifica!ion as such in ano!her are of no "o"en! consi&erin# !ha! !he &esi#na!ion of !he ille#i!i"a!e chil&ren as beneficiaries in Lore!o;s insurance policies re"ains vali&. 'ecause no le#al proscrip!ion e%is!s in na"in# as beneficiaries !he chil&ren of illici! rela!ionships b !he insure&- !he shares of Eva in !he insurance procee&s- ,he!her forfei!e& b !he cour! in vie, of !he prohibi!ion on &ona!ions un&er Ar!icle 3+4 of !he Civil Co&e or b !he insurers !he"selves for reasons base& on !he insurance con!rac!s- "us! be a,ar&e& !o !he sai& ille#i!i"a!e chil&ren- !he &esi#na!e& beneficiaries- !o !he e%clusion of pe!i!ioners. I! is onl in cases ,here !he insure& has no! &esi#na!e& an beneficiar - or ,hen !he &esi#na!e& beneficiar is &is$ualifie& b la, !o receive !he procee&s- !ha! !he insurance polic procee&s shall re&oun& !o !he benefi! of !he es!a!e of !he insure&.

'. INSURA'LE INTEREST IN LIFE AN( PROPERTY

INSURA'LE INTEREST IN LIFE AS TO E9TENT TI8E :0EN IT 8UST E9IST NEE( FOR LE)AL 'ASIS 'ENEFICIARY;S INTEREST Unli"i!e& e%cep! if secure& b !he cre&i!or A! !he !i"e of !he perfec!ion of !he con!rac! E%pec!a!ion of benefi! "us! have le#al basis Insurable in!eres! is no! necessar if !he insure& !oo5 ou! !he polic on his o,n life an& &esi#na!e& ano!her. 'eneficiar "us! have insurable in!eres! if one !oo5 ou! an insurance on !he life of ano!her.

INSURA'LE INTEREST IN PROPERTY Li"i!e& up !o !he value of !he proper! . A! !he !i"e of !he perfec!ion of !he con!rac! an& a! !he !i"e of !he loss E%pec!a!ion of benefi! nee& no! have le#al basis 'eneficiar "us! have insurable in!eres!.

INSURA'LE INTEREST IN LIFE

SEC. /<. Ever person has an insurable in!eres! in !he life an& heal!h. =a> Of hi"self- of his spouse an& of his chil&ren6 =b> Of an person on ,ho" he &epen&s ,holl or in par! for e&uca!ion or suppor!- or in ,ho" he has a pecuniar in!eres!6 =c> Of an person un&er a le#al obli#a!ion !o hi" for !he pa "en! of "one - or respec!in# proper! or services- of ,hich &ea!h or illness "i#h! &ela or preven! !he perfor"ance6 an& =&> Of an person upon ,hose life an es!a!e or in!eres! ves!e& in hi" &epen&s. INSURA'LE INTEREST IN PROPERTY

SEC. /+. Ever in!eres! in proper! - ,he!her real or personal- or an rela!ion !here!o- or liabili! in respec! !hereof- of such na!ure !ha! a con!e"pla!e& peril "i#h! &irec!l &a"nif !he insure&- is an insurable in!eres!. :0EN INSURA'LE INTEREST IN PROPERTY 8UST E9IST SEC. /4. An in!eres! in proper! insure& "us! e%is! ,hen !he insurance !a5es effec!- an& ,hen !he loss occurs- bu! nee& no! e%is! in !he "ean!i"e6 an& in!eres! in !he life or heal!h of a person insure& "us! e%is! ,hen !he insurance !a5es effec!- bu! nee& no! e%is! !hereaf!er or ,hen !he loss occurs. 8EASURE OF INSURA'LE INTEREST O?ER PROPERTY SEC. /3. The "easure of an insurable in!eres! in proper! is !he e%!en! !o ,hich !he insure& "i#h! be &a"nifie& b loss or in@ur !hereof.

ILLUSTRATION OF :0AT IS INSURA'LE INTEREST IN PROPERTY

SEC. /A. An insurable in!eres! in proper! "a consis! in. =a> An e%is!in# in!eres!6 E%is!in# in!eres! inclu&es !he in!eres! of an o,ner. Ti!le of o,nership is no! essen!ial. Thus- !he follo,in# persons have insurable in!eres! over !he proper! even if !he are no! !he o,ners !hereof. Lessee (eposi!ar Usufruc!uar 'orro,er in co""o&a!u"

The ven&ee or bu er has insurable in!eres! over !he #oo&s even ,hile !he #oo&s are s!ill in !ransi!. 0is in!eres! over !he #oo&s is base& on !he perfec!e& con!rac! of sale. The perfec!e& con!rac! of sale be!,een hi" an& !he sellerBshipper of !he #oo&s opera!es !o ves! in hi" an e$ui!able !i!le even before &eliver or before he perfor"e& !he con&i!ions of !he sale. =Filipino 8erchan!s Insurance v. CA>

In sale of #oo&s- an unpai& seller re!ains insurable in!eres! over !he #oo&s even if o,nership ha& alrea& been !ransferre& !o !he ven&ee upon &eliver . An unpai& seller has a ven&or;s lien an& !herefore- he ,ill be &a"nifie& b !he loss of !he #oo&s even af!er &eliver . =)aisano Ca#a an- Inc. vs. Insurance Co"pan of Nor!hern A"erica> Lessee has insurable in!eres! in !he proper! . The s!ipula!ion in Sec!ion /A of !he lease con!rac!- !ha! !he e$uip"en! shall be insure& a! !he cos! an& e%pense of !he lessee a#ains! loss&a"a#e- or &es!ruc!ion fro" fire- !hef!- acci&en!- or o!her insurable ris5 for !he full !er" of !he lease- is a bin&in# an& vali& s!ipula!ion. Pe!i!ioner- as a lessee- has an insurable in!eres! in !he e$uip"en! an& "o!or vehicles lease&. Sec!ion /3 of !he Insurance Co&e provi&es !ha! !he "easure of an insurable in!eres! in proper! is !he e%!en! !o ,hich !he insure& "i#h! be &a"nifie& b loss or in@ur !hereof. I! canno! be &enie& !ha! C?L ,ill be &irec!l &a"nifie& in case of loss- &a"a#e- or &es!ruc!ion of an of !he proper!ies lease&. =On# Li" Sin# vs. FE' Leasin#> =b> An inchoa!e in!eres! foun&e& on an e%is!in# in!eres!6 or E%a"ple. A sharehol&er has an inchoa!e in!eres! on !he proper!ies of !he corpora!ion. 0is inchoa!e in!eres! over !he proper!ies of !he corpora!ion is foun&e& on his e%is!in# in!eres! in !he corpora!ion as sharehol&er. =c> An e%pec!anc - couple& ,i!h an e%is!in# in!eres! in !ha! ou! of ,hich !he e%pec!anc arises. INSURA'LE INTEREST OF 'AILEE

SEC. /*. A carrier or &eposi!or of an 5in& has an insurable in!eres! in a !hin# hel& b hi" as such- !o !he e%!en! of his liabili! bu! no! !o e%cee& !he value !hereof.

INSURA'LE INTEREST O?ER 8ORT)A)E( PROPERTY

The "or!#a#or an& !he "or!#a#ee have each an in&epen&en! insurable in!eres! in !he "or!#a#e& proper! an& bo!h in!eres! "a be covere& b one polic - or each "a !a5e ou! a separa!e polic coverin# his in!eres!- ei!her a! !he sa"e or a! separa!e !i"es.

8ORT)A)OR

INSURA'LE INTEREST D As o,ner of !he "or!#a#e& proper! - his insurable in!eres! covers !he full value of !he "or!#a#e& proper! - even !hou#h !he "or!#a#e& &eb! is e$uivalen! !o !he value of !he proper! .

REASON. !he los! or &es!ruc!ion of !he proper! insure& ,ill no! e%!in#uishe& !he "or!#a#e &eb!.

8ORT)A)EE

INSURA'LE INTEREST D To !he e%!en! of !he &eb!- no! e%cee&in# !he value of !he "or!#a#e& proper! .

REASON. Proper! relie& on as "or!#a#e& is onl a securi! . 0ence- ,ha! is insure& is !he in!eres! or lien !hereon.

:0EN T0ERE IS NO INSURA'LE INTEREST IN PROPERTY SEC. /E. A "ere con!in#en! or e%pec!an! in!eres! in an !hin#- no! foun&e& on an ac!ual ri#h! !o !he !hin#- nor upon an vali& con!rac! for i!- is no! insurable. EFFECT TO T0E POLICY SEC. /F. No con!rac! or polic of insurance on proper! shall be enforceable e%cep! for !he benefi! of so"e person havin# an insurable in!eres! in !he proper! insure&. INSTANCES :0EN POLICY :ILL 'ECO8E ?OI( =SEC. 1*> Ever s!ipula!ion in a polic of insurance for !he pa "en! of loss ,he!her !he person insure& has or has no! an in!eres! in !he proper! insure&- or !he polic shall be receive& as proof of such in!eres!- an& ever polic e%ecu!e& b ,a of #a"in# or ,a#erin#

C. C0AN)E OF INSURA'LE INTEREST )ENERAL RULE. a chan#e of in!eres! in an par! of a !hin# insure& unacco"panie& b a correspon&in# chan#e of in!eres! in !he insurance- suspen&s !he insurance !o an e$uivalen! e%!en!un!il !he in!eres! in !he !hin# an& !he in!eres! in !he insurance are ves!e& in !he sa"e person. E9CEPTIONS.

