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A2015 Insurance Reviewer (Edited) - Sanchez
A2015 Insurance Reviewer (Edited) - Sanchez
Sanchez
Chapter
I
Introduction
By
Claire
A.
Concept
- A
contract
of
insurance
is
any
contract
by
which
one
of
the
parties,
for
a
valuable
consideration,
known
as
a
premium,
assumes
a
risk
of
loss
or
liability
that
rests
upon
the
other,
pursuant
to
a
plan
for
the
distribution
of
such
risk.
- It
is
usually
an
agreement
by
which
one
party,
for
a
consideration,
promises
to
pay
money
or
its
equivalent,
or
to
do
an
act
valuable
to
the
insured,
upon
the
destruction,
loss,
or
injury
of
something
in
which
the
other
party
has
an
interest.
- Contracts
by
which
indemnity
is
promised
under
a
distributive
scheme
against
loss
or
detriment
that
may
be
suffered
by
reason
of
specified
contingencies
B.
Function
and
Purpose
Indemnity
for
loss
The
main
function
of
insurance
is
to
provide
-
compensation
or
indemnity
for
a
loss
which
a
person
may
suffer
due
to
the
happening
of
a
designated
event,
which
may
be
either
contingent
or
uncertain
as
to
the
time
of
its
occurrence.
It
is
based
on
the
concept
of
pooling
the
resources
of
a
-
big
group
of
persons
to
compensate
the
few
among
them
who
may
suffer
some
loss
from
the
accidental
occurrence
of
disastrous
events.
The
effect
is
to
spread,
in
an
equitable
manner,
the
-
loss
which
would
normally
fall
upon
a
single
individual
among
the
members
of
a
large
group
exposed
to
the
same
risks.
Risk
Distributing
Device
A
contract
of
insurance
is
fundamentally
a
risk-
-
distributing
device.
It
equitably
distributes
losses
out
of
a
general
fund
-
contributed
by
all.
The
device
of
insurance
serves
to
distribute
the
risk
of
-
economic
loss
among
as
many
possible
of
those
who
are
subject
to
the
same
kind
of
risk.
Each
member
contributes
toward
compensation
for
-
losses
suffered
by
any
member,
by
paying
a
pre-
determined
amount
into
a
general
fund,
out
of
which
payment
will
be
made.
It
provides
protection
against
absorbing
ones
losses
-
alone.
The
member
has
no
way
of
knowing
in
advance
-
whether
he
will
receive
compensation
more
than
he
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
INSURANCE
FINALS REVIEWER
5.
-
-
-
6.
-
-
7.
-
-
-
-
Fire
Insurance
It
did
not
assume
importance
until
the
great
fire
of
London
in
1666.
The
oldest
fire
insurance
company,
Sun
Fire
Office
was
established
in
England,
in
1770.
Life
Insurance
It
is
one
of
the
newest
kinds
of
insurance.
Religious
and
moral
reasons
hindered
its
development.
It
was
considered
as
wagers
on
life,
and
was
thus
prohibited
in
many
countries.
The
first
society
formed
for
insuring
against
loss
of
life
was
Equitable
Assurance
Society
of
London,
established
in
1762.
8.
-
-
Accident
Insurance
It
was
derived
from
life
insurance.
At
first,
accident
insurance
companies
granted
indemnity
against
railway
accidents
only,
but
eventually
expanded
to
include
accidents
of
all
kinds.
9.
-
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
-
-
-
-
-
-
-
-
-
-
-
-
-
Aboitiz
Shipping
v
New
India
Assurance
F:
SFDC
loaded
a
cargo
of
textiles
and
auxiliary
chemicals
on
a
vessel
owned
by
FBSI.
Cargo
was
consigned
to
General
Textile
Inc.
and
insured
by
New
India
Assurance
Ltd.
In
HK,
the
cargo
was
transferred
to
M/V
P.
Aboitiz
for
transhipment
to
Manila.
Japanese
Meteorological
Center
advised
that
it
was
safe
to
travel
but
while
at
sea,
a
report
said
that
a
typhoon
was
moving
to
the
ships
general
path.
The
vessel
changed
its
course
however,
its
hull
leaked,
and
the
vessel
sank.
H:
Doctrine
of
limited
liability
does
not
apply.
From
the
nature
of
their
business
and
for
reasons
of
public
policy,
common
carriers
are
bound
to
observe
extraordinary
diligence
over
the
goods
they
transport
according
to
all
the
circumstances
of
each
case.
In
the
event
of
loss,
destruction,
or
deterioration
of
the
insured
goofs,
common
carriers
are
responsible
and
are
presumed
to
have
been
at
fault,
unless
they
can
prove
that
it
was
brought
about
by
causes
under
CC
1734.
Aboitiz
failed
to
overcome
the
burden
of
showing
that
it
exercised
extraordinary
diligence
in
the
transport
of
goods.
Both
TC
and
CA
found
that
the
sinking
was
due
to
the
vessels
unseaworthiness,
and
that
the
weather
was
moderate
when
it
sank.
D.
Laws
Governing
Insurance
1. The
Insurance
Code
Ang
Giok
Chip
v
Springfield
F:
Ang
Giok
Chip
was
the
owner
of
a
warehouse,
the
contents
of
which
were
insured
with
3
companies
for
the
total
of
P60k.
The
warehouse
was
destroyed
by
fire,
while
the
policy
issued
by
Springfield
worth
P10k
was
in
force.
P
seeks
to
recover
a
proportional
part
of
the
loss.
D
claimed
a
violation
of
warranty
F,
fixing
the
amount
of
hazardous
goods
which
might
be
stored
in
the
insured
building
to
a
maximum
of
3%.
More
than
3%
of
the
total
value
of
the
merchandise
constituted
hazardous
goods
(39%).
H:
Warranty
F
is
valid.
The
applicable
law
is
Sec
65
of
the
Insurance
Act:
Every
express
warranty,
made
at
or
before
the
execution
of
a
policy,
must
be
contained
in
the
policy
itself,
or
in
another
instrument
signed
by
the
insured
and
referred
to
in
the
policy,
as
making
part
of
it.
A
rider
attached
to
a
policy
is
a
part
of
the
contract,
to
the
same
extent
and
with
like
effect
as
if
actually
embodied
therein.
An
express
warranty
must
appear
upon
the
face
of
the
policy,
or
be
clearly
incorporated
therein
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
Chapter
II
The
Contract
of
Insurance
By
Claire
A.
Definitions
Sec.
2.
Whenever
used
in
this
Code,
the
following
terms
shall
have
the
respective
meanings
hereinafter
set
forth
or
indicated,
unless
the
context
otherwise
requires:
(1)
A
"contract
of
insurance"
is
an
agreement
whereby
one
undertakes
for
a
consideration
to
indemnify
another
against
loss,
damage
or
liability
arising
from
an
unknown
or
contingent
event.
A
contract
of
suretyship
shall
be
deemed
to
be
an
insurance
contract,
within
the
meaning
of
this
Code,
only
if
made
by
a
surety
who
or
which,
as
such,
is
doing
an
insurance
business
as
hereinafter
provided.
(2)
The
term
"doing
an
insurance
business"
or
"transacting
an
insurance
business",
within
the
meaning
of
this
Code,
shall
include:
making
or
proposing
to
make,
as
insurer,
any
insurance
contract;
making
or
proposing
to
make,
as
surety,
any
contract
of
suretyship
as
a
vocation
and
not
as
merely
incidental
to
any
other
legitimate
business
or
activity
of
the
surety;
doing
any
kind
of
business,
including
a
reinsurance
business,
specifically
recognized
as
constituting
the
doing
of
an
insurance
business
within
the
meaning
of
this
Code;
doing
or
proposing
to
do
any
business
in
substance
equivalent
to
any
of
the
foregoing
in
a
manner
designed
to
evade
the
provisions
of
this
Code.
In
the
application
of
the
provisions
of
this
Code
the
fact
that
no
profit
is
derived
from
the
making
of
insurance
contracts,
agreements
or
transactions
or
that
no
separate
or
direct
consideration
is
received
therefor,
shall
not
be
deemed
conclusive
to
show
that
the
making
thereof
does
not
constitute
the
doing
or
transacting
of
an
insurance
business.
As
used
in
this
code,
the
term
"Commissioner"
means
the
"Insurance
Commissioner".
Sec.
3.
Any
contingent
or
unknown
event,
whether
past
or
future,
which
may
damnify
a
person
having
an
insurable
interest,
or
create
a
liability
against
him,
may
be
insured
against,
subject
to
the
provisions
of
this
chapter.
Contract
of
Insurance
An
agreement
whereby
one
undertakes
for
a
-
consideration
to
indemnify
another
against
loss,
damage
or
liability
arising
from
an
unknown
or
contingent
event.
A
contract
of
insurance
is
an
agreement
by
which
one
-
party
(insurer),
for
a
consideration
(premium)
paid
by
the
other
party,
promises
to
pay
money
or
its
equivalent
or
to
do
some
act
valuable
to
the
latter
(or
his
nominee(,
upon
the
happening
of
a
loss,
damage,
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
b.
Group
Life
Sec.
50.
The
policy
shall
be
in
printed
form
which
may
contain
blank
spaces;
and
any
word,
phrase,
clause,
mark,
sign,
symbol,
signature,
number,
or
word
necessary
to
complete
the
contract
of
insurance
shall
be
written
on
the
blank
spaces
provided
therein.
Any
rider,
clause,
warranty
or
endorsement
purporting
to
be
part
of
the
contract
of
insurance
and
which
is
pasted
or
attached
to
said
policy
is
not
binding
on
the
insured,
unless
the
descriptive
title
or
name
of
the
rider,
clause,
warranty
or
endorsement
is
also
mentioned
and
written
on
the
blank
spaces
provided
in
the
policy.
Unless
applied
for
by
the
insured
or
owner,
any
rider,
clause,
warranty
or
endorsement
issued
after
the
original
policy
shall
be
countersigned
by
the
insured
or
owner,
which
countersignature
shall
be
taken
as
his
agreement
to
the
contents
of
such
rider,
clause,
warranty
or
endorsement.
Group
insurance
and
group
annuity
policies,
however,
may
be
typewritten
and
need
not
be
in
printed
form.
Sec.
228.
No
policy
of
group
life
insurance
shall
be
issued
and
delivered
in
the
Philippines
unless
it
contains
in
substance
the
following
provisions,
or
provisions
which
in
the
opinion
of
the
Commissioner
are
more
favorable
to
the
persons
insured,
or
at
least
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
therewith.
Sec.
180.
An
insurance
upon
life
may
be
made
payable
on
the
death
of
the
person,
or
on
his
surviving
a
specified
period,
or
otherwise
contingently
on
the
continuance
or
cessation
of
life.
Every
contract
or
pledge
for
the
payment
of
endowments
or
annuities
shall
be
considered
a
life
insurance
contract
for
purpose
of
this
Code.
In
the
absence
of
a
judicial
guardian,
the
father,
or
in
the
latter's
absence
or
incapacity,
the
mother,
or
any
minor,
who
is
an
insured
or
a
beneficiary
under
a
contract
of
life,
health
or
accident
insurance,
may
exercise,
in
behalf
of
said
minor,
any
right
under
the
policy,
without
necessity
of
court
authority
or
the
giving
of
a
bond,
where
the
interest
of
the
minor
in
the
particular
act
involved
does
not
exceed
twenty
thousand
pesos.
Such
right
may
include,
but
shall
not
be
limited
to,
obtaining
a
policy
loan,
surrendering
the
policy,
receiving
the
proceeds
of
the
policy,
and
giving
the
minor's
consent
to
any
transaction
on
the
policy.
Sec.
180-A.
The
insurer
in
a
life
insurance
contract
shall
be
liable
in
case
of
suicides
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.
2.
Non-life
Includes
policies
covering
risks
to
which
property
may
-
be
exposed,
as
well
as
those
which
cover
the
risk
of
liability
to
third
persons.
This
may
be
open,
valued,
or
running.
-
These
are
mostly
time
policies,
such
that
they
have
a
-
definite
period
of
coverage.
a.
Marine
Sec.
99.
Marine
Insurance
includes:
xxx
(2)
"Marine
protection
and
indemnity
insurance,"
meaning
insurance
against,
or
against
legal
liability
of
the
insured
for
loss,
damage,
or
expense
incident
to
ownership,
operation,
chartering,
maintenance,
use,
repair,
or
construction
of
any
vessel,
craft
or
instrumentality
in
use
of
ocean
or
inland
waterways,
including
liability
of
the
insured
for
personal
injury,
illness
or
death
or
for
loss
of
or
damage
to
the
property
of
another
person.
b.
Fire
Sec.
167.
As
used
in
this
Code,
the
term
"fire
insurance"
shall
include
insurance
against
loss
by
fire,
lightning,
windstorm,
tornado
or
earthquake
and
other
allied
risks,
when
such
risks
are
covered
by
extension
to
fire
insurance
policies
or
under
separate
policies.
c.
Casualty
Sec.
174.
Casualty
insurance
is
insurance
covering
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.
It
includes,
but
is
not
limited
to,
employer's
liability
insurance,
motor
vehicle
liability
insurance,
plate
glass
insurance,
burglary
and
theft
insurance,
personal
accident
and
health
insurance
as
written
by
non-life
insurance
companies,
and
other
substantially
similar
kinds
of
insurance.
d.
Suretyship
Sec.
175.
A
contract
of
suretyship
is
an
agreement
whereby
a
party
called
the
surety
guarantees
the
performance
by
another
party
called
the
principal
or
obligor
of
an
obligation
or
undertaking
in
favor
of
a
third
party
called
the
obligee.
It
includes
official
recognizances,
stipulations,
bonds
or
undertakings
issued
by
any
company
by
virtue
of
and
under
the
provisions
of
Act
No.
536,
as
amended
by
Act
No.
2206.
3.
Other
modes
of
classification
a.
private
and
pubis
(voluntary
and
compulsory
Private
(voluntary)
Person
takes
insurance
out
himself.
-
Pubis
(compulsory)
Insurance
is
required.
(ex.
SSS,
GSIS)
-
-
first
party
insurance
and
third
party
insurance
In
first
party
insurance,
the
contract
between
the
-
insurer
and
the
insured
is
designed
to
indemnify
the
insured
for
a
loss
suffered
directly
by
the
insured.
In
third
party
insurance,
the
interests
protected
by
the
-
contract
are
those
of
third
parties
injured
by
the
insured.
If
the
insured
negligently
causes
injury
to
a
third
party,
-
the
third
party
will
posses
a
claim
against
the
insured.
The
loss
is
indirect
in
that
it
is
the
third
party
who
suffer
the
direct
loss.
4.
Some
life
insurance
plans
in
the
market
a.
whole
life
plan
Insured
agrees
to
pay
premiums
while
he
lives.
-
Insurer
agrees
to
pay
face
value
upon
death
of
the
-
insured.
b.
limited
payment
plan
Insured
agrees
to
pay
premiums
only
for
a
specified
-
number
of
years.
Should
he
survive
that
period,
he
would
stop
paying.
-
Insurer
pays
the
proceeds
upon
his
death.
Should
he
die
before
the
expiration
of
the
period,
the
-
beneficiary
is
entitled
to
the
proceeds
without
having
to
pay
the
remainder.
c.
term
plan
Insurers
liability
arises
upon
the
death
of
the
insured,
-
within
the
agreed
period.
If
the
insured
survives,
the
insurer
is
not
liable
for
-
anything.
d.
pure
endowment
plan
Insured
pays
premiums
for
a
specified
period.
-
Should
he
survive,
the
insurer
pays
the
face
value
of
-
the
policy.
Should
he
die
within
the
period,
the
insurer
is
released
-
from
liability,
unless
otherwise
provided.
e.
endowment
plan
Whether
insured
lives
or
dies,
insurer
is
liable.
-
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
f.
others
D.
Construction/Interpretation
of
Insurance
Contracts
1.
Basis/Rationale
Where
terms
are
clear
The
cardinal
principle
of
insurance
law
in
interpreting
-
contracts
favorably
to
the
insured
is
applicable
only
in
cases
of
doubt.
When
the
intention
of
the
policy
is
clear
or
the
language
is
sufficiently
clear
to
convey
the
meaning
of
the
parties,
no
interpretation
may
be
done.
The
court
is
bound
to
adhere
to
the
insurance
contract
-
as
the
authentic
expression
of
the
intention
of
the
parties,
and
it
must
be
construed
and
enforced
according
to
the
sense
and
meaning
of
the
terms
which
the
parties
themselves
have
used.
-
Where
there
is
ambiguity
or
doubt
General
Rule:
Contracts
of
insurance
are
to
be
construed
liberally
in
favor
of
the
insured,
and
strictly
against
the
insurer,
resolving
all
ambiguities
against
the
latter,
so
as
to
effect
its
dominant
purpose
of
indemnity
or
payment
to
the
insured.
An
insurance
policy
is
a
contract
of
adhesion.
The
-
insurer
is
under
the
duty
to
make
its
meaning
clear
if
it
desires
to
limit
or
restrict
the
operation
of
the
general
provisions
of
its
contract.
Cases
Cebu
Shipyard
v
William
Line
F:
William
Lines
insured
its
M/V
Manila
City
under
Prudential
Guarantee
for
hull
and
machinery.
The
policy
contained
a
clause
providing
that
loss/damage
caused
by
negligence
or
charterers
or
repairers
are
excluded
from
the
coverage.
William
Lines
brought
the
vessel
to
Cebu
Shipyard
for
annual
dry-docking
and
repair.
The
two
executed
contracts
stipulating
the
liabilities
of
both
parties,
including
that
the
insurance
on
the
vessel
should
be
maintained
by
the
owner
during
the
period
of
the
contract.
After
the
vessel
was
transferred
to
the
docking
quay,
it
caught
fire
and
sank.
Cebu
Shipyard
claims
that
it
is
a
co-assured
by
virtue
of
the
clause,
therefore
no
subrogation
can
be
made
by
Prudential.
H:
Cebu
Shipyard
is
not
a
co-assured
in
the
policy.
William
lines
merely
undertook
to
maintain
the
insurance
while
under
dry-
docking
and
repair.
The
intention
of
the
parties
to
make
each
other
co-assured
is
to
be
gleaned
from
the
insurance
contract
or
the
polity,
and
not
from
any
other
contract
or
agreement.
New
Life
Enterprises
v
CA
F:
New
Life
acquired
insurance
for
their
stock
in
trade
(construction
materials)
from
three
companies.
A
fire,
electrical
in
nature,
destroyed
the
building
and
stocks
in
trade.
The
company
claimed
for
payment,
but
all
three
denied
the
claim
for
breach
of
policy
condition,
which
required
the
insured
to
give
notice
to
the
insurer
if
any
other
insurances
are
effected
or
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
10
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
11
2.
Chapter
III
INSURABLE
INTEREST
B.
Insurable
interest
in
life/health
Sec
10
-
Every
person
has
an
insurable
interest
in
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
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.
1.
Notes:
2
general
classes
of
life
policies:
1. Insurance
upon
one's
life
-
for
the
benefit
of
himself,
or
of
his
estate
or
for
the
benefit
of
a
third
person
designated
as
beneficiary.
-
Does
not
usually
present
an
insurable
interest
question,
only
requires
good
faith
-
The
mere
fact
that
a
man
on
his
own
motion
insures
his
life
for
the
benefit
of
either
himself
or
of
another
is
sufficient
evidence
of
good
faith.
-
If
taken
out
for
the
benefit
of
another,
it
is
similar
to
a
donation
in
that
it
is
made
out
of
the
liberality
of
the
insured.
2. Insurance
upon
the
life
of
another
-
must
have
insurable
interest
in
the
life
of
that
person.
-
The
insurable
interest
in
the
life
of
another
must
be
a
pecuniary
one
and
it
exists
whenever
the
relation
between
the
assured
and
the
insured,
whether
by
blood,
marriage
or
commercial
intercourse,
is
such
that
the
assured
shall
have
an
interest
to
preserve
the
life
insured
in
spite
of
the
insurance,
rather
than
destroy
it
because
of
the
insurance.
-
When
the
insurance
is
on
the
life
of
another
and
for
the
benefit
of
a
third
party
beneficiary,
both
the
owner
and
beneficiary
must
have
an
insurable
interest
in
the
life
of
the
subject
person
(cestui
que
vie).
If
such
requirement
is
satisfied,
the
life
policy
is
assignable
even
without
further
satisfying
the
requirement.
-
Generally,
blood
or
material
relationships
fit
the
concept
of
insurable
interest.
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
By
Kaye
A.
Definition
&
Purpose
An
interest
of
some
kind
susceptible
of
pecuniary
estimation
It
is
that
interest
which
the
law
requires
to
owner
of
an
insurance
policy
to
have
in
the
person
or
thing
insured.
Pecuniary
in
nature
-
where
the
insured
will
derive
financial
benefit
or
advantage
from
its
preservation
and
will
suffer
pecuniary
loss
or
damage
from
its
destruction
Exception:
in
life
insurance,
the
benefit
need
not
be
pecuniary
in
nature
The
requirement
that
a
person
must
have
an
interest
over
the
property
in
order
that
he
may
legally
insure
the
same
is
a
matter
of
public
policy.
It
affords
temptation
or
an
inducement
to
the
insured,
having
nothing
to
lose
and
everything
to
gain,
to
bring
to
pass
the
event
upon
he
happening
of
peril
insured
against.
