INSURANCE LAW

SAN. BEDA LAW CENTRALIZED BBAR OPERATIONS= MEMORY AID 2019

S U R A N = C O D E : THE CONTRACT OF
THE IN : __INSURANCE oe
Governing ‘Laws : Insurance. Contract oe
primary , Acontract of: insurance is an agreement whereby one
1.. InSuranice Code (P: D. No. 612,¢ asfinally amended [the insurer]. Jundértakes ‘for a consideration [the ‘
by:R-A,.No. 10607); _ , premium] to indernnify’another. [the ‘insured} against
2. An Act Strengthening the Insurance Industry (R. A. loss, damage or ‘liability: arising from an’ unknown.or .
* No. 10607);* contingent’ évent [the: risk] (R:A; No: 10607, Sec: “2(a))
“3. Reviséd Gove fitment Service Insurance Act of ihereinafter, INSURANCE CODE}. ;
OTF: (P.D. 1146;:a8 ‘amended);: °
4 ~ Social Security: Act Of 1954: (BA: No. 1161, ‘as A contract- of suretyship’ ‘shal ‘be™ ‘deerned:“to: be: an
amended); | insurance contract, within the meaning of. this Code,
~ 5.. Government, Property. Insurance ‘Law: (RA: 656,” only if made by a surety who “or: “which $ si
as aménded by'P:D.-No. 245); doing an insurance© business (id). 0:
6 Philippine’ Deposit Insurance: Corporation Law.
(RA. 3591, as. amended RA No. 9302 &RA- No. Ifa person agrees, to: bind hirnseif. Solidarily for the. -
9576); _ debts contracted’ by a principat debtor, “he is. deemed
‘7: An Act’ ‘Amending: ‘the National Heailth Insurane 4 _to be a surety” (Civ: CODE, Art: 2047). :
' Act.of 1995 (R.A. No. 10606); anid:
” 8. Code: ‘of Commerce... ‘Risk, Distribution as ‘Primary Function “of

“4, Civil Code (R'A.No. 386); and ="

,Suppletory.

2. Since the present: dngurance’ God

: “principally, upon, Act. No. 2427, 2G ‘Philippines? (2 4), P. on ‘Tiereinafter DE LEON,
Soe
California, in “accordance tt Cotes caris of
ne statutory, construction, ‘thes court should: follow j istics o ni Insurance Contract:
fundamental. ‘points, at Teast; “thé Ons i. A CONintra OF | nde Loe .
_. placed by California Courts: QF aie nia Taw ; _ Insurers: ‘pay-nomore than’ the actual loss suffered: .
(Ang ‘Giok’ Chip Vv. ‘Springfield _ The’ purpose-of insurance’ ‘is'td leave the insured
Insurance. Company, GR. in - the same “financial position, as hé was iin .
‘December 31,1 1939) a minediately prior to the incident of loss, damage, .
ER SF Pliability. (DIZON, The’ Insurarice ‘Codé ‘of the
: Philippines - eon): “P: 14) {hereinafter ‘DIZON,
_ Insurance Code}...

"where ‘the: result is. death noe LEON, ‘Insurance a

Code, supra at 21). . :

: EXECUTIVE COMMITTEE SUBJECT COMMITTEE |: MENIBERS eo

. MARY CYRIELL. Cc” SUMANQUI ‘DENTZEN'S..VILLEGAS Subject -VYEL MARIE’ C. BRODIT, “Justice JAPAR'B IMAAMPAO,
“'“ Oversall. Chairpersoiiy « ‘ERICA.’ Chair, URSULAINE GRACE © ‘CAMILLE G CACHO,; ANNA: and" Atty! ‘MARIA. ZARAH R. -
MAE Cc. _ VISTA jChaieperson. for . FELICLANO Assistant’. ‘Subject © “CARMELA 'C. DELA CRUZ, ‘VILLANUEVA- CASTRO. “
Ghair; LOUISE. SIGRID. C. PATRICIA -- ERIKA. ° A...)
" BARBERO™ Chaitpe for Hotel - ANTONIO Subject,’ " Blectronic EUSTAQUIO, AIRA MARIELLE ,
Operations; JHELSEA’ LOUISE B. . ‘Data Processifig, ‘ JEREMY _ M. M. GERONIMO, PRISCILLA, Qa
_ ' DIMAANO Vice Chairperson for- MERCADER Banking Law; JAN LINGAN, ‘ANNA DOMINI UE
~\Seeretariat, EARL JUSTIN \M. ’ -WENZY we ‘CRUZ, Corporittion G. MARMOL, FATIMA: D.
YAMBAO ‘Vice, Chairperson for’ Law, DANIELLE. LOSE ‘B. TUMBALI, PAOLA CIARRA E.*" -
. Operations; ‘MA, ANGELICA B:. . VALENCIA, , * ©. JOANNE | +
DE :LEON: Vice ‘Chairperson for GUIANINA SHIELA ( : , KRISTEEN C.. WY, “JEEN:
an ‘Finarice, “ARRA OLMAYA - J.’A. SORIANO Law.on Intellectual - KATHLEE B. LIM, and .
BADANGAN Vice “Chairperson ** Property, . MILANE ANNE...C: MARC. RUSSEL ANN: P. “
for Audit, JORDAN N. CHAVEZ - CUNANAN °* - Negotiable“ LUBANGCO vee
_ Vice” Chairperson for Electronic Instruments., Law, FRANCES
: Data Processing, : HANZ: ANGELA °.-:V. “SALVACION
DARRYL D.° TU Vice ‘Franspottation _. Law,
. Chairperson for. Logistics, DOHN URSULAINE’ GRACE — C.
ALFREDE. AQUILIZAN Vice FELICIANO Other Commercial
‘Chairperson for Membership ‘ Papers,. .Consumer Protection
Laws and Law on Insolvency
 INSURA NCE LAW
SAN BEDA LAW CENTRALIZED BAR OPERATIONS ~ MEMORY AID 2019

2. ‘An Aleatory Contract 9. A Conditional Contract

The insurer's obligation to indemnify iis dependent The’ obligation of: the insurer is subject to
"on the happening-of an event, which is uncertain, - conditions, . the -principal one of which is the
or which is ‘to occur..at an indeterminate time (happening of the event insured against. In addition
(CIVIL CODE, Art. 2010); to. this ‘main condition, the contract usually
includes many other conditions (e.g. full:payment .
8 of premium or performance of some other act)
A Risk Distributing. Device . .
-A primary causé of the contract is the insurer's -which. must be complied with as.precedént,to the
“assumption. of risk’ which it undertakes ‘because, . right of the insured to: claim benefit under it (DE
the ‘assumption of risk is. supported. by. general LEON, Insurance Code,- -Supra.at an -
“scheme to distribute any contingent loss among a
sarge. numberof persons: exposed to-similar risks 4 Elements of.a Contract. of Insurance: -
’ [the insureds] ‘drawing from a common. fund to- An: insurance contract exists. where the following .
which:such persons| have contributéd..
1, .

