INSURANCE:
deliver a generic thing, the loss or destruction of anything
A contract of insurance, being a contract of
adhesion, par excellence, any ambiguity therein should be
resolved against the insurer; in other words, it should be
construed liberally in favor of the insured and strictly
against the insurer.
The insured is specifically required to disclose to the
insurer any other insurance and its particulars, which he
may have effected on the same subject matter.
The knowledge of such insurance by the insurer's
agents, even assuming the acquisition thereof by the
former, is not the "notice" that would estop the insurers
from denying the claim.
Besides, the so-called theory of imputed
knowledge, that is, knowledge of the agent is knowledge of
the principal, aside from being of dubious applicability here
has likewise been roundly refuted by respondent court
whose factual findings we find acceptable.
when the seller retains ownership only to insure
that the buyer will pay its debt, the risk of loss is borne
by the buyer. Accordingly, petitioner bears the risk of
loss of the goods delivered.
in property insurance, one's interest is not
determined by concept of title, but whether insured has
substantial economic interest in the property.
insurable interest in property may consist in:
(a) an existing interest;
(b) an inchoate interest founded on existing interest; or
(c) an expectancy, coupled with an existing interest in
that out of which the expectancy arises.
Anyone has an insurable interest in property who
derives a benefit from its existence or would suffer loss
from its destruction.
Indeed, a vendor or seller retains an insurable interest in
the property sold so long as he has any interest therein,
in other words, so long as he would suffer by its
destruction, as where he has a vendor's lien.
Petitioner's argument that it is not liable because the fire is
a fortuitous event under Article 1174 of the Civil Code is
misplaced.
Where the obligation consists in the payment of money,
the failure of the debtor to make the payment even by
reason of a fortuitous event shall not relieve him of his
liability.
Under Article 1263 of the Civil Code, "[i]n an obligation to
of the same kind does not extinguish the obligation."
The right of subrogation accrues simply upon payment by
the insurance company of the insurance claim.
An insurance premium is the consideration paid an insurer
for undertaking to indemnify the insured against a specified
peril. In fire, casualty, and marine insurance, the premium
payable becomes a debt as soon as the risk attaches.
Proceeds of an insurance policy belong exclusively
to the beneficiary and not to the estate of the person whose
life was insured.
Any person who is forbidden from receiving any
donation under Article 739 cannot be named beneficiary of
a life insurance policy of the person who cannot make any
donation to him.
General Rule: The only persons entitled to claim the
insurance proceeds are either the insured, if still alive; or
the beneficiary, if the insured is already deceased, upon the
maturation of the policy.
Exception: situation where the insurance contract was
intended to benefit third persons who are not parties to the
same in the form of favorable stipulations or indemnity. In
such a case, third parties may directly sue and claim from
the insurer.
* No legal proscription exists in naming as beneficiaries the
children of illicit relationships by the insured
it is only in cases where the insured has not
designated any beneficiary, or when the designated
beneficiary is disqualified by law to receive the proceeds,
that the insurance policy proceeds shall redound to the
benefit of the estate of the insured.
A common law wife of the insured who has a legal
wife is disqualified as beneficiary. It is not required that
there be a previous conviction for adultery or concubinage
for the prohibition to apply.
This disqualification, however, certainly do not
apply to the children of common law wife likewise named
beneficiaries by the deceased. As a matter of a fact the new
Civil Code recognized certain successional rights of
illegitimate children.
Whether the beneficiaries under the life insurance
policy is the same as that of in the retirement insurance in
the absence of any designation of the beneficiaries on the
latter. NO
Beneficiaries in life insurance.
(1)
 In the case of the proceeds of a life insurance, the
same are paid to whoever is named the beneficiary
in the life insurance policy. As in the case of life
insurance provided for in the Insurance Act (Act
2427, as amended), the beneficiary in a life
insurance under the GSIS may not necessarily be an
heir of the insured. The insured in a life insurance
may designate any person as beneficiary unless
disqualified to be so under the provisions of the
Civil Code. And in the absence of any beneficiary
named in the life insurance policy, the proceeds of
the insurance will go to the estate of the insured.
(2) Beneficiaries in retirement insurance.
Retirement insurance is primarily intended for the
benefit of the employeeto provide for his old age,
or incapacity, after rendering service in the
government for a required number of years. If the
employee reaches the age of retirement, he gets the