1. Recall
definition
of
an
insurance
contract:
12
1.
Sec
11
-
The
insured
shall
have
the
right
to
change
the
beneficiary
he
designated
in
the
policy,
unless
he
has
expressly
waived
his
right
in
said
policy.
Notes:
-
General
rule:
insured
has
he
right
to
change
the
beneficiary
without
the
consent
of
the
latter.
Exception:
when
such
right
is
expressly
waived.
In
such
case,
insured
may
change
beneficiary
only
with
the
consent
of
the
latter.
-
Beneficiary
-
the
person
who
is
named
or
designated
in
a
contract
of
life,
health,
or
accident
as
the
one
who
is
to
receive
the
benefits
upon
the
death
of
the
insured.
Kinds
of
beneficiary:
1.
The
insured
himself
2.
Third
person
who
paid
a
consideration
3.
Third
person
through
mere
bounty
of
the
insured
(no
consideration)
Limitations
in
the
appointment
of
beneficiary:
Art.
2012.
Any
person
who
is
forbidden
from
receiving
any
donation
under
Article
739
cannot
be
named
beneficiary
of
a
life
insurance
policy
by
the
person
who
cannot
make
any
donation
to
him,
according
to
said
article.
Art.
739.
The
following
donations
shall
be
void:
(1)
Those
made
between
persons
who
were
guilty
of
adultery
or
concubinage
at
the
time
of
the
donation;
(2)
Those
made
between
persons
found
guilty
of
the
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
13
c. Expectancy
Insurable
interest
may
either
be
in
the
form
of
a
benefit
expected
from
the
goods
OR
an
expected
loss
if
the
goods
be
subject
to
risks.
In
this
case,
when
goods
are
damaged,
the
consignee
may
be
held
liable
for
the
value
of
such
damage.
Gaisano
Cagayan
v.
Insurance
Co.
of
North
America
F:
Insured
took
out
a
book
debts
insurance
policy
on
its
accounts
receivables
so
long
as
the
debts
appear
on
the
books
of
the
insured
within
45
days
from
the
time
of
loss.
Fire
broke
out
in
Gaisanos
(dealer-debtor)
warehouse
destroying
readymade
goods.
Insured
claimed
against
the
insurer
which
the
latter
paid
and
thus
now
claim
that
it
had
been
subrogated
to
the
rights
of
the
insured
for
collection
against
the
petitioner.
Gaisano
claims
that
there
cannot
be
insurance
over
a
credit
and
insured
did
not
have
insurable
interests
over
the
goods
because
ownership
had
been
transferred
upon
delivery
of
the
goods
to
them.
H:
Insurable
interest
exists
when
the
insured
either
derives
benefit
from
the
existence
of
the
property
OR
incurs
a
loss
upon
its
destruction.
For
as
long
as
there
is
an
economic
interest
over
the
property,
regardless
of
ownership,
one
has
an
insurable
interest.
In
this
case,
the
insurable
interest
is
the
payment
of
the
credit
due
to
the
companies.
3. Measure
of
insurable
interest
in
property
Sec
15
-
A
carrier
or
depository
of
any
kind
has
an
insurable
interest
in
a
thing
held
by
him
as
such,
to
the
extent
of
his
liability
but
not
to
exceed
the
value
thereof.
Sec
16
-
A
mere
contingent
or
expectant
interest
in
anything,
not
founded
on
an
actual
right
to
the
thing,
nor
upon
any
valid
contract
for
it,
is
not
insurable.
Notes:
-
A
son
cannot
insure
specific
properties
of
his
father
upon
expectancy
of
inheriting.
-
A
creditor
cannot
insure
specific
properties
of
the
debtor
who
is
alive.
But
an
unsecured
creditor
may
insure
the
property
of
the
deceased
debtor.
An
unsecured
may
also
insure
the
specific
property
of
the
debtor
if
after
obtaining
a
judgment
he
is
able
to
prove
that
the
debtor
has
no
other
properties
which
may
satisfy
the
judgment.
Cases:
Filipino
Merchants
Ins.
Co.
v.
CA
F:
A
consignee
is
the
insured
in
an
"all
risks"
insurance
policy
that
it
took
over
goods
on
board
and
to
be
delivered
in
Manila.
Upon
arrival
at
destination,
goods
were
found
to
be
damaged.
Insurer
refused
to
pay
among
the
grounds
of
which
is
that
allegedly
the
consignee
has
no
insurable
interest
over
the
goods.
H:
A
consignee
of
the
goods
has
an
insurable
interest.
Insurable
interest
may
either
be:
a. Existing
b. Inchoate
interest
derived
from
an
existing
interest
Sec
17
-
The
measure
if
an
insurable
interest
in
property
is
the
extent
to
which
the
insured
might
be
damnified
by
loss
or
injury
thereof.
Notes:
-
The
mortgagor
has
insurable
interest
to
the
extent
of
the
value
of
the
property.
-
The
mortgagee
has
insurable
interest
only
to
the
extent
of
the
credit
due
to
him.
-
Going
back
to
the
purpose
of
an
insurance,
it
is
an
indemnity
for
loss
suffered
and
is
intended
to
place
the
insured
in
its
status
before
the
occurrence
of
the
peril.
It
should
not
result
to
a
profit
on
the
part
of
the
insured.
Measure
of
indemnity
in
specific
contracts
1. Marine
or
Fire
insurance
-
either
fixed
or
open.
If
fixed,
the
amount
of
indemnity
cannot
exceed
the
amount
of
total
loss
despite
a
higher
fixed
value
of
the
policy.
2. Liability
insurance
-
does
not
become
payable
unless
the
insured
suffers
a
loss
from
the
liability.
Thus,
if
the
liability
is
unenforceable,
insurer
incurs
no
obligation.
3. Life
insurance
-
the
amount
id
always
fixed
and
payable
upon
death.
Such
amount
does
not
necessarily
approximate
the
value
of
the
life
of
the
person
rather
it
is
merely
the
amount
that
the
insurer
bound
itself
to
pay.
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
1.
14
5.
6.
4.
Sec
19
-
An
interest
in
property
insured
must
exist
when
the
insurance
takes
effect,
and
when
the
loss
occurs,
but
need
not
exist
in
the
meantime;
and
interest
in
life
or
health
of
a
person
insured
must
exist
when
the
insurance
takes
effect,
but
need
not
exist
thereafter
or
when
the
loss
occurs.
Notes:
-
Insurable
interest
on
PROPERTY:
a.
At
the
time
the
policy
takes
effect
(at
the
time
procured),
and
b.
At
the
time
of
loss
- Otherwise,
the
policy
is
void
-
Insurable
interest
in
LIFE
a.
At
the
time
the
policy
takes
effect
- "need
not
exist
in
the
meantime"
means
need
not
exist
in
the
intervening
period
Sec
20
-
Except
in
the
cases
specified
in
the
next
four
sections,
and
in
cases
of
life,
accident,
and
health
insurance,
a
change
of
interest
in
any
part
of
a
thing
insured
unaccompanied
by
a
corresponding
change
of
interest
in
the
insurance,
suspends
the
insurance
to
an
equivalent
extent,
until
the
interests
in
the
thing
and
the
interest
in
the
insurance
are
vented
in
the
same
person.
Notes:
-
Mere
transfer
of
the
property
does
not
transfer
the
policy
but
suspends
it
until
the
same
person
becomes
the
owner
of
both
the
policy
and
the
thing
insured.
-
When
insurance
contracts
are
not
suspended:
1. Life,
health
and
accident
insurance
2. Change
in
interest
after
the
occurrence
of
the
peril
3. Change
of
interest
in
one
or
more
of
several
things
separately
insured
by
one
policy
4. Change
of
interest
by
will
or
succession
on
death
of
insured
5. Transfer
of
interest
by
one
of
several
partners,
joint
owners,
or
owners
in
common,
who
are
jointly
insured
6. When
the
policy
provides
that
the
policy
shall
inure
to
the
benefit
of
whoever
owns
the
interest
insured
7. When
there
is
express
prohibition
against
alienation
of
policy
in
which
case
alienation
shall
AVOID
instead
of
suspend
the
policy
Note:
If
separately
insured
in
one
policy,
then
it
is
divisible
thus
the
change
in
interest
in
one
does
not
affect
the
other.
But
if
they
are
insured
under
one
policy
with
a
gross
sum
and
for
an
entire
premium,
the
policy
is
indivisible.
Sec
23
-
A
change
of
interest,
by
will
or
succession,
on
the
death
of
the
insured,
does
not
avoid
an
insurance;
and
his
interest
in
the
insurance
passes
to
the
person
taking
his
interest
in
the
thing
insured.
Note:
An
insurance
on
property
passes
automatically
to
the
heir
or
legatee
or
devisee
who
acquired
the
property
upon
the
death
of
the
insured.
Sec
24
-
A
transfer
of
interest
by
one
of
several
partners,
joint
owners,
or
owners
in
common,
who
are
jointly
insured,
to
the
others,
does
not
avoid
an
insurance
even
though
it
has
been
agreed
that
the
insurance
shall
cease
upon
an
alienation
of
the
thing
insured.
Notes:
-
If
interest
is
transferred
to
other
partners/co-owners,
contract
is
not
avoided
since
the
hazard
is
not
increased
by
the
fact
that
one
owner
gained
a
greater
interest
in
the
property
than
he
used
to
have.
But
if
the
policy
contains
a
specific
prohibition,
it
shall
be
avoided
if
made
without
the
consent
of
the
insurer.
-
If
interest
is
transferred
to
strangers,
policy
is
avoided.
Sec
53
-
The
insurance
proceeds
shall
be
applied
exclusively
to
the
proper
interest
of
the
person
in
whose
name
or
for
whose
benefit
it
is
made
unless
otherwise
specified
in
the
policy.
Note:
The
benefits
of
a
contract
of
insurance,
such
agreement
being
personal
to
the
insurer
and
the
insured,
cannot
inure
to
the
benefit
of
a
third
person
even
if
the
insured
and
such
third
person
both
have
interests
in
the
same
property
except
if
the
contract
is
one
of
an
express
or
implied
trust.
Sec
57
-
A
policy
may
be
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.
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
4.
15
Note:
The
person
claiming
the
benefit
must
at
least
prove
that
he
is
the
person
named
in
the
contract
if
insurance
as
the
proper
recipient
of
the
proceeds.
D.
Double
insurance
and
over
insurance
Notes:
-
There
is
co-insurance
by
two
or
more
insurers.
-
Requisites:
1. The
person
insured
is
the
same
2. Two
or
more
insurers
insuring
separately
3. The
subject
matter
is
the
same
4. The
interest
insured
is
also
the
same
5. The
risk
or
peril
insured
against
is
likewise
the
same
*Double
insurance
vs.
Over-insurance
Over
Insurance
Double
Insurance
Amount
of
insurance
is
Does
not
necessarily
result
in
beyond
the
value
of
over
insurance
as
when
the
the
insured's
insurable
total
amount
of
the
indemnity
interest
provided
by
the
co-insurers
do
not
exceed
the
value
of
the
interest.
May
involve
only
one
Always
more
than
one
insurer
insurer
-
"Other
insurance"
clause-provided
for
in
contracts
which
expressly
prohibit
procuring
of
other
insurance
contracts
which
have
for
their
subject
the
same
insurable
interest
without
the
consent
of
the
insurer.
Without
this
stipulation,
additional
insurance
obtained
shall
not
invalidate
the
contract
except
if
it
results
in
an
over-insurance.
Purpose:
to
prevent
perpetration
of
fraud
and
over-insurance.
Sec
94
-
Where
the
insured
is
over-insured
by
double
insurance:
(a)
The
insured,
unless
the
policy
otherwise
provides,
may
claim
payment
from
the
insurers
in
such
order
as
he
may
select,
up
to
the
amount
for
which
the
insurers
are
severally
liable
under
their
respective
contracts;
(b)
Where
the
policy
under
which
the
insured
claims
is
a
valued
policy,
the
insured
must
give
credit
as
against
the
valuation
for
any
sum
received
by
him
under
any
other
policy
without
regard
to
the
actual
value
of
the
subject
matter
insured;
(c)
Where
the
policy
under
which
the
insured
claims
is
an
unvalued
policy
he
must
give
credit,
as
against
the
full
insurable
value,
for
any
sum
received
by
him
under
any
policy;
(d)
Where
the
insured
receives
any
sum
in
excess
of
the
valuation
in
the
case
of
valued
policies,
or
of
the
insurable
value
in
the
case
of
unvalued
policies,
he
Notes:
-
Contribution
Principle-requires
each
insurer
to
contribute
rateably
to
the
loss
or
damage.
This
applies
only
when
there
is
over-insurance
because
otherwise,
each
insurer
shall
indemnify
for
the
total
amount
of
policy
that
they
bound
themselves
to
pay.
E.
Multiple
or
several
interests
on
same
property;
special
provisions
on
mortgagor
&
mortgagee
Sec
8
-
Unless
the
policy
otherwise
provides,
where
a
mortgagor
of
property
effects
insurance
in
his
own
name
providing
that
the
loss
shall
be
payable
to
the
mortgagee,
or
assigns
a
policy
of
insurance
to
a
mortgagee,
the
insurance
is
deemed
to
be
upon
the
interest
of
the
mortgagor,
who
does
not
cease
to
be
a
party
to
the
original
contract,
and
any
act
of
his,
prior
to
the
loss,
which
would
otherwise
avoid
the
insurance,
will
have
the
same
effect,
although
the
property
is
in
the
hands
of
the
mortgagee,
but
any
act
which,
under
the
contract
of
insurance,
is
to
be
performed
by
the
mortgagor,
may
be
performed
by
the
mortgagee
therein
named,
with
the
same
effect
as
if
it
had
been
performed
by
the
mortgagor.
Sec
9
-
If
an
insurer
assents
to
the
transfer
of
an
insurance
from
a
mortgagor
to
a
mortgagee,
and,
at
the
time
of
his
assent,
imposes
further
obligation
on
the
assignee,
making
a
new
contract
with
him,
the
act
of
the
mortgagor
cannot
affect
the
rights
of
said
assignee.
Notes:
-
General
Rule:
Policy
take
out
by
the
mortgagor
does
not
inure
to
the
benefit
of
the
mortgagee.
Except:
If
the
policy
provides
that
the
proceeds
shall
be
payable
to
the
mortgagee.
In
this
case,
despite
such
assignment
by
the
mortgagor,
he
shall
remain
to
be
a
party
to
the
contract
and
his
acts
prior
to
loss
shall
produce
the
same
effects
as
if
he
is
the
named
insured
of
the
insurance
contract.
Any
act
of
the
mortgagee
pertaining
to
the
mortgagor
shall
produce
the
same
effect
as
if
it
was
performed
by
the
mortgagor
himself.
If
the
mortgagee
procures
an
insurance,
the
destruction
of
the
mortgaged
property
makes
the
insurer
liable
to
the
insured
but
it
shall
not
extinguish
the
liability
of
the
mortgagor,
instead
there
is
subrogation
of
the
insurer
to
rights
of
the
insured
to
collect
from
the
mortgagor.
>>
Exception:
if
mortgagee
procures
the
insurance
policy
for
the
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
16
Different
ways
where
a
mortgagee
may
become
the
beneficial
payee
in
a
policy
(Geogina
vs
CA):
1. Assignment
-
as
an
assignee
of
the
policy
with
the
consent
of
the
insurer
2. As
a
pledgee
of
the
thing
without
such
consent
(by
designation
in
the
policy)
3. The
original
policy
contains
an
open
mortgage
clause
4. A
rider
making
the
policy
payable
to
the
mortgagee
"as
his
interest
may
appear"
5. A
"standard
mortgage
clause"
containing
a
collateral
independent
contract
between
the
mortgagee
and
the
insurer
6. If
the
policy
names
the
mortgagor
the
payee
but
the
procurement
of
such
insurance
is
under
a
contract
duty
to
insure
the
mortgagee's
benefit.
Mortgage
clauses:
1. Standard
or
Union
mortgage
clause
-
acts
of
the
mortgagor
does
not
affect
the
mortgagee
2. Open
or
loss-payable
mortgage
clause
-
acts
of
the
mortgagor
affect
the
mortgagee
-
Where
a
new
and
distinct
consideration
passes
from
the
mortgagee
to
the
insurer,
a
new
contract
is
created
between
them
(novation).
Cases:
Geogina
v.
CA
F:
Insured
secured
a
fire
insurance
policy
from
insurer
for
his
business.
Policy
provided
that
the
petitioner
is
obliged
to
notify
the
insurer
of
any
other
policy
obtained
it
over
the
property
and
failure
to
do
so
shall
mean
forfeiture
(other
insurance
clause).
However,
the
clause
shall
not
apply
if
the
total
insurance
is
not
more
than
200,000.
The
property
was
caught
in
a
fire
and
thus
insured
claimed
for
the
indemnity.
Respondent
denied
the
claim
alleging
violation
of
the
condition.
H:
Although
the
provision
of
the
policy
is
a
valid
stipulation,
such
was
not
violated
by
the
insured
despite
its
knowledge
of
another
insurance
policy
over
the
same
property.
In
this
case,
the
other
policies
over
the
property
were
obtained
by
the
mortgagee.
As
a
mortgagee,
he
holds
a
different
insurable
interest
over
the
property
from
that
of
the
mortgagor.
It
may
therefore
not
be
said
that
there
is
double
insurance
over
the
property.
Tai
Tong
Chuache
&
Co.
v.
Insurance
Commission
F:
AP
obtained
a
loan
from
TTC
secured
by
a
mortgage
on
a
land
and
building.
Insured1
insured
its
interest
as
mortgagor
over
said
properties
with
the
insurer1.
Insured2
its
interest
as
mortgagee
over
the
building
with
insurer2.
Building
and
its
contents
were
totally
razed
by
fire.
Insurer2
paid
its
share
of
the
loss.
Insurer1
refused
to
pay
alleging
that
when
the
fire
occurred,
debt
had
already
been
paid
by
the
mortgagor
thus
insured1
had
lost
interest
over
the
property.
H:
Insured
1
is
entitled
to
indemnity
for
loss
of
the
property
due
to
fire.
A
mortgagor
does
not
lose
its
right/interest
over
a
mortgaged
property
upon
payment
of
the
debt
which
act
was
not
even
substantiated
by
the
insurer.
(Not
explicit
in
the
case
Chapter
IV
PERFECTION
OF
THE
CONTRACT
OF
INSURANCE
By
Kaye
A.
Offer
and
acceptance;
consensuality
Art.
1319
CC
-
Consent
is
manifested
by
the
meeting
of
the
offer
and
the
acceptance
upon
the
thing
and
the
cause
which
are
to
constitute
the
contract.
The
offer
must
be
certain
and
the
acceptance
absolute.
A
qualified
acceptance
constitutes
a
counter-offer.
Acceptance
made
by
letter
or
telegram
does
not
bind
the
offerer
except
from
the
time
it
came
to
his
knowledge.
The
contract,
in
such
a
case,
is
presumed
to
have
been
entered
into
in
the
place
where
the
offer
was
made.
Notes:
-
In
an
insurance
contract,
the
potential
insured
is
the
one
who
makes
the
offer
and
the
insurer
is
the
one
who
shall
signify
an
acceptance.
It
is
the
insurer
who
is
responsible
to
asses
whether
the
risk
is
probable
or
improbable
to
happen.
The
insurance
company
represents
the
policy
holders
to
which
risk
is
distributed
and
therefore
they
should
ensure
that
in
accepting
a
new
insured,
the
risk
they
maintain
is
not
increased
(public
policy
interest).
-
If
an
application
has
not
been
either
accepted
or
rejected,
there
is
no
contract
yet
as
it
is
merely
an
offer
or
proposal.
1. Delay
in
acceptance;
tort
theory
Art.
2176
CC
-
Whoever
by
act
or
omission
causes
damage
to
another,
there
being
fault
or
negligence,
is
obliged
to
pay
for
the
damage
done.
Such
fault
or
negligence,
if
there
is
no
pre-existing
contractual
relation
between
the
parties,
is
called
a
quasi-delict
and
is
governed
by
the
provisions
of
this
Chapter.
Note:
Acceptance
by
the
insurer
should
be
made
the
earliest
time
possible
so
as
not
to
jeopardize
the
interest
of
the
insured
not
getting
an
indemnity
just
because
the
insurer
delayed
in
assenting
to
the
contract.
2. Delivery
of
policy
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
17
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
Notes:
-
Policy
-
the
written
document
embodying
the
terms
and
stipulations
of
the
contract
of
insurance
between
the
insured
and
the
insurer.
-
Delivery
is
the
act
of
putting
the
insurance
policy
into
the
possession
of
the
insured.
It
is
the
communication
of
the
insurer's
acceptance
of
the
offer
of
the
applicant-insured.
-
Delivery
is
not,
however,
a
prerequisite
to
a
valid
insurance
contract.
The
delivery
of
a
binding
receipt
may
take
the
substitute
of
delivery
if
policy
for
purposes
of
reckoning
the
time
of
commencement
of
contract.
-
Binding
receipt
-
a
conditional
acceptance/receipt
by
the
insurer
which
is
dependent
upon
the
happening
of
a
future
event.