CA Persoriaf’ Contract “2: The insurable interest issubject to. a. risk of loss
Each party enters into: the:contract bearing in ‘mind ot by the. ‘happeniig. of the. designated ‘peril;
_ the character, credit, and: conduct of the other. 3. The insurer's Promise is- in consideration of. the
“sciagpayment ‘of-a‘premium; ,
5. A, Contract of Utmost Good Faith, weft 4K “}ie:insurer AAssumes the: risk; ‘and . .
Insurance: ‘contracts are . ubétrimae™ Tid. ySubh y ae suinption of risk is ‘part: of a Risk
demand the. most abundant or utmost st “Bor dl ith Sdistrigution® scheme (Gulf Resorts, ° Inc. .
(Verendia v. CA, GR. No. 75606, eget 22; ; *hilip sine. GI ter Insurance Corporation, GR
1993). ffiY yyLF fone. 1564467, MEX 16. 2008).
. Utmost good ‘faith is eal ak he oR a Nee: Stated’ différently, theessential elements of the
‘decidirig |whether or not ta’ acceptia tisk} must rely ¢ % -contraét.of insufagice Bi:
-primarily upon. the. information supplied to fihina . Cause « eo wens,
the. applicant (SUNDIANG*& ~AQUINO, tRevidy CHS il AL
“Ee
on ‘Commercial Law (261
SUNDIANG & AQUINO, f
: Law]..
ANS 13,27
WS oy pe EBs ‘Distribution Scheme -
leno.
Les
A Consensual Gontract x. ; AN S 5 ye Amount o} Insurance Benefit . :
The: -contract. of insurance ‘is perfet ted By
consent. without: the . eed Sof delivery. “qTest:, tO, jetermi 3 Whether a Gohtract is an
formality (Perez v. CA, G:R.R NOt 23 vannel

Ne
inisurati¢e e Contract:
28, 2000). ss~— I€ opythe'
‘0 nature of ‘the promise, the. act’
eee '6@ performed, and the‘exact nature of the
JA Unilateral Contract. I fi agiéeniénti in the light of the. occurrence, contingency,
, Upon pay, int- of the. premium; the contract ne Mis “circumstances: ‘under ‘which’ the
performance a
has.one obligation ‘which is. imposed: on'the part of | ‘becomes requisite. itiis. not oe what’ itis called wenite
_the.insurer’ who undertakés to indemnify. the
insured for’ any joss Re. suffers. from covered risks
_ ‘within the term-of. the. policy. it is.not necessary for. ...’- .
: the: insured, to: undertake any: Obligations: althiongh os
it- may: do 80.
' o for orrenee or ‘any chance or ticket i inaailottery drawing
. Normally a Coritract: of Adhesion. no, aeprice is ‘not allowed: (INSURANCE CODE, See. a
One of the. parties. (insurer) imposes. a ready-made ys
form of contract, which: the ‘éthier party (jnsured) - “While . a:“ eontract of insurance ‘is ‘based ‘on a
may:: ‘aecept or rejett,. “but! which: the latter cannot . -coritingericy,. it is riot. contract‘of chance’and is not
-modify. The former prepares the stipulation in the used for.profit. The very purpose of insurance is the .
“contract, while: the. othier party merely affixes: ‘his: reimmbursement‘of the holder, of irisurance for actual
. signature: Or his "adhesion" théreto, giving. no room: - loss*suffered from spécified. risks (DE LEON & DE
for. negatiation and depriving the latter of the LEON: ur, supra: at.71 ). .
opportunity to bargain on equal. footing (Norton 7
Resources and Development Corporation v. All - Every policy executed: by way Of gaming or wagering ,
Asia.. Bank - :Corporation, G.R. No, _ 162523, : is void. (INSURANCE: CODE, Sec. 28).
November 25, 2009). a

oa | 2019-SAN'BEDA'LAWCENTRALIZED BAR‘OPERATIONS © -
h
 INSURANCE LAW
SAN 'BEDA LAW CENTRALIZED BAR OPERATIONS ~ MEMORY AID 2019

Lottery person, or on his surviving a specified period, or.

This extends to all schemes for’ the distribution of " otherwise’. contingentiy on’ the continuance or
prizes by chance, such as policy,,gift exhibition, prize cessation of life (INSURANCE CODE, Sec: 181-
concerts, raffles. at fairs, eté., and: various forms of 182).
gambling: (DE LEON, Insurance Code, ‘at 70). Note: It includes: every: contract’ or undertaking for
the payrrient ‘of lump sums under ‘a ‘retirement
Efements of Lottery: (crc) _ . program: where the insurer manages ‘or. acts as 2
a. Consideration;: trustee’ for such: program; or every “contract ‘oF
|
b; Prizes;. and’ : pledge for the payment ‘of . ‘endowments. or
-C. Chance Wa. ‘at 70: annuities (INSURANCE CODE, Sec. 181- -182)..
ao All other. ‘classés of insurance: are: considered
a “non--life” ‘insurances. ' wre. .

2. Property insurance. .
a, Fite Insurance. .
A contract” by, ‘Which, the, insurer for a
consideration: : agrees “indemnify: the -
insured against ” loss a or damage to,
property - by” hostile fire;
. ‘including: loss: by,
lightning,” windstorm, tornado or. earthquake :
_ and other allied ‘risks, when ‘such: fisks are
covered: by. extension --to ‘fire insurance ;
policies ‘or: ‘under ’ separate.” "Policies,
URANCE CODE, Sec. 169):
. Marine Insurance
rrgiary
-An-jnsurance against risks connected with
ation, to which a ship, cargo, ‘freightage, .
The _gambl pnp ts} orlgther insurable interést in: movable
fortune.. pf petty, may. be exposed during’ a’ certain
“|The. 7" ‘contract | ” of eS fs nsurange pod ca. fi xed: period of “time
gambling « tends. to téi oe) Z A CE CODE, ‘Sec. 101).
increase ‘the inequality |
Suretyship
. of fortune.
An. agreement. whereby ¢ a party.called: the
rely, - guarantees - the- - performance by ‘
other called: the. principal-or- obligor .of: an
obligation . or, undertaking in..favor. ofa. third: ....
- Party called the oblige INSURANCE CODE, f
son ‘wins- from F ured, ace Rauch — .. See: 177)...
la wager | is Jost by’ the premiums. paid, the’ funds : Note: The: “property ‘insured -is. edit: or :
' Jother wageringa party. |-which make possible’ the} . standing. .
: payiment, ofail Claire, .

iat .
( ling. those falingunder
_|makes <a “wager; he does not créate a new and, other: types of i insurance: such: as..fire or ‘marine .
. ‘creates-a-risk of logs to therefore,: “nori-existing: risk . | UINSURANCE | CODE, Seé. 476).
Himself where:no* such ‘of. loss’ to the purchaser. “Compulsory | Motor Vehicle. Liab
jrisk existed-previously. |: . . ! “InSurance (CMVLI ).
(a. at’ 741- 72). _ A special'type. of casualty’ insuranee: ‘against os
- v.passengerand third-party liability for déath: or:
"Classes of insurance. Contract: aE os a bodily injuries” and damage. “to property
Insurancé contracts’are classifiied soéerding: to. the” arising ‘from -:motor:. vehicle: accidents.
subject .matter:of the’ insurance and the risk insured ‘ (INSURANCE CODE, Seq, SERED);
against. - o
. Microinsurance : oo
1.. Life. insurance am a oO
" _Jt-is the insuraneé-on human lives anid, insurance ~ An. -- activity providing - ” $peciti ic - " insurance; ,
appeitaining - - thereto - Or. connected . therewith, . * insurance-like .and other similar products. and
which may. be made. payable on the “death of the . services that ‘meet the needs: of. the low-income

2019 SAN BEDA LAW CENTRALIZED BAR OPERATIONS| 247 .

 INSURANCE LAW.
- SAN BEDA LAW CENTRALIZED BAR OPERATIONS - MEMORY AID 2019.

sector for- risk protection and. relief -against Delay i in Acceptance

distress, misfortune, and other contingent events Mere delay by the insurer, although unreasonable, in
(insurance Memorandum Circular No. 001-10, _ acting. Upon the application raises no implication of
. danuary 229, 2070). acceptance nor does it estop ‘the insurer to deny the
existence of the contract (Perez.v. CA,. GR. No.
_ 112329, January 28, 2000).

