THE INSURANCE LAW:

PRINCIPLES, LAW AND JURISPRUDENCE

Professors Ernestine Carmen Jo Desiderio Villareal-Fernando, Mark Bocobo,

Pilar M. Pilares - Gutierrez, Dionne Sanchez, Lorybeth Baldrias-Serrano and Martin Loon
(1st Semester, Academic Year 2021-2022)

Subject Competencies

This course will enable the student:

1. To appreciate the philosophy and rationale behind the business of insurance through an
overview of its history and development worldwide as an industry that seeks to spread the
risk of loss among individuals and entities and, therefore, as one imbued with public interest;

2. To identify the primary sources of laws governing insurance as to further enable the student
to conduct their own research and validation;

3. To gain proficiency in evaluating the validity, deficiency, and compliance with legal
requirements of contracts of insurance as to further enable the student to determine the
enforceability of a contract of insurance, as follows:

a. By spotting the presence of the essential requisites of: insurable interest, payment of
premium, conditions for liability, exceptions to liability, etc.
b. By differentiating a consensual contract from a contract of adhesion;
c. By the application of the features of an insurance contract under the Civil Code as an
aleatory contract, etc.

4. To gain an understanding of pre-need plans, their rationale, the particular provisions that
govern them, and (as to skill) to differentiate it from an ordinary insurance contract and
determine its validity and enforceability along the following requisites for pre need plans;

5. To gain mastery of the concepts of life versus non-life insurance plans, as follows:
a. memorize the features of life insurance: contestability clause; excepted events;
identifying a beneficiary
b. memorize the features of a non life insurance
c. To identify what set of rules will apply to either class on the following issues: requisites
for validity; grounds for rescission; grounds for avoidance of liability, and the like
Course Objectives

Students will learn about The Insurance Code (Republic Act No. 10607) and related laws, with
focus on the laws’ substantive provisions.

From a study of the concept, history, and functions of insurance, the nature, and general terms
and conditions of the insurance contract, insurable interest, and the various forms/kinds of
insurance, among others. The following principles shall guide the conduct of this insurance
course:

1. More attention shall be given to substantive provisions of the Insurance Code as against the
administrative provisions and the organizational structure of the insurance industry

2. A topical instead of sequential treatment of provisions of the Insurance Code shall be

observed. References are provided for the previous laws.

3. There will be an occasional discussion of relevant illustrations from bar examination

questions.

Grading System

The student will be graded, as follows:

Final Exam 50%

Total 100%

CHAPTER I. RATIONALE

Outcomes:

Knowledge – To know a) the basic concept, definitions, and functions of Insurance; b) its historical
development from ancient civilizations through its practice by maritime merchants throughout
Europe; its adoption to on land commercial activities; its wide expansion and diversification in the
US, and development in the Philippines; and c) the laws presently governing Insurance in
Philippine jurisdiction.

Skills - To enable the student to make a flowchart of the development of modern day insurance
from early practices of bottomry and respondentia through efforts to cope with usury laws in order
to craft an agreement that would rationalize payment of returns commensurate to the risks involved
in a venture thus paving the way for the expansion of risk distribution to all fields of socio-
economic activity.
Values – To instill into the students a healthy reverence and respect for the law precisely as it is
written and before them today, with the knowledge and appreciation that these laws were not
invented by some philosopher meditating under a tree but are a product of the actual cases and
controversies painstakingly experienced by humans throughout thousands of years.

A. COURSE COVERAGE

- Know the basic and related laws on Insurance particularly The Insurance Code (PD 612,
as amended by PD Nos. 1141, 1280, 1455, 1460, 1814 & 1981, and BP Blg. 874, and as further
amended by RA 10607); the Civil Code (Republic Act No. 386); Arts. 2011; 2012 in relation to
Art. 739; Arts. 2021-2027; Art. 2186; and Art. 2207, and other Special Laws related to
Insurance.

B. CONCEPT & DEFINITIONS

- “Guarantee Against Loss”

(See Definitions of Insurance in Webster’s New Collegiate Dictionary; 43 Am.