-
Where
premium
remains
unpaid
despite
delivery
of
the
policy,
insurer
cannot
be
presumed
to
have
extended
credit.
-
There
is
no
binding
insurance
contract
where
no
premium
is
paid
unless
credit
is
given
or
there
is
a
waiver
or
some
agreement
obviating
the
necessity
for
prepayment
of
the
premium.
But
where
premium
has
been
previously
paid,
the
contract
is
perfected
upon
approval
although
the
policy
has
not
yet
been
issued.
Cases:
Perez
v.
CA
F:
Insured
filled
out
the
application
for
the
upgrade
of
policy
and
paid
for
the
premium
partially.
However,
the
agent
took
the
form
to
the
the
Gumaga
office
which
he
failed
to
turn
over
to
Manila
office.
Prior
to
the
approval
of
the
policy
insured
died
and
wife
thus
claim
for
the
indemnity.
Insurer
grants
the
original
policy
but
denies
the
upgraded
one
saying
that
at
the
time
the
additional
policy
was
approved,
insured
had
died.
H:
Insurers
acceptance
is
signified
by
approval
and
delivery
of
policy
by
the
insurance
company
and
NOT
upon
the
filing
of
the
application
form.
There
has
to
be
a
meeting
of
the
offer
and
acceptance
for
the
insurer
to
be
bound.
Vda.
De
Sindayen
v.
Insular
F:
Insured
and
his
wife
made
a
written
application
to
insurer,
through
the
latters
agent,
for
a
life
insurance
policy.
It
was
agreed
with
the
agent
that
the
policy
would
be
delivered
to
his
aunt
who
shall
also
tender
the
balance
of
the
first
premium.
Agent
did
as
agreed
and
also
asked
if
the
insured
was
in
good
health.
Aunt
replied
that
she
has
not
any
idea
of
any
sickness
of
the
insured.
Day
after
delivery
of
policy,
insured
suffered
severe
headache
and
died
a
few
days
after
thus
insured
reclaimed
the
policy
and
forfeited
premiums.
H:
Beneficiaries
of
the
insured
are
entitled
to
indemnity.
The
delivery
to
the
aunt
of
the
insured,
which
was
constituted
in
the
application
as
agent
of
the
insured,
is
sufficient
to
bind
the
parties
into
the
contract.
When
the
policy
was
delivered
and
accepted,
the
insured
was
not
yet
sick
and
therefore
he
was
still
in
good
health
(condition
in
the
policy)
when
the
policy
took
effect.
Enrique
v.
Sun
Life
F:
Insured
applied
for
an
insurance
policy
which
was
approved
in
the
insurers
head
office
in
Montreal
on
Nov
26
but
letter
of
18
Sec
66
-
In
case
of
insurance
other
than
life,
unless
the
insurer
at
least
forty-five
days
in
advance
of
the
end
of
the
policy
period
mails
or
delivers
to
the
named
insured
at
the
address
shown
in
the
policy
notice
of
its
intention
not
to
renew
the
policy
or
to
condition
its
renewal
upon
reduction
of
limits
or
elimination
of
coverages,
the
named
insured
shall
be
entitled
to
renew
the
policy
upon
payment
of
the
premium
due
on
the
effective
date
of
the
renewal.
Any
policy
written
for
a
term
of
less
than
one
year
shall
be
considered
as
if
written
for
a
term
of
one
year.
Any
policy
written
for
a
term
longer
than
one
year
or
any
policy
with
no
fixed
expiration
date
shall
be
considered
as
if
written
for
successive
policy
periods
or
terms
of
one
year.
Notes:
-
Another
exception
to
Sec
77
is
the
provisions
on
renewal
of
the
contract
of
insurance.
-
In
such
case,
the
insured
is
allowed
to
pay
the
premium
for
the
renewal
of
the
policy
even
after
the
lapse
of
the
original
term
if
the
insurer
fails
to
notify
the
insured
of
its
intention
not
to
renew
the
contract
at
least
45
days
prior
to
the
expiration
of
the
such
term
and
such
date
of
payment
shall
be
considered
the
date
of
effectivity
of
the
renewed
policy.
If
the
original
policy
contains
a
provision
regarding
renewal,
such
renewal
shall
be
considered
an
extension
of
the
original
one.
But
if
the
contract
is
silent
as
to
renewal
and
this
provision
applies,
the
renewal
shall
be
considered
a
new
contract
independent
of
the
first.
Cases:
Velasco
v.
Apostol
F:
Petitioners
claim
indemnity
from
the
insurer
of
the
defendant.
The
court,
however,
exonerated
the
insurer
on
the
ground
that
at
the
time
of
accident,
the
policy
has
not
been
paid
and
was
thus
not
in
force.
Petitioners
assert
that
there
is
an
implied
agreement
to
grant
credit
extension
and
that
the
acceptance
of
late
payment
and
delivery
of
the
policy
shows
estops
the
insurer.
H:
There
is
no
proof
of
implied
agreement
to
grant
credit
extension.
Unless
there
is
a
clear
proof
of
such
grant
of
credit
extension,
it
cannot
be
deemed
agreed
upon.
Also,
the
subsequent
payment
was
accepted
without
knowledge
that
the
risk
insured
against
had
already
happened.
Valenzuela
v.
CA
F:
Valenzuela
was
an
agent
of
Philamgen
in
soliciting
and
selling
non-life
insurances
and
was
paid
on
commission
basis.
Because
of
his
reluctance
to
agree
on
a
proposal
by
Philamgen
to
share
with
his
commissions,
V
was
terminated
and
was
held
liable
to
pay
half
of
the
unpaid
and
uncollected
premiums
he
contracted
with
policyholders.
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
the
following:
(a)
non-payment
of
premium;
xxx
19
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
UCPB
General
Insurance
v.
Masagana
Telamart
F:
Despite
a
previous
notice
by
the
insurer
of
its
intention
not
to
renew,
insured
paid
for
the
premiums
for
the
renewal
of
the
policies
and
the
same
was
accepted
by
the
cashier
of
the
insurer.
Premium
payments
were
returned
by
the
insurer
to
the
insured
saying
that
the
policies
were
not
renewed
and
that
the
payment
was
made
after
the
fire
occurred.
Insured
insists
on
paying
the
policies
on
saying
that
it
paid
within
the
usual
credit
period
granted
to
him
by
the
insurer
(60-90-day
credit
term).
H
(1999
decision):
Sec
77
does
not
allow
any
agreement
to
an
extension
of
credit.
Payment
beyond
the
date
of
effectivity
is
not
valid.
In
as
much
as
payment
was
made
after
the
fire
and
the
credit
term
being
void,
such
payment
does
not
produce
a
binding
effect
and
so
insurer
is
not
liable.
H
(2001
decision):
Reversing
the
1999
decision,
the
court
held
that
an
agreement
to
grant
credit
extension
is
valid
as
it
is
not
expressly
prohibited
by
the
code.
Such
grant
is
made
an
exception
to
the
rule
on
Sec
77.
A
payment
within
such
term
binds
the
insurer
and
renders
the
policy
effective.
Dissent
to
2001
decision:
The
majority
was
in
error
when
it
applied
the
Makati
Tuscany
case
in
deciding
the
present
case.
In
the
Makati
Tuscany
case,
there
was
a
partial
payment
which
made
the
contract
effective.
In
the
present
case,
first
payment
was
made
after
the
fire.
Also,
there
was
no
clear
and
express
agreement
as
to
the
grant
of
credit
extension
in
the
policy.
Estoppel
cannot
lie
to
allow
what
is
expressly
prohibited
by
law.
The
requirement
for
payment
of
premiums
is
a
mandate
of
public
policy
which
cannot
be
bypassed
by
invoking
estoppel.
American
Home
Insurance
v.
Chua
F:
Insured
deposited
the
check
in
payment
of
premiums
for
the
policy
one
day
before
the
fire
razed
the
property
of
the
insured.
Upon
deposit
of
check,
insurer
issued
an
acknowledgement
receipt.
Insurer
claims
exception
from
liability
on
the
ground
that
when
the
risk
insured
against
occurred,
the
check
was
yet
to
be
cashed
and
therefore
has
yet
to
produce
the
effect
of
payment.
H:
The
receipt
issued
is
conclusive
evidence
of
payment.
Payment
by
check
produces
the
effect
of
payment
when
cashed
but
effectivity
is
reckoned
from
time
of
tendering
of
check.
C.
Non-default
options
in
life
insurance
20
Case:
Manufacturer's
Life
Insurance
v.
Meer
F:
Policy
contains
a
provision
that
after
3
years
of
being
in
force,
the
same
shall
not
lapse
despite
non-payment
of
premiums
for
renewal
and
the
cash
surrender
value
and
dividends
shall
automatically
answer
for
such
premiums
(automatic
premium
loan).
Commissioner
if
Internal
Revenue
assesses
such
CSVs
and
dividends
as
applied
to
be
taxable
collections
of
the
insurer.
H:
CIR
is
correct.
Th
CSVs
and
dividends
due
to
the
insured,
when
applied
as
an
automatic
premium
loan,
takes
the
form
of
premium
payments
from
the
insured
and
are
thus
properly
considered
as
collections
by
the
insurer.
They
are
removed
from
the
books
of
the
insurer
as
liabilities
to
the
insured
and
are
recorded
as
cash
receipts/collections/revenues.
D.
Reinstatement
of
a
lapsed
policy
of
life
insurance
Sec
227
-
In
the
case
of
individual
life
or
endowment
insurance,
the
policy
shall
contain
in
substance
the
following
conditions:
xxx
(j)
A
provision
that
the
policyholder
shall
be
entitled
to
have
the
policy
reinstated
at
any
time
within
three
years
from
the
date
of
default
of
premium
payment
unless
the
cash
surrender
value
has
been
duly
paid,
or
the
extension
period
has
expired,
upon
production
of
evidence
of
insurability
satisfactory
to
the
company
and
upon
payment
of
all
overdue
premiums
and
any
indebtedness
to
the
company
upon
said
policy,
with
interest
rate
not
exceeding
that
which
would
have
been
applicable
to
said
premiums
and
indebtedness
in
the
policy
years
prior
to
reinstatement.
xxx
Case:
Andres
v.
Crown
Life
Insurance
F:
Insureds
life
is
covered
under
a
policy
for
which
the
first
and
second
premiums
were
paid
but
the
last
two
were
not.
Insurer
informed
the
insured
and
her
husband
that
the
policy
had
lapsed
and
that
they
had
60
days
to
file
for
reinstatement.
Spouses
filed
for
reinstatement.
Upon
initial
payment
for
the
balance,
policy
was
issued
but
the
insured
died
even
before
they
completed
payment.
Husband
tendered
the
balance
at
the
same
instance
that
he
filed
for
a
claim
for
the
proceeds
of
the
policy
which
the
insurer
denied.
H:
There
was
no
perfected/reinstated
policy.
The
tender
of
payment
for
overdue
premiums
after
the
death
of
the
insured
cannot
produce
the
effect
of
reinstatement.
After
the
death
of
the
insured,
insurer
cannot
be
compelled
to
accept
payment
for
reinstatement
of
the
policy.
E.
Refund
of
Premiums
Sec
79
-
A
person
insured
is
entitled
to
a
return
of
premium,
as
follows:
(a)
To
the
whole
premium
if
no
part
of
his
interest
in
the
thing
insured
be
exposed
to
any
of
the
perils
insured
against;
(b)
Where
the
insurance
is
made
for
a
definite
period
of
time
and
the
insured
surrenders
his
policy,
to
such
portion
of
the
premium
as
corresponds
with
the
unexpired
time,
at
a
pro
rata
rate,
unless
a
short
period
rate
has
been
agreed
upon
and
appears
on
the
face
of
the
policy,
after
deducting
from
the
whole
premium
any
claim
for
loss
or
damage
under
the
policy
which
has
previously
accrued;
Provided,
That
no
holder
of
a
life
insurance
policy
may
avail
himself
of
the
privileges
of
this
paragraph
without
sufficient
cause
as
otherwise
provided
by
law.
Sec
80
-
If
a
peril
insured
against
has
existed,
and
the
insurer
has
been
liable
for
any
period,
however
short,
the
insured
is
not
entitled
to
return
of
premiums,
so
far
as
that
particular
risk
is
concerned.
Sec
81
-
A
person
insured
is
entitled
to
return
of
the
premium
when
the
contract
is
voidable,
on
account
of
fraud
or
misrepresentation
of
the
insurer,
or
of
his
agent,
or
on
account
of
facts,
the
existence
of
which
the
insured
was
ignorant
without
his
fault;
or
when
by
any
default
of
the
insured
other
than
actual
fraud,
the
insurer
never
incurred
any
liability
under
the
policy.
Sec
82
-
In
case
of
an
over-insurance
by
several
insurers,
the
insured
is
entitled
to
a
ratable
return
of
the
premium,
proportioned
to
the
amount
by
which
the
aggregate
sum
insured
in
all
the
policies
exceeds
the
insurable
value
of
the
thing
at
risk.
When
may
premiums
be
refunded:
1. Return
of
the
whole
premium
if
no
part
of
his
interest
is
exposed
to
peril
(where
risk
never
attached)
2. If
policy
is
for
a
definite
period,
upon
surrender
of
the
unexpired
portion
(not
available
to
life
insurance)
3. If
the
contract
if
insurance
is
voidable
through
fraud
committed
by
the
insurer
4. Over
insurance
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
4.
21
Chapter
V
THE
POLICY,
PARTIES
THERETO
AND
RIGHTS
THEREON
c)
d)
By
Phimie
A.
1. Definition
of
a
Policy
of
Insurance
e)
f)
g)
Sec.
228.
No
policy
of
group
life
insurance
shall
be
issued
and
delivered
in
the
Philippines
unless
it
contains
in
substance
the
following
provisions,
or
provisions
which
in
the
opinion
of
the
Commissioner
are
more
favorable
to
the
persons
insured,
or
at
least
as
favorable
to
the
persons
insured
and
more
favorable
to
the
policy-holders:
(Very
long
provision,
for
enumeration,
please
check
the
Insurance
Code)
Ed
Form:
Contents:
Enumerated
in
Sec.
51
Other
stipulations
not
required
by
law
may
be
included
as
long
as
they
are
not
prohibited
or
are
inconsistent
with
the
law.
Missing
provisions
required
does
not
void
the
while
policy.
Missing
provisions
will
be
read
into
the
policy
and
will
substitute
those
which
are
in
conflict
with
the
law
Stipulations
not
in
the
exact
terms
of
the
statute,
if
more
favorable
to
the
insured,
will
be
enforced.
3. Riders
and
Endorsements;
Rules
on
Formalities
and
Effectivity
(Sec.
50,
par.
2)
Rider
a
printed
or
typed
stipulation
contained
on
a
slip
of
paper
attached
to
the
policy
and
forming
an
integral
part
of
the
policy.
In
case
of
conflict
between
rider
and
stipulations
of
the
policy:
the
rider
prevails,
as
being
a
more
deliberate
expression
of
the
agreement
of
the
contracting
parties.
The
code
states
that
the
rider
needs
to
be
attached
or
pasted
to
the
policy
and
descriptive
title
or
name
of
the
rider,
clause,
warranty,
or
endorsement
is
mentioned
and
written
on
the
blank
spaces
provided
in
the
policy
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
Definition
of
a
Policy:
It
is
the
written
document
embodying
the
terms
and
stipulations
of
the
contract
of
insurance
between
the
insured
and
the
insurer.
It
is
a
contract
of
adhesion
It
is
different
from
the
contract
itself
2. Forms
and
Contents
22
Warranty
inserted
or
attached
to
a
policy
to
eliminate
specific
potential
increases
of
hazard
during
the
policy
term
owing
to:
1)
actions
of
the
insured
or
2)
conditions
of
the
property
Sec.
52.
Cover
notes
may
be
issued
to
bind
insurance
temporarily
pending
the
issuance
of
the
policy.
Within
sixty
(60)
days
after
the
issue
of
the
cover
note,
a
policy
shall
be
issued
in
lieu
thereof,
including
within
its
terms
the
identical
insurance
bond
under
the
cover
note
and
the
premium
thereof.
Cover
notes
may
be
extended
or
renewed
beyond
such
sixty
(60)
days
with
the
written
approval
of
the
Commissioner
if
he
determines
that
such
extension
id
not
contrary
to
and
is
not
foe
the
purpose
of
violating
any
provisions
of
this
Code.
The
Commissioner
may
promulgate
rules
and
regulations
governing
such
extensions
for
the
purpose
of
preventing
such
violations
and
may
by
such
rules
and
regulations
dispense
with
the
requirement
of
written
approval
by
him
in
the
case
of
extension
in
compliance
with
such
rules
and
regulations.
Clause
an
agreement
between
the
insurer
and
the
insured
on
certain
matters
relating
to
the
liability
of
the
insurer
in
case
of
loss
Endorsement
any
provision
added
to
an
insurance
contract
altering
its
scope
and
application.
4. Cover
Notes
Cover
note
is
merely
a
written
memorandum
of
the
most
important
terms
of
a
preliminary
contract
of
insurance,
intended
to
give
temporary
protection
pending
the
investigation
of
the
risk
by
the
insurer,
or
until
the
issue
of
a
formal
policy,
provided
it
is
later
determined
that
the
applicant
was
insurable
at
the
time
it
was
given.
It
is
also
called
a
binding
slip
or
a
binder
t
is
a
temporary
contract
usually
issued
after
the
first
premium
has
been
paid,
pending
the
approval
of
the
contract
It
shall
be
deemed
to
be
a
contract
of
insurance
Effectivity
of
a
cover
note:
A
cover
note
shall
be
valid
and
binding
for
a
period
not
exceeding
(60)
days
from
the
date
of
its
issuance,
whether
or
not
the
premium
has
been
paid,
but
such
cover
note
may
be
cancelled
by
either
party
upon
at
least
seven
(7)
days
notice
to
the
other
party.
If
it
is
not
cancelled,
a
policy
of
insurance
shall
be
issued
in
place
of
the
cover
note
within
sixty
(60)
days
after
its
issuance.
Lim
v
Sun
Life
Insurance
F:
L
applied
for
a
life
insurance
with
SL,
naming
his
wife
as
the
beneficiary.
L
died
after
the
issuance
of
the
provisional
policy
but
before
approval
of
the
application.
P
(insureds
wife)
brought
an
action
to
recover.
Provisional
policy
stated
that
L
is
to
be
assured
with
the
terms
and
conditions
of
the
insurance
policy,
which
may
be
granted,
for
4
months
only.
Provided,
That
said
insurance
policy
would
be
approved.
I:
WoN
there
was
a
perfected
contract
of
insurance
H:
No.
There
shall
be
no
perfected
contract
of
insurance
even
if
premium
was
already
paid
if
there
is
a
condition
which
states
that
no
liability
shall
attach
until
the
principal
approves
the
risk
and
a
receipt
is
given
by
the
agent.
Great
Pacific
Life
v
CA
(1979)
F:
Ngo
Hing
applied
for
a
20-year
endowment
for
his
daughter
under
petitioner,
GP.
Upon
Ns
payment
of
the
premium,
agent
of
GP
gave
him
a
binding
deposit
receipt
pending
(BDRP)
the
applications
approval.
GP
rejected
the
approval
but
such
was
not
communicated
to
N.
Ns
daughter
died
2
months
later
and
he
files
a
claim
for
recovery.
I:
WoN
BDRP
was
a
temporary
contract
of
life
insurance
H:
Where
an
agreement
is
made
between
the
applicant
and
the
agent,
no
liability
shall
attach
until
the
principal
approves
the
risk
and
a
receipt
is
given
by
the
agent.
The
acceptance
is
merely
conditional
and
is
subordinated
to
the
act
of
the
company
in
approving
or
rejecting
the
application.
In
life
insurance,
a
binding
slip
or
binding
receipt
does
not
insure
by
itself.
Pacific
Timber
Export
v
CA
F:
PT
secured
temporary
insurance
from
Workmens
Insurance
Co.
for
its
exportation
of
logs.
After
the
issuance
of
the
cover
note
but
before
the
issuance
of
the
two
marine
policies,
some
of
the
logs
were
lost
during
the
loading
operations.
PT
demanded
payment
of
the
loss.
WI
denied
the
claim
on
the
ground
that
the
cover
note
is
null
and
void
for
lack
of
valuable
consideration.
I:
WoN
the
cover
note
was
null
and
void
for
lack
of
valuable
consideration
H:
The
fact
that
no
separate
premium
was
paid
on
the
cover
note
does
not
affect
its
validity.
Cover
notes
do
not
contain
particulars
as
basis
for
the
computation
of
premiums,
and
as
a
consequence,
no
separate
premium
was
intended
to
be
paid
on
a
cover
note.
B.
Types
of
Non-Life
Insurance
Policies
Sec.
59.
A
policy
is
either
open,
valued
or
running.
Sec.
60.
An
open
policy
is
one
in
which
the
value
of
the
thing
insured
is
not
agreed
upon,
but
is
left
to
be
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
23
2.
Sec.
161.