1. Life- acci&en!- an& heal!h insurance 2. Au!o"a!ic Transfer Clause provi&e& in Sec!ions 1/G1A of !he Co&e SEC. 1/. A chan#e of in!eres! in a !hin# insure&- af!er !he occurrence of an in@ur ,hich resul!s in a loss- &oes no! affec! !he ri#h! of !he insure& !o in&e"ni! for !he loss. SEC. 11. A chan#e of in!eres! in one or "ore of several &is!inc! !hin#s- separa!el insure& b one polic - &oes no! avoi& !he insurance as !o !he o!hers. SEC. 1+. A chan#e of in!eres!- b ,ill or succession- on !he &ea!h of !he insure&- &oes no! avoi& an insurance6 an& his in!eres! in !he insurance passes !o !he person !a5in# his in!eres! in !he !hin# insure&. SEC. 1A. A !ransfer of in!eres! b one of several par!ners- @oin! o,ners- or o,ners in co""on,ho are @oin!l insure&- !o !he o!hers- &oes no! avoi& an insurance even !hou#h i! has been a#ree& !ha! !he insurance shall cease upon an aliena!ion of !he !hin# insure&. CONCEALMENT Requisites: /. A par! 5no,s a fac! (a material fact) ,hich he ne#lec!s !o co""unica!e or &isclose !o !he o!her par! 6 1. Such par! concealin# is &u! boun& !o &isclose such fac! !o !he o!her6 +. Such par! concealin# "a5es no ,arran! as !o !he fac! conceale&6 an& A. The o!her par! has no "eans of ascer!ainin# !he fac! conceale&. Sec. 27. Conceal"en! ,he!her in!en!ional or unin!en!ional en!i!les !he in@ure& par! !o rescin& a con!rac! of insurance. Effect of Concealment: a> If !here is conceal"en! un&er Sec. 13- !he re"e& of !he insurer is rescission. b> The par! clai"in# !he e%is!ence of conceal"en! "us! prove !ha! !here ,as 5no,le&#e of !he fac! conceale& on !he par! of !he par! char#e& ,i!h conceal"en!. c> )oo& fai!h is no! a &efense in conceal"en!. Conceal"en!- ,he!her in!en!ional or unin!en!ional en!i!les !he in@ure& par! !o rescin& !he con!rac! of insurance (Sec. 27). d) The matter concealed need not be the cause of loss. (as stated in the s llab the insured need not die of disease he failed to disclose) e> To be #uil! of conceal"en!- a par! "us! have 5no,le&#e of !he fac! conceale& a! !he !i"e of !he effec!ivi! of !he polic . f> Failure !o co""unica!e infor"a!ion ac$uire& AFTER !he effec!ivi! of !he polic ,ill NOT be a #roun& !o rescin& !he con!rac!. !eason" Infor"a!ion is no lon#er "a!erial as i! ,ill no lon#er influence !he o!her par! !o en!er in!o such con!rac!. Matters that need not be disclosed Nei!her par! !o a con!rac! of insurance is boun& !o co""unica!e infor"a!ion of "a!!ers follo,in#EXCEPT in ans,er !o in$uiries of !he o!her. (#O$EE) /. Those ,hich !he o!her %no,s6

1. Those ,hich- in !he e%ercise of or&inar care- !he o!her ou#h! !o 5no, an& of ,hich- !he for"er has no reason !o suppose hi" i#noran!6 +. Those of ,hich !he o!her &aives co""unica!ion6 A. Those ,hich prove or !en& !o prove !he e%is!ence of a ris5 e%clu&e& b a ,arran! - an& ,hich are no! o!her,ise "a!erial6 *. Those ,hich rela!e !o a ris5 e%e"p!e& fro" !he polic an& ,hich are no! o!her,ise "a!erial. Test of Materialit SEC. '(. 8a!eriali! is !o be &e!er"ine& no! b !he even!- bu! solel b !he probable an& reasonable influence of !he fac!s upon !he par! !o ,ho" !he co""unica!ion is &ue- in for"in# his es!i"a!e of !he &isa&van!a#es of !he propose& con!rac!- or in "a5in# his in$uiries. SEC. ''. #ai)er of material information /. b !he !er"s of !he con!rac!6 1. b failure !o "a5e an in$uir as !o such fac!s- ,here !he are &is!inc!l implied in o!her fac!s =N# #anHee vs asian crusa&er> I&here the insurer failed to conduct further in*uiries on sur+er disclosed b insured. INCONTESTA'ILITY CLAUSE )ENERAL RULE. The insurer has !,o ears fro" !he &a!e of issuance of !he insurance con!rac! or of i!s las! reins!a!e"en! ,i!hin ,hich !o con!es! !he polic - ,he!her or no!- !he insure& s!ill lives ,i!hin such perio&. Af!er !,o ears- !he &efenses of conceal"en! or "isrepresen!a!ion- no "a!!er ho, pa!en! or ,ell foun&e&- no lon#er lie. E9CEPTIONS. for nonpa "en! of pre"iu" e%cep! for viola!ion of !he con&i!ions of !he polic rela!in# !o "ili!ar or naval service in !i"e of ,ar6 Proper! Insurance SEC. /F+. The insurer in a life insurance con!rac! shall be liable in case of suici&e onl ,hen i! is co""i!!e& af!er !he polic has been in force for a perio& of !,o =1> ears fro" !he &a!e of i!s issue or of i!s las! reins!a!e"en!- unless !he polic provi&es a shor!er perio&. Provided, however- Tha! suici&e co""i!!e& in !he s!a!e of insani! shall be co"pensable re#ar&less of !he &a!e of co""ission.

Purpose of Incontestability Clause To assure !ha! af!er !he specifie& perio&- !he polic o,ner "a rel upon !he insurance co"pan !o carr ou! !he !er"s of !he con!rac!- re#ar&less of irre#ulari!ies in connec!ion ,i!h !he applica!ion ,hich "a la!er be &iscovere&. Requisites ( -!iP": /. I! "us! be a Life insurance polic 6 1. I! "us! be ,a able on !he &ea!h of !he insure&6 an&

+. I! "us! be in force &urin# !he life!i"e of !he insure& for a! leas! 2 ears fro" i!s &a!e of issue or of i!s las! reins!a!e"en!. note J The perio& of !,o ears "a be shor!ene& bu! i! canno! be e%!en&e& b s!ipula!ion. E-ce.tions or #efenses not barred by incontestability clause (TIME-P$%" /. Tha! !he person !a5in# !he insurance lac5e& /nsurable in!eres! as re$uire& b la,6 1. Tha! !he cause of !he &ea!h of !he insure& is an e%cep!e& ris56 +. Tha! !he .re"iu"s have no! been pai&6 A. Tha! !he con&i!ions of !he polic rela!in# !o mili!ar or naval service have been viola!e&6 *. Tha! !he frau& is of a par!icular )icious ! pe6 E. Tha! !he beneficiar faile& !o furnish proof of &ea!h or !o co"pl ,i!h an con&i!ions i"pose& b !he polic af!er !he loss has happene&6 3. Tha! !he ac!ion ,as no! brou#h! ,i!hin !he ti"e specifie&. Misre.resation" Effects" /. The in@ure& par! en!i!le& !o rescin& fro" !he TI8E ,hen !he represen!a!ion beco"es false (Sec. 45). 1. :hen !he insurer accep!e& !he pa "en! of pre"iu" ,i!h !he 5no,le&#e of !he #roun& for rescission!here is a ,aiver of such ri#h!. +. There is no ,aiver of !he ri#h! of rescission if !he insurer ha& no 5no,le&#e of !he #roun& !herefor a! !he !i"e of accep!ance of pre"iu" pa "en!. ,olic " SEC. A4. The ,ri!!en ins!ru"en!- in ,hich a con!rac! of insurance is se! for!h- is calle& a polic of insurance. Note" I! is no! necessar for !he perfec!ion of !he con!rac!. Note" An insurance con!rac! "a be verbal or in ,ri!in#- or par!l in ,ri!in# an& par!l verbal. 0o,ever!he la, provi&es !ha! no polic of insurance shall be issue& or &elivere& unless in !he for" previousl approve& b !he Insurance Co""ission (Sec. 22 ). The approval of !he Insurance Co""issioner "a be &ispense& ,i!h upon !he cer!ifica!ion of !he presi&en!- viceGpresi&en!- or #eneral "ana#er of !he insurance co"pan concerne& !ha! !he ris5 involve&!he values of such ris5s an&B or !he pre"iu"s !herefore has no! e! been &e!er"ine& or es!ablishe&- or such e%!ension or rene,al is no! con!rar !o an& is no! for !he purpose of viola!in# an provisions of !he Insurance Co&e- or of an rulin#s- ins!ruc!ions- or circulars of !he Insurance Co""issioner SEC. *<. The polic shall be in prin!e& for" ,hich "a con!ain blan5 spaces6 an& an ,or&- phraseclause- "ar5- si#n- s "bol- si#na!ure- nu"ber- or ,or& necessar !o co"ple!e !he con!rac! of insurance shall be ,ri!!en on !he blan5 spaces provi&e& !herein. KAn ri&er- clause- ,arran! or en&orse"en! purpor!in# !o be par! of !he con!rac! of insurance an& ,hich is pas!e& or a!!ache& !o sai& polic is no! bin&in# on !he insure&- unless !he &escrip!ive !i!le or na"e of !he ri&er- clause- ,arran! or en&orse"en! is also "en!ione& an& ,ri!!en on !he blan5 spaces provi&e& in !he polic .

KUnless applie& for b !he insure& or o,ner- an ri&er- clause- ,arran! or en&orse"en! issue& af!er !he ori#inal polic shall be coun!ersi#ne& b !he insure& or o,ner- ,hich coun!ersi#na!ure shall be !a5en as his a#ree"en! !o !he con!en!s of such ri&er- clause- ,arran! or en&orse"en!. KNo!,i!hs!an&in# !he fore#oin#- !he polic "a be in elec!ronic for" sub@ec! !o !he per!inen! provisions of Republic Ac! No. F341- o!her,ise 5no,n as !he LElec!ronic Co""erce Ac!; an& !o such rules an& re#ula!ions as "a be prescribe& b !he Co""issioner. KSEC. */. A polic of insurance "us! specif . K=a> The par!ies be!,een ,ho" !he con!rac! is "a&e6 K=b> The a"oun! !o be insure& e%cep! in !he cases of open or runnin# policies6 K=c> The pre"iu"- or if !he insurance is of a charac!er ,here !he e%ac! pre"iu" is onl &e!er"inable upon !he !er"ina!ion of !he con!rac!- a s!a!e"en! of !he basis an& ra!es upon ,hich !he final pre"iu" is !o be &e!er"ine&6 K=&> The proper! or life insure&6 K=e> The in!eres! of !he insure& in proper! insure&- if he is no! !he absolu!e o,ner !hereof6 K=f> The ris5s insure& a#ains!6 an& K=#> The perio& &urin# ,hich !he insurance is !o con!inue.