Jur. 2d 74; Vance, Handbook on the Law on Insurance, 3rd ed., p. 83)
C. FUNCTIONS
- Indemnity for Loss (Campos, Insurance, 1st ed., 1983, p.1)
- Risk-Distributing Scheme (De Leon, Insurance Code, 2006 ed., pp. 22-23; Vance, op cit.,
p. 4)
- Principal, Subsidiary and Indirect Functions (De Leon, op cit., pp. 55-57)

D. HISTORY

1. Early Development in Ancient Societies

a) Babylonian / Phoenician / Indian / Greek / Roman / Chinese / Egyptian

- Read: The Origin and Early History of Insurance Including The Contract of
Bottomry, Charles Farley Trenerry, London, P. S. King & Son, 1926, pp. 3-42

2. Growth of Modern Insurance in Europe

a) Italian Maritime Merchants and Medieval Guilds / Earliest Known Insurance

Contract (Genoa, 1347)

b) England’s Friendly Societies

c) Lloyd’s of London (Edward Lloyd’s Coffee House, 1688) / Underwriters

d) Great Fire of London (1666) / Sir Edmund Halley’s Mortality Table (1693)
 - See Campos, Insurance, 1st ed., 1983, pp.2-5; Vance, Handbook on the Law on
Insurance, 3rd ed., pp. 9-20.

3. Development in the United States

a) Marine Insurance dominated by British Underwriters from 1700s - 1900s

b) Benjamin Franklin and the Philadelphia Contributorship for the Insurance of

Houses from Loss by Fire (1730)

c) Presbyterian Ministers’ Fund for Philadelphia (1759)

d) Constitutionality of State Insurance Regulation (1869) / New York Insurance Code

(1906) / The Armstrong Committee Investigation on Abuses in Life Insurance Business
(1907)

e) Expansion and Diversification: Health Care Insurance, Worker’s Compensation,

Unemployment Insurance, Automotive Coverage, Passenger and Cargo Insurance, Social
Security and Medicare, etc.

- Vance, Handbook on the Law on Insurance, 3rd ed., pp. 22-35.

4. Introduction and Development in the Philippines

a) Spanish Era: Introduction of Marine Insurance

b) American Period: Flourishing of Various Forms of Insurance

- Campos, op. cit., 1983, pp. 5-6; De Leon, op. cit., pp.3-5

E. LAWS GOVERNING INSURANCE IN PHILIPPINE JURISDICTION

1. Sources of Philippine Insurance Law

- Ang Giok Chip v. Springfield Fire & Marine Ins. Co., 56 Phil. 375 (1931)
- Republic v. Del Monte Motors, Inc., 504 SCRA 53 (2006)

2. Present Governing Laws

a) The Insurance Code (PD 612, as amended by PD Nos. 1141, 1280, 1455, 1460,
1814 & 1981, and BP Blg. 874, and as further amended by RA 10607)

b) The Civil Code (Republic Act No. 386); Arts. 2011; 2012 in relation to Art. 739;
Arts. 2021-2027; Art. 2186; and Art. 2207.
 c) Other Special Laws

[Revised Government Service Insurance Act of 1977 (PD No. 1460); Social
Security Act of 1954 (RA 1161, as amended); Property Insurance Law (PD No. 245); RA
4898, as amended by RA 5756 providing life, disability and accident insurance to barangay
officials; RA 3591, creating the Philippine Deposit Insurance Corporation (PDIC); RA
10606, National Health Insurance Act of 2013; RA 11223, Universal Health Care Act]

d) Office of the Insurance Commission. Administrative & Adjudicatory Powers.

Sections 437 to 439

- PHILAM v. Arnaldo, 234 SCRA 505 (1994)

- Republic v. Del Monte Motors, Inc., 504 SCRA 52 (2006)

e) Applicability of Insurance Code’s Chapter 1 under Sec. 5 thereof

- Sec. 5, Insurance Code

CHAPTER II. THE CONTRACT OF INSURANCE

Outcomes:

Knowledge: To gain mastery of the significant rules on statutory construction as provided for in
the Civil Code, Insurance Code, et., as well as the landmark rulings in the above cases

Skills: Be able to read by oneself legal provisions, rules and regulations, pertaining to Insurance
and write an opinion on the impact of these provisions on a given complex factual situation using
the principles of statutory construction in relation to provisions of Insurance Law.