In
estimating
a
loss
under
an
open
policy
of
marine
insurance
the
following
rules
are
to
be
observed:
1) The
value
of
a
ship
is
its
value
at
the
beginning
of
the
risk,
including
all
articles
or
charges
which
add
to
its
permanent
value
or
which
are
necessary
to
prepare
it
for
the
voyage
insured;
2) The
value
of
the
cargo
is
its
actual
cost
to
the
insured,
when
laden
on
board,
or
where
the
cost
cannot
be
ascertained,
its
market
value
at
the
time
and
place
of
lading,
adding
the
charges
incurred
in
purchasing
and
placing
it
on
board,
but
without
reference
to
any
loss
incurred
in
raising
money
for
its
purchase
Sec.
171.
If
there
is
no
valuation
in
the
policy,
the
measure
of
indemnity
in
an
insurance
against
fire
is
the
expense
it
would
be
to
the
insured
at
the
time
of
the
commencement
of
the
fire
to
replace
the
thing
lost
or
injured
in
the
condition
in
which
at
the
time
of
the
injury;
but
if
there
is
a
valuation
in
a
policy
of
fire
insurance,
the
effect
shall
be
the
same
as
in
a
policy
of
marine
insurance.
Sec.
156.
A
valuation
in
a
policy
of
marine
insurance
in
conclusive
between
the
parties
thereto
in
the
adjustment
of
either
a
partial
or
total
loss,
if
the
insured
has
some
interest
at
risk,
and
there
is
no
fraud
on
his
part;
except
that
when
a
thing
has
been
hypothecated
by
bottomry
or
respondentia,
before
its
insurance,
and
without
the
knowledge
of
the
person
actually
procuring
the
insurance,
he
may
show
the
real
value.
But
a
valuation
fraudulent
in
fact,
entitles
the
insurer
to
rescind
the
contract.
1.
Open
Policy
-
it
is
one
in
which
a
certain
agreed
sum
is
written
on
the
face
of
the
policy
not
as
the
value
of
the
property
insured,
but
as
the
maximum
limit
of
the
insurers
liability.
Insurer
only
pays
the
actual
cash
value
of
the
property
as
determined
at
the
time
of
loss.
Amount
recoverable
is
determined
by
the
amount
of
the
loss
but
not
exceeding
the
face
amount
of
the
policy
Valued
Policy
-
it
is
one
in
which
the
parties
expressly
agree
on
the
value
of
the
subject
matter
of
insurance.
Face
value
of
the
policy
is
the
max
amount
insurer
pays
in
case
of
loss
Value
of
the
thing
insured
Liability
of
the
insurer
under
a
life
policy
is
measured
by
the
face
value
of
the
policy
In
the
absence
of
fraud
or
mistake,
the
agreed
value
of
the
thing
insured
will
be
paid
in
case
of
total
loss
of
the
property,
unless
the
insurance
is
for
a
lower
amount.
3.
Running
Policy
-
it
is
intended
to
provide
indemnity
for
property
which
cannot
well
be
covered
by
a
valued
policy
because
of
its
frequent
change
of
location
and
quantity,
or
for
property
of
such
a
nature
as
not
to
admit
of
a
gross
valuation.
It
also
denotes
insurance
which
contemplates
that
the
risk
is
shifting,
fluctuating,
or
varying,
and
which
covers
a
class
of
property
rather
than
any
particular
thing.
Development
Insurance
v
IAC
F:
A
fire
occurred
in
the
building
of
Philippine
Union
Realty
Corp.
(herein
Respondent)
and
it
sued
for
recovery
of
damages
against
Development
Insurance
Corp.
(herein
Petitioner)
on
basis
of
an
insurance
contract.
I:
WoN
elevators
considered
part
of
the
insured
interest.
WoN
Respondent
should
share
pro-rata
in
the
loss
sustained.
C:
The
court
held
that
the
policy
in
this
case
is
an
open
policy.
It
is
one
in
which
the
value
of
the
thing
insured
is
not
agreed
upon
but
is
left
to
be
ascertained
in
case
of
loss.
This
means
that
the
actual
loss,
as
determined,
will
represent
the
total
indemnity
due
the
insured
from
the
insurer
except
only
that
the
total
indemnity
shall
not
exceed
the
face
value
of
the
policy.
Harding
v
Commercial
Union
Assurance
F:
H
insured
her
car
under
CUA.
In
the
proposal
it
was
indicated
that
the
price
paid
for
the
car
was
3.5k,
but
after
the
companys
mechanic
examined
the
car
he
said
that
the
present
value
was
3k.
The
policy
stated
that
CUA
would
indemnify
H
up
to
the
value
of
the
car
or
3k,
whichever
is
higher.
The
car
was
subsequently
destroyed
by
fire
and
H
filed
a
claim.
CUA
refused
to
pay,
claiming
that
there
was
misrepresentation
as
to
the
value
of
the
car.
H:
Since
there
was
agreement
the
insured
and
insurer
as
to
be
the
value
of
the
car,
such
valuation
shall
bind
both
parties.
It
is
not
right
to
say
that
the
validity
of
all
valued
policies
must
depend
upon
absolute
correctness
of
such
estimated
value.
Thus,
in
the
absence
of
fraud
or
misrepresentation,
the
agreed
price
between
parties
shall
control.
C.
Parties
Essential
requisites
for
a
person
to
be
a
party
in
an
insurance
contract:
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
24
Natural
person:
1) Must
be
competent
to
enter
into
a
contract
2) Must
possess
insurable
interest
3) Must
not
be
a
public
enemy
Juridical
Person
b)
Parties
to
an
Insurance
Contract:
Insurer
the
party
who
assumes
or
accepts
the
risk
of
loss
and
undertakes
for
a
consideration
to
indemnify
the
insured
or
to
pay
him
a
certain
sum
on
the
happening
of
a
specified
contingency
or
event
Insured
the
person
in
whose
favor
the
contract
is
operative
and
who
is
indemnified
against,
or
is
to
receive
a
certain
sum
upon
the
happening
of
a
specified
contingency
or
event.
He
is
the
person
whose
loss
is
the
occasion
for
the
payment
of
the
insurance
proceeds
by
the
insurer.
Beneficiary
the
person
designated
by
the
terms
of
the
policy
as
the
one
to
receive
the
proceeds
of
the
insurance.
1. Insurer
Sec.
6.
Every
person,
partnership,
association,
or
corporation
duly
authorized
to
transact
insurance
business
as
elsewhere
provided
in
this
code,
may
be
an
insurer.
Sec.
184.
For
purposes
of
this
Code,
the
term
"insurer"
or
"insurance
company"
shall
include
all
individuals,
partnerships,
associations,
or
corporations,
including
government-owned
or
controlled
corporations
or
entities,
engaged
as
principals
in
the
insurance
business,
excepting
mutual
benefit
associations.
Unless
the
context
otherwise
requires,
the
terms
shall
also
include
professional
reinsurers
defined
in
section
two
hundred
eighty."Domestic
company"
shall
include
companies
formed,
organized
or
existing
under
the
laws
of
the
Philippines.
"Foreign
company"
when
used
without
limitation
shall
include
companies
formed,
organized,
or
existing
under
any
laws
other
than
those
of
the
Philippines.
Sec.
185.
Corporations
formed
or
organized
to
save
any
person
or
persons
or
other
corporations
harmless
from
loss,
damage,
or
liability
arising
from
any
unknown
or
future
or
contingent
event,
or
to
indemnify
or
to
compensate
any
person
or
persons
or
other
corporations
for
any
such
loss,
damage,
or
liability,
or
to
guarantee
the
performance
of
or
compliance
with
contractual
obligations
or
the
payment
of
debt
of
others
shall
be
known
as
"insurance
corporations".
The
provisions
of
the
Corporation
Law
shall
apply
to
all
insurance
corporations
now
or
hereafter
engaged
in
business
in
the
Philippines
insofar
as
they
do
not
conflict
with
the
provisions
of
this
chapter.
Insurer:
Types
are
enumerated
in
Sec.
6
Engaged
as
principals
in
the
insurance
business
Does
not
include
mutual
benefit
organizations
Sec.
299.
No
insurance
company
doing
business
in
the
Philippines,
nor
any
agent
thereof,
shall
pay
any
commission
or
other
compensation
to
any
person
for
services
in
obtaining
insurance,
unless
such
person
shall
have
first
procured
from
the
Commissioner
a
license
to
act
as
an
insurance
agent
of
such
company
or
as
an
insurance
broker
as
hereinafter
provided.
No
person
shall
act
as
an
insurance
agent
or
as
an
insurance
broker
in
the
solicitation
or
procurement
of
applications
for
insurance,
or
receive
for
services
in
obtaining
insurance,
any
commission
or
other
compensation
from
any
insurance
company
doing
business
in
the
Philippines,
or
any
agent
thereof,
without
first
procuring
a
license
to
act
from
the
Commissioner,
which
must
be
renewed
annually
on
the
first
day
of
January,
or
within
six
months
thereafter.
.Such
license
shall
be
issued
by
the
Commissioner
only
upon
the
written
application
of
the
person
desiring
it,
such
application
if
for
a
license
to
act
as
insurance
agent,
being
approved
and
countersigned
by
the
company
such
person
desires
to
represent,
and
shall
be
upon
a
form
prescribed
by
the
Commissioner
giving
such
information
as
he
may
require,
and
upon
payment
of
the
corresponding
fee
hereinafter
prescribed.
The
Commissioner
shall
satisfy
himself
as
to
competence
and
trustworthiness
of
the
applicant
and
shall
have
the
right
to
refuse
to
issue
or
renew
and
to
suspend
or
revoke
any
such
license
in
his
discretion.
No
such
license
shall
be
valid
after
the
thirtieth
day
of
June
of
the
year
following
its
issuance
unless
it
is
renewed.
(As
amended
by
Presidential
Decree
No.
1455).
Insurance
Agent:
There
is
need
to
procure
from
the
Commissioner
a
license
to
act
as
an
insurance
agent
of
a
company
or
as
an
insurance
broker
Such
license
must
be
renewed
annually
Application
filed
to
the
Commissioner
must
be
approved
and
countersigned
by
the
company
White
Gold
Marine
Services
v
Pioneer
Insurance
F:
WG
procured
a
protection
and
indemnity
coverage
for
its
vessels
from
The
Steamship
Mutual
Underwriting
Association
through
P.
WG
failed
to
fully
pay
its
accounts,
SMUA
refused
to
renew
the
coverage.
SMUA
thereafter
filed
a
case
against
WG
for
collection
of
sum
of
money
to
recover
the
latters
unpaid
balance.
WG
filed
a
complaint
before
the
Insurance
Commission
claiming
that
SMUA
and
P
for
violating.
According
to
WG
SMUA
violated
Secs.
186
&187,
and
that
P
violated
Secs.
299,
300,
and
301
in
relation
to
Secs.
302
and
303.
H:
No
insurer
or
insurance
company
is
allowed
to
engage
in
the
insurance
business
without
a
license
or
a
certificate
of
authority
from
the
Insurance
Commission.
Pandiman
v
Marine
Manning
Mngt.
Corp.
F:
Benito
Singhid
was
hired
by
Fullwin
Maritime
Limited
(Fullwin),
through
its
local
agent,
Marine
Manning
and
Management
Corporation
(MMMC),
as
chief
cook
on
board
the
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
a)
25
NCC
Art.
1390.
The
following
contracts
are
voidable
or
annullable,
even
though
there
may
have
been
no
damage
to
the
contracting
parties:
(1)
Those
where
one
of
the
parties
is
incapable
of
giving
consent
to
a
contract;
(2)
Those
where
the
consent
is
vitiated
by
mistake,
violence,
intimidation,
undue
influence
or
fraud.
These
contracts
are
binding,
unless
they
are
annulled
by
a
proper
action
in
court.
They
are
susceptible
of
ratification.
3.
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
vessel
MV
Sun
Richie
Five
for
a
term
of
twelve
(12)
months.
The
vessel
and
its
crew
were
insured
with
Ocean
Marine
Insurance
Association
Limited
(OMMIAL),
a
Protection
and
Indemnity
Club
(P&I
Club)
of
which
Sun
Richie
Five
Bulkers
S.A.,
owner
of
the
vessel
Sun
Richie
Five,
is
a
member.
OMMIAL
transacted
business
in
the
Philippines
through
its
local
correspondent,
Pandiman
Philippines,
Inc.
(PPI)
Benito
suffered
a
heart
attack,
and
subsequently
died.
Rosita,
widow
of
Benito,
filed
a
claim
for
death
benefits
with
MMMC,
which,
however,
referred
her
to
PPI.
PPI
approved
but
R
was
still
not
paid.
H:
The
insurance
contract
between
the
insurer
and
the
insured
shall
be
binding
only
upon
the
parties
(and
their
assigns
and
heirs)
who
execute
the
same.
2. Insured
(cf.
cestui
que
vie
in
life
insurance)
Cestui
que
vie
the
person
upon
whose
life
the
insurance
is
made
Public
Enemy
a
nation
with
whom
the
Philippines
is
at
war
and
it
includes
every
citizen
or
subject
of
such
nation.
26
Sec.
11.
The
insured
shall
have
the
right
to
change
the
beneficiary
he
designated
in
the
policy,
unless
he
has
expressly
waived
this
right
in
said
policy.
b. Statutory
Limitations
Limitations
in
the
Appointment
of
Beneficiary:
Insurance
is
in
a
concept
of
a
donation
if
the
beneficiary
is
a
third
person
since
they
are
founded
on
the
same
consideration
of
liberality
General
rule:
conviction
is
necessary
for
a
person
to
be
disqualified
as
a
beneficiary
under
the
second
item
in
Art.
739
For
cases
of
adultery
and
concubinage,
there
is
no
need
for
a
conviction.
Preponderance
of
evidence
is
enough.
NCC
Article
739.
The
following
donations
shall
be
void:
(1)
Those
made
between
persons
who
were
guilty
of
adultery
or
concubinage
at
the
time
of
the
donation;
(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.
In
the
case
referred
to
in
No.
1,
the
action
for
declaration
of
nullity
may
be
brought
by
the
spouse
of
the
donor
or
donee;
and
the
guilt
of
the
donor
and
donee
may
be
proved
by
preponderance
of
evidence
in
the
same
action.
NCC
Article
2011.
The
contract
of
insurance
is
governed
by
special
laws.
Matters
not
expressly
provided
for
in
such
special
laws
shall
be
regulated
by
this
Code.
NCC
Article
2012.
Any
person
who
is
forbidden
from
receiving
any
donation
under
article
739
cannot
be
named
beneficiary
of
a
life
insurance
policy
by
the
person
who
cannot
make
any
donation
to
him,
according
to
said
article.
Insular
v
Ebrado
F:
E
acquired
a
whole-life
insurance
from
Insular.
rider
for
Accidental
Death
for
the
same
amount
E
designated
wife
C
as
his
wife,
as
the
revocable
beneficiary
in
his
policy.
P,
claiming
to
be
Es
wife,
also
filed
her
claim
as
the
widow
of
the
deceased
insured.
She
asserts
that
she
is
the
one
entitled
to
the
insurance
proceeds,
not
the
common-law
wife,
C.
In
doubt
as
to
whom
the
insurance
proceeds
shall
be
paid,
the
insurer,
The
Insular
Life
Assurance
Co.,
Ltd.
commenced
an
action
for
Interpleader
before
the
Court
of
First
Instance
H:
The
bar
in
donations
between
legitimate
spouses
and
those
between
illegitimate
ones
should
be
enforced
in
life
insurance
policies
since
the
same
are
based
on
similar
consideration,
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
27
Assignment
v.
Change
of
Beneficiary:
Upon
assignment,
assignee
becomes
the
owner
of
the
policy.
What
are
assigned
are
the
rights
available
t
o
the
insured
under
the
policy
as
the
considered
assets
of
the
policy
In
change
of
beneficiary,
the
insured
is
still
the
owner
Sun
Life
Assurance
of
Canada
v
Ingersoll
F:
Dy
Poco
had
a
20
year
endowment
period,
a
life
insurance,
under
Sun
Life.
Before
he
died,
he
was
declared
insolvent
and
his
rights
were
assigned
to
Ingersoll.
Upon
his
death,
both
his
assignee
and
Tan
Sit,
administratrix
of
his
estate
filed
claims
to
the
proceeds
of
his
life
insurance.
H:
Tan
Sit
as
administratrix
has
a
better
right.
In
this
jurisdiction,
assignee
in
insolvency
can
only
have
title
over
policies
with
cash
surrender
value,
and
this
acquisition
of
the
title
is
only
so
that
they
can
have
a
claim
on
the
realizable
cash
surrender
value.
Since
the
policy
in
this
case
has
no
cash
surrender
value,
Ingersoll,
the
assignee,
has
no
beneficial
interest
in
said
policy.
The
proceeds
of
the
policy
should
therefore
be
delivered
to
Tan
Sit
Great
Pacific
Life
v
CA
(1999)
H:
Where
the
mortgagor
(Leuterio)
pays
the
insurance
premium
under
the
group
insurance
policy,
making
the
loss
payable
to
the
mortgagee
(DBP),
the
insurance
is
on
the
mortgagor's
interest,
and
the
mortgagor
continues
to
be
a
party
to
the
contract.
2. Right
to
Borrow
Sec.
227.
In
the
case
of
individual
life
or
endowment
insurance,
the
policy
shall
contain
in
substance
the
following
conditions:
(g)
A
provision
that
at
anytime
after
a
cash
surrender
value
is
available
under
the
policy
and
while
the
policy
is
in
force,
the
company
will
advance,
on
proper
assignment
or
pledge
of
the
policy
and
on
sole
security
thereof,
a
sum
equal
to,
or
at
the
option
of
the
owner
of
the
policy,
less
than
the
cash
surrender
value
on
the
policy,
at
a
specified
rate
of
interest,
not
more
than
the
maximum
allowed
by
law,
to
be
determined
by
the
company
from
time
to
time,
but
not
more
often
than
once
a
year,
subject
to
the
approval
of
the
Commissioner;
and
that
the
company
will
deduct
from
such
loan
value
any
existing
indebtedness
on
the
policy
and
any
unpaid
balance
of
the
premium
for
the
current
policy
year,
and
may
collect
interest
in
advance
on
the
loan
to
the
end
of
the
current
policy
year,
which
provision
may
further
provide
that
such
loan
may
be
deferred
for
not
exceeding
six
months
after
the
application
therefor
is
made
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
28
Right
to
Dividends
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
3.
29
By
Cielo
A.
Basis/
Rationale
1. Insurance
is
of
utmost
good
faith
(Uberrimae
fiddae)
-
An
insurance
contract
is
imbued
with
public
interest
-
It
is
based
on
good
faith
because
both
parties
rely
(particularly
the
insurer)
mainly
on
the
information
each
party
provides
Four
primary
concerns
of
parties
to
an
insurance
contract:
a. Correct
estimation
of
risk
w/n
the
insurer
will
assume
the
risk
b. Precise
delimitation
of
the
risk
to
determine
the
duty
to
pay
of
insurer
c. Control
of
risk
by
the
insurer
to
guard
against
increase
of
risk
and
change
of
conditions
d. Determining
whether
loss
occurred,
and
if
so,
the
amount
of
loss
2. As
risk
management
devices
Devices
for
ascertaining
and
controlling
risk
and
loss:
a. Concealment
and
representations
developed
to
enable
the
insurer
to
secure
the
same
information
from
the
applicant
so
that
he
can
form
a
just
estimate
of
its
quality
b. Warranties
and
conditions
created
to
make
more
definite
the
general
words
to
describe
the
risk
as
to
designation
of
specific
property
interest
to
be
covered
and
the
specification
of
the
perils
c. Exception
also
makes
more
definite
the
coverage
by
excluding
certain
specified
risks
that
otherwise
would
have
been
included
under
the
general
language
d. Executory
warranties
and
conditions
conditions
that
should
not
exist
in
the
future,
otherwise,
the
insurer
can
rescind
the
contract
because
he
is
no
longer
to
bear
the
risk
e. Conditions
precedent
used
by
insurer
to
protect
himself
from
fraudulent
claims
of
loss
B.
Concealment
1. Definition
-
An
act
of
holding
back
information
pertinent
to
the
insurance
contract
(applies
even
if
not
asked
by
the
insurer)
Sec.
26.
A
neglect
to
communicate
that
which
a
party
knows
and
ought
to
communicate,
is
called
a
concealment.
Sec.
27.
A
concealment
whether
intentional
or
unintentional
entitles
the
injured
party
to
rescind
a
contract
of
insurance.
(As
amended
by
Batasang
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
Chapter
VI
RESCISSION
OF
INSURANCE
CONTRACTS:
CONCEALMENT,
MISREPRESENTATION
AND
BREACH
OF
WARRANTIES
30
Sec.
35.
Neither
party
to
a
contract
of
insurance
is
bound
to
communicate,
even
upon
inquiry,
information
of
his
own
judgment
upon
the
matters
in
question.
No
duty
to
make
disclosure:
a. Matters
known
to,
or
right
to
be
known
by
insurer,
or
of
which
he
waives
disclosure
(in
estoppel)
b. Risks
excepted
form
policy
but
the
undisclosed
fact
must
not
be
material
c. Nature
or
amount
of
insureds
interest
d. Where
fact
concealed
not
material
e. If
party
is
bound
to
know
the
fact
as
public
and
general
usages
of
trade
(32)
includes
public
events
like
wars
and
general
trade
usages
and
rules
of
navigation
f. If
the
interest
of
the
person
being
insured
is
absolute,
there
is
no
necessity
to
disclose
the
extent
of
his
interest
g. Matters
of
opinion,
speculation,
intention
or
expectation
3. Test
of
Materiality
Sec.
