FEU INSTITUTE OF LAW

Insurance Law JOSE VENER C.IBARRA, AB, JD.

Schedule : Tues 2000-2200hrs

I. Introduction

A. What is Insurance?
B. History of the use of Insurance
C. Importance of Insurance to modern commerce

II. The Contract of Insurance

A. Applicable Laws -
a. RA 10607 (2013) re-enacted the Insurance Code of 1978 (PD 602)
b. Art 2011 CCP "Contracts of Insurance is governed by special laws and matters not
expressly provided for in special laws shall be regulated by this Code".

b.1. Civil Code Provision on donations.

b.2. Civil Code Provisions on Wills and Succession.
b.3. Provisions of the Civil Code on loss and fortuitous events.

c. Certain provisions of the Family Code in relation to property relationship between

spouses.

B. Requisties of the Contract of Insurance-

a. Object- The protection against loss, damage or peril. The payment of indemnity when
peril arises.
b. Cause- The premium
c. Consent- (See also Art .1327 and 1328, in relation to persons who cannot give
consent to contracts)

C. Elements of a Contract of Insurance -

a. The insured has insurable interest.
b. The insured is subject to a risk of loss by happening of the designated peril;
c. The insurer assumes the risk;
d. Such assumption of risk is part of a general scheme to distribute actual losses among
a large group of persons bearing a similar risk; and
e. In consideration of the insurer's promise, the insured pays a premium.

Case: VIRGINIA A. PEREZ vs. COURT OF APPEALS and BF LIFEMAN INSURANCE CORPORATION
G.R. No. 112329 January 28, 2000

D. Characteristics of a Contract of Insurance-

 a. Aleatory contract - Element of risk. An aleatory contract is one which is dependent on
the occurence of an uncertain event or one which is certain to happen but the
time is unknown.

nb. An aleatory contract contains elements of both a conditional obligation and an

obligation subject to a period.

b. Onerous - There is valuable consideration exchanged and expected

c. Bilateral
d. Form - It is a formal contract as the law requires a pre-approved contract called a
POLICY.
E. Common Concepts in Insurance-
Concepts and term used -

a. Type of Insurance-
a.1. Life Insurance
i. Individual life
ii. Group Life
iii. Industrial.
a.2. Non-Life Insurance
i. Marine
ii. Fire
iii Casualty
a.3. Suretyship
Cases: SOUTHERN LUZON EMPLOYEES' ASSOCIATION vs. JUANITA GOLPEO, ET AL.,
G.R. No. L-6114 October 30, 1954
III. The Business of Insurance -
A. Doing an Insurance Business- The term "doing an insurance business" or "transacting an insurance
business includes:
1. Making or Proposing to make as insurer any insurance contract.
2. Making or proposing to make, as surety, any contract of suretyship as a vocation and not
merely incidental to any other legitimate business or activity of the surety;
3. Doing any kind of business, including a reinsurance business, specifically recognized as
constituting the doing of an insurance business;
4. Doing or proposing to do any business in substance equivalent to any of the foregoing in a
manner designed to evade the provisions of the Code;
(Cf. Sec. 2, I.C, ICP).
Cases:
Republic vs. Sunlife Insurance Company of Canada GR No. 158085 Oct. 14 2005
White Gold Services, Inc. vs. Pioneer Insurance Corporation. GR No 154514 July 28, 2005
Gulf Resorts Inc. vs Philippine Charter Insurance Corporation GR No. 156167 May 16, 2005

Almendras Mining Corporation vs Office of the Insurance Commission and Country Bankers Insurance
Corporation GR No. 72878 April 15, 1988.

PHILIPPINE HEALTH CARE PROVIDERS, INC., vs. COMMISSIONER OF INTERNAL REVENUE, G.R. No.