Values: develop an interest in policy formulation and language structure of laws pertaining to
insurance

A. DEFINITIONS

1. Contract of Insurance (Sec. 2-3, par 1);

Contract of Suretyship
(ibid; Sec. 177-180)

2. Doing an insurance business (Sec. 2)

B. ELEMENTS (Sec 51)

1. Insurable interest

2. Risk of loss or damage

3. Designated peril as cause

4. Consideration: premium

5. Risk distributing scheme

C. CHARACTERISTICS/NATURE OF INSURANCE CONTRACTS

[Review relevant provisions of the Civil Code on "Obligations and Contracts"]

1. Aleatory (Art. 2010, Civil Code)

2. Executory and conditional

3. Synallagmatic (See dissent of Vitug, J. in UCPB General

Insurance vs. Masagana Telamart, 356 SCRA 307 (2001)

4. Consensual and voluntary (Arts. 1305, 1306, 1308, Civil Code)

5. Contract of Adhesion (further discussed infra)

6. Personal and of highest degree of good faith

7. Indemnity (non-life or property)

D. CONTRACTS FOR CONTINGENT SERVICES. PRE-NEED PLANS AND

SIMILAR ARRANGEMENTS; WARRANTIES COVERING GOODS OR SERVICES

1. Cases on health care agreement.

PHILAMCARE Health Systems v. CA, G.R. 1256781, March 3, 2002; 379 SCRA 356
[2002]

Blue Cross Health Care v. Olivares, G.R. 169737, February 12, 2008; 544 SCRA 580 (2008)

Philippine Health Care Providers v. Commission of Internal

Revenue, G.R. 167330, 2 June 2008; 554 SCRA 411 (2008) and 600 SCRA 413 (18
 September 2009) resolution of Motion for Reconsideration

2. Pre Need Code of the Philippines (R.A. 9829, 3 December 2009)

E. GENERAL CLASSIFICATION OF INSURANCE UNDER THE CODE

1. Life

a. Individual life. Sections 181-186

b. Group life. (Secs. 228, 233, last par. and 234)

Pineda v. CA & Insular Life, 226 SCRA 7554 (93)

c. Industrial life. Sec. 235-237

2. Non-Life (Definitions)

a. Marine. (Sec. 101)

b. Fire. (Sec. 169)

c. Casualty or Liability insurance. (Sec. 176)

d. Suretyship. (Sec. 177-180)

3. Other modes of classification of insurance contracts

a. Private and Public (Voluntary and Compulsory)

b. "First party insurance" and "Third party insurance". (Sec. 176)

4. Some life insurance plans in the market

a. Whole life plan (ordinary, limited payment, single premium, joint-life, universal life,
variable life; endowment life)

b. Term plan

c. Modified life

d. Pure endowment plan

 e. Endowment plan

5. Other types of insurance:

a. Microinsurance (Sec. 187, 188)

b. Bancassurance (Sec 375-377)

F. CONSTRUCTION/INTERPRETATION OF INSURANCE CONTRACTS (Review Civil

Code 1370-1379)

1. Basis/rationale for interpretation, whether literal or liberal (review consensual and

obligatory nature of an insurance contract Articles 1305, 1306, & 1308, Civil Code), as well
as Articles 1370 to 1379 on interpretation.

2. Some cases dealing with construction and interpretation.

Cebu Shipyard v. William Lines, 306 SCRA 762 (1999)

New Life Enterprises v. CA, 207 SCRA 669 (1992)
First Quezon City Insurance v. CA, 218 SCRA 526
Ty v. First National, 1 SCRA 1324 (1961)*
Misamis Lumber v. Capital Inc., 17 SCRA 228 (1966)*
Sun Insurance v. CA, 195 SCRA 193 (1991)
Fortune Ins. v. CA 244 SCRA 308 (1995)
Perla v. CA, 185 SCRA 74*
Oriental Assurance v. CA, 200 SCRA 459 (1991)
Malayan Ins. V. CA, 270 SCRA 242 (1997)
Western Guaranty v. CA, 187 SCRA 652
Qua Chee Gan v. Law Union 96 Phil. 85 (1955)
Del Rosario v. Equitable Ins. 8 SCRA 343 (1963)
Geagonia v. CA 241 SCRA 152 (1995)
Sun Insurance v. CA 211 SCRA 554 (1992)
Rizal Surety v. CA 336 SCRA 12
CHAPTER III. INSURABLE INTEREST

Outcomes:

Knowledge: Know by heart the nature and concept of insurable interest and be able to give
various examples of when it is present or absent

Skills: In a seriously contested issue of whether there is insurable interest or not, to be able to
make a persuasive argument for or against the issue using canonical principles and
jurisprudential rulings

Values: To develop love for argumentation, as the student compares and contrasts between
insurable interest in life / health and property, and multiple insurers and insurable interests on the
same property.