31.
Materiality
is
to
be
determined
not
by
the
event,
but
solely
by
the
probable
and
reasonable
influence
of
the
facts
upon
the
party
to
whom
the
communication
is
due,
in
forming
his
estimate
of
the
disadvantages
of
the
proposed
contract,
or
in
making
his
inquiries.
TEST:
The
effect
which
the
knowledge
of
the
fact
would
have
in
making
the
contract.
The
fact
need
not
increase
the
risk
or
contribute
to
any
loss
or
damage
suffered
It
is
sufficient
that
the
fact
would
INFLUENCE
the
party
in
making
the
contract.
NOTES:
-
Concealment
must
take
place
at
the
time
the
contract
is
entered
into
The
duty
of
disclosure
ends
with
the
completion
or
effectivity
of
the
contract
(cf
reinsurance)
-
For
life
insurance,
an
applicant
should
inform
the
insurer
of
changes
in
his
health
between
the
date
of
submission
and
the
date
of
delivery
C.
Misrepresentation
1. The
active
form
of
concealment
2. Concepts
Sections
36
to
47
(a) Form
and
when
made
Sec.
36.
A
representation
may
be
oral
or
written.
Sec.
37.
A
representation
may
be
made
at
the
time
of,
or
before,
issuance
of
the
policy.
Sec.
41.
A
representation
may
be
altered
or
withdrawn
before
the
insurance
is
effected,
but
not
afterwards.
Sec.
42.
A
representation
must
be
presumed
to
refer
to
the
date
on
which
the
contract
goes
into
effect.
Representation
statement
made
by
the
insured
at
the
time
or,
or
prior
to,
the
issuance
of
the
policy
(may
be
about
a
past,
existing
fact,
or
future
happening)
Misrepresentation:
a. Statement
of
a
fact
which
is
untrue
b. Which
the
insured
stated
with
knowledge
that
such
is
untrue
and
with
an
intent
to
deceive,
or
when
he
states
something
positively
as
true
without
knowing
it
to
be
true
c. Material
to
the
risk
will
render
the
contract
of
insurance
voidable
at
the
option
of
the
insurer
Form
and
nature
of
representation:
a. The
information
given
concerns
risk
used
in
estimating
the
character
and
assumption
of
risk
b. Forms
basis
of
contract
describes
and
defines
the
risk
assumed
c. Intended
as
collateral
inducements
for
the
insurer
to
accept
the
risk
NOTES:
-
Because
the
representation
is
not
part
of
the
contract,
it
may
be
altered
or
withdrawn
before
the
contract
actually
takes
place
but
not
after
the
insurer
has
agreed
to
assume
risk
due
to
that
representation
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
31
-
(b) Representation
as
to
future
Sec.
39.
A
representation
as
to
the
future
is
to
be
deemed
a
promise,
unless
it
appears
that
it
was
merely
a
statement
of
belief
or
expectation.
Affirmative
Representation
existence
or
non-existence
of
a
fact
when
the
contract
begins
Promissory
Representation
any
promise
to
be
fulfilled
after
the
contract
has
come
into
existence
or
any
statement
concerning
the
happening
of
an
event
-
Similar
to
a
warranty
or
condition
-
It
may
be
incorporated
in
the
policy
itself
(although
not
specifically
made
a
warranty)
(c) Representation
as
to
information
Sec.
43.
When
a
person
insured
has
no
personal
knowledge
of
a
fact,
he
may
nevertheless
repeat
information
which
he
has
upon
the
subject,
and
which
he
believes
to
be
true,
with
the
explanation
that
he
does
so
on
the
information
of
others;
or
he
may
submit
the
information,
in
its
whole
extent,
to
the
insurer;
and
in
neither
case
is
he
responsible
for
its
truth,
unless
it
proceeds
from
an
agent
of
the
insured,
whose
duty
it
is
to
give
the
information.
NOTES:
-
The
insured
is
allowed
to
give
information
of
which
he
has
no
personal
knowledge
about
if
the
info
turns
out
to
be
false,
he
is
not
held
responsible
therefor
-
This
situation
occurs
in
the
case
of
agents
(either
of
the
insured
or
the
insurer)
(d) Effect
of
misrepresentation
Sec.
44.
A
representation
is
to
be
deemed
false
when
the
facts
fail
to
correspond
with
its
assertions
or
stipulations.
Sec.
45.
If
a
representation
is
false
in
a
material
point,
whether
affirmative
or
promissory,
the
injured
party
is
entitled
to
rescind
the
contract
from
the
time
when
the
representation
becomes
false.
The
right
to
rescind
granted
by
this
Code
to
the
insurer
is
waived
by
the
acceptance
of
premium
payments
despite
knowledge
of
the
ground
for
rescission.
(As
amended
by
Batasang
Pambansa
Blg.
874).
NOTES:
-
In
order
to
avoid
the
policy,
a
representation
must
be
false
in
a
material
and
substantial
aspect
(e) Misrepresentation
as
to
age
Sec.
227.
In
the
case
of
individual
life
or
endowment
insurance,
the
policy
shall
contain
in
substance
the
following
conditions:
(d)
A
provision
that
if
the
age
of
the
insured
is
considered
in
determining
the
premium
and
the
benefits
accruing
under
the
policy,
and
the
age
of
the
insured
has
been
misstated,
the
amount
payable
under
the
policy
shall
be
such
as
the
premium
would
have
purchased
at
the
correct
age;
(f)
Test of materiality
Sec.
46.
The
materiality
of
a
representation
is
determined
by
the
same
rules
as
the
materiality
of
a
concealment.
NOTE:
Materiality
is
judicial
question
and
not
left
to
the
insurance
companys
sole
discretion
Other
provisions
on
Misrepresentation
Sec.
38.
The
language
of
a
representation
is
to
be
interpreted
by
the
same
rules
as
the
language
of
contracts
in
general.
Sec.
40.
A
representation
cannot
qualify
an
express
provision
in
a
contract
of
insurance,
but
it
may
qualify
an
implied
warranty.
Sec.
42.
A
representation
must
be
presumed
to
refer
to
the
date
on
which
the
contract
goes
into
effect.
NOTES:
-
Construction
should
be
liberally
in
favor
of
the
insured
-
Representations
are
required
to
be
only
SUBSTANTIALLY
true
while
warranties
must
be
LITERALLY
true
or
the
contract
will
fail
-
A
representation
is
not
an
express
provision
or
warranty
because
it
is
not
part
of
the
contract
but
only
a
collateral
inducement
it
may
qualify
as
an
implied
warranty
D.
Cases
on
concealment
and
misrepresentations
Ng
v.
Asian
Crusader
F:
In
the
insurance
policy,
insurer
claims
that
K
(insured)
gave
false
info
re
question
as
to
his
ailment
or
previous
operation.
K
said
he
was
operated
on
for
a
tumor
associated
with
ulcer
of
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
32
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
33
a.
b.
c.
Effect
of
incontestability:
The
insurer
cannot
refuse
payment
claiming
that:
a. the
policy
is
void
ab
initio
(void
ab
initio
here
should
be
understood
as
voidable
as
contemplated
by
the
Civil
Code;
fraud
is
in
the
inducement)
b. rescissible
by
reason
of
fraudulent
concealment
c. rescissible
by
reason
of
fraudulent
misrepresentation
Defenses
not
barred
by
incontestable
clause
a. the
person
taking
the
insurance
has
no
insurable
interest
as
required
b. cause
of
death
is
an
excepted
risk
c. the
premiums
had
not
been
paid
d. the
conditions
of
the
policy
relating
to
military
or
naval
service
have
been
violated
e. fraud
is
of
a
particularly
vicious
type
like
in
pursuant
of
a
scheme
to
murder
the
insured
f. the
beneficiary
failed
to
furnish
proof
of
death
or
to
comply
with
any
condition
by
the
policy
g. the
action
was
not
brought
within
the
time
specified
DIONNE:
pertains
to
the
essential
elements
of
the
contract
so,
they
are
not
time-bound
Tan
v.
CA
F:
T
obtained
a
life
insurance
and
died
of
hepatoma.
Insurer
denied
the
claims
of
the
heir
on
the
ground
of
misrepresentation
by
T.
Heirs
claimed
that
the
defense
by
insurer
is
already
barred.
H:
Policy
was
only
in
force
for
one
year
and
five
months
from
issuance,
hence
the
insurer
is
not
barred
from
proving
that
the
policy
is
void
(remember
that
void
here
is
not
void
as
defined
in
CC)
by
reason
of
the
fraudulent
concealment
or
misrepresentation.
Tan
Chay
v.
West
Coast
Life
F:
T
obtained
a
life
insurance
from
W.
When
T
died,
W
refused
to
honor
the
claims
on
the
ground
that
there
was
no
contract
because
it
was
obtained
thru
fraud
and
deceit.
T
allegedly
colluded
with
the
medical
examiner
to
conceal
Ts
usage
of
morphine
and
cocaine
which
eventually
aggravated
his
tuberculosis,
the
cause
of
his
death.
H:
Ts
beneficiary
claims
that
Ws
action
is
barred
by
the
commencement
of
action
to
collect.
But
SC
upheld
Ws
argument
that
it
was
not
rescinding
the
contract,
instead,
W
is
asserting
that
there
was
no
contract
to
begin
with
due
to
the
fraud
and
deceit
employed
by
T
and
the
doctor.
F.
Warranties
Definition:
a
statement
or
promise
by
the
insured
set
forth
in
the
policy,
the
untruth
or
non-fulfillment
of
which
in
any
respect
renders
the
policy
voidable
by
the
insurer.
-
Presumed
to
be
affirmative
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
34
-
-
2.
-
-
-
-
-
(b) Implied
warranty
(marine
only)
Implied
from
the
very
nature
of
the
policy
or
from
the
general
tenor
of
the
words,
the
warranty
can
be
surmised
even
if
not
necessarily
embodied
in
the
policy
binds
the
insured
just
like
in
expressed
In
marine
insurance,
there
is
an
IMPLIED
warranty
that
the
ship
is
seaworthy
(d) Promissory
Also
called
executory
warranty
must
be
material
to
the
risk
(it
is
material
if
it
increases
the
risk)
The
insured
stipulates
that
certain
facts
or
conditions
pertaining
to
the
risk
shall
exist
or
that
certain
things
with
reference
thereto
shall
be
done
or
omitted
In
the
nature
of
condition
subsequent
Sec
73
provides
the
exceptions
when
contracts
are
voided
due
to
breach
of
warranties
(1)when
loss
occurs
before
time
for
performance;
(2)
performance
becomes
unlawful;
(3)
performance
becomes
impossible
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
35
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
36
-
-
Sec.
380.
No
cancellation
of
the
policy
shall
be
valid
unless
written
notice
thereof
is
given
to
the
land
transportation
operator
or
owner
of
the
vehicle
and
to
the
Land
Transportation
Commission
at
least
fifteen
days
prior
to
the
intended
effective
date
thereof.
Upon
receipt
of
such
notice,
the
Land
Transportation
Commission,
unless
it
receives
evidence
of
a
new
valid
insurance
or
guaranty
in
cash
or
surety
bond
as
prescribed
in
this
chapter,
or
an
endorsement
of
revival
of
the
cancelled
one,
shall
order
the
immediate
confiscation
of
the
plates
of
the
motor
vehicle
covered
by
such
cancelled
policy.
The
same
may
be
re-issued
only
upon
presentation
of
a
new
insurance
policy
or
that
a
guaranty
in
cash
or
surety
band
has
been
made
or
posted
with
the
Commissioner
and
which
meets
the
requirements
of
this
chapter,
or
an
endorsement
or
revival
of
the
cancelled
one.
(Amended
by
PD
1455).
Sec.
227.
xxx
(b)
A
provision
that
the
policy
shall
be
incontestable
after
it
shall
have
been
in
force
during
the
lifetime
of
the
insured
for
a
period
of
two
years
from
its
date
of
issue
as
shown
in
the
policy,
or
date
of
approval
of
last
reinstatement,
except
for
non-payment
of
premium
and
except
for
violation
of
the
conditions
of
the
policy
relating
to
military
or
naval
service
in
time
of
war;
Filipinas
Compania
de
Seguros
v.
Nava
F:
Before
the
war,
N
obtained
18
insurance
policies.
Pursuant
to
the
policy
loan
clause
in
the
policies
(which
allows
insured
to
borrow
money
from
insurer
after
3
years
from
approval
of
policy),
N
applied
for
a
5,000-peso
loan.
Insurers
refused
due
to
alleged
adjustment
of
currency
after
the
war.
N
filed
a
case
for
rescission
due
to
these
refusals.
H:
Rescission
is
valid.
Using
the
Haw
Pia
case,
the
SC
ruled
that
payment
made
during
the
Japanese
occupation
in
lieu
of
pre-
war
contractual
obligation
shall
be
valid.
Insurance
contracts
are
also
in
the
nature
of
an
ordinary
obligation,
hence,
payment
made
by
N
shall
be
valid
and
he
should
have
been
entitled
to
the
loan.
Areola
v.
CA
F:
supra
H:
Insurer
is
still
liable
to
the
insured
for
unilaterally
cancelling
the
policy.
Even
if
non-payment
of
premium
was
due
to
the
fault
of
insurers
agent,
such
is
imputable
to
the
principal.
Tan
Chay
v.
CA
F:
supra
Chapter
VII
RISK
AND
COVERAGES
By
Cielo
A.
In
General:
Risks
and
causation
1. Insurable
risks
Sec.
3.
Any
contingent
or
unknown
event,
whether
past
or
future,
which
may
damnify
a
person
having
an
insurable
interest,
or
create
a
liability
against
him,
may
be
insured
against,
subject
to
the
provisions
of
this
chapter.
The
consent
of
the
spouse
is
not
necessary
for
the
validity
of
an
insurance
policy
taken
out
by
a
married
person
on
his
or
her
life
or
that
of
his
or
her
children.
All
rights,
title
and
interest
in
the
policy
of
insurance
taken
out
by
an
original
owner
on
the
life
or
health
of
the
person
insured
shall
automatically
vest
in
the
latter
upon
the
death
of
the
original
owner,
unless
otherwise
provided
for
in
the
policy.
1
NOTES:
-
Event
or
peril
insured
against
may
be
any
(future)
or
contingent
or
unknown
event,
past
or
future
which
can
either:
(a)
cause
damage
or
cause
loss
to
a
person
having
an
insurable
interest
an
example
is
a
marine
insurance
against
damage
that
may
be
suffered
by
the
vessel
and
its
owner
(b)
create
a
liability
against
the
person
insured
an
example
is
a
third
party
liability
taken
by
the
owner
of
a
car
or
common
carrier
-
A
married
woman
may
take
out
insurance
on
her
life
or
children
without
the
consent
of
her
husband;
she
may
also
insure
her
paraphernal
properties
-
A
minor
may
also
enter
into
a
valid
contract
of
insurance
for
life,
health
and
accident;
other
contracts
of
insurance
entered
into
by
the
minor
shall
be
voidable
(cf
CC)
2. Specified
risks
and
all
risks
policies
Specified
the
policy
specifies
what
risks
are
covered
-
Generally,
policies
are
of
this
kind
-
BoP
to
prove
that
the
risk
is
covered
is
on
the
insured
Deleted:
Any
minor
of
the
age
of
eighteen
years
or
more,
may,
notwithstanding
such
minority,
contract
for
life,
health
and
accident
insurance,
with
any
insurance
company
duly
authorized
to
do
business
in
the
Philippines,
provided
the
insurance
is
taken
on
his
own
life
and
the
beneficiary
appointed
is
the
minor's
estate
or
the
minor's
father,
mother,
husband,
wife,
child,
brother
or
sister.
The
married
woman
or
the
minor
herein
allowed
to
take
out
an
insurance
policy
may
exercise
all
the
rights
and
privileges
of
an
owner
under
a
policy.
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
37
-
-
Vda
de
Bataclan
v.
Medina
F:
B
rode
a
bus
from
Manila.
It
was
speeding
along
a
slippery
highway
when
its
front
tires
burst,
causing
the
bus
to
turn
turtle.
B
was
trapped
inside
the
bus
while
the
driver
called
for
help.
It
was
nighttime
and
because
there
was
no
electricity
in
the
area,
rescuing
villagers
brought
with
them
brought
torches.
Unbeknownst
to
them,
the
gasoline
from
the
bus
strated
to
leak.
When
the
villagers
approached
the
bus,
the
gas
ignited
and
the
bus
exploded.
B
died.
H:
B
can
recover
from
the
driver
and
the
company.
The
proximate
cause
of
Bs
death
was
the
negligence
of
the
driver
(he
was
speeding
and
it
was
discovered
that
he
failed
to
change
the
tires
despite
the
reminder
by
the
owner)
which
brought
about
a
series
of
events
leading
to
his
death.
6. Rescue
from
covered
peril
Sec.
87.
An
insurer
is
liable
where
the
thing
insured
is
rescued
from
a
peril
insured
against
that
would
otherwise
have
caused
a
loss,
if,
in
the
course
of
such
rescue,
the
thing
is
exposed
to
a
peril
not
insured
against,
which
permanently
deprives
the
insured
of
its
possession,
in
whole
or
in
part;
or
where
a
loss
is
caused
by
efforts
to
rescue
the
thing
insured
from
a
peril
insured
against.
Two
situations:
a. The
loss
took
place
while
being
rescued
from
the
peril
insured
against
-
The
loss
was
caused
by
a
peril
not
insured
against
after
it
was
exposed
to
such
peril
DURING
rescue
efforts
from
a
peril
insured
against
-
E.g.
during
a
fire
(insured)
rescue
efforts,
furniture
were
taken
out
of
the
house
which
were
later
stolen
(not
insured
against)
insurer
liable
b. The
loss
is
caused
by
the
efforts
to
rescue
the
thing
from
the
peril
insured
against
-
The
rescue
effort
itself
became
the
peril
-
E.g.
an
insured
machine
was
being
taken
out
during
a
fire
thru
a
small
hole
causing
damage
to
it
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
All-risk
insurance
covers
any
and
all
risks
that
may
imperil
the
insurers
property
-
BoP
is
on
the
insurer
to
prove
that
risk
is
excluded
3. Exceptions
and
Exclusions
-
Both
pertain
to
risks
not
covered
-
Strictly
construed
against
the
insurer
Exceptions
apply
in
all-risk
policies
all
are
covered
EXCEPT
the
following
Exclusions
apply
in
specified
policies
those
not
included
in
the
specified
risks
are
excluded
4. Causes
38
d.
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
39
3)
4)
2.
Suicide
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
40
-
-
C.
Fire
Insurance
1. What
fire
insurance
includes
Sec.
169.
As
used
in
this
Code,
the
term
fire
insurance
shall
include
insurance
against
loss
by
fire,
lightning,
windstorm,
tornado
or
earthquake
and
other
allied
risks,
when
such
risks
are
covered
by
extension
to
fire
insurance
policies
or
under
separate
policies.
Fire
insurance
a
contract
of
indemnity
by
which
the
insurer
agrees
to
indemnify
the
loss
caused
by
hostile
fire
-
Also
involves
loss
from
allied
lines
like
lightning
if
such
risks
are
covered
by
fire
and
extended
coverage
-
The
standard
fire
contract
pertains
to
payment
of
direct
loss
but
it
may
also
extend
to
indirect
or
consequential
losses
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
Pineda
v.
CA
F:
PMSI
procured
a
group
life
insurance
policy
for
its
employees.
When
a
vessel
sank,
6
of
its
employees
died.
The
beneficiaries
allowed
the
PMSI
president
to
process
the
claims
but
the
latter
misappropriated
the
benefits.
H:
Insurer
is
still
liable
to
the
beneficiaries.
In
a
group
life
insurance
policy,
the
employer
acts
as
the
agent
of
the
insurer
in
collecting
the
premium.
Although
the
policy
is
in
the
name
of
the
insurer,
the
real
policy
holders
are
the
employees.
After
all,
the
premiums
paid
came
from
their
labor.
Eternal
Gardens
v.
Philamlife
F:
E
procured
a
group
life
insurance
policies
for
its
clients.
E
submitted
a
list
of
its
clients
with
their
insurable
balances.
One
of
Es
clients,
C,
died.
E
filed
a
claim
but
P
did
not
act
on
it.
E
sued
P.
F:
P
is
liable
to
E.
Upon
the
purchase
by
Es
client
of
a
memorial
lot,
he
is
covered
by
the
insurance
policy
subject
to
approval/
disapproval
of
P.
Because
of
Ps
inaction,
C
shall
be
deemed
covered
by
the
policy.
5. Industrial
Life
-
Tailored
to
the
needs
of
majority
of
its
purchasers
the
urban
industrial
class
or
blue
collar
workers
-
The
policy
shall
not
lapse
after
non-payment
of
premiums
in
3
months
after
the
expiration
of
the
grace
period
if
such
non-payment
is
due
to
the
failure
of
the
company
to
send
its
representatives
to
the
insured
to
collect
premium
-
The
usual
rule
on
insurable
interest
does
not
apply
here:
o The
proceeds
are
typically
small,
hence,
lesser
inducement
for
murder
o Investigation
and
processing
would
be
time-
consuming
and
nullify
the
advantage
of
speedy
payment
of
proceeds
for
funeral
and
burial
expenses
under
the
facility
of
payment
clause
o Addition
of
pointless
administrative
costs
for
the
insurer
or
beneficiary
could
destroy
the
current
usefulness
of
this
type
of
insurance
-
Unlike
ordinary
life
insurance,
the
premiums
and
proceeds
are
smaller
-
Sold
thru
individual
solicitation
without
med
exam
41
b.
c.