167330 September 18, 2009
PHILIPPINE AMERICAN LIFE INSURANCE COMPANY and RODRIGO DE LOS REYES, 
vs.HON. ARMANDO ANSALDO G.R. No. 76452 July 26, 1994

ABOITIZ SHIPPING CORPORATION, vs.INSURANCE COMPANY OF NORTH AMERICA, G.R. No. 168402          

August 6, 2008

GREGORIO V. TONGKO, vs.THE MANUFACTURERS LIFE INSURANCE CO. (PHILS.), INC. and RENATO A.
VERGEL DE DIOS, G.R. No. 167622  November 7, 2008 and June 29, 2010 (Motion for Reconsideration)

B. What may be insured in a contract of insurance-

a. Future, Contingent or past event may be insured. (Sec. 3. I.C.)
b. Insurance on Lottery (Sec. 4, I.C.); difference between Insurance and Wager.

Cases: Lorcom Thirteen (Pty) Ltd v Zurich Insurance Company South Africa Ltd (54/08) [2013] ZAWCHC
64; 2013 (5) SA 42 (WCC); [2013] 4 All SA 71 (WCC) (29 April 2013)

III. PARTIES TO A CONTRACT OF INSURANCE -

A. THE INSURED- The insured is the person who applied for and whom an insurance policy is issued to
cover his life, property or the life of or property of other persons in whose life or property he has
insurable interest or liability to other persons. The insured is the one who enters into a contract with
the insured.
a. Insured vs Assured- In life insurance, if a person insures the life on another, the person
whose life is insured is called "the insured", while the person who took out the insurance is called the
"assured".
b. Married women may enter into contracts of insurance without the need of the consent of
their spouses. (cf. Sec. 3 ICP).
c. Minors may not enter into contracts of insurance. (nb. previously under PD 602, Minors may
obtain life insurance over the life of his parents or siblings. This was deleted in Sec. 3 of RA 10607)
d. Effect of death of owner- Applicable only to life insurance. “All interest, 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”.
e. Public enemy - Sec. 7 of the ICP Provides "Anyone except a public enemy may be insured". A
public enemy is a state or citizens of a state at war with the Philippines.

f. Capacity of Insured to contract in relation to the Civil Code. (See Art. 1327 and 1390 CCP)

B. THE INSURER-
a. Who can be an Insurer (Sec. 6, I.C.)- Every person, partnership, association or corporation
duly authorized to transact insurance business may be an insurer.

a.1. Kinds of Insurers

 a.1.1 Insurance Companies and Reinsurance Companies-

a.1.2. Partnerships, persons, associations etc.

a.1.3. Mutual Benefits Association- (Sec. 184 IC)

a.1.4. Mutual Insurance Companies (sec. 268 IC)

a.1.5. Cooperative and Cooperative Insurance Societies (Sec. 190 IC, in relation
to Arts. 105-109 Philippine Cooperative Code)

a.2. Basic Qualification of Insurer (Sec. 192 IC).

a.3. Certificate of Authority required for insurance companies (see Sec. 193 IC).

Case: White Gold Marine Services Inc. vs. Pioneer Insurance and Surety et.al., G.R.
No. 154514, July 28, 2005.

b. Prohibited Acts for Insurers (Sec. 193 IC) -

C. THE BENEFICIARY-

a. Definition of beneficiary (Sec. 53)

b. Effect of designation of beneficiary - A person designated to be a beneficiary in life

insurance is the person entitled to receive the proceeds , which may be
difference from the heirs of the insured. When there is a valid designation, the
proceeds shall not form part of the estate of the insured.

c. Third Parties - The insurer has no obligation to turn over the proceeds of an insurance
to third parties even if they are immediate relatives of the insured.

Case: Heirs of Loreto C. Maramag vs. Eva Verna Maramag G.R. No. 181132 June 05,
2009.

d. Effect when there is no designated beneficiary or the designation is void- The rules of
succession will apply.

Cases: Maramag vs. Maramag (Ibid)

SSS vs. Candelaria Davac G.R. No. L-21642, July 30, 1966.