A. DEFINITION & PURPOSE

1. Recall definition of an insurance contract (Sec. 2)

2. May not be waived (Sec. 25)

B. INSURABLE INTEREST IN LIFE/HEALTH

1. Insurable interest of the insured in his own life compared to that on the life of others.
(Sec. 10)

2. Insurable interest in health (see 2002 PHILAMCARE case, supra)

C. INSURABLE INTEREST IN PROPERTY

1. Definition (Sec. 14). Enforceability where no insurable interest (Sec. 18)

2. What it may consist of (Sec. 14).

Cf. expectancy (Sec. 16)

Filipino Merchants Ins. Co. v. Court of Appeals, 179 SCRA 638 (1989)
 Gaisano Cagayan v. Insurance Co. of North America, 490 SCRA 286 (2006)

3. Measure of insurable interest in property. (Sec 14 to 17)

4. When should insurable interest exist? Cf. life (Sec. 19)

5. Change of interest in property. Instances of automatic transfer of

Interest. (Sec. 20- 24; Sec. 53 & 57)

D. DOUBLE INSURANCE AND OVER INSURANCE. (Sec. 95- 96, Sec 83)

E. MULTIPLE OR SEVERAL INTERESTS ON SAME PROPERTY. Special provisions

on mortgagor & mortgagee. (Sec. 8- 9)

Geagonia v. Court of Appeals, 241 SCRA 152 (1995)

Tai Tong Chuache & Co. v. Insurance Commission, 158 SCRA 366 (1988)

CHAPTER IV. PERFECTION OF THE CONTRACT OF INSURANCE

A. OFFER AND ACCEPTANCE. CONSENSUALITY

1. Delay in acceptance; "tort theory"; Vide, Article 2176, Civil Code

2. Delivery of policy

Perez v. CA 323 SCRA 613 (2000)

Vda de Sindayen v. Insular 62 Phil 51

(1935)

Enriquez v. Sun Life 41 Phil. 269 (1920)

B. PREMIUM PAYMENT

Sec. 77- 79; 64 & 66; 83-84, 315

Velasco v. Apostol, 173 SCRA 228 (1985)

Valenzuela v. CA, 191 SCRA 1(1990)

Tibay v. CA 257 SCRA 126 (see dissent) (1996)

Makati Tuscany v. CA 215 SCRA 462 (1992)

South Sea Surety v. CA 244 SCRA 744 (1995)

Areola v. CA 236 SCRA 643 (1994)

UCPB Gen. Ins. v. Masagana Te/amart, June 15, 1999; 308 SCRA 259

(1999); 356 SCRA 307 (en banc; see dissents) (2001)

American Home Assurance v. Chua, 309 SCRA 250 (1999)

C. NON-DEFAULT OPTIONS IN LIFE INSURANCE (Sec. 233, f & h)

1. Cash surrender value

2. Extended insurance

3. Paid up insurance

4. Automatic premium loan

Manufacturer's Life Insurance v. Meer, 89 Phil. 351 (1951)

D. REINSTATEMENT OF A LAPSED POLICY OF LIFE INSURANCE. (Sec. 233: j)

Andres v. Crown Life Insurance

E. REFUND OF PREMIUMS. (Sec. 80- 83)

CHAPTER V. THE POLICY, PARTIES THERETO & RIGHTS THEREON

A. THE POLICY OF INSURANCE

1. Definition of a policy of insurance. (Sec. 49)

2. Form & contents; (Sec. 50 & 51 a to g; Sec. 232); Group

insurance; Sec. 234; Sec 228

3. Riders and endorsements; Rules on formalities & effectivity; Sec.50, par. 4. Cover
notes (Sec. 52)

Lim v. Sun Life Assurance 41 Phil. 263 (1920)

Great Pacific Life v. CA, 89 SCRA 543 (1979)

Pacific Timber Export v. CA, 112 SCRA 199 (1982)