retirement benefits even to the exclusion of the
beneficiary or beneficiaries named in his
application for retirement insurance. The
beneficiary of the retirement insurance can only
claim the proceeds of the retirement insurance if
the employee dies before retirement. If the
employee failed or -overlooked to state the
beneficiary of his retirement insurance, the
retirement benefits will accrue to his estate and
will be given to his legal heirs in accordance with
law, as in the case of a life insurance if no
beneficiary is named in the insurance policy.
a life insurance policy is no different from a civil
donation insofar as the beneficiary is concerned. Both are
founded upon the same consideration: liberality.
A beneficiary is like a donee, because from the
premiums of the policy which the insured pays out of
liberality, the beneficiary will receive the proceeds or
profits of said insurance.
As a consequence, the proscription in Article 739 of
the new Civil Code should equally operate in life insurance
contracts. The mandate of Article 2012 cannot be laid aside:
any person who cannot receive a donation cannot be named
as beneficiary in the life insurance policy of the person who
cannot make the donation.
Thus, a common-law wife named as beneficiary in
the life insurance policy of a legally married man cannot
claim the proceeds thereof in case of death of the latter
No contract or policy of insurance on property shall
be enforceable except for the benefit of some person having
an insurable interest in the property insured.
A non-life insurance policy such as the fire
insurance policy taken by petitioner-spouses over their
merchandise is primarily a contract of indemnity.
Insurable interest in the property insured must
exist at the time the insurance takes effect and at the
time the loss occurs.
The basis of such requirement of insurable interest
in property insured is based on sound public policy: to
prevent a person from taking out an insurance policy on
property upon which he has no insurable interest and
collecting the proceeds of said policy in case of loss of the
property.
In such a case, the contract of insurance is a mere
wager which is void under Section 25 of the Insurance Code.
The lessor cannot be validly a beneficiary of a fire
insurance policy taken by a lessee over his merchandise,
and the provision in the lease contract providing for such
automatic assignment is void for being contrary to law
and/or public policy; the insurer cannot be compelled to
pay the proceeds of the policy to a person who has no
insurable interest in the property insured.
Insured may be regarded as the real party in
interest, although he has assigned the policy for the purpose
of collection, or has assigned as collateral security any
judgment he may obtain.
The rationale of a group insurance policy of
mortgagors, otherwise known as the mortgage redemption
insurance, is a device for the protection of both the
mortgagee and the mortgagor.
On the part of the mortgagee, it has to enter into
such form of contract so that in the event of the unexpected
demise of the mortgagor during the subsistence of the
mortgage contract, the proceeds from such insurance will
be applied to the payment of the mortgage debt, thereby
relieving the heirs of the mortgagor from paying the
obligation.
Concealment exists where the assured had
knowledge of a fact material to the risk, and honesty, good
faith, and fair dealing requires that he should communicate
it to the assured, but he designedly and intentionally
withholds the same.
Where the mortgagor pays the insurance premium
under the group insurance policy, making the loss payable
to the mortgagee, the insurance is on the mortgagors
interest, and the mortgagor continues to be a party to
the contract.
* Where the mortgagee under a mortgage redemption
insurance has already foreclosed on the mortgage, it
cannot collect the insurance proceedsthe proceeds
then rightly belong to the heirs of the mortgagor
A lessee has an insurable interest in the equipment and
motor vehicles leased, and the measure of its insurable
interest is the extent to which it may be damnified by loss
or injury thereof
Section 27 of the Insurance Law provides: Such party a
contract of insurance must communicate to the other, in good
faith, all facts within his knowledge which are material to the
contract, and which the other has not the means of
ascertaining, and as to which he makes no warranty.
Concealment exists where the assured had knowledge of a
fact material to the risk, and honesty, good faith, and fair
dealing requires that he should communicate it to the
assurer, but he designedly and intentionally withholds the
same. The concealment must, in the absence of inquiries, be
not only material, but fraudulent, or the fact must have been
intentionally withheld.
Misrepresentation as a defense of the insurer to avoid
liability is an 'affirmative' defense. The duty to establish
such a defense by satisfactory and convincing evidence
rests upon the defendant.
Failure of insurer to undertake a further inquiry on
insurance application on the question of the insureds
ailment and operation which is important in determination
of grant of insurance or not, constitutes waiver by insurer
of imperfection in the answer and renders omission to