Co)er Notes" A concise an& !e"porar ,ri!!en con!rac! issue& b !he insurer !hrou#h i!s &ul au!horiHe& a#en! e"bo& in# !he principal !er"s of an e%pec!e& polic of insurance. ,ur.ose" I! is in!en&e& !o #ive !e"porar insurance pro!ec!ion covera#e !o !he applican! pen&in# !he accep!ance or re@ec!ion of his applica!ion. !ules on Co)er Notes" a. The cover no!e is vali& for E< &a s- af!er ,hich !he polic "us! be issue&. b. The perio& "a be e%!en&e& or rene,e& of !he Co""issioner if he &e!er"ines !ha! such e%!ension is no! con!rar !o an& is no! for !he purpose of viola!in# an provisions of !he Co&e. c. No separa!e pre"iu"s are in!en&e& or re$uire& !o be pai& on a cover no!e because cover no!es &o no! con!ain par!iculars of !he proper! insure& !ha! ,oul& serve as basis for !he co"pu!a!ion of pre"iu"s. Thus- no pre"iu" coul& be fi%e& an& pai& on !he cover no!e. Cover no!es shoul& no! be !rea!e& as separa!e policies bu! shoul& be in!e#ra!e& !o !he re#ular policies subse$uen!l issue& so !ha! !he pre"iu"s on !he re#ular policies inclu&e !he consi&era!ion for !he cover no!es (Pacific Tim!er E"port #orporatio$ v%. #o&rt of Appeal%, 'R (o. )*+, -+, --2 S#RA -.., Fe!r&ar/ 25, -.,2). $inds of ,olic "

SEC. E<. An open polic is one in ,hich !he value of !he !hin# insure& is no! a#ree& upon- an& !he a"oun! of !he insurance "erel represen!s !he insurer;s "a%i"u" liabili! . The value of such !hin# insure& shall be ascer!aine& a! !he !i"e of !he loss. KSEC. E/. A value& polic is one ,hich e%presses on i!s face an a#ree"en! !ha! !he !hin# insure& shall be value& a! a specific su". KSEC. E1. A runnin# polic is one ,hich con!e"pla!es successive insurances- an& ,hich provi&es !ha! !he ob@ec! of !he polic "a be fro" !i"e !o !i"e &efine&- especiall as !o !he sub@ec!s of insurance- b a&&i!ional s!a!e"en!s or in&orse"en!s. Note" :here !he con!rac! provi&es for indemnity a&ainst liability !o !hir& persons- !hen !he la!!er !o ,ho" !he insure& is liable- can &irec!l sue !he insurer. On !he o!her han&- ,here !he insurance is for indemnity a&ainst actual loss or payment- !hen !hir& persons canno! procee& a#ains! !he insurer- !he con!rac! bein# solel !o reim!&r%e !he insure& for liabili! ac!uall &ischar#e& b hi" !hrou#h pa "en! !o !hir& persons- sai& !hir& person;s recourse bein#- !hus li"i!e& !o !he insure& alone. CANCELLAT/ON O0 NON1L/0E ,OL/C2 Requisites ('()*": (sec +," /. prior no!ice of cancella!ion !o !he insure&6 1. no!ice "us! be base& on !he occurrence af!er !he effec!ive &a!e of !he polic of one or "ore of !he #roun&s "en!ione&6 +. no!ice "us! be in &ri!in#- "aile& or &elivere& !o !he insure& a! !he a&&ress sho,n in !he polic 6 A. no!ice "us! s!a!e !he +roun&s relie& upon provi&e& in Sec!ion EA of !he Insurance Co&e an& upon re$ues! of !he insure& !o furnish fac!s on ,hich cancella!ion is "a&e. *rounds ($P- %r()C": (sec +-" /. nonGpa "en! of pre"iu"s6 1. convic!ion of a cri"e ou! of ac!s increasin# !he haHar& insure& a#ains!6 +. frau& or "a!erial "isrepresen!a!ion6 A. ,illful or rec5less ac!s or o"issions increasin# !he ris5 insure& a#ains!6 *. .h sical chan#es in !he proper! insure& "a5in# i! uninsurable6 E. &e!er"ina!ion b !he Insurance Co""issioner !ha! !he polic ,oul& )iola!e !he Insurance Co&e. !ene&al of .olic " SEC. EE. In case of insurance o!her !han life- unless !he insurer a! leas! for! Gfive =A*> &a s in a&vance of !he en& of !he polic perio& "ails or &elivers !o !he na"e& insure& a! !he a&&ress sho,n in !he polic no!ice of i!s in!en!ion no! !o rene, !he polic or !o con&i!ion i!s rene,al upon re&uc!ion of li"i!s or eli"ina!ion of covera#es- !he na"e& insure& shall be en!i!le& !o rene, !he polic upon pa "en! of !he pre"iu" &ue on !he effec!ive &a!e of !he rene,al. An polic ,ri!!en for a !er" of less !han one =/> ear shall be consi&ere& as if ,ri!!en for a !er" of one =/> ear. An polic ,ri!!en for a !er" lon#er !han one =/> ear or an polic ,i!h no fi%e& e%pira!ion &a!e shall be consi&ere& as if ,ri!!en for successive polic perio&s or !er"s of one =/> ear.

#arranties" SEC. E3. A ,arran! is ei!her e%presse& or i"plie&. SEC. E4. No par!icular for" of ,or&s is necessar !o crea!e a ,arran! . 3reach of &arranties" Effects of .reach: (. CON4/T/ON ,!ECE4ENT D preven!s !he accrual of cause of ac!ion. 2. CON4/T/ON S53SE65ENT D avoi&s !he polic or en!i!les !he insurer !o rescin& J The insurer "a also pro!ec! hi"self a#ains! frau&ulen! clai"s of loss b inser!in# in !he polic various con&i!ions ,hich !a5e !he for" of con&i!ions prece&en!. For ins!ance- !here are con&i!ions re$uirin# i""e&ia!e no!ice of loss or in@ur an& &e!aile& proofs of loss,i!hin a li"i!e& perio&. #arrant Nature " Par! of !he con!rac! 0orm" :ri!!en on !he polic - ac!uall or b reference Materialit " Presu"e& "a!erial Com.liance" 8us! be s!ric!l co"plie& ,i!h Effect of falsit 7non1com.liance" Falsi! or nonGfulfil"en! opera!es as a breach of con!rac! 8ere colla!eral in&uce"en! 8a be ,ri!!en in !he polic or "a be oral. 8us! be prove& !o be "a!erial Re$uires onl subs!an!ial !ru!h an& co"pliance Falsi! ren&ers !he polic voi& on !he #roun& of frau& !e.resentation

NOTE" !he insure& has !he &u! !o &isclose e%is!ence of o!her policies. PRE8IU8S :0EN 8UST PRE8IU8S 'E PAI(. An insurer is en!i!le& !o pa "en! of !he pre"iu" as soon as !he !hin# insure& is e%pose& !o !he peril insure& a#ains!. EFFECT OF NONGPAY8ENT. )ENERAL RULE. no polic or con!rac! of insurance issue& b an insurance co"pan is vali& an& bin&in# unless an& un!il !he pre"iu" !hereof has been pai&. E9CEPTIONS. in !he case of a life or an in&us!rial life polic ,henever !he #race perio& provision applies- or =Sec.33>

,henever un&er !he bro5er an& a#enc a#ree"en!s ,i!h &ul license& in!er"e&iaries- a nine! =4<>G&a cre&i! e%!ension is #iven. No cre&i! e%!ension !o a &ul license& in!er"e&iar shoul& e%cee& nine! =4<> &a s fro" &a!e of issuance of !he polic . =Sec.33> An ac5no,le&#"en! in a polic or con!rac! of insurance or !he receip! of pre"iu" is conclusive evi&ence of i!s pa "en!- so far as !o "a5e !he polic bin&in#- no!,i!hs!an&in# an s!ipula!ion !herein !ha! i! shall no! be bin&in# un!il !he pre"iu" is ac!uall pai&. =Sec. 34> If !he par!ies have a#ree& !o !he .a ment in installments of !he pre"iu" an& .artial .a ment has been made at the time of loss M0a1ati T&%ca$/ #o$domi$i&m v. #AN The insurer "a #ran! credit e-tension for !he pa "en! of !he pre"iu" M 0a1ati T&%ca$/ #o$domi$i&mN Esto..el

EFFECT OF PARTIAL PAY8ENT. In case !here is a perfec!e& con!rac! of insurance an& par!ial pa "en! of !he pre"iu"- !he par!ies coul& &e"an& fro" each o!her !he perfor"ance of ,ha!ever obli#a!ions !he ha& assu"e&. In !he case of !he insurer- i! is obvious !ha! i! ha& !he ri#h! !o &e"an& fro" !he insure& !he co"ple!ion of !he pa "en! of !he pre"iu" &ue or sue for !he rescission of !he con!rac!. As i! chose !o &e"an& specific perfor"ance of !he insure&Os obli#a!ion !o pa !he balance of !he pre"iu"- !he la!!erOs &u! !o pa is in&ee& in&ubi!able. =Phil. Phoeni% vs. :oo&,or5s>

)RACE PERIO( IN PAY8ENT OF PRE8IU8S

A #race perio& is !he perio& af!er !he &a!e !he pre"iu" is &ue &urin# ,hich !he pre"iu" can be pai& ,i!h no in!eres! char#e& an& !he polic re"ainin# in force.