B. TYPES OF NON-LIFE INSURANCE POLICIES

Sections 59 – 62; Cf. Sec. 158, 163, 173

1. Open

2. Valued

3. Running (floating)

Development Insurance v. lAC, 143 SCRA 62 (1986)

Harding v. Commercial Union Assurance, 38 Phil. 464 (1918)

C. PARTIES

1. The Insurer
 Sections 6, 184, 190 & 299

Cf: Agents and brokers: (Sec. 309, 310 & 315)

White Gold Marine Services v. Pioneer Insurance & the Steamship

Mutual, 464 SCRA 448 (2005)

Pandiman v. Marine Manning Management Corp. & Singhid, 460 SCRA 418 (2005)

2. The insured (cf. cestui que vie in life insurance)

Sections 7, 54, 55, 56 & 57; RA 6809; Articles 110-111, Family Code; Article 1390, Civil
Code

Filipinas Cia de Seguros v. Christern Huenefeld, 89 Phil. 54 (1951)

3. The Beneficiaries (Life Insurance)

a. Designation & right to change. (Sec. 11)

b. Statutory limitations. Articles 739, 2011 & 2012, Civil Code

Insular v. Ebrado, 80 SCRA 181(1977)

Consuegra v. GSIS, 37 SCRA 315 (1971)

SSS v. Davac, 17 SCRA 863 (1966)

Del Val v. Del Val, 29 Phil. 534 (1915)

Gercio v. Sun Life Assurance, 48 Phil. 53 (1925)

Philippine American Life Insurance v. Pineda, 175 SCRA 416 (1989)

3. Forfeiture of benefits by the beneficiary. (Sec. 12)

D. RIGHTS OF INSURED OVER A LIFE INSURANCE POLICY

1. Right to assign (cf. change of beneficiary)

Sec. 184- 185

Sun Life Assurance of Canada v. Ingersoll, 41 Phil. 331 (1922)

Grepalife v. CA, 316 SCRA 677 (1999). Especially on "mortgage

redemption insurance.”

2. Right to borrow. (Sec. 233: g)

3. Right to dividends. (Sec. 233: e)

CHAPTER VI. RESCISSION OF INSURANCE CONTRACTS:

CONCEALMENT, MISREPRESENTATION & BREACH OF
WARRANTIES

A. BASIS/RATIONALE

1. Insurance is of utmost good faith (Uberrimae fidei)

2. As risk management devices

3. As grounds for rescission

B. CONCEALMENT

1. Definition. (Sec. 26, 27 (as amended by B.P. 874) 28 & 29)

2. Matters which need not be disclosed. (Sec. 30, 32, 33, 34 & 35)

3. Test of materiality. (Sec. 31)

C. MISREPRESENTATION

1. The active form of concealment

 2. Sec. 36 to 48 (Sec. 45 as amended by BP 874):

(a) Form and when made (Sec. 36, 37, 41 & 42)

(b) Representation as to future (Sec. 39)

(c) Representation as to information (Sec. 43)

(d) Effect of misrepresentation (Sec. 44 & 45)

(e) Misrepresentation as to age; Supra; Sec. 233:d (Old: 227:d)

(f) Test of materiality (Sec. 46)

D. CASES ON CONCEALMENT AND MISREPRESENTATION

Ng v. Asian Crusader, 122 SCRA 461 (1983)

Canilang v. CA, 223 SCRA 443 (1993)

Yu v. CA, 105 Phil. 930 (1959)

Great Pacific Life v. CA, 89 SCRA 643 (1979)

Pacific Banking v. CA, 168 SCRA 1 (1988)

Sunlife v. CA, 245 SCRA 268 (1995)

Eguaras v. Great Eastern, 33 Phil. 263 (1916)

Qua v. Law Union Rock, 98 Phil. 85 (1955)

Argente v. West Coast Life, 51 Phil. 725 (1928)

Great Pacific Life v. CA, 316 SCRA 677 (1999)

Edillon v. Manila Bankers Life, 117 SCRA 187 (1982)

Harding v. Commercial Union, 38 Phil. 469 (1918)

E. THE "INCONTESTABLE CLAUSE" IN LIFE INSURANCE POLICIES.

Defenses not barred. (Sections 48 and 233:b (Old:227:b))

 Tan v. CA, 174 SCRA 403 (1989)