answer more fully immaterial
An incontestability clause precludes the insurer from
disowning liability under the policy it issued on the ground
of concealment or misrepresentation.
The defense of fortuitous event or natural disaster
cannot be successfully made when the injury could
have been avoided by human precaution.
The doctrine of limited liability under Article 587 of
the Code of Commerce does not apply to situations in
which the loss or the injury is due to the concurrent
negligence of the shipowner and the captain.
Subrogation is the substitution of one person by
another with reference to a lawful claim or right,
so that he who is substituted succeeds to the
rights of the other in relation to a debt or claim,
including its remedies or securities
Where a fire insurance policy provides that
"If the claim be in any respect fraudulent, or if any
false declaration be made or used in support thereof,
or if any fraudulent means or devices are used by the
Insured or anyone acting on his behalf to obtain any
benefit under this Policy,"
and the evidence is conclusive that the proof of claim
which the insured submitted was false and fraudulent
both as to the kind, quality and amount of the goods
and their value destroyed by the fire, such a proof of
claim is a bar against the insured to recover on the
policy even for the amount of his actual loss.
A concealment whether intentional or
unintentional entitles the injured party to rescind a
contract of insurance
An alteration in the use or condition of a thing
insured from that to which it is limited by the policy
made without the consent of the insurer, by means
within the control of the insured, and increasing the
risks, entitles an insurer to rescind a contract of fire
insurance
An insurer who seeks to defeat a claim because of an
exception or limitation in the policy has the burden of
establishing that the loss comes within the purview of
the exception or limitation.
If loss is proved apparently within a contract
of insurance, the burden is upon the insurer to
establish that the loss arose from a cause of loss which
is excepted or for which it is not liable, or from a cause
which limits its liability. In the present case, CBIC
failed to discharge
the nature of suretyship, which actually involves two
types of relationship ---
the underlying principal relationship between the
creditor (respondent) and the debtor (Gabriel),
and the accessory surety relationship between the
principal (Gabriel) and the surety (petitioner).
The creditor accepts the suretys solidary undertaking
to pay if the debtor does not pay. Such acceptance,
however, does not change in any material way the
creditors relationship with the principal debtor nor
does it make the surety an active party to the principal
creditor-debtor relationship.
In other words, the acceptance does not give the surety
the right to intervene in the principal contract.
The suretys role arises only upon the debtors default,
at which time, it can be directly held liable by the
creditor for payment as a solidary obligor.
A surety is released from its obligation when there is a
material alteration of the principal contract in
connection with which the bond is given, such as
- a change which imposes a new obligation on the
promising party,
-or which takes away some obligation already
imposed,
- or one which changes the legal effect of the original
contract and not merely its form.
The requisites in order for double insurance to arise
are as follows:
(1) The person insured is the same;
(2) Two or more insurers insuring separately;
(3) There is identity of subject matter;
(4) There is identity of interest insured; and
(5) There is identity of the risk or peril insured
against.
Even though the two concerned insurance policies
were issued over the same goods and cover the
same risk, there arises no double insurance since
they were issued to two different persons/entities
having distinct insurable interests. Necessarily, over
insurance by double insurance cannot likewise exist.

However, a surety is not released by a change in the

contract, which does not have the effect of making its
obligation more onerous.

The law is clear that a surety contract should be read

and interpreted together with the contract entered
into between the creditor and the principal
An insurance company may not escape
liability under the insurance policy by citing
restrictions which are not applicable or germane to
the claim.

There may be theft even if the accused has

possession of the property. If he was entrusted only
with the material or physical (natural) or de facto
possession of the thing, his misappropriation of the
same constitutes theft.

When theft is committed through misappropriation

the insurer is still liable to the insured under the theft
clause.

In property insurance policies, the evident intention

of the contracting parties, i.e., the insurer and the
assured, determine the import of the various terms
and provisions embodied in the policy. However,
when the terms of the insurance policy are
ambiguous, equivocal or uncertain, such that the
parties themselves disagree about the meaning of
particular provisions, the policy will be construed by
the courts liberally in favor of the assured and strictly
against the insurer.