"PERFECTION OF THE . Construction of Insurance Contracts:

_CONTRACT 1. The Fine Print Rule .
Any ambiguity in: an insurance policy i is resolved
_ in favor of the insured ‘and: ‘against the insurer, for
‘Pre-need Plans. v.:Contract ‘of Ingurance : it is the latter who caused the. obscurity (Gulf
.. Resorts, ° “Ine. v. Philippine. Charter insurance .
_ Corporation, GR. ‘No: 156167, , May 16, 2005).
These’ are- contracts ‘Itis an aptéernertt whereby : The: ‘reason being that the- insurance. policy. is
which provide’ for the. the insurer undertakes for a ‘presented to the insured already in its: printed
performance . of future consideration, » “known as ‘form, so thatthe either “takes:it or leaves it.” Most
services . of or”. the the premium, to indemnify, ‘of the terms of the contract ‘do not. result from .
payment Of future the. insured against, t AOSSF |= : “mutual negotiations between the: parties as-they
monetary .~ damage. or liabilit “arising if . Are,prescribed by the insurer.in final: printed form
considerations at’ ‘the from. Ak owh\ Or |S tofwhich the insured may “adhere” if he ‘chooses
_|time) actual néed, for contingent 2. vt Levent F *but, which’ay cannot change (Rizal, Surety: ‘&

f
: which plan holdéis pay (NSURAK CE Oy
dope” ‘See.,
s | InstiDance A, GR: No. 112360, July 18, -
in cash or instailment, ;2(2)). we 2
at stated prices, with or| fee ‘5 inf P Se a AS A te
without interest © ner i gs In: Favor ‘ohh epi hha Policy i in Force
‘‘/insurance ©: coverage} § f sa oe am -Provig ions, ¥ nics. ‘or exceptions in. policies’.
and: . includes _ life, ) : \ Lo att ~ Brow tend’:Vcd
4 a-forfeiture of insurance .
|pension, education, | . 7 x , {policies shoul be to) Astrued: most strictly’ against : _
‘linterment, and other it ‘ a ™ thos pfegwh se benefits they are inserted, and
plans . ‘Which . the] | yo rd. those: against whom they
Conimissicn ;may: from Area
a) eaat b alo (Geagonia oe
v.. GR.
-‘Itime: to time -approve Re LT 14427, Febfuary’6,.1 995). -
(RA No. 8799, Settion
3.9). ood a Lace P icy Const
es bs Wt ie prov ;
: vas SRE
SENT)“ep+ sabe ° Bioviel?.&nd.int
im Perfection of the Contract of ‘Ins iran ee
fo wpiated | ib consonance with
_ Ina contract of i insurance, the prospective iGo | is 84 ef
The: ‘policy’: cannot | Be” -construéd
the: offeror: He: Offers.io pay the’ premiuin in exchange
for a-_promise by.the praspective insurer to indemnify
MA piscam éal (Gulf Resorts, ‘ine. - v.. Philippine.
rer surance Corporation, 7 R No. 1561 67,
a contingent loss fron) a. Specified risk. _ May 16, 2008).

The prospective irisurer is the consenting party, The’

insurer may refuse the offer when he-is unwilling to
assume: the: risk: ‘involved. or if the premium offered is THE : INSURANCE} POLICY
“insufficiefit.. On’ ‘the. other Hand; the, ‘contract’ of
" insurance ‘is “perfected: ‘upon acceptance by the: — Policy of Insurance: ‘ . RS mo
‘insurer. of the-offér-to pay the premium, Signifying a _. The written. instrument where ; a 1 Cofitract of i insurance
promise to indemnify. : is’ set forth. (INSURANCE CODE, See: 49)...
The insurer: may also. make a counter-offer. In which Ati is the written ; document embodying the: terms and a
“case, the-contract-will-be perfected’ upon acceptance: . stipulations of the: ‘contract of insurance between the
‘ by. the. prospective insured. oF the terms of the ]
insured and thei insurer (DE LEON, Insurance Code,
counter-offer. .
, supra ‘at 478): ; ;
Application. as ‘mere ° Offer Note: Ani insurance contracti isa consensual contract,
It should be noted that an: application: isa mere.offer. |
Hence, the absence of a policy does not.bar the °
. which requires the overt ‘act ofthe. instrer for it to contract’ from coming. into existence (AQUINO,
ripen into a-contract’ (Perez v. CA, G.R. No. 4. 12329, . Insurance Code; » Supra at. 1 04). : .
. January 28, 2000). . n~,

248 | 2019 SAN.BEDA.LAW CENTRALIZED BAR OPERATIONS.

 INSURANCE LAW
SAN BEDA LAW CENTRALIZED BAR OPERATIONS - MEMORY AlD 2019 |

Policy Distinct from Contract defined, | especially ‘as to the subjects of

A.policy of insurance is different from the ‘contract of insurance, --by — additional statements: Or
-insurance. The policy is the formal written instrument- : endorsements (INSURANCE CODE, Sec. 62) ‘
evidencing thé contract of insurance entered into.
’ between the insured and .the insurer (DE LEON, Life Insuranee i is considered a Valued Policy -
: insurances Code, supra. at 181). ’ Although. ‘the. value of a ‘ife-.cannot ‘be ‘estimated
pecuniarily, a-life ‘insurance’ policy i is deeméd to be a
Form of lrisurance Policy: . : - valued policy where the: measuré of. the indemnity iis ©
No Policy of insurance Shall be issued Or. delivered “the face: value of. the: policy (INSURANCE. CODE, - ”
unless in’ the form ‘ previously approved by: the ° ‘Sec.. 4 86). -
Insurance Commission. (INSURANCE CODE, See. ,
232). : : Importance of Delivery: of Policy to Insured : °
1. Itis. evidence of the contract'and of its.terms;
Note: The policy. shall be in pritited form Which may 7 ' 2) itis conclusive'evidénce of. communication ofthe
-conitain blank Spaces and any word, phrase, clause, cae, insuret’s Acceptance of the, insured’'s offer. -
mark, - sign, symbol, -signature, number,- or _ word
necessary to complete.the contract: oti insurance’ ‘shall — . ‘Effect:of Non-Delivery” .
* be written. on ‘the’ blank spaces: provided . ‘therein . ' Delivery of ‘the policy is not a. prerequisite toa valid
, (INSURANCE CODE, Sec. PO). contract ‘of. .ifsurdnce. The. contract may “be
Electronic Policy’ | . J of completed’ priér to delivery of the’ policy or even
“A policy may snow: bé electronic subject - to? without the delivery of the policy. depending on the ©
intention’ ‘of the’ parties. The - policy ‘May: contain. a:
pertinent {provisions ‘of the Electronic Commerc
(R.A. No..8792) and to, such rulés. and regulation: | provision that states'that the.i‘insurance is not effective
il. the deli a‘of the policy: ‘
- may -be prescribed by the’ -Commissio
(INSURANCE CODE, Sec.@- 90). oo
Effé
Conditigita al Delivery
‘Non-pesfoymance of. the’ condition precédent .
ooeee

. prevents. fpe'pontiact fromn taka effect (id. ‘at

.policies: 189)-9 ~ , .
’ Premium or a staterne
determined; ‘ dif onal Slivery .
Property OR Life Insured; eng & This’ ‘consummates the: contract,. and the policy
Interést ofthe insured in the progeny delivered becomes: ‘the final contract between the
ee

the absolute owner; or . patties-(id.). - -: ot

. Risk insured against; ‘and - —_: Where -the premium: is still unipaid after
Period of coverage” (INSURANCE litional- délivery and the absence Of any clear
oe

5). “agreement granting..credit. extension, ‘the policy will.