Friendly
fire
if
it
burns
in
a
place
where
it
was
intended
to
burn,
and
ought
to
be,
and
regarded
as
an
agency
for
the
accomplishment
of
some
purpose
and
not
as
a
hostile
peril
Hostile
fire
the
fire
occurs
outside
the
usual
confines
or
begins
as
a
friendly
fire
and
becomes
hostile
by
escaping
from
the
place
where
it
ought
to
be
Philippine
Home
Assurance
v.
CA
F:
Various
insured
goods
were
loaded
in
E
vessel
en
route
from
Japan
to
Manila.
While
on
voyage,
a
small
flame
was
discovered
in
an
acetylene
cylinder
in
the
accommodation
area.
An
explosion
followed
which
caused
a
fire
that
razed
the
ship.
A
salvage
company
towed
the
cargoes
and
loaded
them
to
another
vessel
which
were
eventually
delivered
to
their
destination.
PHAC
paid
the
vessel,
in
behalf
of
the
consignee,
for
the
salvage
charges.
H:
The
carrier,
not
PHAC,
should
be
liable.
Liability
from
fire
may
not
be
considered
a
natural
disaster
if
it
arise
from
some
act
of
man
or
thru
human
means.
In
this
case,
the
fire
was
caused
by
the
crews
negligence
(the
acetylene
should
have
been
in
the
storage
room,
not
near
the
engine
room)
so
they
should
be
held
liable.
2. Increase
or
risks
and
moral
hazards
clauses
See
warranties
in
fire
insurance,
supra
Increase
of
risks
and
moral
hazard
clauses
-
Every
contract
of
insurance
is
made
with
reference
to
the
conditions
surrounding
the
subject
matter
of
the
risk
and
the
premium
is
fixed
with
reference
thereto
-
There
is
an
implied
promise
or
undertaking
on
the
part
of
the
insured
that
he
will
not
change
the
premises
or
the
character
of
the
business
carried
there
so
as
to
increase
the
risk
of
loss
by
fire
-
Most
fire
insurance
policies
contain
a
specific
provision
against
an
increase
risk
or
hazard
-
An
increase
of
hazard
takes
place
whenever
insured
property
is
put
to
some
new
use,
and
the
new
use
increases
the
chance
of
loss
-
Increase
shall
be
substantial
in
character
-
Moral
Hazard
clauses
clauses
to
prevent
insured
from
defrauding
insurer
Requisite
for
rescission
due
to
alteration:
-
The
use
or
condition
of
the
thing
is
specifically
limited
or
stipulated
in
the
policy
-
Such
use
or
condition
is
altered
-
Without
the
consent
of
the
insurer
-
By
means
within
the
control
of
the
insured
-
Increases
the
risk
there
is
an
implied
promise
that
the
insured
will
not
change
the
character
of
business
so
as
not
to
increase
risk
of
loss
by
fire
Alterations:
-
Will
not
avoid
the
policy
if
the
articles
introduced
are
necessary
in
the
business
or
if
the
alteration
is
not
of
a
dangerous
character
-
Also,
alterations
without
which
the
insured
property
would
be
useless
if
prohibited
like
making
repairs,
painting
the
place
or
using
a
small
amount
of
gasoline
to
remove
paint
etc.
will
not
avoid
the
policy
-
Note
that
the
knowledge
of
insured
is
presumed
-
But
it
the
policy
does
not
contain
a
limitation
as
to
use,
an
alteration
will
not
violate
the
policy
Where
insured
has
no
control
or
knowledge
of
alteration:
-
Insurers
liability
unaffected
when
increase
of
risk
occasioned
by
accident,
adjacent
premises,
acts
of
a
tenant,
or
other
causes
over
which
insured
has
no
control
-
Insureds
knowledge
is
presumed
in
case
of
increase
of
risk
caused
by
his
tenant
3. Measures
of
indemnity
Measures
of
indemnity
-
In
the
absence
of
express
valuation
in
the
policy,
the
insured
is
entitled
to
recover
the
amount
of
actual
loss
sustained
BoP
is
to
the
insured
-
For
open
policies,
the
expenses
incurred
by
the
insured
at
the
time
f
the
commencement
of
the
fire
or
the
value
of
the
damaged
property
in
the
condition
it
was
in
at
the
time
of
the
fire
but
their
liability
shall
be
limited
to
the
face
value
of
the
policy
-
For
valued
policies,
the
valuation
agreed
upon
will
be
conclusive
upon
the
parties
-
In
case
of
personal
property,
the
market
value
may
be
used
as
the
value
of
the
actual
loss
sustained
Sec.
173.
If
there
is
no
valuation
in
the
policy,
the
measure
of
indemnity
in
an
insurance
against
fire
is
the
expense
it
would
be
to
the
insured
at
the
time
of
the
commencement
of
the
fire
to
replace
the
thing
lost
or
injured
in
the
condition
in
which
it
was
at
the
time
of
the
injury;
but
if
there
is
a
valuation
in
a
policy
of
fire
insurance,
the
effect
shall
be
the
same
as
in
a
policy
of
marine
insurance.
Sec.
174.
Whenever
the
insured
desires
to
have
a
valuation
named
in
his
policy,
insuring
any
building
or
structure
against
fire,
he
may
require
such
building
or
structure
to
be
examined
by
an
independent
appraiser
and
the
value
of
the
insureds
interest
therein
may
then
be
fixed
as
between
the
insurer
and
the
insured.
The
cost
of
such
examination
shall
be
paid
for
by
the
insured.
A
clause
shall
be
inserted
in
such
policy
stating
substantially
that
the
value
of
the
insureds
interest
in
such
building
or
structure
has
been
thus
fixed.
In
the
absence
of
any
change
increasing
the
risk
without
the
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
a.
42
Co-insurance
clause
some
fire
insurer
requires
the
insured
to
maintain
an
insurance
to
an
amount
equal
to
the
value
or
specified
percentage
of
the
value
of
the
property
-
This
is
to
divide
the
potential
risk
between
the
insured
and
the
insurer
in
case
of
partial
loss
or
destruction
of
the
property
-
For
example,
if
a
house
which
has
a
value
of
1M
is
insured
for
500,000.
If
there
is
a
co-insurance
clause,
the
insurer
is
liable
for
while
the
other
half
is
to
be
borne
by
the
insured
himself.
Hence,
in
case
of
partial
loss,
the
insurer
will
pay
250k
only.
But
in
case
of
total
loss,
all
the
500k
will
be
paid.
D.
Casualty
and
liability
insurance
Casualty
insurance
includes
all
forms
of
insurance
or
liability
arising
from
accident
or
mishap
excluding
certain
types
of
loss
within
the
scope
of
other
insurance:
marine,
fire,
suretyship
and
life
-
It
covers
those
losses
not
included
in
other
policies
like
insurance
against
accident
(if
not
in
life),
burglary,
robbery
and
theft
in
the
robbery
insurance,
restrictions
are
higher
so
as
to
prevent
fraud
-
Accepting
casualty
to
mean
accident
a
violent
mishap
proceeding
from
an
unknown
or
unexpected
cause;
casualty
insurance
might
be
presumed
to
include
any
loss
or
damage
when
an
accident
is
the
cause
of
the
loss
-
Casualty
insurance
excludes
losses
arising
from
accident
which
are
within
the
coverage
of
the
other
types
of
insurance
mentioned
Liability
insurance
contract
of
indemnity
for
the
benefit
of
the
insured
and
those
in
privity
with
him,
or
to
those
to
whom
the
law
extends
the
indemnity
against
liability
-
Indemnity
is
provided
to
the
insured
in
respect
of
his
legal
liability
to
pay
damages,
usually
arising
out
of
negligence
or
nuisance
and
occasionally,
under
contract
-
Liability
for
quasi-delict
or
non-fulfillment
of
contract
liability
is
financial
responsibility
that
one
party
has
to
-
-
Sec.
176.
Casualty
insurance
is
insurance
covering
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.
It
includes,
but
is
not
limited
to,
employers
liability
insurance,
motor
vehicle
liability
insurance,
plate
glass
insurance,
burglary
and
theft
insurance,
personal
accident
and
health
insurance
as
written
by
non-life
insurance
companies,
and
other
substantially
similar
kinds
of
insurance.
Two
general
divisions
of
casualty
insurance:
a. Against
specified
perils
which
may
affect
the
persons.
Property
such
as
personal
accident,
robbery
or
theft
b. Against
specified
perils
which
may
give
rise
to
liability
on
the
part
of
the
insured
such
as
motor
vehicle
liability,
products
liability
Fortune
Insurance
v.
CA
F:
An
armoured
car
of
Producers
Bank
was
robbed
while
transferring
money;
the
driver
and
guard
of
the
van
were
indicted.
F
denies
liability
alleging
that
the
incident
was
excepted
because
it
was
perpetuated
by
the
banks
employees.
H:
F
is
relieved
from
liability
because
the
driver
and
the
guard
are
deemed
to
be
employees
of
the
bank.
In
cases
of
robbery
and
theft,
the
opportunity
to
defraud
the
insurer
is
so
great
that
the
insurer
are
allowed
to
include
all
sorts
of
restrictions
to
reduce
the
hazard.
E.
Suretyship
1. Definition
and
extent
of
liability
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
43
Property
Insurance
Principal
contract
in
itself
Two
parties
Contract
of
indemnity
No
right
of
recovery
(but
insurer
may
be
subrogated
to
the
rights
of
the
insured)
May
be
cancelled
unilaterally
by
the
insured
or
by
the
insurer
on
proper
grounds
Does
not
need
acceptance
by
third
party
Risk-distributing
device
(premium
as
contribution
to
common
fund)
Suretyship
Surety
assumes
liability
as
a
regular
party
to
undertaking
Primarily
liable
Not
entitled
to
the
benefit
of
exhaustion
of
debtors
assets
(if
the
debtor
does
not
pay)
Guaranty
Liability
depends
upon
an
independent
agreement
Secondarily
liable
The
guarantor
can
exhaust
all
of
the
debtor
property
and
legal
remedies
before
he
will
be
compelled
to
pay
(if
debtor
cannot
pay)
Suretyship,
especially
fidelity
bonds,
is
treated
like
(non-life)
insurance.
-
The
rule
on
contracts
of
adhesion
apply;
the
terms
of
the
surety
is
contrued
in
favor
of
the
obligee.
National
Power
Corporation
v.
CA
F:
NPC
entered
into
a
contract
with
F
for
the
building
of
the
Angat-Balintawak
transmission
lines.
Philamgen
issued
a
surety
bond
for
a
year
for
Fs
faithful
performance.
F
abandoned
the
project;
NPC
wrote
to
P
that
F
reneged
on
its
obligation
and
NPC
will
continue
the
project.
Thereafter,
P
refused
to
honor
NPCs
claim
because
the
period
has
expired.
H:
the
letter
NPC
sent
to
P
is
enough
notice
of
Fs
abandonment,
thereby
making
P
liable
to
NPC.
Zaragoza
v.
FIdelino
F:
Z
filed
a
suit
for
replevin
against
F
due
to
the
latters
non-
payment
of
a
car
she
bought
from
Z.
The
car
was
returned
to
F
because
of
a
surety
bond
posted
by
Mabini
Insurance.
Upon
judgment
in
favor
of
Z,
M
refused
to
pay.
H:
Ms
liability
to
pay
the
oblige,
Z,
attached
upon
the
promulgation
of
verdict
against
F.
Eastern
Assurance
v.
IAC
F:
In
a
public
bidding
by
DAR
Cebu
for
the
repair
of
7
eisehower
jeeps,
M
won.
E
issued
a
proposal
bond
as
Ms
surety
for
the
faithful
performance
of
the
obligation.
Only
6
units
were
repaired,
E
refused
to
pay
DAR
alleging
that
it
entered
into
a
proposal
bond
only.
H:
The
proposal
bond
covers
the
actual
performance
of
the
undertaking.
The
bond
is
not
limited
to
the
concluding
of
the
contract
but
also
its
implementation.
Prudential
Guarantee
v.
Equinox
F:
J
entered
into
a
contract
with
E
for
the
construction
of
Eastgate
Center.
P
issued
two
surety
bonds
in
favor
of
J
for
the
faithful
performance
of
the
obligation.
J
did
not
adhere
to
the
conditions
(failure
to
submit
report
and
delayed
the
work
on
the
project).
P
denied
solidary
liability.
H:
The
insurance
code
and
the
civil
code
provides
that
the
surety
is
solidary
bound.
The
surety
assumes
liability
as
a
regular
party
in
the
contract
and
shall
be
principally
liable
to
the
principal
or
the
obligee.
2. Premium
Payment
Sec.
179
The
surety
is
entitled
to
payment
of
the
premium
as
soon
as
the
contract
of
suretyship
or
bond
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
44
Types
of
Surety
Bonds
Contract
Bonds
these
are
bonds
usually
connected
with
construction
and
supply
contracts.
They
function
to
protect
the
owner
against
a
possible
default
by
the
contractor
to
comply
with
his
contract
or
to
pay
material
men,
laborers
and
sub-
contractors.
There
are
two
kinds
of
contract
bonds:
-
Performance
bond
covers
the
faithful
performance
of
the
contract
-
Payment
bond
covers
the
payment
of
the
laborers
and
material
men
Fidelity
Bonds
serves
to
pay
the
employer
for
loss
caused
by
a
dishonest
act
of
his
employee.
They
can
be
classified
further
into:
-
Industrial
bond
usually
required
by
private
employers
to
cover
possible
loss
through
dishonesty
of
employees
-
Public
official
bond
usually
required
of
public
officers
for
the
faithful
performance
of
their
duties
and
as
a
condition
upon
the
assumption
of
their
offices.
It
ordinarily
includes
all
officers
who
have
custody
of
public
funds.
It
functions
to
protect
such
public
funds.
Judicial
Bonds
commonly
required
in
judicial
proceedingsExamples
are
replevin
bonds,
injuction
bonds,
appeal
bonds,
and
bail
bonds,
among
others.
The
general
rule
is
that
the
conditions
of
a
bond
specified
and
required
in
the
provisions
of
the
law/regulation
requiring
the
submission
of
the
bond
are
deemed
incorporated
into
the
bond
even
if
not
expressly
written
thereon.
Rules
in
payment
of
premiums:
a. The
premium
becomes
a
debt
as
soon
as
the
contract
of
suretyship
or
bond
is
perfected
and
delivered
to
the
obligor
b. The
contract
shall
not
be
valid
until
premium
has
been
paid
c.
d.
e.
f.
3.
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
45
2.
Standard
Driver
Clause
and
Drivers
License
Requirement
-
Standard
authorized
driver
clause
this
clause
is
a
staple
in
CMVLI
policies:
AUTHORIZED
DRIVER
Any
of
the
following:
(a)
the
insured
(b)
any
person
driving
on
the
insureds
order
or
with
his
permission;
provided,
that
the
person
driving
is
permitted
in
accordance
with
licensing
or
other
laws
or
regulations
to
drive
the
motor
vehicle
and
is
not
disqualified
from
driving
such
motor
vehicle
by
order
of
a
court
of
law
or
by
reason
of
any
enactment
or
regulation
in
that
behalf.
-
Drivers
License
When
it
is
the
insured
himself
who
is
driving,
possessing
the
license
is
not
required
for
the
coverage
to
apply
nor
will
having
an
expired
license
defeat
the
claim.
It
merely
renders
him
subject
to
the
proper
penalties
for
violation
of
the
relevant
regulations.
However,
if
the
one
driving
is
another
person
who
had
permission
or
was
under
the
orders
of
the
insured,
possessing
a
valid
license
is
a
requisite
for
the
claim
to
lie.
2. The
No
Fault
clause
NOTES:
-
The
term
no-fault
connotes
that
the
victim
can
recover
without
regard
to
his
contributor
fault
-
The
ratio
is
to
guarantee
indemnity
to
the
victims
-
This
applies
to
death
and
injury
sustained
by
third
party
but
not
to
property
damage
-
The
insurer
shall
also
be
liable
if
the
victim
is
an
occupant
or
passenger
regardless
of
his
own
fault
-
The
insurer
liable
is
the
not
necessarily
the
insurer
of
the
vehicle
that
caused
the
accident
BUT
the
insurer
of
vehicle
which
the
occupant
is
riding,
mounting,
or
dismounting
from.
Sec.
391.
Any
claim
for
death
or
injury
to
any
passenger
or
third
party
pursuant
to
the
provisions
of
this
chapter
shall
be
paid
without
the
necessity
of
proving
fault
or
negligence
of
any
kind;
Provided,
That
for
purposes
of
this
section:
(i)
The
total
indemnity
in
respect
of
any
person
shall
not
exceed
five
thousand
pesos;
(ii)
The
following
proofs
of
loss,
when
submitted
under
oath,
shall
be
sufficient
evidence
to
substantiate
the
claim:
(a)
Police
report
of
accident;
and
(b)
Death
certificate
and
evidence
sufficient
to
establish
the
proper
payee;
or
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
46
CASES
for
motor
vehicle
insurance:
Perla
Companie
de
Seguros
v.
CA
F:
Car
was
carnapped
but
insurer
refused
to
pay
because
license
was
expired,
hence,
the
insured
was
not
an
authorized
driver.
H:
The
theft
clause
and
not
the
authorized
driver
clause
shall
apply.
Theft
is
a
different
legal
concept
from
that
of
accidents
where
the
authorized
driver
clause
usually
applies.
Shafer
v.
Judge
F:
S
obtained
a
car
policy
for
his
Ford
from
M
(for
third
party
liability).
The
car
figured
in
an
accident
and
a
passenger
was
injured.
S
was
charged
with
criminal
negligence.
H:
S
can
implead
the
insurance
company
as
a
third
party
defendant
in
the
criminal
action
when
civil
liability
ex
delicto
is
also
tried.
The
liability
of
the
insurer
accrues
immediately
upon
the
occurrence
of
the
loss
or
accident.
Far
Eastern
Surety
v.
Misa
F:
M
hired
a
taxicab
operated
by
L.
The
cab
collided
with
a
truck
(the
truck
was
at
fault).
M
was
injured
so
she
filed
a
case
against
L
which
filed
a
third
party
complaint
against
F
as
the
insurer.
H:
F
is
not
liable.
Indemnity
was
predicated
on
the
representation
that
the
cab
insures
the
passengers
to
accidents.
In
this
case,
because
L
has
not
legal
liability
(it
was
not
at
fault),
F
also
has
no
liability.
But
using
the
doctrine
of
estoppel,
L
is
still
liable
to
M.
Peza
v.
Alikpala
F:
Employee
of
a
company
drove
the
company
car
without
a
license
and
runs
two
kids
over.
Insurer
refused
to
reimburse
the
company
using
the
authorized
driver
clause.
H:
SC
upheld
insurer.
Employee
is
not
an
authorized
driver.
Perla
v.
Ancheta
F:
A
collision
of
a
car
and
a
bus
in
Bicol
resulted
to
injury
to
the
passengers
of
the
bus.
They
filed
against
the
insurer,
claims
for
passenger
liability
and
third
party
liability.
H:
The
insurer
is
liable
for
passenger
liability
only.
It
is
mandatory
for
the
insurer
of
the
bus
to
pay
such
even
without
any
showing
which
vehicle
was
at
fault.
In
any
case,
the
insurer
can
recover
from
the
vehicle
responsible
for
the
accident.
The
ratio
for
the
no-fault
indemnity
clause
is
to
provide
the
victims
with
immediate
compensation
after
the
accident.
G.
Reinsurance
-
one
party
(the
reinsurer)
indemnify
another
(the
reinsured
or
the
original
insurer)
against
loss
or
Sec.
97.
A
contract
of
reinsurance
is
one
by
which
an
insurer
procures
a
third
person
to
insure
him
against
loss
or
liability
by
reason
of
such
original
insurance.
Sec.
98.
Where
an
insurer
obtains
reinsurance,
except
under
automatic
reinsurance
treaties,
he
must
communicate
all
the
representations
of
the
original
insured,
and
also
all
the
knowledge
and
information
he
possesses,
whether
previously
or
subsequently
acquired,
which
are
material
to
the
risk.
Sec.
99.
A
reinsurance
is
presumed
to
be
a
contract
of
indemnity
against
liability,
and
not
merely
against
damage.
Sec.
100.
The
original
insured
has
no
interest
in
a
contract
of
reinsurance.