(cf. Tan Chay v. West Coast Life, 51 Phil. 80 (1927)

F. WARRANTIES. (Sec. 67 to 76)

1. Kinds

(a) Express (Sec. 67 & 71)

(b) Implied (Marine only)

(e) Affirmative (Sec. 68)

(d) Promissory (Sec. 72 & 73)

2. Materiality and fraud. (Sec. 74, 75 & 76)

3. Warranties in fire insurance policies. Standard clauses.

Sec. 169, 170- 172 (Old: 168- 170)

Storage of hazardous materials

Alteration in use or condition
Sole ownership clause
"Other insurance" clause

4. Cases:

Pioneer v. Yap, 61 SCRA 426 (1974)

New Life Enterprises v. CA, 207 SCRA 609 (1992) (cf. Pacific Banking v. CA, 168
SCRA 1 (1988)

Qua Chee Gan v. Law Union, 98 Phil. 85 (1955)

Young v. Midland Textile Insurance, 30 Phil. 617 (1915)

G. GROUNDS & EXERCISE OF RIGHTS OF RESCISSION

Sec. 27, 29, 45, 48, 63, 64, 65, 172 (Old:170), 233:b (Old: 227), 393 (Old:380)

Tan v. CA, supra

Areola v. CA, 236 SCRA 643, supra

Tan Chay v. West Coast Life, 51 Phil. 80 (1927) supra

Filipina Compania de Seguros v. Nava, 17 SCRA 210 (1965)

CHAPTER VII. RISKS AND COVERAGES

Outcomes:

Knowledge: Know how to discern the elements and characteristics of an Insurance Product based
on the discussions in the previous Chapters of the outline. Know the various types of Insurance
Products. Be able to give various examples of Insurance Products that would be applicable in
different types of businesses and/or situations.

Skills: Be able to give various examples of Insurance Products that would be applicable in
different types of businesses and/or situations.

Values: Develop an appreciation for the use of Insurance and its value for saving lives and
business investments. To practice selectivity in counselling individuals and/or corporations as to
which Insurance Products are appropriate for a business or condition. This would thus allow the
counsellor to reign in abuse of unnecessary or groundless claims of Insurance products.

A. IN GENERAL: RISKS AND CAUSATION

1. Insurable risks. Sec. 3

2. "Specified risks: & "All-risks" policies

3. Exceptions/exclusions

4. Causes mentioned in the Code. "Proximate," "remote," &

 "immediate" (Sections 86) Cf. other terms used, e.g.

"legal," "efficient," "predominant," etc.

5. Meaning of "proximate cause"

Vda. de Bataclan v. Medina, 102 Phil. 181 (1957)

6. Rescue from covered peril. (Sec. 87)

7. Loss due to negligence. (Cf. willful act: Section 89)

FGU v. CA, 454 SCRA 337 (2005)

B. LIFE INSURANCE

1. Death or survival. (Sec. 181- 182)

2. Suicide. (Sec. 183 (Old: 180-A); Cf. Sec. 89, supra

3. Accidental death. Cf. death by accidental means

Finman v. CA, 213 SCRA 493 (1992)

Calanoc v. CA, 98 Phil. 79 (1955)

Biagtan v. Insular, 44 SCRA 58 (with dissenting opinion) (1972)

Sun Insurance v. CA, 211 SCRA 554 (1992)

De la Cruz v. Capital Insurance, 17 SCRA 559 (1966)

4. Group life insurance. (Sec. 50; Sec. 234)

Pineda v. CA, supra

Eternal Gardens vs. PHILAMLIFE, 551 SCRA 1

GREPALIFE v. CA, 316 SCRA 677

5. Industrial Life. (Sec. 235, 236)

6. Mutual Life Insurance Companies. (Sec. 268 - 280, 417, 418)

Republic v. Sunlife, 473 SCRA 129

C. FIRE INSURANCE

1. What "fire insurance" covers. (Sec. 169)

2. "Hostile" fire and ''friendly'' fire

Phil. Home Assurance v. CA, 257 SCRA 468 (1996)

3. "Increase of risks" and "moral hazard" clauses

Alteration of insured property. (Sec. 170- 172)

4. Measure of indemnity. (Sec. 173- 174)

Prohibitions on transfer
(Sec 175)

D. CASUALTY & LIABILITY INSURANCE

Section 176

Coverage includes Product Liability, Services, Manufacturing.