,Prohibited. Stipulatiéns i in-an Insurance Policy:
A Stipulation. -for ‘the. payment.of loss whether the
"person: insured..has ‘or has-no ‘interést in: the
-. <gubject.matter of the insurance;:and
-. Stipulation ‘that thé: pdlicy:'shall be. received” as.
proof of insurable: interestt (INSURANCE: ‘CODE,
| See. 28).
: ‘Kinds of insurance Policies: ea
1c Open. ‘Policy + one in which the: valu. of, ‘the
: property insured shall be. ascertained. at the'time
\. of the loss and the’ amount of i insurance merely.
’: represents’ -ihe.. insurer’s.. maximum Aiability.,
. (INSURANGE CODE,. Sec.: 60)...
‘ Valued, Policy — one: which expresses on its: face
dgreement that the thing insured shall be-valued-
at a- specifi ied sum (INSURANCE CODE, Sec.
61).
3. ‘Running . Policy: - - one which: contemplates
successive insurances and which provides that.
the object of the policy may. be from. time to- time ‘
lapse. if ‘the premium is’ not. paid.at ‘the: time” and
” manner. ‘specific ied'in ‘the- policy: (Phil: Phoenix: ‘Surety -
' &Ins: Co., Inc. v. Woodworks, | Inc., G: R * No, E- 25317,
: August 6, 1979).
| Attachments to the Basic ‘Policy.
oS 1. “Special Clauses, Conditions, and Exeéptions’
e Stipulations” ‘and ‘Specific’ agreements: governing
the © modalitiés ‘of “the ‘insurance contract’: > .
' (Example: Mortgage clause, loss:payable’ clause,’ -
incontestabilty clause; suicide clause).
Warranties
: .
_ Statements‘which, become: grounds to reseind the .
- contract:if they are“material to: ‘the: ‘consent of the -
_ rescinding. party and are-found or ‘become false.
during the term of thei insurance contract.
Endorsements or Riders , -
. Anadjustment: or. amendment to an insurance
-_ policy that medifies the conditions of the policy by
"expanding orr restricting its:benefit its: or. excluding.

2019 SAN BEDA LAW GENTRALIZED BAR OPERATIONS | 249

 INSURANCE LAW
SAN BEDA LAW CENTRALIZED BAR OPERATIONS— MEMORY AID. 2019

certain conditions from the coverage “(Black's . office (Great Pacific Life Assurance Company v.
Law Dictionary, 5 ed., p. 1189). Honorable Court of Appeals, G.R, No. L-31845, April .
30," 1979). oe . ;
’ Rule in Case of Conflict "Between Rider and ;
Printed Stipulations of:a Policy ~~ . ‘Rules on Cover Notes: .
- The rider .prevails as..being: a more deliberate 7° 41. The Cover note is valid f6r.60: days,. after which thie :
expression. of the agreement ‘of the ‘contracting .. ‘policy must: be issued (INSURANCE CODE, Sec,
- parties. ‘This principle applies to the interpretation oF ° §2); -
clauses, warranties, .
.or ‘endorsements which. are. 2." The period may be. extended or renewed beyond .
attached to policies to vary: their terms (PE LEON, ' » 60. days ‘with the written approval of the |
Insurance Code, supra at 190. ) -e Commissioner ‘if -he determines’ that. such
J bole Sete ee extension is. not contrary to and ‘is not for the
‘Form. of Attachment, rar 7 . , '
purpose of violating :any provisions of ‘the Code
No rider, clauise,. warranty or endorsement, shall bé . a (INSURANCE CODE, Sec. 2);
‘attached to, printed or ‘Stamped™ upon; such ‘policy, - .. :
certificate,’ or contract unless the form of such’ © Note: The approval _ Of | the - ‘Insuranée
application, rider, clause, warranty :or endorsement ©. Commissioner may be. dispensed: ‘with upon the
has . been: ‘approved... by- ‘the | “Cornrnissioner . ‘certification of the président, vice-president, or.
(INSURANCE: ‘CODE, Sec. - 282): soximten,. general mahager of the insurance company
: Pdugnriges that the ‘risk involyed, the values. of
Countersignature . “UU . ) fs cfrrigks. 3 and/or’ the premiums. therefor has °
4. if-attachment.is. ‘issued: ‘simulfanesus Will =e yet, beenan determined or-established, or
, .if- thezdeseribtive :
it'shall be binding only -if sien en igs, or renewal is net, contrary :to
name of the’ rider,:.« ojise SOK Wwwatranty“OFr =and.,, TS, “not “forthe purpose | of violating any
- endorsement .is :mentione AOS Writer on i A sycProvigion® , Insurance . Code; or- of any
blank spaces provided jv the; iginal. print d £ sruling} morte Sor circular of the “Insurance
/ policy, form. INSURANCECODE, rs 50) . BES_.Gomniissiont (insurance Memo.. Gir. No. 3-75,
: eee oes ~ Gated Septem.
er effective. Ogtober 21,
; Note: .: Any’: “rider; dae ‘war rant ep 97 i an 1 u ‘
endorsement: pasted ondaugeti’ too th policy's 3. Og i bs: i. .
- considered: part. of of h “poli contre . No sé jarate pr emiums are: ‘intended or required to
. insurance... (CIR —v. mene LE aid. in af svetinote because cover notes do:
“. Jnsuraincs; GRE No. ney K yoo : ’ tain. particulags «of the property.’ insured: that
1. oN Guile’. serye: as: basis - for. the computation of
2. See rhiums? |
Thus fo. premium could ‘be fixed and - :
i peal Jon the coyer note (Pagitic. Timber Export.
“Corporation: uyCA,. GR. No, “L-38613, ‘February
oe : RA eS (82) ys id
3. fe gttachment is,5 issued ‘after ee ae ”
but it was: not -applied : for. by. the’. ing tt Mist: a separate. policy. Tt fons. an. igtegral part, :
- addition: to ‘descripti - policy, it Ror ei — OF: the policy.upoh thei issuance of the fatter: If the.
countersigned: _by ‘the © ‘insured. . to. “signify ; ., fote'is to be treated.as.a separate: policy instead:
gay ore. thereto (INSURANCE CODE, See. . . of”. integrating... it to. the. ‘regular... “policies . a
50). won ie - -. ‘subsequently. i sued, the.. purpose.’ and _ a
NO
» function of the Cover. Nate would be set at- naught
Gaver Ni 5 Ga dom ; .
. ‘orrendered.meaningless, for it is ina real sense a
= contract, not a mere. application’ for“ insurance -
A. concise. and: 4empora written. contract ‘ésubd 4 by
the.’ insurer ‘through : “its” duly.. “authorized, : agent ° .. . Which’ is a mere offer. (Pacific Timber Export
embodying: the rincipal: terms of an. “expected policy oo Corporation vw (oA, GR No. L-38613; February
_of insurance (la. at 208). ., Do oo. £25,;. 1982). me sa .