Reinsurance
The
original
insurer
becomes
the
insured
The
subject
is
the
original
insurers
risk
There
is
a
different
interest
The
original
insured
has
no
interest
in
the
reinsurance
The
consent
of
the
original
insured
is
not
necessary
Double
Insurance
The
original
insurer
remains
the
insurer
The
property
of
the
insured
Insurance
of
the
same
interest
The
original
insured
is
a
party
in
all
contracts
The
insured
has
to
give
his
consent
NOTES:
Importance:
it
is
valuable
in
the
economy
strengthen
the
insurance
company
which
has
its
own
retention
limit
as
to
awards
(now
it
can
insure
amounts
exceeding
its
limit)
-
results
to
improved
undertaking
analysis
which
is
more
efficient
because
it
will
be
undertake
by
one
company
over
many
insurers
-
as
to
the
insured,
it
is
valuable
in
making
his
policy
more
stable
-
similar
to
the
original
contract
of
insurance,
the
original
insurer
has
the
duty
to
disclose
material
facts
relating
to
the
insurance
contract
-
share
in
the
insurance
may
be
automatic
(reinsurer
is
obligated
to
accept
a
fixed
share
of
the
risk)
or
facultative
(liability
on
individual
risk
where
each
party
has
a
free
choice
to
accept)
-
this
is
a
contract
against
liability
(under
the
original
insurance
contract)
and
not
against
damage
the
original
insurer
should
pay
the
insured
first
before
the
reinsurer
can
pay
-
rule
on
subrogation
is
applicable
-
the
original
insured
has
no
privity
of
contract
between
the
reinsurer
and
the
original
insurer
EXCEPT
if
there
is
a
provision
in
the
reinsurance
contract
allowing
the
reinsurer
to
become
liable
OR
if
there
a
novation
in
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
47
Automatic
vs.
Facultative
-
Automatic
Under
an
automatic
reinsurance
treaty,
the
ceding
company
(reinsured)
is
bound
to
cede
(i.e.,
give
off
by
way
of
reinsurance)
and
the
reinsurer
is
obligated
to
accept
a
fixed
share
of
the
risk
which
has
to
be
reinsured.
-
Facultative
-
there
is
no
obligation
to
cede
on
the
part
of
the
reinsured
nor
an
obligation
to
accept
on
the
part
of
the
reinsurer,
as
each
party
has
a
free
choice.
However,
once
the
risk
that
the
reinsured
cedes
is
accepted
by
the
reinsurer,
the
obligation
is
absolute
and
the
liability
assumed
thereafter
may
only
be
discharged
by
one
way:
payment
of
the
share
of
the
losses.
Reinsurance
Treaties
vs.
Reinsurance
Policies
-
Reinsurance
treaty
the
agreement
between
two
insurance
companies
that
one
(reinsurer)
will
indemnify
the
other
(reinsured)
against
loss
or
liability
it
may
sustain
under
the
original
contract
of
insurance
it
entered
into.
Simply
stated,
it
is
not
yet
the
insurance
policy
per
se
but
just
an
understanding
between
the
two
parties
to
engage
in
reinsurance.
It
is
a
contract
FOR
reinsurance.
-
Reinsurance
policy
the
actual
contract
that
came
as
a
result
of
the
agreement/reinsurance
treaty.
The
reinsurer
is
now
bound
to
indemnigy
the
reinsured
for
the
loss/liability
it
may
incur,
as
stated
in
the
policy.
It
is
a
contract
OF
insurance.
The
subject
of
a
reinsurance
contract
is
NOT
the
property
insured
by
the
reinsured
under
the
original
insurance
policy
but
the
reinsureds
risk
of
sustaining
liability
under
that
said
original
insurance
policy.
Liability
of
the
Reinsurer
to
the
Original
Insured
-
Contract
of
Reinsurance
solely
between
reinsurer
and
reinsured
the
original
insured
is
considered
a
stranger
to
this
contract
of
reinsurance
and
has
absolutely
no
interest
thereto.
-
Contract
of
Reinsurance
with
stipulation
pour
autrui
in
favor
of
the
original
insured
the
original
insured
may
now
proceed
against
both
the
reinsured
(insurer
in
the
original
insurance
policy)
and
the
reinsurer.
-
Contract
of
reinsurance
amounting
to
novation
this
is
not,
technically,
a
reinsurance
because
what
happens
is
that
the
reinsurer
replaces
the
reinsured
as
the
insurer
in
a
new
insurance
policy
in
favor
the
original
insured.
Philam
v.
Auditor
F:
P
claims
that
its
insurance
treaty
with
Airco
was
in
fact
an
insurance
policy,
and
as
such,
should
be
exempted
from
the
Margin
Law.
H:
A
reinsurance
policy
is
a
contract
of
indemnity
one
insurer
makes
with
another
to
protect
the
first
insurer
from
risk
the
latter
has
already
assumed.
A
reinsurance
treaty
is
merely
an
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
48
A.
Definition
&
Risks
Covered
Marine
protection
and
indemnity
insurance"(Sec
99
par
2)
insurance
against,
or
against
legal
liability
of
the
insured
for
loss,
damage,
or
expense
incident
to
ownership,
operation,
chartering,
maintenance,
use,
repair,
or
construction
of
any
vessel,
craft
or
instrumentality
in
use
of
ocean
or
inland
waterways,
including
liability
of
the
insured
for
personal
injury,
illness
or
death
or
for
loss
of
or
damage
to
the
property
of
another
person.
Risks
covered
(Sec
99
par
1)
a. Vessels,
craft,
aircraft,
vehicles,
goods,
freights,
cargoes,
merchandise,
effects,
disbursements,
profits,
moneys,
securities,
choses
in
action,
evidences
of
debts,
valuable
papers,
bottomry,
and
respondentia
interests
and
all
other
kinds
of
property
and
interests
therein,
in
respect
to,
appertaining
to
or
in
connection
with
any
and
all
risks
or
perils
of
navigation,
transit
or
transportation,
or
while
being
assembled,
packed,
crated,
baled,
compressed
or
similarly
prepared
for
shipment
or
while
awaiting
shipment,
or
during
any
delays,
storage,
transhipment,
or
reshipment
incident
thereto,
including
war
risks,
marine
builder's
risks,
and
all
personal
property
floater
risks;
b. Person
or
property
in
connection
with
or
appertaining
to
a
marine,
inland
marine,
transit
or
transportation
insurance,
including
liability
for
loss
of
or
damage
arising
out
of
or
in
connection
with
the
construction,
repair,
operation,
maintenance
or
use
of
the
subject
matter
of
such
insurance
(but
not
including
life
insurance
or
surety
bonds
nor
insurance
against
loss
by
reason
of
bodily
injury
to
any
person
arising
out
of
ownership,
maintenance,
or
use
of
automobiles);
c. Precious
stones,
jewels,
jewelry,
precious
metals,
whether
in
course
of
transportation
or
otherwise;
d. Bridges,
tunnels
and
other
instrumentalities
of
transportation
and
communication
(excluding
buildings,
their
furniture
and
furnishings,
fixed
contents
and
supplies
held
in
storage);
piers,
wharves,
docks
and
slips,
and
other
aids
to
navigation
and
transportation,
including
dry
docks
and
marine
railways,
dams
and
appurtenant
facilities
for
the
control
of
waterways.
All
risks
Marine
Insurance
Policy
-
insures
against
all
causes
of
conceivable
loss
or
damage,
except
as
otherwise
excluded
in
the
policy
or
due
to
fraud
or
intentional
misconduct
on
the
part
of
the
insured.
B.
General
&
Particular
Average
Sec
136.
Where
it
has
been
agreed
that
an
insurance
upon
a
particular
thing,
or
a
class
of
things,
shall
be
free
from
a
particular
average,
a
marine
insurer
is
not
liable
for
any
particular
average
loss
not
depriving
the
insured
of
the
possession,
at
the
port
of
destination,
of
the
whole
of
such
thing,
or
class
of
things,
even
though
it
becomes
entirely
worthless;
but
such
insurer
is
liable
for
his
proportion
of
all
general
average
loss
assessed
upon
the
thing
insured.
Average
-
Any
extraordinary
or
accidental
expense
incurred
during
the
voyage
for
the
preservation
of
the
vessel,
cargo,
or
both;
and
-
All
damages
to
the
vessel
and
cargo
from
the
time
it
is
loaded
and
the
voyage
commenced
until
it
ends
and
the
cargo
unloaded
KINDS
1. Gross/General
Averages
-
Damages
and
expenses
deliberately
caused
by
the
master
of
the
vessel
or
upon
his
authority,
in
order
to
save
the
vessel,
cargo,
or
both
at
the
same
time
from
a
real
and
known
risk
-
Borne
equally
by
all
of
the
interests
concerned
in
the
venture
Requisites
to
the
right
to
claims
the
General
Avergage
Contribution
a. There
must
be
a
common
danger
to
the
vessel
or
cargo
b. Part
of
the
vessel
or
cargo
was
sacrificed
deliberately
c. The
sacrifice
must
be
for
the
common
safety
or
for
the
benefit
of
all
d. It
must
be
made
by
the
master
or
upon
his
authority
e. It
must
not
be
caused
by
any
fault
of
the
party
asking
the
contribution
f. It
must
be
successful
g. It
must
be
necessary
2. Simple/Particular
Averages
-
All
damages
and
expenses
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
-
Loss
is
suffered
by
and
borne
by
the
owner
of
the
cargo
or
vessel
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
Chapter
VIII
Marine
Insurance
49
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
C.
Perils
of
the
Sea/Perils
of
the
Ship
Perils
of
the
sea
-
includes
only
those
casualties
due
to
the
unusual
violence
or
extraordinary
action
of
wind
and
wave,
or
to
other
extraordinary
causes
connected
with
navigation;
these
arise
from
some
overwhelming
power
which
cannot
be
guarded
against
by
the
ordinary
exertion
of
human
skill
or
prudence
(ex:
shipwreck,
foundering,
stranding,
collision)
->
COVERED
BY
MARINE
INSURANCE
Perils
of
the
ship
-
includes
losses
which
result
a. from
the
natural
and
inevitable
action
of
the
sea
b. from
the
ordinary
wear
and
tear
of
the
ship,
or
c. from
the
negligent
failure
of
the
ships
owner
to
provide
the
vessel
with
proper
equipment
to
convey
the
cargo
under
ordinary
conditions
->
NOT
COVERED
BY
MARINE
INSURANCE
Cathay
Insurance
v
CA
Ruling:
The
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.
Roque
v
IAC
Ruling:
Section
113
of
the
Insurance
Code
provides
that
in
every
marine
insurance
upon
anything,
a
warranty
is
implied
that
the
ship
is
seaworthy.
The
loss
having
been
caused
by
ordinary
strong
waves
and
wind,
a
normal
condition
in
the
open
sea,
coupled
by
negligence
and
mistake
on
the
part
of
the
vessel
crew,
the
same
does
not
fall
under
a
peril
of
the
sea
and
not
covered
by
the
insurance
contract.
La
Razon
v
Union
Insurance
Ruling:
In
the
present
case
the
entrance
of
the
sea
water
into
the
ship's
hold
through
the
defective
pipe
already
described
was
not
due
to
any
accident
which
happened
during
the
voyage,
but
to
the
failure
of
the
ship's
owner
properly
to
repair
a
defect
of
the
existence
of
which
he
was
apprised.
The
loss
was
therefore
more
analogous
to
that
which
directly
results
from
simple
unseaworthiness
than
to
that
which
results
from
perils
of
the
sea.
Malayan
Insurance
v
CA
Ruling:
With
the
incorporation
of
subsection
1.1
of
Section
1
of
the
Institute
War
Clauses,
"arrest"
caused
by
ordinary
judicial
process
is
deemed
included
among
the
covered
risks.
This
interpretation
becomes
inevitable
when
subsection
1.1
of
50
2.
b.
Shipowners
and
lenders
insurable
interest
where
vessel
hypothecated
by
bottomry
! Owner
-
has
insurable
interest
only
in
the
excess
of
its
value
over
the
amount
of
the
bottomry
loan
(Sec.
101).
! Lender
has
insurable
interest
in
the
vessel
given
as
security
for
the
loan
up
to
the
amount
thereof
Meaning
of
freightage
Freightage
is
the
benefit
which
is
to
accrue
to
the
owner
of
the
vessel
from
its
use
in
the
voyage
contemplated
or
the
benefit
derived
from
the
employment
of
the
ship.
Sources
of
freightage
1) Chartering
of
the
ship;
2) Its
employment
for
the
carriage
of
his
own
goods;
and
3) Its
employment
for
the
carriage
of
the
goods
of
others
(Sec.
102).
Insurable
interest
in
expected
or
anticipated
freightage
1. Freight
money
assured
to
the
shipowner
may
be:
a. freight
in
its
ordinary
acceptance;
b. the
hire
of
the
vessel;
and
c. the
benefit
accruing
to
the
owner
from
the
use
of
his
vessel
in
the
way
of
profits
upon
carriage
of
his
own
goods.
2. Owner
of
the
ship
has
insurable
interest
in
expected
freightage
which
he
may
not
earn
in
case
of
the
intervention
of
a
peril
insured
against
or
other
peril
incident
to
the
voyage.
However,
where
the
agreement
is
that
the
freight
is
payable
in
any
event,
the
shipowner
has
no
insurable
interest
in
such
freight.
But
shipper
who
has
prepaid
the
freightage
under
such
condition,
has
an
insurable
interest
on
the
same.
Insurable
interest
in
passage
money
1) Passenger
can
insure
his
advances
of
passage
money.
2) Shipowner
may
not
insure
passage
money
unless
it
is
payable
only
upon
completion
of
the
passage.
Insurable
interest
in
expected
freightage
in
a
charter
party
1. When
it
exists.
Insured
must
have
an
inchoate
right
to
freight
3.
4.
Insurable
interest
in
expected
profits
a. Interest
in
thing
involved
based
on
some
legal
right.
One
having
reasonable
expectation
of
profits
from
marine
adventure
may
take
out
insurance
to
protect
such
profits.
However,
interest
should
be
legal
interest
although
it
may
be
contingent.
b. Interest
in
thing
involved
based
on
a
valuable
consideration.
The
insured
has
sufficient
interest
if
it
is
based
on
a
valuable
consideration
paid.
2. Kinds
of
charter
parties
a.
Bareboat
or
demise
charter
Shipowner
turns
over
full
possession
and
control
of
his
vessel
to
the
charterer,
who
then
undertakes
to
provide
a
crew
and
victuals
and
supplies
and
fuel
for
her
during
the
term
of
the
charter.
Charterer
becomes,
in
effect,
the
owner
for
the
voyage
or
service
stipulated
(owner
pro
hac
vice),
subject
to
liability
for
damages
caused
by
negligence.
b.
Contract
of
affreightment
Owner
of
the
vessel
leases
part
or
all
of
its
space
to
haul
goods
for
others.
Owner
of
the
vessel
retains
possession
and
control
of
the
vessel,
the
charterer
merely
having
use
of
the
space.
c.
Voyage
charter
A
contract
for
the
carriage
of
goods,
master
and
crew
remain
in
the
employ
of
the
owner
of
the
vessel.
Parties
may
fully
contract
respecting
liability
for
damage
to
the
goods
and
other
matters.
Basic
principle:
Responsibility
for
cargo
loss
falls
on
the
one
who
agreed
to
perform
the
duty
involved.
d.
Time
charter
A
contract
for
the
use
of
a
vessel
for
a
specified
period
of
time
or
for
the
duration
of
one
or
more
specified
voyages.
Owner
of
the
vessel
retains
possession
and
control
through
the
master
and
crew
who
remain
his
employees.
Time
charterer
acquires
right
to
utilize
the
carrying
capacity
and
facilities
of
the
vessel
and
to
designate
her
destinations.
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
51
3.
Concealment
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
E.
Concealment
&
Misrepresentation
52
Misrepresentation
Section
115.
An
implied
warranty
of
seaworthiness
is
complied
with
if
the
ship
be
seaworthy
at
the
time
of
the
commencement
of
the
risk
except
in
the
following
cases:
a.
When
the
insurance
is
made
for
a
specified
length
of
time,
the
implied
warranty
is
not
complied
with
unless
the
ship
be
seaworthy
at
the
commencement
of
every
voyage
it
undertakes
during
that
time.
b.
When
the
insurance
upon
the
cargo
which,
by
the
terms
of
the
policy,
description
of
the
voyage
or
established
custom
of
the
trade,
is
to
be
transhipped
at
an
intermediate
port,
the
implied
warranty
is
not
complied
with
unless
each
vessel
upon
which
the
cargo
is
shipped
or
transhipped
be
seaworthy
at
the
commencement
of
each
particular
voyage.
Section
116.
A
warranty
of
seaworthiness
extends
not
only
to
condition
of
the
structure
of
the
ship
itself,
but
requires
that
it
be
properly
laden,
and
provided
with
competent
master,
a
sufficient
number
of
competent
officers
and
seamen,
and
the
requisite
appurtenances
and
equipment,
such
as
ballasts,
cables
and
anchors,
cordage
and
sails,
food,
water,
fuel
and
lights,
and
other
necessary
or
proper
stores
and
implements
for
the
voyage.
Section
117.
Where
different
portions
of
the
voyage
contemplated
by
a
policy
differ
in
respect
to
the
things
requisite
to
make
ship
seaworthy
therefore,
a
warranty
of
seaworthiness
is
complied
with
if,
at
the
commencement
of
each
portion,
the
ship
is
seaworthy
with
reference
to
that
portion.
Section
118.
When
the
ship
becomes
unseaworthy
during
the
voyage
to
which
an
insurance
relates,
an
unreasonable
delay
in
repairing
the
delay
exonerates
the
insurer
on
ship
or
shipowners
interest
from
liability
from
any
loss
arising
therefrom.
Section
119.
A
ship
which
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
the
insurance
upon
the
cargo.
Cases
Roque
vs.
IAC
F:
February
29,
1972,
the
petitioners
loaded
on
the
barge,
811
pieces
of
logs
at
Malampaya
Sound,
Palawan
for
carriage
and
delivery
to
North
Harbor,
Port
of
Manila,
but
the
shipment
never
reached
its
destination
because
Mable
10
sank
with
the
811
pieces
of
logs
somewhere
off
Cabuli
Point
in
Palawan
on
its
way
to
Manila.
As
alleged
by
the
petitioners
in
their
complaint
and
as
found
by
both
the
trial
and
appellate
courts,
the
barge
where
the
logs
were
loaded
was
not
seaworthy
such
that
it
developed
a
leak.
The
appellate
court
further
found
that
one
of
the
hatches
was
left
open
causing
water
to
enter
the
barge
and
because
the
barge
was
not
provided
with
the
necessary
cover
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
4.
53
G.
Losses
Covered
by
Marine
Insurance
The
law
classifies
loss
into
either
total
or
partial:
Every
loss
which
is
not
total
is
partial
There
are
two
kinds
of
total
loss:
actual
or
absolute
and
constructive
or
technical.
When
the
loss
is
total,
the
insurer
is
liable
for
the
whole
of
the
amount
insured.
1. Actual
Total
Loss
-
Actual
loss
exists
when
the
subject
matter
of
the
insurance
is
wholly
destroyed
or
lost
or
when
it
is
so
damaged
as
no
longer
to
exist
in
its
original
character
-
Under
Sec
130,
an
actual
total
loss
is
cause
by:
! A
total
destruction
of
the
thing
insured;
! The
irretrievable
loss
of
the
thing
by
sinking,
or
by
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
-
Actual
loss
may
be
presumed
from
the
continued
absence
of
a
ship
without
being
heard
of.
The
length
of
time
which
is
sufficient
to
raise
this
presumption
depends
on
the
circumstances
of
the
case.
(Sec.
132)
2. Constructive
Total
Loss
-
A
constructive
or
technical
loss
is
one
in
which
the
loss
is
such
a
character
that
the
insured
is
entitled,
if
he
thinks
fit,
to
treat
it
as
total
by
abandonment.
-
In
actual
loss,
no
abandonment
is
necessary,
but
if
the
loss
is
merely
constructively
total,
an
abandonment
is
necessary
in
order
to
recover
as
for
a
total
loss.
Choa
v
CA
H:
An
all
risk
insurance
policy
insures
against
all
causes
of
conceivable
loss
or
damage,
except
as
otherwise
excluded
in
the
policy
or
due
to
fraud
or
intentional
misconduct
on
the
part
of
the
insured.
An
"all
risks"
provision
of
a
marine
policy
creates
a
special
type
of
insurance
which
extends
coverage
to
risks
not
usually
contemplated
and
avoids
putting
upon
the
insured
the
burden
of
establishing
that
the
loss
was
due
to
peril
falling
within
the
policy's
coverage.
The
insurer
can
avoid
coverage
upon
demonstrating
that
a
specific
provision
expressly
excludes
the
loss
from
coverage.
In
this
case,
the
damage
caused
to
the
cargo
has
not
been
attributed
to
any
of
the
exceptions
provided
for.
Thus,
the
liability
of
respondent
insurance
company
is
clear.
Filipino
Merchants
v
CA
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
54
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
55
Other
Effects
of
Abandonment
Main
Effect:
Recover
for
a
total
loss
of
the
thing
Abandoned!
! is
equivalent
to
a
transfer
by
the
insured
of
his
interest
to
the
insurer,
with
all
the
chances
of
recovery
and
indemnity.
! acts
done
in
good
faith
by
those
who
were
agents
of
the
insured
in
respect
to
the
thing
insured,
subsequent
to
the
loss,
are
at
the
risk
of
the
insurer
and
for
his
benefit.
! On
an
accepted
abandonment
of
a
ship,
freightage
earned
previous
to
the
loss
belongs
to
the
insurer
of
said
freightage;
but
freightage
subsequently
earned
belongs
to
the
insurer
of
the
ship.
No
Abandonment
If
a
person
insured
omits
to
abandon,
he
may
nevertheless
recover
his
actual
loss.