Fortune Insurance v. CA, 244 SCA 309, supra II-F

E. SURETYSHIP

Sections 177- 180

1. Definition and extent of liability; Sec. 177-178

National Power Corp. v. CA, 145 SCRA 529 (1986)

Zaragoza v. Fidelino, 163 SCRA 443 (1988)

 Eastern Assurance v. lAC, 179 SCRA 561 (1989)

Stronghold Insurance v. CA, 208 SCRA 336 (1992)

Prudential v. Equinox, 533 SCRA 257 (2007)

Intra-Strata v. Republic, 557 SCRA 363

2. Premium Payment (Sec. 177)

Reparations Commission v. Universal Deep Sea Fishing Corp.,

83 SCRA 764 (1979)

Philippine Pryce Assurance v. CA, 230 SCRA 164 (1994)

3. Applicability of the Civil Code; (Sec. 180)

F. MOTOR VEHICLE INSURANCE (LIMITED DISCUSSION)

1. Compulsory Motor Vehicle Insurance. Sec. 386- 402

Perla Compania de Seguros v. CA & Lim 208 SCRA 487 (1992)

Shafer v. Judge, 167 SCRA 386 (1988)

Vda. de Maglana v. Consolacion, 212 SCRA 268 (1992)

Far Eastern Surety v. Misa, 25 SCRA 663 (1968)

Peza v. Alikpala, 160 SCRA 31(1988)

Western Guaranty v. CA, 187 SCRA 652 (supra) (1990)

2. The "no-fault" clause. Sec. 391

Perla v. Ancheta, 164 SCRA 144 (1988)

G. REINSURANCE.

Sec. 97- 100

PHILAM v. Auditor, 22 SCRA 135 (1968)

Fieldman v. Asian Surety, 34 SCRA 36 (1970)

Equitable Insurance v. Rural Insurance, 4 SCRA 343 (1962)

Artex Development Co. v. Wellington Ins. Co., 51 SCRA 352 (1973)

H. MICROINSURANCE.

Section 187, RA 10607

I. PRE-NEED PLANS.

1. Fixed Future Benefit of an Unspecified Peso Amount

2. Fixed Amount of Future Benefit

3. The Role of the Risk Oversight Committee

J. BANCASSURANCE.

CHAPTER VIII. MARINE INSURANCE

Outcomes:

Knowledge: Gain knowledge and a deeper understanding of Marine Insurance by an in-depth

discussion of each of the elements of the contract of insurance in the context of marine insurance.
Understand certain principles unique to marine insurance such as implied warranties and kinds of
losses and how to compute for them.
Skills: Be able to determine in a marine insurance case whether the cause of the loss is a risk
covered by the contract. Be able to compute the loss suffered by the insured if any, whether actual
or partial, which is to be indemnified by the insurer if proven.

Values: Develop an appreciation of marine insurance, as one of the first types of non-life
insurance that paved the way to commercial insurance as we know it today, and as a thriving and
specialized practice in the insurance industry today.

A. DEFINITION AND RISKS COVERED. (Sec. 101)

B. GENERAL AND PARTICULAR AVERAGE. Sec. 138

(Optional: Article 811, Code of Commerce)

A. Magsaysay, Inc. v. Agan, 96 Phil. 504 (1955)

Jarque v. Smith Bell & Co., 56 Phil. 758 (1930)

Phil. Home Assurance v. CA, 257 SCRA 468, supra

C. “PERILS OF THE SEA” AND “PERILS OF THE SHIP”

Cathay Insurance v. CA, 151 SCRA 710 (1987)

Roque v. lAC, 139 SCRA 596 (1985)

La Razon v. Union Insurance, 40 Phil. 40 (1919)

Malayan Insurance v. CA, 270 SCRA 242 (1997)

Mayer Steel v. CA & Southsea Surety, 274 SCRA 432

D. INSURABLE INTEREST IN MARINE INSURANCE

1. Parties with insurable interest. (Sec. 102- 103; 105- 107)

2. Kinds of “charter parties”. (Sec. 108)

Coastwise v. CA, 245 SCRA 796 (1995)