Purpose: iti Is. intended. to give. temporary insurance. 8: ‘The: cover note may be’ éancelled. by either party a
protection: coverage ‘to the. “applicant”. Pending ‘the upon’ prior notice: ‘to:the ‘other of atleast 7days
acceptance or rejection of his's application (la. de Lo -. -(SUNDIANG.- -&. -AQUINO, . _ Reviewer ‘on
° Commercial. Law, Supra at 78).
Binding Receipt.
It isa. mere acknowledgment; on, behalf. of the . _
company that its branch office. iad;received-from the -. ” oe
applicant the: ‘ingurance: premium. and. had accepted Sa
-the: Application: subject ‘to, processing by. the..head -

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 INSURANCE LAW
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Validity of ~ Agreement - Limiting “Time for — controlled ‘corporations , or. entities, engaged as
Commencirig Action principals-‘in thé ‘insurance business, excepting —-
General Rule:.A clausein an jrisurance policy to'the mutual - benefit: associations. (INSURANCE CODE,
effect that an-action upon thé policy: by the insured Sec. 190). us
: must be. brought within a certain period is. valid and Requisites: (EC). ;
will prevail over the general’ law: on limitations of 1. It must -have sufficient ' Gapital ' and’ assets .
actions -as prescribed: by thé Givit Codé under Art. . "required. (INSURANCE CODE, Sec: 192); and .
1144, if not contrary: té Sec.63:of the Insurance Code 2. It must have.a Certificate ‘of: ‘authority. to operate
DE LEON, Insurance Code, supra at 217).° "issued -by” the. Insurance ‘Commission: ‘which
should: «be: “renewed: - every _ three. : “years
Example: A! provision réquiting presentation of. claim (INSURANCE CODE, Sec. 193). we
-within ‘thrée months.‘after. fire, and the bringing: of
action within’ three. ‘months: after. refusal ‘of ‘claim is. - Foreign. Insurance Corporation... . .
. valid’ ‘(Teal Motor. Gompany; “Ine. v.. Orient. Insurance . They may . be authorized by. the | Commission. to.
‘ Company, G: R. Nos. L36701- ‘07, March 28, 1934). engage in: insurance usiness |in. ‘the Philippines. The
requirements, ‘among 1g other
Note: A. condition: | in the policy: that ‘élaims must be A. appointnient. fa" Residen
‘presented “within? one year after. rejection” ‘is’ not " geheral agént-on whom-any: nee sis ‘proof of —
_ Merely a: procedural requirement: but an: important - ~~ Idss_ may. be sérved and® on whom summons
"-matter-essential ‘to a prompt. settlement of claims. coy ~ other ‘process may be Served;
. against | insurance companies, as: it demands ‘that 4 it 2. It must! possess paid-up: Unimpaired asséts. or |
insurance suits be brought by the insured. while th ‘capital and’ réserve not less ‘than 1 Billion: Pésos;.
evidence as to. thé origin and-cause of loss’ haved ot" 3. ° It must deposit: for. the Benefit: ‘and ‘security of
_yét disappeared (Sun Life Office. ‘Eta. v. CA, | policyholders, securities, + Satisfactory: to the
89741, March 78, 7999). : Commiss SiOén; and o
invest ent should not. exceed 20% of the. net
“worth off ie foreign’ corporation ‘or 20% ‘of the
“capital 6f the, registered ‘enterprise’ (SUNDIANG
ike
Reviewer on:
o Commercial Law, supra
at en BB A ;
1. Essential Paities”
a. insurer; and.”
b. Insured. ,
"2." Incidental Parties*
a, Cestui que vie; and’
_b. Beneficiary.
: " mefely, incidental to any (égitimate, eins or”.
- Te insurer activity of the surety; °
He is the party who. a’sumes or: accepts the risk of | ‘3. Doig © any kind. OF business, - ‘including
. Joss. and: undertakes for @ consideration’ to indemnify ° Reinsurance business, peste recognized as. -
‘the 7 urance. ‘business’
ue happening of: a ‘specifi ed contingency, ‘or event WE”
LEON, insurance Code, Supra at. 74).
: ay
- An insurer may be: veo
4 A: foreign® or domestic ‘insurance: conipany or : : Code" “insURANCE CODE, ‘Sée. 2)..
corporation; or Fe
BP A partnership. or: an association. INSURANCE Note: The, fact that. no rofit. |is derived from the
CODE, sec, 8). ‘ making. ‘of: Ansuifance. 6On
‘ransadtons: that | no _ Separate . or.
Note: The’. “teri: “insurer” ¢ no.5 loriger includes. ‘
“individuals” ‘under R.A. : No. 40607. ‘Hence, an
-individual natural. _personis no longer allowed tobe : agen ed constitu the.ho ths ‘orJe aig ineof an
_.an insurer: (SUNDIANG &., AQUINO,, ‘Reviewer on insurance’ ‘business:S (INSURANCE (GODE, Sec: 204) ;
- Commeicial Law, Supra af 84)..
The Insuted
Insurance Corporation : : 7 “He! is the- ‘party in? - whose favor the’ contract is
All: partnerships, associations, : cooperatives ‘or operative ° and’ who is indemnified. against,.or. is to
- corporations, including ~ govérnrherit-qvined or - “Teceive a certain. sum, upon the. happening of a

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 : NSU RANCE LAW
SAN BEDA LAW CENTRALIZED BAR OPERATIONS ~ MEMORY AID 2019 —-

specified contingency or event. ‘He is the person Rule on Minors J

whose loss’ is thé..occasion for the payment of the — Like any contract, an insurance: eontract entered into
insurance proceeds. by the. insurer (DE LEON, by a minor is merely voidable (CIVIL CODE, Art.
Insurance Code, supra at 74). 1390),

Capacity of the Party | Insured: (CIP) Rule on Married Women

1. He must be Competent to make a contract (CIVIL . The consent of the. spouse is not necessary for the
. CODE, Art, (1327-1329); ,validity of.aivinisurance policy taken out by a married
' 2. He must possess, an Insurable interest.in the person on his or her tife or that of his or her children
subject of the insurance (DE LEON, Insurance UNSURANCE CODE, Sec. 3, par, 2), or that of her
Code, supra at 78);.and - husband: (INSURANCE. CODE, Sec..10):
3. He’ must not be a Public enemy y INSURANCE -
COBE, Sec. 7). She. may. also take out insurance on:her paraphernal
or separate: ‘property,’or. on property givén to her by
Effect of. War. on Insurance Contracts: ‘her -husband «(Harding v: ‘Commercial ‘Union -
41. Public Enemy Cannot-be an’ Insured Assurance. Co., GR: No.. L- 12707, August 10, 1918).
Citizen. or subject of a’ nation .with whorn, the /
, , Philippines . is at. war.with ‘but does not include Note; : While either spouse - may ‘exercise. any
“Tobbers, thieves, and. other criminals ( pe LEON, _.....1eg itimate activity without the consent of the other, the
“ Insurance. Code, supra at 78.), In case the ‘UbliC, “ate nay, object on.valid; serious, and moral grounds

Sinadae
enemy. . is a corporation, the: pationality
nA is} (Pap PY ODE, Art. 73).
determined _by. the controlling” “egtockh olders.,crc Oe
irrespective. of ‘the . place: 4 ee IRephporation
isathe"pefson hose life is.; the subject of za life
a
ingurans palicyetf} s the person whose life-is used-to .
asure} the‘ uation of a trust, gift or insurance
2. Existing Insurance
scorn an Abi
AL G P», contract (DE LE Cup insyrance Code,
Cs ‘supra.at 449).
_ All intercourse betwee ‘Citizer
as. of, elligerent=,°
i aan
powers | which. ‘is inconsjstent jith a State: of-wa nr ws scot’
THECestyi que vie Laals¢ called the “life insured” and
‘is prohipies. The thee dae is to. Fg enemy ast be Mistinguistred-from “the insured’ party”. The
“| fatter isf i i yp ed aga <j death or injury of the
pict ee
destroy its” enemy's | Ree
insurance the value. of what nase AS fed ba the Joestui que vie are: separate.
destroyed, ‘or ‘that it ‘she auld in. af‘sl BE Seon wht the pete insurance policy -
increase the resources of th enemysor ner Lee f anoth oe
aid. (Filipinas Compafia dé Seguros , Christ |
Huenefeld & Co., Ine., ‘GR. No: ses OF oe is the. cestui que vie if he takes aa
1961). pality: ph Berown ite
life. ee