E9A8PLES OF )RACE PERIO( PRO?I(E( IN T0E CO(E SEC. 1++. In !he case of in&ivi&ual life or en&o,"en! insurance =a> A provision !ha! !he polic hol&er is en!i!le& !o a #race perio& ei!her of !hir! =+<> &a s or of one =/> "on!h ,i!hin ,hich !he pa "en! of an pre"iu" af!er !he firs! "a be "a&e- sub@ec! a! !he op!ion of !he insurer !o an in!eres! char#e no! in e%cess of si% percen! =EP> per annu" for !he nu"ber of &a s of #race elapsin# before !he pa "en! of !he pre"iu"- &urin# ,hich perio& of #race !he polic shall con!inue in full force- bu! in case !he polic beco"es a clai" &urin# !he sai& perio& of #race before !he over&ue pre"iu" is pai&- !he a"oun! of such pre"iu" ,i!h in!eres! "a be &e&uc!e& fro" !he a"oun! pa able un&er !he polic in se!!le"en!6

SEC. 1+A. No polic of #roup life insurance shall be issue& an& &elivere& in !he Philippines unless i! con!ains in subs!ance !he follo,in# provisions- or provisions ,hich in !he opinion of !he Co""issioner are "ore favorable !o !he persons insure&- or a! leas! as favorable !o !he persons insure& an& "ore favorable !o !he polic hol&ers. =a> A provision !ha! !he polic hol&er is en!i!le& !o a #race perio& of ei!her !hir! =+<> &a s or of one =/> "on!h for !he pa "en! of an pre"iu" &ue af!er !he firs!- &urin# ,hich #race perio& !he &ea!h benefi! covera#e shall con!inue in force- unless !he polic hol&er shall have #iven !he insurer ,ri!!en no!ice of &iscon!inuance in a&vance of !he &a!e of &iscon!inuance an& in accor&ance ,i!h !he !er"s of !he polic . The polic "a provi&e !ha! !he polic hol&er shall be liable for !he pa "en! of a pro rata pre"iu" for !he !i"e !he polic is in force &urin# such #race perio&6 SEC. 1+*. The !er" i$d&%trial life i$%&ra$ce as use& in !his Co&e shall "ean !ha! for" of life insurance un&er ,hich !he pre"iu"s are pa able ei!her "on!hl or of!ener- if !he face a"oun! of insurance provi&e& in an polic is no! "ore !han five hun&re& !i"es !ha! of !he curren! s!a!u!or "ini"u" &ail ,a#e in !he Ci! of 8anila- an& if !he ,or&s i$d&%trial polic/ are prin!e& upon !he polic as par! of !he &escrip!ive "a!!er. =a> A provision !ha! !he insure& is en!i!le& !o a #race perio& of four =A> ,ee5s ,i!hin ,hich !he pa "en! of an pre"iu" af!er !he firs! "a be "a&e- e%cep! !ha! ,here pre"iu"s are pa able "on!hl - !he perio& of #race shall be ei!her one =/> "on!h or !hir! =+<> &a s6 an& !ha! &urin# !he perio& of #race- !he polic shall con!inue in full force- bu! if &urin# such #race perio& !he polic beco"es a clai"- !hen an over&ue an& unpai& pre"iu"s "a be &e&uc!e& fro" an a"oun! pa able un&er !he polic in se!!le"en!6

INSTANCES :0ERE INSURE( IS ENTITLE( TO RETURN OF PRE8IU8S

INSTANCES if no par! of his in!eres! in !he !hin# insure& be e%pose& !o an of !he perils insure& a#ains! :here !he insurance is "a&e for a &efini!e perio& of !i"e an& !he insure& surren&ers his polic

E9TENT To !he ,hole pre"iu" !o such por!ion of !he pre"iu" as correspon&s ,i!h !he une%pire& !i"e- a! a pro ra!a ra!e- unless a shor! perio& ra!e has been a#ree& upon an& appears on !he face of !he polic - af!er &e&uc!in# fro" !he ,hole pre"iu" an clai" for loss or &a"a#e un&er !he polic ,hich has previousl accrue&. Provided- Tha! no hol&er of a life insurance polic "a avail hi"self of !he privile#es of !his para#raph ,i!hou! sufficien! cause as o!her,ise provi&e& b

la,.

,hen !he con!rac! is voi&able- an& subse$uen!l annulle& un&er !he provisions of !he Civil Co&e6 or on accoun! of !he frau& or "isrepresen!a!ion of !he insurer- or of his a#en!- or on accoun! of fac!s- or !he e%is!ence of ,hich !he insure& ,as i#noran! of ,i!hou! his faul!6 or ,hen b an &efaul! of !he insure& o!her !han ac!ual frau&- !he insurer never incurre& an liabili! un&er !he polic .

A person insure& is en!i!le& !o a re!urn of !he pre"iu"

In case of an over insurance b several insurers o!her !han life

!he insure& is en!i!le& !o a ra!able re!urn of !he pre"iu"- propor!ione& !o !he a"oun! b ,hich !he a##re#a!e su" insure& in all !he policies e%cee&s !he insurable value of !he !hin# a! ris5.

:0EN INSURE( IS NOT ENTITLE( TO T0E RETURN OF T0E PRE8IU8 If a peril insure& a#ains! has e%is!e&- an& !he insurer has been liable for an perio&- ho,ever shor!- !he insure& is no! en!i!le& !o re!urn of pre"iu"s- so far as !ha! par!icular ris5 is concerne&. A person insure& is no! en!i!le& !o a re!urn of pre"iu" if !he polic is annulle&- rescin&e& or if a clai" is &enie& b reason of frau&. 8AY AN INSURER ACCEPT PAY8ENTS IN A((ITION TO RE)ULAR PRE8IU8SQ An insurer "a con!rac! an& accep! pa "en!s- in a&&i!ion !o re#ular pre"iu"- for !he purpose of pa in# fu!ure pre"iu"s on !he polic or !o increase !he benefi!s !hereof.

NE: PRO?ISION IN T0E INSURANCE CO(E. SEC. 3F. E"plo ees of !he Republic of !he Philippines- inclu&in# i!s poli!ical sub&ivisions an& ins!ru"en!ali!ies- an& #overn"en!Go,ne& or Gcon!rolle& corpora!ions- "a pa !heir insurance pre"iu"s an& loan obli#a!ions !hrou#h salar &e&uc!ion. Provided- Tha! !he !reasurer- cashier-

pa "as!er or official of !he en!i! e"plo in# !he #overn"en! e"plo ee is au!horiHe&no!,i!hs!an&in# !he provisions of an e%is!in# la,- rules an& re#ula!ions !o !he con!rar - !o "a5e &e&uc!ions fro" !he salar - ,a#e or inco"e of !he la!!er pursuan! !o !he a#ree"en! be!,een !he insurer an& !he #overn"en! e"plo ee an& !o re"i! such &e&uc!ions !o !he insurer concerne&- an& collec! such reasonable fee for i!s services.

Loss" ,ro-imate cause" SEC. FE. 5nless other&ise .ro)ided b the .olic - an insurer is liable for a loss of ,hich a peril insure& a#ains! ,as !he pro%i"a!e cause8 althou+h a .eril not contem.lated b the contract ma ha)e been a remote cause of the loss6 but he is not liable for a loss of &hich the .eril insured a+ainst &as onl a remote cause. E-tension of ,ro-imate cause" SEC. F3. An insurer is liable ,here !he !hin# insure& is rescue& fro" a peril insure& a#ains! !ha! ,oul& o!her,ise have cause& a loss- if- in the course of such rescue8 the thin+ is e-.osed to a .eril not insured a+ainst8 ,hich per"anen!l &eprives !he insure& of i!s possession- in ,hole or in par!6 or ,here a loss is cause& b effor!s !o rescue !he !hin# insure& fro" a peril insure& a#ains!. Effect of ne+li+ence KSEC. FF. :here a peril is especiall e%cep!e& in a con!rac! of insurance- a loss- ,hich ,oul& no! have occurre& bu! for such peril- is !hereb e%cep!e& al!hou#h !he i""e&ia!e cause of !he loss ,as a peril ,hich ,as no! e%cep!e&. KSEC. F4. An insurer is no! liable for a loss cause& b !he ,illful ac! or !hrou#h !he connivance of !he insure&6 bu! he is no! e%onera!e& b !he ne#li#ence of !he insure&- or of !he insurance a#en!s or o!hers. Summar " #9EN /NS5!E! /S L/A3LE 0O! LOSS /. Loss !he pro%i"a!e cause of ,hich is !he peril insure& a#ains! 1. Loss !he i""e&ia!e cause of ,hich is !he peril insure& a#ains! e"cept ,here !he pro%i"a!e cause is an e%cep!e& peril +. Loss !hrou#h !he ne#li#ence of !he insure& e"cept ,here !here ,as #ross ne#li#ence a"oun!in# !o ,illful ac! A. Loss cause& b effor!s !o rescue !he !hin# insure& fro" a peril insure& a#ains! *. Loss cause& b a peril NOT insure& a#ains! !o ,hich !he !hin# insure& ,as e%pose& in !he course of rescuin# !he sa"e fro" !he peril insure& a#ains! #9EN T9E /NS5!E! /S NOT L/A3LE /. Loss b !he insure&;s ,illful ac! or #ross ne#li#ence6 1. Loss &ue !o !he connivance of !he insure& +. Loss ,here !he e%cep!e& peril is !he pro%i"a!e cause. Notice and ,roof of loss"

SEC. 4<. In case of loss upon an insurance a#ains! fire- an insurer is e%onera!e&- if ,ri!!en no!ice !hereof be no! #iven !o hi" b an insure&- or so"e person en!i!le& !o !he benefi! of !he insurance- ,i!hou! unnecessar &ela . For o!her nonGlife insurance- !he Co""issioner "a specif !he perio& for !he sub"ission of !he no!ice of loss. KSEC. 4/. :hen a preli"inar proof of loss is re$uire& b a polic - !he insure& is no! boun& !o #ive such proof as ,oul& be necessar in a cour! of @us!ice6 bu! i! is sufficien! for hi" !o #ive !he bes! evi&ence ,hich he has in his po,er a! !he !i"e. KSEC. 41. All &efec!s in a no!ice of loss- or in preli"inar proof !hereof- ,hich !he insure& "i#h! re"e& an& ,hich !he insurer o"i!s !o specif !o hi"- ,i!hou! unnecessar &ela - as #roun&s of ob@ec!ion- are ,aive&. KSEC. 4+. (ela in !he presen!a!ion !o an insurer of no!ice or proof of loss is ,aive& if cause& b an ac! of hi"- or if he o"i!s !o !a5e ob@ec!ion pro"p!l an& specificall upon !ha! #roun&. KSEC. 4A. If !he polic re$uires- b ,a of preli"inar proof of loss- !he cer!ifica!e or !es!i"on of a person o!her !han !he insure&- i! is sufficien! for !he insure& !o use reasonable &ili#ence !o procure i!- an& in case of !he refusal of such person !o #ive i!- !hen !o furnish reasonable evi&ence !o !he insurer !ha! such refusal ,as no! in&uce& b an @us! #roun&s of &isbelief in !he fac!s necessar !o be cer!ifie& or !es!ifie&. Summar " /. #ritten notice "us! be #iven !o !he insurer in or&er for hi" !o be liable. 1. :aiver of &efec!s in !he no!ice of loss if insurer fails to ob:ect +. (ela in !he presen!a!ion of no!ice of loss is ,aive if insurer fails to ob:ect A. !easonable dili+ence is sufficien! !o procure a cer!ifica!e or !es!i"on of a person o!her !han !he insure&. 4ouble /nsurance" (ouble insurance e%is!s ,here !he sa"e person is insure& b several insurers separa!el - in respec! !o !he sa"e sub@ec! an& in!eres! (Sec. .5). !e*uisites (21 same /!/S)" /. sa"e insure& person6 1. sa"e sub@ec! "a!!er6 +. sa"e in!eres! insure&6 A. sa"e ris5 or peril insure& a#ains!6 an& *. 2 or "ore insurers insurin# separa!el . O;E!1/NS5!ANCE E%is!s ,hen !he insure& insures !he sa"e proper! for an a"oun! )REATER !han !he value of !ha! proper! . Effect in case of loss" /. The insurer is boun& onl !o pa !he e%!en! of !he real value of !he proper! los!6 1. The insure& is en!i!le& !o recover !he a"oun! of pre"iu" correspon&in# !o !he e%cess in value of !he proper! .