H.
Measure
of
Indemnity:
Open
and
Valued
Policies
Valued
Policies
Sec.
156.
A
valuation
in
a
policy
of
marine
insurance
is
conclusive
between
the
parties
thereto
in
the
adjustment
of
either
a
partial
or
total
loss,
if
the
insured
has
some
interest
at
risk,
and
there
is
no
fraud
on
his
part;
except
that
when
a
thing
has
been
hypothecated
by
bottomry
or
respondentia,
before
its
insurance,
and
without
the
knowledge
of
the
person
actually
procuring
the
insurance,
he
may
show
the
real
value.
But
a
valuation
fraudulent
in
fact,
entitles
the
insurer
to
rescind
the
contract.
Proportional
Recovery
:
Cargo
Sec.
159.
In
case
of
a
valued
policy
of
marine
insurance
on
freightage
or
cargo,
if
a
part
only
of
the
subject
is
exposed
to
the
risk,
the
evaluation
applies
only
in
proportion
to
such
part.
Presumption
of
Total
Loss
Sec.
160.
When
profits
are
valued
and
insured
by
a
contract
of
marine
insurance,
a
loss
of
them
is
conclusively
presumed
from
a
loss
of
the
property
out
of
which
they
are
expected
to
arise,
and
the
valuation
fixes
their
amount.
Open
Policies
Sec.
161.
In
estimating
a
loss
under
an
open
policy
of
marine
insurance
the
following
rules
are
to
be
observed:
NOTE:
The
value
of
a
ship
is
its
value
at
the
beginning
of
the
risk,
including
all
articles
or
charges
which
add
to
its
permanent
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
56
A.
Notice
and
Proof
of
Loss
SECTION
88
Insurance
Code
In
case
of
loss
upon
an
insurance
against
fire,
an
insurer
is
exonerated,
if
notice
thereof
be
not
given
to
him
by
an
insured,
or
some
person
entitled
to
the
benefit
of
the
insurance,
without
unnecessary
delay.
Conditions
before
loss
-
Insured
must
comply
with
the
terms
of
the
policy
-
Terms
of
contract
measure
of
insurers
liability
-
Non-compliance
bars
right
of
recovery
-
Examples:
a. Notice
requirement
when
another
insurance
policy
covers
same
property
b. Prohibition
on
procurement
of
another
insurance
policy
covering
same
property
-
Notice
and
proof
or
loss
(Sec.
88
&
89)
are
conditions
concerning
matters
after
loss
that
must
be
fulfilled
before
insured
becomes
entitled
to
the
benefit
of
the
policy
Example:
Certificate
of
attending
physician
(life
and
accident
policies)
-
Nature:
Conditions
subsequent
to
breach
-
Construction:
Substantial
compliance
necessary
Notice
of
Loss:
NOTICE
OF
LOSS
MUST
BE
GIVEN
TO
INSURER
Fire
insurance
Loss
No
notice
within
reasonable
time
Insurer
exonerated
DEFINITION:
Formal
notice
given
to
the
insurer
by
the
insured
or
claimant
under
a
policy
of
the
occurrence
of
the
loss
insured
against.
PURPOSE:
To
apprise
the
insurance
company
with
the
occurrence
of
the
loss,
so
that
it
may
gather
information
and
make
proper
investigation
while
the
evidence
is
still
fresh,
and
take
such
action
as
may
be
necessary
to
protect
its
interest
from
fraud
or
imposition.
Property
insurance:
to
prevent
further
loss
IMPORTANCE:
Without
notice
of
loss
given
to
the
insurer
without
unnecessary
delay,
insurer
may
be
exonerated
or
discharged
from
liability.
-
In
the
absence
of
specific
requirements
as
stipulated
in
the
policy,
no
particular
form
of
notice
is
necessary
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
Chapter
IX
Claims
Settlement
&
Subrogation
57
B.
Guidelines
on
claims
settlement
SECTION
241.
1)
No
insurance
company
doing
business
in
the
Philippines
shall
refuse,
without
just
cause,
to
pay
or
settle
claims
arising
under
coverages
provided
by
its
policies,
nor
shall
any
such
company
engage
in
unfair
claim
settlement
practices.
Any
of
the
following
acts
by
an
insurance
company,
if
committed
without
just
cause
and
performed
with
such
frequency
as
to
indicate
a
general
business
practice,
shall
constitute
unfair
claim
settlement
practices:
(a)
knowingly
misrepresenting
to
claimants
pertinent
facts
or
policy
provisions
relating
to
coverage
at
issue;
(b)
failing
to
acknowledge
with
reasonable
promptness
pertinent
communications
with
respect
to
claims
arising
under
its
policies;
(c)
failing
to
adopt
and
implement
reasonable
standards
for
the
prompt
investigation
of
claims
arising
under
its
policies;
(d)
not
attempting
in
good
faith
to
effectuate
prompt,
fair
and
equitable
settlement
of
claims
submitted
in
which
liability
has
become
reasonably
clear;
or
(e)
compelling
policyholders
to
institute
suits
to
recover
amounts
due
under
its
policies
by
offering
without
justifiable
reason
substantially
less
than
the
amounts
ultimately
recovered
in
suits
brought
by
them.
(2)
Evidence
as
to
numbers
and
types
of
valid
and
justifiable
complaints
to
the
Commissioner
against
an
insurance
company,
and
the
Commissioner's
complaint
experience
with
other
insurance
companies
writing
similar
lines
of
insurance
shall
be
admissible
in
evidence
in
an
administrative
or
judicial
proceeding
brought
under
this
section.
(3)
If
it
is
found,
after
notice
and
an
opportunity
to
be
heard,
that
an
insurance
company
has
violated
this
section,
each
instance
of
non-compliance
with
paragraph
(1)
may
be
treated
as
a
separate
violation
of
this
section
and
shall
be
considered
sufficient
cause
for
the
suspension
or
revocation
of
the
company's
certificate
of
authority.
Claims
Settlement
Article
241
Prohibition
on
unjustified
refusal
to
pay
or
settle
covered
claims
Prohibition
on
unfair
claim
settlement
practices
Unfair
Claim
Settlement
Practices
General
Characteristics:
a. Lack
of
just
cause
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
There
is
a
waiver
where
the
insurer:
a. Writes
the
insured
that
he
considers
the
policy
null
and
void
as
the
furnishing
of
the
notice
or
proof
of
loss
would
be
vain
and
useless
(Bachrach
v
British
Am.
Ins.
Co.)
b. Recognizes
his
liability
to
pay
the
claim
(45
C.J.S.
1209)
c. Denies
all
liability
under
the
policy.
(Vance,
op.
cit.
p.
894)
d. Joins
in
the
proceedings
for
determining
the
amount
of
loss
by
arbitration,
making
no
objections
on
account
of
notice
and
preliminary
proof
(Carol
v
Gerard
Fire
Ins.
Co.)
e. Makes
objection
on
any
ground
other
than
a
formal
defect
in
the
preliminary
proof
(McMasters
&
Bruce
vs
Westchester
County
Mut.
Ins.)
58
Acts:
a. Knowing
misrepresentations
b. Failure
to
acknowledge
communications
c. Failure
to
adopt
and
implement
standards
d. Lack
of
good
faith
in
settlements
e. Suits
Administrative/Judicial
Proceeding:
Evidence:
Numbers
and
types
of
valid
and
justifiable
complaints
Commissioners
complaint
experience
with
other
similar
insurance
companies
NOTE:
Each
act
=
1
count
of
violation
PENALTY:
Suspension
Revocation
of
certificate
of
authority
SECTION
242.
The
proceeds
of
a
life
insurance
policy
shall
be
paid
immediately
upon
maturity
of
the
policy,
unless
such
proceeds
are
made
payable
in
installments
or
as
an
annuity,
in
which
case
the
installments,
or
annuities
shall
be
paid
as
they
become
due:
Provided,
however,
That
in
the
case
of
a
policy
maturing
by
the
death
of
the
insured,
the
proceeds
thereof
shall
be
paid
within
sixty
days
after
presentation
of
the
claim
and
filing
of
the
proof
of
the
death
of
the
insured.
Refusal
or
failure
to
pay
the
claim
within
the
time
prescribed
herein
will
entitle
the
beneficiary
to
collect
interest
on
the
proceeds
of
the
policy
for
the
duration
of
the
delay
at
the
rate
of
twice
the
ceiling
prescribed
by
the
Monetary
Board,
unless
such
failure
or
refusal
to
pay
is
based
on
the
ground
that
the
claim
is
fraudulent.
The
proceeds
of
the
policy
maturing
by
the
death
of
the
insured
payable
to
the
beneficiary
shall
include
the
discounted
value
of
all
premiums
paid
in
advance
of
their
due
dates,
but
are
not
due
and
payable
at
maturity.
Life
Insurance
Article
242
Time
of
payment
of
claims
General
rules:
a. Policy
with
stipulated
expiration:
immediately
upon
maturity;
exception:
installments
or
as
annuity:
when
due
b. Policy
maturing
upon
death
prior
to
expiration:
60
days
from
presentation
of
claim
and
filing
of
proof
Refusal
or
failure
to
pay
within
time
prescribed
=
interest
Amount
of
interest
is
2x
the
ceiling
c/o
the
Monetary
Board
Exception:
Grounded
on
fraudulent
claim
SECTION
243.
The
amount
of
any
loss
or
damage
for
which
an
insurer
may
be
liable,
under
any
policy
other
than
life
insurance
policy,
shall
be
paid
within
thirty
days
after
proof
loss
is
received
by
the
insurer
and
ascertainment
of
the
loss
or
damage
is
made
either
by
agreement
between
the
insured
and
the
insurer
or
by
arbitration;
but
if
such
ascertainment
is
not
had
or
made
within
sixty
days
after
such
receipt
by
the
insurer
of
the
proof
of
loss,
then
the
loss
or
damage
shall
be
paid
within
ninety
days
after
such
receipt.
Refusal
or
failure
to
pay
the
loss
or
damage
within
the
time
prescribed
herein
will
entitle
the
assured
to
collect
interest
on
the
proceeds
of
the
policy
for
the
duration
of
the
delay
at
the
rate
of
twice
the
ceiling
prescribed
by
the
Monetary
Board,
unless
such
failure
or
refusal
to
pay
is
based
on
the
ground
that
the
claim
is
fraudulent.
NOTE:
-
Reference
to
Arbitration
1) Where
arbitration
not
required
should
insurer
deny
liability
2) Where
arbitration
limited
to
amount
of
insurers
liability
3) Where
arbitration
required
only
when
there
is
dispute
4) Where
settlement
by
arbitration
not
invoked
5) Where
insured
voluntarily
submitted
to
arbitration
Sanction
for
Refusal
or
Failure
to
Pay
Loss
or
Damage
within
the
Time
Prescribed
Would
entitle
the
assured
to
collect
interest
on
the
proceeds
of
the
policy
for
the
duration
of
the
delay
at
the
rate
of
twice
the
ceiling
prescribed
by
the
Monetary
Board
The
term
ceiling
prescribed
by
the
Monetary
Board
means
the
legal
rate
of
interest
of
12%
per
annum
provided
in
Central
Bank
Circular
416,
pursuant
to
Presidential
Decree
116.
(New
World
International
Devt.,
Inc.
vs.
Seaboard
Insurance
Co.,
Inc.)
Effect
where
Claim
is
Fraudulent:
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
b.
59
General
Rule:
The
rights
of
the
parties
flow
from
the
insurance
contract;
hence,
they
are
not
bound
by
the
statute
of
limitations
nor
by
exemptions
thereto
(Ang
vs
Fulton
Fire
Insurance
Co.)
-
Period
Limitation:
As
per
Sec
63,
if
the
period
fixed
is
less
than
one
year
from
the
time
the
cause
of
action
accrues,
the
stipulation
would
be
void.
However,
based
on
Art.
231
(d),
a
policy
of
industrial
life
insurance,
the
period
cannot
be
less
than
6
years
after
the
cause
of
action
accrues.
When
Cause
of
Action
Accrues:
The
period
of
commencing
an
action
under
a
policy
of
insurance
under
Sec
63
is
to
be
computed
not
from
the
time
when
the
loss
actually
occurs
but
from
the
time
when
the
insured
has
a
right
to
bring
an
action
against
the
insurer.
The
right
of
the
insured
to
the
payment
of
his
loss
accrues
from
the
happening
of
the
loss.
However,
the
cause
of
action
in
an
insurance
cotnract
does
not
accrue
until
the
insured's
claim
is
finally
rejected
by
the
insurer.
This
is
because
before
such
final
rejection,
there
is
no
real
necessity
for
bringing
suit.
(Eagle
Star
Insurance
vs
Chia
Yu)
Scenarios:
1. Stipulated
prescriptive
period
begins
from
happening
of
the
loss
This
kind
of
stipulation
is
repugnant
to
Sec.
63
because
if
given
effect
would
reduce
the
period
allowed
the
insured
for
bringing
his
action
to
less
than
one
year
2. Stipulated
prescriptive
period
begins
from
rejection
of
claim
The
new
Insurance
Code,Sec.
416,
empowers
the
Insurance
Commissioner
to
adjudicate
disputes
relating
to
an
insurance
company's
liability
to
an
insured
under
a
policy
issued
by
the
former
to
the
latter.
3. Stipulated
prescriptive
period
begins
from
filing
of
claim
Where
a
fidelity
bond
requires
action
to
be
filed
within
1
year
from
the
filing
of
the
claim
of
loss,
such
condition
contradicts
the
public
policy
of
discouraging
unnecessary
litigation
expressed
in
Sec
63.
SECTION
384.
Any
person
having
any
claim
upon
the
policy
issued
pursuant
to
this
Chapter
shall,
without
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
60
SECTION
416.
The
Commissioner
shall
have
the
power
to
adjudicate
claims
and
complaints
involving
any
loss,
damage
or
liability
for
which
in
insurer
may
be
answerable
under
any
kind
of
policy
or
contract
of
insurance,
or
for
which
such
insurer
may
be
liable
under
a
contract
of
suretyship,
or
for
which
a
reinsurer
may
be
sued
under
any
contract
of
reinsurance
it
may
have
entered
into;
or
for
which
a
mutual
benefit
association
may
be
held
liable
under
the
membership
certificates
it
has
issued
to
its
members,
where
the
amount
of
any
such
loss,
damage
or
liability,
excluding
interest,
cost
and
attorney's
fees,
being
claimed
or
sued
upon
any
kind
of
insurance,
bond,
reinsurance
contract,
or
membership
certificate
does
not
exceed
in
any
single
claim
one
hundred
thousand
pesos.
The
insurer
or
surety
may,
in
the
same
action
file
a
counterclaim
against
the
insured
or
the
obligee.
The
insurer
or
surety
may
also
file
a
cross-claim
against
a
party
for
any
claim
arising
out
of
the
transaction
or
occurrence
that
is
the
subject
matter
of
the
original
action
or
of
a
counterclaim
therein.
With
leave
of
the
Commissioner,
an
insurer
or
surety
may
file
a
third-party
complaint
against
its
reinsurers
for
indemnification,
contribution,
subrogation
or
any
other
relief,
in
respect
of
the
transaction
that
is
the
subject
matter
of
the
original
action
filed
with
the
Commissioner.
The
party
filing
an
action
pursuant
to
the
provisions
of
this
section
thereby
submits
his
person
to
the
jurisdiction
of
the
Commissioner.
The
Commissioner
shall
acquire
jurisdiction
over
the
person
of
the
impleaded
party
or
parties
in
accordance
with
and
pursuant
to
the
provisions
of
the
Rules
of
Court.
The
authority
to
adjudicate
granted
to
the
Commissioner
under
this
section
shall
be
concurrent
with
that
of
the
civil
courts,
but
the
filing
of
a
complaint
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
61
NOTES:
1.
Any
decision,order
or
ruling
rendered
by
the
Commissioner
after
a
hearing
shall
have
the
force
and
effect
of
a
judgment.
Any
party
may
appeal
from
a
final
order,
ruling
or
decision
by
filing
with
the
Commissioner
within
thirty
days
from
receipt
of
copy
of
such
order,
ruling
or
decision,
a
notice
of
appeal
to
the
Intermediate
Appellate
Court.
Appeals
period:
30
days
from
receipt
of
the
order,
ruling
or
decision
-
A
notice
of
appeal
to
the
IAC
must
be
filed
-
Otherwise,
the
order
becomes
final
and
executory.
-
The
Commissioner
shall
motu
proprio
or
on
the
motion
of
an
interested
party
cause
the
execution
of
the
order.
2.
The
following
actions
must
be
brought
within
ten
years
from
the
time
the
right
of
action
accrues:
a. Upon
a
written
contract;
b. Upon
an
obligation
created
by
law;
c. Upon
a
judgment.
CLARIFICATION:
Notice
of
claim
must
be
filed
within
six
months
from
the
date
of
accident
but
the
actions
in
Article
1144
have
to
be
brought
within
ten
year
from
the
time
the
right
of
action
accrues
D.
Subrogation
ARTICLE
1236
Civil
Code
The
creditor
is
not
bound
to
accept
payment
or
performance
by
a
third
person
who
has
no
interest
in
the
fulfillment
of
the
obligation,
unless
there
is
a
stipulation
to
the
contrary.
Whoever
pays
for
another
may
demand
from
the
debtor
what
he
has
paid,
except
that
if
he
paid
without
the
knowledge
or
against
the
will
of
the
debtor,
he
can
recover
only
insofar
as
the
payment
has
been
beneficial
to
the
debtor.
(1158a)
ARTICLE
2207
Civil
Code
If
the
plaintiff's
property
has
been
insured,
and
he
has
received
indemnity
from
the
insurance
company
for
the
injury
or
loss
arising
out
of
the
wrong
or
breach
of
contract
complained
of,
the
insurance
company
shall
be
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
62
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
Choa
v
CA
F:
Choa's
company
ordered
bags
of
Lactose
crystals
from
Holland.
Some
of
the
bags
arrived
in
bad
order.
Insurer
refused
to
pay
proceeds.
The
insurance
policy
included
an
"all
risks"
provision.
H:
Insurer
liable
because
an
all
risk
policy
insures
against
all
possible
causes
of
loss
or
damage,
except
those
excluded
or
due
to
the
insured's
fraud
or
intentional
misconduct.
An
insurer
may
avoid
liability
by
showing
that
a
specific
provision
expressly
excludes
an
incident
from
the
coverage
-
this
was
not
done.
Filipino
Merchants
v
CA
F:
Bags
of
fishmeal
were
insured
in
an
all
risks
policy.
Upon
unloading
from
the
boat,
some
bags
were
discovered
to
be
in
bad
order.
H:
Insurer
liable
for
bags
that
were
in
bad
order,
even
if
there
was
no
proof
of
a
fortuitous
event.
An
all
risks
policy
gives
greater
protection
than
a
perils
clause
because
it
protects
against
all
losses
attributable
to
outside
causes.
Burden
of
insured
=
prove
that
the
goods
have
been
lost/destroyed/deteriorated.
Burden
of
insurer
=
prove
loss
was
because
of
excepted
perils.
Oriental
Assurance
v
CA
F:
Oriental
insured
apitong
logs
under
a
marine
insurance
policy.
The
logs
were
loaded
on
2
boats.
Part
of
the
logs
were
lost
when
1
boat
sank.
H:
Oriental
not
liable
because
the
policy
only
covered
total
loss.
The
fact
that
1
of
the
boats
sank
cannot
be
considered
constructive
total
loss
because
the
logs
were
not
separately
valued.
Pan
Malayan
v
CA
F:
Boat
carrying
UN's
rice
seedlings
to
be
shipped
to
Kampuchea
sank.
Boat
was
refloated,
recovering
the
seedlings,
although
they
were
no
longer
usable
because
they
were
wet.
Insurer
refused
to
pay,
saying
the
loss
was
partial
and
not
covered
by
the
policy,
which
covered
actual
loss.
H:
There
was
actual
loss.
Complete
physical
destruction
not
necessary
for
actual
loss.
Since
the
seedlings
were
made
so
that
they
would
germinate
upon
contact
with
water,
they
may
be
considered
lost.
PHILAM
v
CA
F:
PHILAM
issued
Pulido
a
nonmedical
life
insurance
policy.
It
denied
the
claim
of
Pulido's
beneficiary,
saying
that
P
was
dead
at
the
time
the
policy
was
applied
for.
H:
PHILAM
was
within
its
rights
to
deny
the
claim.
Death
certificates
are
public
documents,
and
entries
found
in
such
documents
are
presumed
correct
unless
the
beneficiary
can
produce
positive
evidence
disproving
such.
Aboitiz
v
Insurance
CO
of
North
America
F:
Wooden
work
tools
and
workbenches
were
insured
under
an
all
risk
policy.
Aboitiz
was
the
shipping
company
that
the
insured
hired
to
move
the
cargo
from
Manila
to
Cebu.
The
cargo
arrived
rusted.
Insurer
sued
Aboitiz
because
it
refused
to
settle
the
claim.
H:
The
insurer's
cause
of
action
is
founded
on
it
being
subrogated
to
the
rights
of
the
consignee
of
the
damaged
63
A 2015 Insurance Agents: Cielo Goo, Kaye De Chavez, Claire De Leon, Phimie Soriano | Prof. Dionne Sanchez
64