\ surance. policy ceases to be" Valid: Mf ee ‘que vie-is ‘an“‘incidental” party precisely
ble’ as: soon as the: idsured becomes ‘because he may” ‘only ; :exist under a life: insurance
@ public. enémy. ‘However, Sleinentary. rules “of “policy.
_ justice require: ‘that’. the’: -premium . baid by. the -
-Effect of: Death of Policy: Owner ae
(Filipinas: Compania de., “Segurds. v.. Christern / “While. “the: insured” and the ‘fife insured” (cestui que :
‘Huenefeld & Co., Inc., GR. No. ‘L-2294; May 25,2 ~ vie), ‘who’ are’ separate persons, are both alive, “the
+1951). insured is called the’ ‘policy owner”.
A ‘fe i urened: contract. is. “abrogated ‘but’ the Upon the: death of the policy owner. allihiss rights, title, ‘
insured ‘is, entitled-to the cash or-reserve value of .:- and interest in, the policy of insurance’ on, the life or
“the policy (if. any); Which is the excess of the. health of the cestui ¢que.vie shall automatically vest in,
.. premiums: paid over “the: actual’ risk, carried during: the latter, Griless:otherwise provided.for in the. policy.
‘ the -years when’ -the. ‘policy’ had been in- force
(Constantino . Lv. Asia, Life. insurance Company, :
4 (INSURANCE: ‘CODE, Sec. 3, par, 3).
6. R.-No. L-1669, ‘August 31, 1950). dn other words, unless otherwise stipulated,-the cestui
qué. vie and. the policy owner -will become ‘the same’ -
3. - Where loss occurs after the ‘end af war
‘ person and the policy will ‘stand as ifthe cestu/| que
The: termination. "of. ‘War. does not revive the- .
- view had originally took out the: policy on his own life.
contract; thus, the insurer. ‘is still ‘not ‘liable (DBE
LEON, “Inisurance Code, supra at 78- 80).

252 | 2019'SAN'BEDA LAW'CENTRALIZED BAR OPERATIONS ©"

 INSURANCE LAW
_ SAN BEDA LAW CENTRALIZED BAR OPERATIONS - MEMORY AID 2019

The Beneficiary -
He is the person allowed by law orbyt the terms of the
contract to demand and receive the proceeds of the :
insurance. . November 29, 1968; CIVIL, CODE, Art. 1462
‘AS a - general rule, it -is: presumed that the: Insured -.
takes out the contract. in ‘his own ‘benefits. A third
' person ‘to: the contract ' of ‘insurance ‘however. is.
generally not prevented by] law tobe” established- “as
the ‘lawful: tecipient ‘of the insurance proceeds
(Coquia. v. ‘Fieldmen’s Insurance |Co.,° GR. No. L
23276, November 29, 1968)...
{ilustration: A husband. thay take. out. a policy onn hig;
wife’ s life,” “proceeds” payable . to” their. Son. The.
husband: isthe insured, the wife is-the cestui que vie, ‘
and the son is the beneficiary. 7 consideration ‘of the designation;- and
Modes. of Become a. Benefi¢iary®
A third: person May or May not be named i in the policy,
claim when the contract is made with the intentidn.
_benefit third persons (Coquia v. Fieldmen’s Jnsute
_.Co., G. R. No. L-23276, November: 29, 1 2.
-b. Contribution: ‘to the premium paid by'a person
not named in the policy as insured (Coquia-v.
. Fieldmen’s. Insurance Co., G.R,,No. L-23276,
* in rélation to: 1447).
Limitations in the Appointment: of Beneficiary
Any person who. ‘is forbidden from ° receiving ariy~
donation ‘cannot be riamed | :bénieficiary”: of ‘a: life~
- insurarice policy by the person who cannot make any’
‘ donation to him (CIVIL ‘CODE, Art.’ 2012), te. wit:
. , (Ac P).
. Those: who are: guilty. of. ‘Adultery: or concubiriage
_ -With the insured at-the:time of designation;
2.: Those who were’ found guilty with’ the insured of
. the. ‘same. Criminal offense, committed ©
“3. A’ Public officer. or “his|wifé, “descendants | and -
: ‘ ascendants designated by reason of ‘his: office ‘
(GIVIL ‘CODE, Art. 739). °
[ Note: The designation ‘Of Such persons is’ void ‘but
‘the policy is-binding::The estate will get the proceeds °
(SUNDIANG- & AQUINO; Reviewer on ) Commercial
v,. supra a 87). .

Life i ance: Policy v. \ Civil Donation:

‘| -In’essence, ailife i insurancé policy is not different from.
cases; iA: a civil dof ation “insofar “as the ‘beneficiary ‘Is
1. Express Designation: in ati e PG! o ue, Goncernedy Bothis
x A are foiinded upon, thé Same
Ifthe insurance: contract copitaains sti ion in consideration? liberality. A beneficiary i is'like a donee,
favor of a ‘named |‘third person (stipulation pour ithe: premiums of the’ policy which the:
Vautrui), the- latter: although ?not™a par 18: the liberality, the -béneficiary will
contract may. enforce. the:stipulati eds OF profits of said, insurance. As
(ew it. is revoked m the ve fi a. consequence, the proscription in Art. 739. of-the
Civil, Code should equally operate. in life insurance
q e Insular Life Assurance Co: v . Ebrado,

7 Unnamed. Third Persons

Where -the contract of ‘insurance. ‘provide es” for Public Enemies. as: Beneficiaries
, Indemnity.. against, liability ‘to, third’. persons, then- : Only citizens or. subjects. ofa ‘Nation! with: worn’ the:
third persons; to whom, the insured is liable, can Philippines is at “war -withi are prohibited from.
Sue the insurer (Guingon’ v. Del Monte,’ ‘G. R. No.. ’ becoming:the insured:in a. ‘contract of insurance : (DE |
L=22042,, August 17,. 1967). ee te LEON, Insurance. Code, sup at t 78;

Example: . In ° omprehei ive ‘Motor Véhicle “ Our- Inetirance ‘Code® ‘do

Liability: Insurance, : ‘the proceeds are ifitended to . publi¢ enemy from being: ‘a beneficiciary” ‘of ac tract
be: paid to any’ person to.whom the. owner. of the .of insufance but well- established is the’ principle that|
‘vehicle may. ‘become’ fable to by Teason’ oF the what cannot be done ‘directly’ cannot be: done
: operation, athe vehicle. Las . : . indirectly. Thus, if a public enemy were designated ¢as
a betiefiiciary: in order to circumvent ‘the. prohibition,°..
3. By a Separate Coniract or Trust the: same is void (DIZON, The Insurance Code ort the
When there is a. Contract or. trust, express’ ‘Or. Philippines; ‘supra ‘at. 102). ' :
, implied, betweeri thé insured and.third: person so -
. as-ta give such. third person a' right to receive: the" Right to: Change Appointed Beneficiary -
. ‘proceeds (Bonifacio Bros.;Inc, v: Mora, G.R. NO. The insured “shall -haye the tight to’ change the ts
“L-20853, May 29, 1967). 9 het beneficiary he designated inin the policy (INSURANCE
/ Examples: . , : CODE; See. 1 1). ,
a. ‘Theassignee in deed of assignnient: ofthe |
‘proceeds. (CIVIL. CODE, Art. 1625) woe Unless | expressly so. ptovided, a. _ designation: of
-beneficiaries is presumed to” be revocable: except:

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SAN BEDA LAW CENTRALIZED BAR OPERATIONS - MEMORY 400.2019

when the insured does not change the beneficiary Insular Life Assurance Company, Ltd.v. Ebrado,
during ‘his lifetime (INSURANCE CODE, Sec. 11). G: R. No. L-44059, ‘October 28, 1977).