E00ECTS O0 O;E! /NS5!ANCE 32 4O53LE /NS5!ANCE (Sec. . ) /.The insure&- unless !he polic o!her,ise provi&es- "a clai" pa "en! fro" !he insurers in such or&er as he "a selec!- up !o !he a"oun! for ,hich !he insurers are severall liable un&er !heir respec!ive con!rac!s6 1. :here !he polic un&er ,hich !he insure& clai"s is a val&ed polic/- !he insure& "us! #ive cre&i! as a#ains! !he valua!ion for an su" receive& b hi" un&er an o!her polic ,i!hou! re#ar& !o !he ac!ual value of !he sub@ec! "a!!er insure&6 +. :here !he polic un&er ,hich !he insure& clai"s is an &$val&ed polic/, he "us! #ive cre&i!- as a#ains! !he full insurable value- for an su" receive& b hi" un&er an polic 6 A. :here !he insure& receives an su" in e%cess of !he valua!ion in !he case of value& policies- or of !he insurable value in !he case of unvalue& policies- he "us! hol& such su" in !rus! for !he insurers- accor&in# !o !heir ri#h! of con!ribu!ion a"on# !he"selves6 *. Each insurer is boun&- as be!,een hi"self an& !he o!her insurers- !o con!ribu!e ra!abl !o !he loss in propor!ion !o !he a"oun! for ,hich he is liable un&er his con!rac!. 4ouble insurance /nterest" Involves !he sa"e in!eres! Sub:ect" Sub@ec! of insurance is proper! /nsurer" Insurer re"ains in such capaci! /nsured" Insure& is !he par! in in!eres! in !he 1 con!rac!s /nsured consent" Insure& has !o #ive consen! Marine /nsurance Co)era+e" (. /nsurance a+ainst loss or dama+e to" a. ?essels- #oo&s- frei#h!- car#o- "erchan&ise- profi!s- "one - valuable papers- bo!!o"r an& respon&en!ia- an& in!eres! in respec! !o all ris5s or perils of navi#a!ion6 b. Persons or proper! in connec!ion ,i!h "arine insurance6 c. Precious s!ones- @e,els- @e,elr an& precious "e!als ,he!her in !he course of !ranspor!a!ion or o!her,ise6 an& &. 'ri&#es- !unnels- piers- &oc5s an& o!her ai&s !o navi#a!ion an& !ranspor!a!ion ,erils of the sea /ncludes" casual!ies &ue !o !he. No consen! is nee&e& Involves !he &ifferen! In!eres! Sub@ec! of insurance is !he ori#inal insurer;s ris5 Insurer beco"es !he insure& in rela!ion !o reinsurer Ori#inal insure& has no in!eres! in !he reinsurance con!rac! !einsurance

/. unusual violence6 or 1. e%!raor&inar ac!ion of ,in& an& ,ave6 or +. o!her e%!raor&inar causes connec!e& ,i!h navi#a!ion. ,erils of the shi. includes" loss ,hich in !he or&inar course of even!s- resul!s fro" !he. /. na!ural an& inevi!able ac!ion of !he sea6 1. or&inar ,ear an& !ear of !he ship6 or +. ne#li#en! failure of !he ship;s o,ner !o provi&e !he vessel ,i!h proper e$uip"en! !o conve !he car#o un&er or&inar con&i!ions. /NS5!A3LE /NTE!EST (. S9/,O#NE! a> Over !he vessel !o !he e%!en! of i!svalue- provi&e& !ha! if char!ere&- !he recover is onl up !o !he a"oun! no! recoverable fro" !he char!erer. b> 0e also has an insurable in!eres! on e%pec!e& frei#h!a#e c> No insurable in!eres! if he ,ill be co"pensa!e& b char!erer for !he value of !he vessel- in case of loss. 2. CA!<O O#NE! J Over !he car#o an& e%pec!e& profi!s (Sec. -25). '. C9A!TE!E! J Over !he a"oun! he is liable !o !he shipo,ner- if !he ship is los! or &a"a#e& &urin# !he vo a#e. Concealment SEC. /<4. In "arine insurance- each par! is boun& !o co""unica!e- in a&&i!ion !o ,ha! is re$uire& b Sec!ion 1F- all the information &hich he .ossesses8 material to the ris%8 e-ce.t such as is mentioned in Section '=- an& !o s!a!e !he e%ac! an& ,hole !ru!h in rela!ion !o all "a!!ers !ha! he represen!s- or upon in$uir &iscloses or assu"es !o &isclose No!e. In conceal"en! an& "isrepresen!a!ion on "arine insurance i! is no! necessar !ha! !he loss be a conse$uence of !he "a!!er conceale&. The conceal"en! of an fac! in rela!ion !o an of !he "a!!ers s!a!e& in Sec. /<4 &oes no! vi!ia!e !he en!ire con!rac! bu! "erel e%onera!es !he insurer fro" a ris5 resul!in# fro" !he fac! conceale&. /m.lied #arranties" SEC. //*. In ever "arine insurance upon a ship or frei#h!- or frei#h!a#e- or upon an !hin# ,hich is !he sub@ec! of "arine insurance- a ,arran! is i"plie& !ha! !he ship is sea,or!h . SEC. //3. An i"plie& ,arran! of sea,or!hiness is co"plie& ,i!h if !he ship be sea,or!h a! !he !i"e of !he co""ence"en! of !he ris5- e%cep! in !he follo,in# cases.

K=a> :hen !he insurance is "a&e for a specifie& len#!h of !i"e- !he i"plie& ,arran! is no! co"plie& ,i!h unless !he ship be sea,or!h a! !he co""ence"en! of ever vo a#e i! un&er!a5es &urin# !ha! !i"e6 K=b> :hen !he insurance is upon !he car#o ,hich- b !he !er"s of !he polic - &escrip!ion of !he vo a#e- or es!ablishe& cus!o" of !he !ra&e- is !o be !ranshippe& a! an in!er"e&ia!e por!- !he i"plie& ,arran! is no! co"plie& ,i!h unless each vessel upon ,hich !he car#o is shippe&- or !ranshippe&- be sea,or!h a! !he co""ence"en! of each par!icular vo a#e. Sea #orth <eneral !ule" KSEC. //E. A ship is sea,or!h ,hen reasonabl fi! !o perfor" !he service an& !o encoun!er !he or&inar perils of !he vo a#e con!e"pla!e& b !he par!ies !o !he polic . E-ce.tion" /. In !he case of a T/ME ,OL/C2- !he ship "us! be sea,or!h a! !he co""ence"en! of ever vo a#e she "a un&er!a5e &urin# !he perio& of !he covera#e. 1. In !he case of CA!<O ,OL/C2- each vessel upon ,hich !he car#o is shippe& or !ransshippe&- "us! be sea,or!h a! !he co""ence"en! of each par!icular vo a#e. +. In !he case of a ;O2A<E ,OL/C2 con!e"pla!in# a vo a#e in &ifferen! s!a#es- !he ship "us! be sea,or!h a! !he co""ence"en! of each s!a#e of !he vo a#e. 4e)iation (evia!ion is a &epar!ure fro" !he course of !he vo a#e insure&- "en!ione& in !he las! !,o =1> sec!ions- or an unreasonable &ela in pursuin# !he vo a#e or !he co""ence"en! of an en!irel &ifferen! vo a#e. KSEC. /1E. A &evia!ion is proper. K=a> :hen cause& b circu"s!ances over ,hich nei!her !he "as!er nor !he o,ner of !he ship has an con!rol6 K=b> :hen necessar !o co"pl ,i!h a ,arran! - or !o avoi& a peril- ,he!her or no! !he peril is insure& a#ains!6 K=c> :hen "a&e in #oo& fai!h- an& upon reasonable #roun&s of belief in i!s necessi! !o avoi& a peril6 or K=&> :hen "a&e in #oo& fai!h- for !he purpose of savin# hu"an life or relievin# ano!her vessel in &is!ress. <eneral a)era+e" :here i! has been a#ree& !ha! an insurance upon a par!icular !hin#- or class of !hin#s- shall be free fro" par!icular avera#e- a "arine insurer is no! liable for an par!icular avera#e loss no! &eprivin# !he insure& of !he possession- a! !he por! of &es!ina!ion- of !he ,hole of such !hin#- or class of !hin#s- even !hou#h i! beco"es en!irel ,or!hless6 bu! such insurer is liable for his propor!ion of all #eneral avera#e loss assesse& upon !he !hin# insure&

Constructi)e loss" i. Ac!ual loss of "ore !han R of !he value of !he ob@ec!6 ii. (a"a#e re&ucin#- b "ore !han R- !he value of !he vessel an& of car#o6 an& iii. E%pense of !ransship"en! e%cee&s R of value of car#o iv. !he vo a#e canno! be perfor"e& ,i!hou! incurrin# !he li5e e%pense or ris5 "en!ione& in !he prece&in# subpara#raph. 'u! frei#h!a#e canno! in an case be aban&one& unless !he ship is also aban&one&. No!e. co"pu!a!ion "us! be base on !he en!ire ship"en! an& no! per vessel basis !eco)er of actual loss in lieu of abandonment. SEC. /*3. If a person insure& o"i!s !o aban&on- he "a never!heless recover his ac!ual loss.