Lea Mer Industries v. Malayan Insurance, 471 SCRA 698,

 G.R. 161745, 30 September 2005

Loadstar Shipping v. Pioneer, 479 SCRA 655 (2006)

G.R. 157481, 24 January 2006

Cebu Salvage v. Phil. Home Assurance, 512 SCRA 667 (2007)

E. CONCEALMENT AND MISREPRESENTATION. (Sec. 109- 114)

Cf. Sec. 28

F. IMPLIED WARRANTIES. (Sec. 115- 122; Sec. 123- 128)

1. Seaworthiness of the vessel. (Sec. 115- 121)

Roque v. Intermediate Appellate Court, 139 SCRA 596, supra

2. Implied warranty against improper deviation.Sec.123-128

3. Implied warranty of proper documentation. Sec. 122

G. KINDS OF LOSSES COVERED BY MARINE INSURANCE. TOTAL, PARTIAL,

ACTUAL, CONSTRUCTIVE; (Sec. 129- 132; Sec. 134)

1. Actual total loss. (Sec. 132)

2. Constructive total loss. (Sec. 133)

3. Concept of abandonment. Requisites. Conditions. (Sec. 140- 157)

4. Cases:

Choa v. CA, 183 SCRA 223 (1990)

 Filipino Merchants v. CA, 178 SCRA 638 (1989)

Oriental Assurance v. CA, 200 SCRA 459 (1991)

Pan Malayan v. CA, 201 SCRA 382 (1991)

H. MEASURE OF INDEMNITY. "OPEN AND "VALUED" POLICIES. (Sec. 158- 168)

I. APPLICATION: PIRACY ON THE HIGH SEAS

CHAPTER IX. CLAIMS SETTLEMENT & SUBROGATION

A. NOTICE AND PROOF OF LOSS. Sec. 90- 94

PHILAM v. CA, 344 SCRA 620

Aboitiz Shipping v. Insurance Company of North America, 561 SCRA 262 (2008)

B. GUIDELINES ON CLAIMS SETTLEMENT. Sec. 247- 250

1. Unfair claims settlement; sanctions

Londres v. National Life, 94 Phil. 627 (1984)

Fernandez v. National Life, 105 Phil. 59 (1959)

Tio v. CA, 202 SCRA 119 (1991)

Cathay v. CA, 174 SCRA 11 (1989)

Noda v. Cruz-Arnaldo, 151 SCRA 227 (1967)

Finman General v. CA, 361 SCRA 214 (2000)

Delsan Transport v. CA,369 SCRA 24 (2004)

 2. Fine and Imprisonment for Fraudulent Claim; Sec. 251: Twice Value and/or Two Years
Imprisonment

C. PRESCRIPTION OF ACTION. Sec. 63, 397 & 439 (Motor Vehicles); Civil Code 1144.

Ang v. Fulton, 2 SCRA 945 (1961)

Travellers Insurance v. CA, 272 SCRA 536 (1997)

Lopez v. Filipinas, 16 SCRA 855 (1966)

Finman v. Inocencio, 179 SCRA 480 (1989)

Sun Insurance v. CA, 195 SCRA 193, supra (1991)

Mayer Steel case, supra

Vda. De Gabriel v. CA, 264 SCRA 137

Eagle Star v. Chin Yu, 96 Phil. 696 (1955)

ACCFA v. Alpha Ins., 24 SCRA 151 (1968)

D. SUBROGATION. Civil Code 1236 & 2207

Coastwise v. CA, 245 SCRA 796 (supra)

Maglana v. Consolacion, 212 SCRA 268 (1992)

Cebu Shipyard v. William Lines, 306 SCRA 762 (1999)

Pioneer Insurance v. CA, 175 SCRA 668 (1989)

Manila Mahogany v. CA, 164 SCRA 652 (1957)

Fireman's Fund v. Jamilla, 70 SCRA 323 (1976)

PHILAMGEN v. CA, 273 SCRA 262 (1997)

St. Paul v. Macondray, 70 SCRA 122 (1976)

Malayan Insurance v. CA, 165 SCRA 536 (1988)

FEDEX v. American Homes Assurance, 437 SCRA 50 (2004)

Lorenzo Shipping v. Chubb & Sons, Inc. et.al., 431 SCRA 266 (2004)

FGU v. CA, 454 SCRA 337, supra

Aboitiz Shipping case (561 SCRA 262), supra.