Irrevocable. Beneficiary Changing the Designation ‘of the Beneficiary from _

The appointment ofa beneficiaryi is irrevocable: Irrevocable to Revocable
1. Upon ‘the insured's death. provided the insured it is only with the consent. of ALL the irrevocable
does hot. change. the designation, during his beneficiaries’ that any change or.. amendment in.the
- - lifetime;, , policy concerning the irrevocable. beneficiaries: may:
2. if the right to change the. benefi iciary is expressly be legaily and validly. effected ° (Philippine American
: Waived - -in. the. policy,. then the insured has no Insurance Company V. Pineda, .G: F., No.’ ‘L-5421 6,
power to make. such:.change without the consent - duly 19, 1989). - , :
: of the benefi iciary (INSURANCE CODE, Sec. 19).
Forfeiture of the Rights of a Beneficiary a
Effects of Irrevocable: Designation ; ‘ The interést.of a.béieficiary ina life insurance’ policy
‘. 4. The beneficiary. acquires. an: absolute and vested. shall.be forfeited when the’ beneficiary i isthe principal,
.interest to, all benefits accrying to.the policy from accomplice, ‘or accessory. in willfully: bringing about
the.date. of. its issuance and delivery (Gercio Y. Sun - the: death’ of the insured.-In Such: case, the proceeds
‘Life. Assurance of Canada, G. R,. No. 23703, Shall be: paid ‘in ‘accordance with: the policy. ‘lf the
' September 28, 1925)... a policy. is silent, the ‘proceeds: shall ‘be: paid. ‘to the.
"2. If the insured refuses to. pay the premiuir fesofth‘the’ insured, . (INSURANCE, CODE, Sec: 12).
designated irrevocable benefi iciary ha 6 thei ight t to |
continue the. policy; by. paying, premiums that ares ny the. .B heficiary Dies- ‘Before ‘the Life
’ due. ‘to protect: ‘his iriterest. (DE, PEON SPPTEON Insured:3-" >
. dn “supra at 105). £. partes c~=-Unlegs “oth Wi ss stipulated in the“ policy, ‘the
3.-A’ new beneficiary ' cannkgts 5 dded benefidiary,ev vep.it revocable, who: predeceases. the
‘
: irrevocably designated: benéfi can)Jor this : ead ppi Aflif fe: {nsui red PanaititsS\rething to ‘his héirs. (CIVIL
‘ effect ‘reduce the latter vested rights (Go ZS. », CODE, Art. . 850) Py
v. 2\/
.- Redfern, .G:R. No: L=47708, April 25, 1947). oe ——
- 4, Neither-can the Insured} he e-the. cash \surréfigers ithep pélicy. sion S ‘gontingent beneficiaries
: value, ‘assign or evens borrd wr ih poligyess “vailemative sonccheet ), the " , .
without the beneficiar =e peat f Ne ario rimaty Ben ficiazies: If tf ne policy dees ot designate
7 "Philamlife, G.R, No. 22796 ’ 1967; ~~ any:vorit hie ficigry, the proceec § shall: inure—
* § The Insured. cannot se Slher Ch vi, sees a 30 his fe Bo!
‘because that would: reduc the amount NW ~
- first .beneficiary may _reéover: “ang d the rer reah OF f. Béference of . ‘Persons: Entitied' to
“adversely. affect “his vested. nghh.(G OC Se Pr py halt 9 fa Minar Renefieiary: - .
“Redfern, G:R..No..47705, April
28, 1944Be Y “2.
3 2F ether, ens Raa?
6. The Insured cannot allow’ his, creditgrs ti aye
ah On gf other fo cog
execute on the policy. (Philamlife v. Se ee ee De
“No. 54216, July 19, 1989). aM 4 s. rapdparent; of”
a
Eldest brother. or § tar who is at least 48 years ”
- old’ (INSURANCE CODE, Sec.. 182, pars. 3 and.
Exception to. Incevocability,
: ‘ 4).
. 1. The innocent spouse may revoke’ the. desighation
_-Note: ‘When | the interest - of the |‘minor: “exceeds |
‘of the other: spouse. Who -aeted jin bad faith as
P500, 000. 00; court authority.or giving of a bond is..
. beneficiary: in-any insurance’ ‘policy, -even. if such
required: (INSURANCE CODE, Sec. 182, Par. )..
: designation be- stipulated. as, irrevocable:(FAMILY.
<CODE, Arte 43(4)); and.. :

"2. After the-fi inaiity. of the. dacres. of. Jegal: separaiion,

the. inhocent. ‘Spouse: may. ‘revoke. thé donations,
made: by. Jhim or her in. favor of ‘the offending
spausé;. as well as the.designation:. ofthe latteras —
-béneficiary (FAMILY. CODE, Art. 64). Se
-Note: The- revocation: shall. take. effect ‘only, upon:
written notification to, ‘the-insured (Re: Proposed-
_ ‘Rule-on.Legal Separation, A: M. No. 02-1 t 1 1-SC,
- March 4, 2003).
Rationale: The above ‘exceptions are.» to ptevant
circumvention: of Art.’ 739. of the: Civil.Code-> (The
Ne = . ts
‘Insurable Interest a
‘In, general, ‘an: insurable: -interest is. that interest which
a@-person is deémed to have: in‘:thie-subject matter
inisured. (Lalican vee ‘Insular Life: Insurance. Co. Lid.,
: GR. ‘No. 183526, August. 25,. 2009). te
“interest” refers to’ that relation: or connection with,’ or’
*. concern in, a life or: ‘property, ‘such that the interested
- person: will ‘derive pecuniary benefi t Or, advantage

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INSURANCE LAW
" SAN BEDA LAW CENTRALIZED BAR OPERATIONS ~ MEMORY AID 2019

from the preservation of the subject matter insured Persons i in whose Life arid Health the Insured has
_and. will suffer. pecuniary loss or. damage from. its _an‘Insurable Interest: (HEDE)
déstruction, termination, or injury bythe happening of - The following are. valid cestui que vie under a contract
the event insured against (Lalican v: Insular Life of life.i insurance:
Insurance Co. Ltd., G.R. No- 183526, “August 25, _ 1. Fhe insured. Himself, his spouse, or his:children;
2008). 2. OF: any, person on whom he: depends wholly or in
“part for Education‘ or support, or in whom he has
The insurable interest, need not always ‘bé pecuniary , pecuniary iriterest}
in nature as-in_ “life. insurance ‘as’ the éxpectatiori of 3. Of.a Debtor with respect toa creditor: ~
benefit.from the continued life: of a‘person need not 4. Of any pérson upon whose life oF Estate vestedinin
; nécessarily be ofa pécuniary nature’ (DE ‘LEON, ; him. depends (NSURANCE GODE, See. 10): .
" Insurance. Code, supra at 90).- ,
. . ye interest in One's ‘Own Life and Health Absolute
Subject Matter of insurable iriterest - .A-person’s. :interést in his ‘own Jife and ‘health’ js:
A’person may: have insurable interest over: __unqiestionable; “absolute, unlimited,: and heeds no
4... The Jife ‘and health. of ‘another (INSURANCE - “proof, (DIZON, | Insurance Godé, ‘Sopra at 126-127)...
CODE, Sec. 10);,or’
' 2. A property interest whether real or personal “the insted’ ‘can ake ‘the - benefits of the’ ieliey
{INSURANCE CODE; Sec. 13). Boo, Ma -payable. ‘to: anyone -he ‘chooses, “incliding | his own .
estate; ‘except persons forbidden from receiving, ‘any :
Necessity of insurable Interest: donation: from’ him (GIMIL CODE, Ant. 739). .