III.

AUT0ORISE( (RI?ER CLAUSE

AUT0ORISE( (RI?ER. An of !he follo,in#. =a> The Insure&. =b> An person &rivin# on !he Insure&Os or&er or ,i!h his per"ission. Provi&e& !ha! !he person &rivin# is per"i!!e& in accor&ance ,i!h !he licensin# or o!her la,s or re#ula!ions !o &rive !he 8o!or ?ehicle an& is no! &is$ualifie& fro" &rivin# such "o!or vehicle b or&er of a Cour! of la, or b reason of an enac!"en! or re#ula!ion in !ha! behalf. Un&er !he secon& ca!e#or - i! is !o be no!e& !ha! !he ,or&s Tan personO is $ualifie& b !he phrase ... on !he insure&Os or&er or ,i!h his per"ission.O I! is !herefore clear !ha! if !he person &rivin# is o!her !han !he insure&- he "us! have been &ul au!horiHe& b !he insure&- !o &rive !he vehicle !o "a5e !he insurance co"pan liable for !he &riverOs ne#li#ence. The "ain purpose of !he Tau!horiHe& &riverT clause- as "a be seen fro" i!s !e%!- %&pra- is !ha! a person o!her !han !he insure& o,ner- ,ho &rives !he car on !he insure&Os or&er- such as his re#ular &river- or ,i!h his per"ission- such as a frien& or "e"ber of !he fa"il or !he e"plo ees of a car service or repair shop "us! be &ul license& &rivers an& have no &is$ualifica!ion !o &rive a "o!or vehicle. ?iola!ion of au!horiHe& &river clause is no! applicable ,hen !he &river of !he insure& "o!or vehicle is !he insure& hi"self The &river of !he insure& "o!or vehicle a! !he !i"e of !he acci&en! ,as- !he insure& hi"self- hence an Tau!horiHe& &riverT un&er !he polic .

:hile !he 8o!or ?ehicle La, prohibi!s a person fro" opera!in# a "o!or vehicle on !he hi#h,a ,i!hou! a license or ,i!h an e%pire& license- an infrac!ion of !he 8o!or ?ehicle La, on !he par! of !he insure&- is no! a bar !o recover un&er !he insurance con!rac!. I! ho,ever ren&ers hi" sub@ec! !o !he penal sanc!ions of !he 8o!or ?ehicle La,. =Paler"o v. P ra"i&- /E/ SCRA E33> T0EFT CLAUSE A car o,ner ,ho en!rus!s his car !o an es!ablishe& car service an& repair shop necessaril en!rus!s his car 5e !o !he shop o,ner an& e"plo ees ,ho are presu"e& !o have !he insure&Os per"ission !o &rive !he car for le#i!i"a!e purposes of chec5in# or roa&G!es!in# !he car. The "ere happens!ance !ha! !he e"plo ee=s> of !he shop o,ner &iver!s !he use of !he car !o his o,n illici! or unau!horiHe& purpose in viola!ion of !he !rus! repose& in !he shop b !he insure& car o,ner &oes no! "ean !ha! !he Tau!horiHe& &riverT clause has been viola!e& such as !o bar recover - provi&e& !ha! such e"plo ee is &ul $ualifie& !o &rive un&er a vali& &riverOs license. The si!ua!ion is no &ifferen! fro" !he re#ular or fa"il &river- ,ho ins!ea& of carr in# ou! !he o,nerOs or&er !o fe!ch !he chil&ren fro" school !a5es ou! his #irl frien& ins!ea& for a @o ri&e an& ins!ea& ,rec5s !he car. There is no $ues!ion of his bein# an Tau!horiHe& &riverT ,hich allo,s recover of !he loss al!hou#h his !rip ,as for a personal or illici! purpose ,i!hou! !he o,nerOs au!horiHa!ion. Secon&l - an& in&epen&en!l of !he fore#oin# =since ,hen a car is unla,full !a5en- i! is !he !hef! clause- no! !he Tau!horiHe& &riverT clause- !ha! applies>- ,here a car is a&"i!!e&l as in !his case unla,full an& ,ron#full !a5en b so"e people- be !he e"plo ees of !he car shop or no! !o ,ho" i! ha& been en!rus!e&- an& !a5en on a lon# !rip !o 8on!alban ,i!hou! !he o,nerOs consen! or 5no,le&#e- such !a5in# cons!i!u!es or par!a5es of !he na!ure of !hef! as &efine& in Ar!icle +<F of !he Revise& Penal Co&e- viH. T:ho are liable for !hef!. U Thef! is co""i!!e& b an person ,ho- ,i!h in!en! !o #ain bu! ,i!hou! violence a#ains! or in!i"i&a!ion of persons nor force upon !hin#s- shall !a5e personal proper! of ano!her ,i!hou! !he la!!erOs consen!-T for purposes of recoverin# !he loss un&er !he polic in $ues!ion. Assu"in#- &espi!e !he !o!all ina&e$ua!e evi&ence- !ha! !he !a5in# ,as T!e"porar T an& for a T@o ri&eT- !he Cour! sus!ains as !he be!!er vie, !ha! ,hich hol&s !ha! ,hen a person- ei!her ,i!h !he ob@ec! of #oin# !o a cer!ain place- or learnin# ho, !o &rive- or en@o in# a free ri&e- !a5es possession of a vehicle belon#in# !o ano!her- ,i!hou! !he consen! of i!s o,ner- he is #uil! of !hef! because b !a5in# possession of !he personal proper! belon#in# !o ano!her an& usin# i!- his in!en! !o #ain is evi&en! since he &erives !herefro" u!ili! - sa!isfac!ion- en@o "en! an& pleasure. =?illacor!a vs. Insurance Co""ission>

I?.

)ENERAL A?ERA)E IN 8ARINE INSURANCE

LE)AL 'ASIS. SEC. /+F. :here i! has been a#ree& !ha! an insurance upon a par!icular !hin#- or class of !hin#s- shall be free fro" par!icular avera#e- a "arine insurer is no! liable for an par!icular avera#e loss no! &eprivin# !he insure& of !he possession- a! !he por! of &es!ina!ion- of !he ,hole of such !hin#- or class of !hin#s- even !hou#h i! beco"es en!irel ,or!hless6 bu! such insurer is liable for his propor!ion of all #eneral avera#e loss assesse& upon !he !hin# insure&.

CONCEPT. )eneralor #ross avera#e shall inclu&e all !he &a"a#es an& e%penses ,hich are &elibera!el cause& in or&er !o sace !he vessel- i!s car#o or bo!h a! !he sa"e !i"e- fro" real an& 5no,n ris5. RE2UISITES. /. There "us! be a co""on &an#er6

Co""on (an#er D bo!h !he ship an& !he car#o- af!er has been loa&e&- are sub@ec! !o !he sa"e &an#er- ,he!her &urin# !he vo a#e- or in !he por! of loa&in# or unloa&in#6 !ha! !he &an#er arises fro" !he acci&en!s of !he sea- &isposi!ions of !he au!hori! - or faul!s of "enprovi&e& !ha! !he circu"s!ances pro&ucin# !he peril shoul& be ascer!aine& an& i""inen! or "a ra!ionall be sai& !o be cer!ain an& i""inen!.

1. For !he co""on safe! par! of !he vessel or of !he car#o or bo!h is sacrifice& &elibera!el 6 There "us! be volun!ar sacrifice of a par! for !he benefi! of !he ,hole in or&er !o @us!if #eneral avera#e con!ribu!ion. +. Fro" !he e%penses or &a"a#es cause& follo,s !he successful savin# of !he vessel an& car#o6 an& The #eneral avera#e canno! be &e"an&e& if !he vessel an& o!her car#o !ha! are sou#h! !o be save& ,ere in fac! no! save&. A. The e%penses or &a"a#es shoul& have been incurre& or inflic!e& af!er !a5in# proper le#al s!eps an& au!hori! .

?.

INSURANCE CO88ISSIONER

SEC. A+3. The Insurance Co""issioner shall be appoin!e& b !he Presi&en! of !he Republic of !he Philippines for a !er" of si% =E> ears ,i!hou! reappoin!"en! an& ,ho shall serve as such un!il !he successor shall have been appoin!e& an& $ualifie&. If !he Insurance Co""issioner is re"ove& before !he e%pira!ion of his !er" of office- !he reason for !he re"oval "us! be publishe&. The Insurance Co""issioner shall have !he &u! !o see !ha! all la,s rela!in# !o insurance- insurance co"panies an& o!her insurance "a!!ers- "u!ual benefi! associa!ions- an& !rus!s for chari!able uses are fai!hfull e%ecu!e& an& !o perfor" !he &u!ies i"pose& upon hi" b !his Co&e- an& shallno!,i!hs!an&in# an e%is!in# la,s !o !he con!rar - have sole an& e%clusive au!hori! !o re#ula!e !he issuance an& sale of variable con!rac!s as &efine& in Sec!ion 1+F hereof an& !o provi&e for !he

licensin# of persons sellin# such con!rac!s- an& !o issue such reasonable rules an& re#ula!ions #overnin# !he sa"e. The Co""issioner "a issue such rulin#s- ins!ruc!ions- circulars- or&ers an& &ecisions as "a be &ee"e& necessar !o secure !he enforce"en! of !he provisions of !his Co&e- !o ensure !he efficien! re#ula!ion of !he insurance in&us!r in accor&ance ,i!h #lobal bes! prac!ices an& !o pro!ec! !he insurin# public. E%cep! as o!her,ise specifie&- &ecisions "a&e b !he Co""issioner shall be appealable !o !he Secre!ar of Finance. In a&&i!ion !o !he fore#oin#- !he Co""issioner shall have !he follo,in# po,ers an& func!ions. =a> For"ula!e policies an& reco""en&a!ions on issues concernin# !he insurance in&us!r - a&vise Con#ress an& o!her #overn"en! a#encies on all aspec!s of !he insurance in&us!r an& propose le#isla!ion an& a"en&"en!s !here!o6 =b> Approve- re@ec!- suspen& or revo5e licenses or cer!ifica!es of re#is!ra!ion provi&e& for b !his Co&e6 =c> I"pose sanc!ions for !he viola!ion of la,s an& !he rules- re#ula!ions an& or&ers issue& pursuan! !here!o6 =&> Prepare- approve- a"en& or repeal rules- re#ula!ions an& or&ers- an& issue opinions an& provi&e #ui&ance on an& supervise co"pliance ,i!h such rules- re#ula!ions an& or&ers6 =e> Enlis! !he ai& an& suppor! of- an&Bor &epu!iHe an an& all enforce"en! a#encies of !he #overn"en! in !he i"ple"en!a!ion of i!s po,ers an& func!ions un&er !his Co&e6 =f> Issue cease an& &esis! or&ers !o preven! frau& or in@ur !o !he insurin# public6 =#> Punish for con!e"p! of !he Co""issioner- bo!h &irec! an& in&irec!- in accor&ance ,i!h !he per!inen! provisions of an& penal!ies prescribe& b !he Rules of Cour!6 =h> Co"pel !he officers of an re#is!ere& insurance corpora!ion or associa!ion !o call "ee!in#s of s!oc5hol&ers or "e"bers !hereof un&er i!s supervision6 =i> Issue subpoena d&ce% tec&m an& su""on ,i!nesses !o appear in an procee&in# of !he Co""ission an&- in appropria!e cases- or&er !he e%a"ina!ion- search an& seiHure of all &ocu"en!spapers- files an& recor&s- !a% re!urns- an& boo5s of accoun!s of an en!i! or person un&er inves!i#a!ion as "a be necessar for !he proper &isposi!ion of !he cases before i!- sub@ec! !o !he provisions of e%is!in# la,s6 =@> Suspen& or revo5e- af!er proper no!ice an& hearin#- !he license or cer!ifica!e of au!hori! of an en!i! or person un&er i!s re#ula!ion- upon an of !he #roun&s provi&e& b la,6 =5> Con&uc! an e%a"ina!ion !o &e!er"ine co"pliance ,i!h la,s an& re#ula!ions if !he circu"s!ances so ,arran! as &e!er"ine& b appropria!e rules an& re#ula!ions6

=l> Inves!i#a!e no! of!ener !han once a ear fro" !he las! &a!e of e%a"ina!ion !o &e!er"ine ,he!her an ins!i!u!ion is con&uc!in# i!s business on a safe an& soun& basis. Provided- Tha!- !he &eficienciesBirre#ulari!ies foun& b or &iscovere& b an au&i! shall be i""e&ia!el a&&resse&6 ="> In$uire in!o !he solvenc an& li$ui&i! of !he ins!i!u!ions un&er i!s supervision an& enforce pro"p! correc!ive ac!ion6 =n> To re!ain an& u!iliHe- in a&&i!ion !o i!s annual bu&#e!- all fees- char#es an& o!her inco"e &erive& fro" !he re#ula!ion of insurance co"panies an& o!her supervise& persons or en!i!ies6 =o> To fi% an& assess fees- char#es an& penal!ies as !he Co""issioner "a fin& reasonable in !he e%ercise of re#ula!ion6 an& =p> E%ercise such o!her po,ers as "a be provi&e& b la, as ,ell as !hose ,hich "a be i"plie& fro"- or ,hich are necessar or inci&en!al !o !he e%press po,ers #ran!e& !he Co""ission !o achieve !he ob@ec!ives an& purposes of !his Co&e. The Co""ission shall in&e"nif !he Co""issioner- (epu! Co""issioner- an& o!her officials of !he Co""ission- inclu&in# personnel perfor"in# supervision an& e%a"ina!ion func!ions- for all cos!s an& e%penses reasonabl incurre& b such persons in connec!ion ,i!h an civil or cri"inal ac!ions- sui!s or procee&in#s !o ,hich !he "a be "a&e a par! !o b !he reason of !he perfor"ance of !heir &u!ies an& func!ions- unless !he are finall a&@u&#e& in such ac!ions- sui!s or procee&in#s !o be liable for ne#li#ence or "iscon&uc!. In !he even! of se!!le"en! or co"pro"ise- in&e"nifica!ion shall be provi&e& onl in connec!ion ,i!h such "a!!ers covere& b !he se!!le"en! as !o ,hich !he Co""ission is a&vise& b e%!ernal counsel !ha! !he persons !o be in&e"nifie& &i& no! co""i! an ne#li#ence or "iscon&uc!. The cos!s an& e%penses incurre& in &efen&in# !he afore"en!ione& ac!ion- sui! or procee&in# "a be pai& b !he Co""ission in a&vance of !he final &isposi!ion of such ac!ion- sui! or procee&in# upon receip! of an un&er!a5in# b or on behalf of !he Co""issioner- (epu! Co""issioner- officer or e"plo ee !o repa !he a"oun! a&vance& shoul& i! ul!i"a!el be &e!er"ine& b !he Co""ission !ha! !he person is no! en!i!le& !o be in&e"nifie&. SEC. A+F. In a&&i!ion !o !he a&"inis!ra!ive sanc!ions provi&e& else,here in !his Co&e- !he Insurance Co""issioner is hereb au!horiHe&- a! his &iscre!ion- !o i"pose upon insurance co"panies- !heir &irec!ors an&Bor officers an&Bor a#en!s- for an ,illful failure or refusal !o co"pl ,i!h- or viola!ion of an provision of !his Co&e- or an or&er- ins!ruc!ion- re#ula!ion- or rulin# of !he Insurance Co""issioner- or an co""ission or irre#ulari!ies- an&Bor con&uc!in# business in an unsafe or unsoun& "anner as "a be &e!er"ine& b !he Insurance Co""issioner- !he follo,in#. =a> Fines no! less !han Five !housan& pesos =P*-<<<.<<> an& no! "ore !han T,o hun&re& !housan& pesos =P1<<-<<<.<<>6 an& =b> Suspension- or af!er &ue hearin#- re"oval of &irec!ors an&Bor officers an&Bor a#en!s. A(CU(ICATORY PO:ERS

SEC. A+4. The Co""issioner shall have !he po,er !o a&@u&ica!e clai"s an& co"plain!s involvin# an loss- &a"a#e or liabili! for ,hich an insurer "a be ans,erable un&er an 5in& of polic or con!rac! of insurance- or for ,hich such insurer "a be liable un&er a con!rac! of sure! ship- or for ,hich a reinsurer "a be sue& un&er an con!rac! of reinsurance i! "a have en!ere& in!o6 or for ,hich a "u!ual benefi! associa!ion "a be hel& liable un&er !he "e"bership cer!ifica!es i! has issue& !o i!s "e"bers- ,here !he a"oun! of an such loss- &a"a#e or liabili! - e%clu&in# in!eres!- cos! an& a!!orne ;s fees- bein# clai"e& or sue& upon an 5in& of insurance- bon&- reinsurance con!rac!- or "e"bership cer!ifica!e &oes no! e%cee& in an sin#le clai" Five "illion pesos =P*-<<<-<<<.<<>. The po,er of !he Co""issioner &oes no! cover !he rela!ionship be!,een !he insurance co"pan an& i!s a#en!sBbro5ers bu! is li"i!e& !o a&@u&ica!in# clai"s an& co"plain!s file& b !he insure& a#ains! !he insurance co"pan . The Co""issioner "a au!horiHe an officer or #roup of officers un&er hi" !o con&uc! inves!i#a!ionin$uir an&Bor hearin# an& &eci&e clai"s an& he "a issue rules #overnin# !he con&uc! of a&@u&ica!ion an& resolu!ion of cases. The Rules of Cour! shall have supple!or applica!ion. The par! filin# an ac!ion pursuan! !o !he provisions of !his sec!ion !hereb sub"i!s his person !o !he @uris&ic!ion of !he Co""issioner. The Co""issioner shall ac$uire @uris&ic!ion over !he person of !he i"plea&e& par! or par!ies in accor&ance ,i!h an& pursuan! !o !he provisions of !he Rules of Cour!. The au!hori! !o a&@u&ica!e #ran!e& !o !he Co""issioner un&er !his sec!ion shall be concurren! ,i!h !ha! of !he civil cour!s- bu! !he filin# of a co"plain! ,i!h !he Co""issioner shall preclu&e !he civil cour!s fro" !a5in# co#niHance of a sui! involvin# !he sa"e sub@ec! "a!!er. An &ecision- or&er or rulin# ren&ere& b !he Co""issioner af!er a hearin# shall have !he force an& effec! of a @u&#"en!. An par! "a appeal fro" a final or&er- rulin# or &ecision of !he Co""issioner b filin# ,i!h !he Co""issioner ,i!hin !hir! =+<> &a s fro" receip! of cop of such or&er- rulin# or &ecision a no!ice of appeal !o !he Cour! of Appeals in !he "anner provi&e& for in !he Rules of Cour! for appeals fro" !he Re#ional Trial Cour! !o !he Cour! of Appeals. For !he purpose of an procee&in# un&er !his sec!ion- !he Co""issioner- or an officer !hereof &esi#na!e& b hi" is e"po,ere& !o a&"inis!er oa!hs an& affir"a!ion- subpoena ,i!nesses- co"pel !heir a!!en&ance- !a5e evi&ence- an& re$uire !he pro&uc!ion of an boo5s- papers- &ocu"en!s- or con!rac!s or o!her recor&s ,hich are relevan! or "a!erial !o !he in$uir . A full an& co"ple!e recor& shall be 5ep! of all procee&in#s ha& before !he Co""issioner- or !he officers !hereof &esi#na!e& b hi"- an& all !es!i"on shall be !a5en &o,n an& !ranscribe& b a s!eno#rapher appoin!e& b !he Co""issioner. In or&er !o pro"o!e par! au!ono" in !he resolu!ion of cases- !he Co""issioner shall es!ablish a s s!e" for resolvin# cases !hrou#h !he use of al!erna!ive &ispu!e resolu!ion.

?I.

PROCEE(S OF INSURANCE

SEC. *+. The insurance procee&s shall be applie& e%clusivel !o !he proper in!eres! of !he person in ,hose na"e or for ,hose benefi! i! is "a&e unless o!her,ise specifie& in !he polic . 0EIRS OF 8ARA8A) v. 8ARA8A). ).R. The onl persons en!i!le& !o clai" !he insurance procee&s are ei!her. !he insure&- if s!ill alive6 or !he beneficiar - if !he insure& is alrea& &ecease&- upon !he "a!ura!ion of !he polic . E9CEPTION. :here !he insurance con!rac! ,as in!en&e& !o benefi! !hir& persons ,ho are no! par!ies !o !he sa"e in !he for" of favorable s!ipula!ions or in&e"ni! . In such a case- !hir& par!ies "a &irec!l sue an& clai" fro" !he insurer. Pe!i!ioners- as le#i!i"a!e chil&ren- are !hir& par!ies !o !he insurance con!rac!s ,i!h Insular an& )repalife an&- !hus- are no! en!i!le& !o !he procee&s !hereof. Accor&in#l - respon&en!s Insular an& )repalife have no le#al obli#a!ion !o !urn over !he insurance procee&s !o pe!i!ioners. The revoca!ion of Eva as a beneficiar in one polic an& her &is$ualifica!ion as such in ano!her are of no "o"en! consi&erin# !ha! !he &esi#na!ion of !he ille#i!i"a!e chil&ren as beneficiaries in Lore!o;s insurance policies re"ains vali&. 'ecause no le#al proscrip!ion e%is!s in na"in# as beneficiaries !he chil&ren of illici! rela!ionships b !he insure&- !he shares of Eva in !he insurance procee&s- ,he!her forfei!e& b !he cour! in vie, of !he prohibi!ion on &ona!ions un&er Ar!icle 3+4 of !he Civil Co&e or b !he insurers !he"selves for reasons base& on !he insurance con!rac!s- "us! be a,ar&e& !o !he sai& ille#i!i"a!e chil&ren- !he &esi#na!e& beneficiaries- !o !he e%clusion of pe!i!ioners. I! is onl in cases ,here !he insure& has no! &esi#na!e& an beneficiar - or ,hen !he &esi#na!e& beneficiar is &is$ualifie& b la, !o receive !he procee&s- !ha! !he insurance polic procee&s shall re&oun& !o !he benefi! of !he es!a!e of !he insure&.

FIRE INSURANCE

CO?ERA)EBE9TENT

Fire i$%&ra$ce shall inclu&e insurance a#ains! loss b fire- li#h!nin#- ,in&s!or"- !orna&o or ear!h$ua5e an& o!her allie& ris5s- ,hen such ris5s are covere& b e%!ension !o fire insurance policies or un&er separa!e policies.

3dama4e d&e to %mo1e a$d %oot 5 e"cl&ded

EFFECTS OF ALTERATION

:0EN ALTERATION ENTITLES T0E INSURER TO RESCIN( T0E CONTRACT

If al!era!ion is "a&e ,i!hou! !he consen! of !he insurer- !hereb increasin# !he ris5 of !he insure& proper! .

:0EN NOT AFFECTE(

Al!era!ion ,hich &oes no! increase !he ris5

Ac! of !he insure& subse$uen! !o !he e%ecu!ion of !he polic ,hich &oes no! viola!e !he provisions even !hou#h i! increases !he ris5

?II.

SURETYS0IP

CONCEPT. A con!rac! of sure! ship is an a#ree"en! ,hereb a par! calle& !he sure! #uaran!ees !he perfor"ance b ano!her par! calle& !he principal or obli#or of an obli#a!ion or un&er!a5in# in favor of a !hir& par! calle& !he obli#ee. I! inclu&es official reco#niHancess!ipula!ions- bon&s or un&er!a5in#s issue& b an co"pan b vir!ue of an& un&er !he provisions of Ac! No. *+E- as a"en&e& b Ac! No. 11<E.

SURETY The sure! insures !he &eb! Sure! D Pri"aril liable

)UARANTY )uaran!or insures !he &eb!or;s insolvenc )uaran!or D Subsi&iaril liable

Sure! D NOT en!i!le& !o !he benefi! of e%cussion

)uran!or D En!i!le& !o !he benefi! of e%cussion

?III.

LIFE INSURANCE

CO?ERA)EBE9TENT

Life insurance is insurance on hu"an lives an& insurance apper!ainin# !here!o or connec!e& !here,i!h. Ever con!rac! or un&er!a5in# for !he pa "en! of annui!ies inclu&in# con!rac!s for !he pa "en! of lu"p su"s un&er a re!ire"en! pro#ra" ,here a life insurance co"pan "ana#es or ac!s as a !rus!ee for such re!ire"en! pro#ra" shall be consi&ere& a life insurance con!rac! for purposes of !his Co&e. 70eal!h Care Insurance is NOT a Life Insurance bu! an In&e"nifica!ion

I9.

8ICROINSURANCE

8icroinsurance is a financial pro&uc! or service !ha! "ee!s !he ris5 pro!ec!ion nee&s of !he poor ,here. =a> The a"oun! of con!ribu!ions- pre"iu"s- fees or char#es- co"pu!e& on a &ail basis- &oes no! e%cee& seven an& a half percen! =3.*P> of !he curren! &ail "ini"u" ,a#e ra!e for nona#ricul!ural ,or5ers in 8e!ro 8anila6 an& K=b> The "a%i"u" su" of #uaran!ee& benefi!s is no! "ore !han one !housan& =/-<<<> !i"es of !he curren! &ail "ini"u" ,a#e ra!e for nona#ricul!ural ,or5ers in 8e!ro 8anila.

9.

CLAI8S SETTLE8ENT

No insurance co"pan &oin# business in !he Philippines shall refuse- ,i!hou! @us! cause- !o pa or se!!le clai"s arisin# un&er covera#es provi&e& b i!s policies- nor shall an such co"pan en#a#e in unfair clai" se!!le"en! prac!ices. An of !he follo,in# ac!s b an insurance co"pan - if co""i!!e& ,i!hou! @us! cause an& perfor"e& ,i!h such fre$uenc as !o in&ica!e a #eneral business prac!ice- shall cons!i!u!e unfair clai" se!!le"en! prac!ices. =/> Vno,in#l "isrepresen!in# !o clai"an!s per!inen! fac!s or polic provisions rela!in# !o covera#e a! issue6 =1> Failin# !o ac5no,le&#e ,i!h reasonable pro"p!ness per!inen! co""unica!ions ,i!h respec! !o clai"s arisin# un&er i!s policies6 =+> Failin# !o a&op! an& i"ple"en! reasonable s!an&ar&s for !he pro"p! inves!i#a!ion of clai"s arisin# un&er i!s policies6 =A> No! a!!e"p!in# in #oo& fai!h !o effec!ua!e pro"p!- fair an& e$ui!able se!!le"en! of clai"s sub"i!!e& in ,hich liabili! has beco"e reasonabl clear6 or =*> Co"pellin# polic hol&ers !o ins!i!u!e sui!s !o recover a"oun!s &ue un&er i!s policies b offerin# ,i!hou! @us!ifiable reason subs!an!iall less !han !he a"oun!s ul!i"a!el recovere& in sui!s brou#h! b !he". =b> Evi&ence as !o nu"bers an& ! pes of vali& an& @us!ifiable co"plain!s !o !he Co""issioner a#ains! an insurance co"pan - an& !he Co""issioner;s co"plain! e%perience ,i!h o!her insurance co"panies ,ri!in# si"ilar lines of insurance shall be a&"issible in evi&ence in an a&"inis!ra!ive or @u&icial procee&in# brou#h! un&er !his sec!ion. =c> If i! is foun&- af!er no!ice an& an oppor!uni! !o be hear&- !ha! an insurance co"pan has viola!e& !his sec!ion- each ins!ance of nonco"pliance ,i!h para#raph =a> "a be !rea!e& as a separa!e viola!ion of !his sec!ion an& shall be consi&ere& sufficien! cause for !he suspension or revoca!ion of !he co"pan ;s cer!ifica!e of au!hori! . PAY8ENT OF PROCEE(S OF INSURANCE UPON 8ATURITY A. LIFE INSURANCE o o Shall be pai& i""e&ia!el If pa able in ins!all"en!s or as an annui! !he ins!all"en!s- or annui!ies shall be pai& as !he beco"e &ue in !he case of a polic "a!urin# b !he &ea!h of !he insure& !he procee&s !hereof shall be pai& ,i!hin si%! =E<> &a s af!er presen!a!ion of !he clai" an& filin# of !he proof of &ea!h of !he insure&. I! shall inclu&e !he &iscoun!e& value of all pre"iu"s pai& in a&vance of !heir &ue &a!es- bu! are no! &ue an& pa able a! "a!uri! .

EFFECT OF REFUSALBFAILURE TO PAY T0E CLAI8 :IT0IN T0E TI8E PRESCRI'E( IN T0E CO(E Refusal or failure !o pa !he clai" ,i!hin !he !i"e prescribe& herein ,ill en!i!le !he beneficiar !o collec! in!eres! on !he procee&s of !he polic for !he &ura!ion of !he &ela a! !he ra!e of !,ice !he ceilin# prescribe& b !he 8one!ar 'oar&- unless such failure or refusal !o pa is base& on !he #roun& !ha! !he clai" is frau&ulen!. '. PROPERTY INSURANCE The a"oun! of an loss or &a"a#e for ,hich an insurer "a be liable- un&er an polic o!her !han life insurance polic - shall be pai& ,i!hin !hir! =+<> &a s af!er proof of loss is receive& b !he insurer an& ascer!ain"en! of !he loss or &a"a#e is "a&e ei!her b a#ree"en! be!,een !he insure& an& !he insurer or b arbi!ra!ion6 if such ascer!ain"en! is no! ha& or "a&e ,i!hin si%! =E<> &a s af!er such receip! b !he insurer of !he proof of loss- !hen !he loss or &a"a#e shall be pai& ,i!hin nine! =4<> &a s af!er such receip!. EFFECT OF REFUSALBFAILURE TO PAY T0E CLAI8 :IT0IN T0E TI8E PRESCRI'E( IN T0E CO(E Refusal or failure !o pa !he loss or &a"a#e ,i!hin !he !i"e prescribe& herein ,ill en!i!le !he assure& !o collec! in!eres! on !he procee&s of !he polic for !he &ura!ion of !he &ela a! !he ra!e of !,ice !he ceilin# prescribe& b !he 8one!ar 'oar&- unless such failure or refusal !o pa is base& on !he #roun& !ha! !he clai" is frau&ulen!.