Presumed Interest i in Life of Family .

has any interest :in- the “property i insured is: ) : ds eneficiary: ‘eed ‘not prove irisurable
, (INSURANCE CODE, Sec. 25). t o -life:'and Health of his: spouse’ ‘and,
: i é sé the latter -are ‘legally obliged to
“4.. support him yi{FAMILY CODE, Art. 795).
%
ay The insure benef iciary howéveér must prove interest _
a? “in the lifeFthe céstui. que’ vie-on whom he'relies on -
lf the insured has. rio9 insurable howe, r the life’ooP ‘for. Seer ifithe latter. is- a-person other than his
propérty ‘he’ insures, the~ “ingarancé ¢ tracts . PORE Chi dren aS in ‘cases ‘contemplated by
- considered unenforceable Je vino, "tp 4 2). the! Insurance Code. . .
: Gode, » supra at 59). nan oo oh
bus, : Where ihe insured ames himself beneficiary’ in
: that’ he takes. on the life of another, he must
sere

“Rave-insurable interest in: the-lifé of the’ latter PE

: LEON, Insurance Code, ‘Supra at BA). :

Creditor s Interest i in the: Life of his debtor

Note: “This ‘nls ‘does riot:+ apply A creditor may ame himself as benefi i
‘insurance’ (INSURANCE cobi _ | hé:takes..cin the’ life ‘of his. debtor: _The-déath of the
- The'reasons are: = " :", debtor may either prevent payment ‘if his éstate isnot
1. Since’ the: ‘proceeds of, industrial life paticies are ’ Sufficient to pay his debts or delay such payment ifan
administrator has to: be: appoirited: to: ‘settle his. estate’.
. jinduoernent to: ‘murder? ” ay ar (DE LEON, Insurance: Code, supra at 98).
2... The investigatiorr ‘and: protessing ‘of: the.‘potentiat
a defense-in each’ case would -bé. time: ‘consuming * The creditor's recovery upon the death of the16 débtor
_ and: nullify:the advantage of: speedy paymient of shouldbe limited: to the: amount of: his” interest, _@g.
te proceeds for funéral’and.burial-expenses’ urider. . .. the ‘amount owing:‘to. him,(i oe
'.. the “facility: of payment: clause: (INSURANCE -
CODE, See. 236 (k) and (m)); and: insurable Interest. in the Life of a’a 1 Berson upon
- 3. -In-view of the dirhinutive size c of thé proceeds, the’ . which an Estate or Interest Depends .
-. addition of pointless ‘administrative: ‘costs for’ ‘One may’ insure: thé life of _ petson : ‘where. ‘the ,
- either the insuref
i ‘or the’ ‘beneficiary:could. ‘destroy , . continuation of ‘the ‘estate -or: interest vested: in: him: .
the current-usefulness: of:this type of insurance’ who ° ‘takés ‘the: insurance - depends upon” ‘the life .
(DE LEON, insurance Code, supra at 585). S insured (Id. ‘att 100). ion.

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SAN BEDA LAW CENTRALIZED BAR OPERATIONS - MEMORY AID 2019

Consent of the Cestui que vie . : : : * 2. An inchoate interest founded on an existing 7

Consent of the cestui que vie in a life insurance policy , interest (INSURANCE CODE, Sec. 14(b))
is not essential to the validity. of the policy. :
illustration: A husband .may take -an insurance
It is the: insured who. has the legal insurable interest : policy over the conjugal partnership to the extent
at the inception: of the ‘policy, the ‘insurance cam be of his inchoate interest in the partnership prior to
valid. even - without. such consent (INSURANCE ‘ the dissolution ‘of the marriage. ,
CODE, Sec. 40). - =
3. ‘An. expectancy, coupled with. an. existing
Time of Existence of insurable Interest i in Life and. : interest in that out of. which the: expectancy
Health — . ' arises (INSURANCE CODE, See. 14(c))..
- Insurable interest i in life or health must exist when the Lo
insurance.takes, effect, -but.need' not. exist. thereafter o Expectanéy to be insurabie. must be coupled with
or when the. loss occurs (INSURANCE CODE, ‘Sec. a ‘ah existing -interest. (INSURANCE CODE, ‘Sec.
, 19). . ne . --, | 94); or: founded on an actual right to-the thing or .
- upon. ‘any valid | contract. -for it “(INSURANCE
~The. Beneficiary. of a ‘Life. Insurance Policy “ CODE, Sec. 16). oy og
. Generaily Need: not have insurable ‘Interest :. : Soe . Lo
Where the ‘benefi iciaty- -of an insurance policy pete ‘ 1h istration:
person other thaii.the insured, Such. beneficiary “doe: , : In inarine insurance, one who: has an interest in
not need to. have. any insurable oS in fife | Oi eo AXtheztning, Ris from which: profits _ are. expected ‘to
property insured. ~ vt emg as proceed hasan insurable : ‘interest in-‘the profits . — :
a (NSURANG CE GODE, Sec, 107).
Where the benefi iciary is also igs? sah imseli-He jr SE <4 : . Loe
must have insurable interest. itt Abel lifes f thie cots 7s x gin Tpit a 4 ‘Oftime irine insurance, where profits
que. vie except when the. insured: Hakeé ot ot he policy ays are § sparately an the insured is entitled to.
on his own life, or the life’ of, his s ouse and/or his “, recover,
eset in Gas loss, a proportion of such
. ff2 PimBite gfoF [r
al ma . a
children, ofits equiva lent t tothe proportion: which the’ value”
co, Lather Po co
ae ie Jost-béars to the-value of the whole
Insurable Interest i‘in Prop rty. fri oY ee) RANG. [Or per 160).
Itis any. interest i in. property; vRethe so fe) go
or any relation thereto, ‘or liability a ke ts ar vated and insured- by. a.contract
“ of such.nature thata conitempl ted peril NG seins ja loss of them is conclusively
damnify the insuredd (INSURA GE CQDE, * : ts jmed from a logs of the. property out. of which

.
; Dp &they= are expected; to arise, and the valdation fi IXes
tt may, consist of: TENTS (INSURANCE CODE, Sec, '162).”
4. An. existing interest.
fet eee in fest without, ‘existing egal’ or
. a. Trustee, as ‘in the |‘éase of the r of M équitableright | .
_ property.s not yet delivered; a Se AdJAD rer€ontingent or. ‘expectant interest in,anything; ;
_. b. Mortgagor. of:the property, mérigaged; and” SE not fourided on-an actual right to. the thing, .nhor-uport:
' ¢. Lessor -of the :property Jeased:.. (DE. LEON, : “any ‘valid contract. for ‘it, “is - not. insurable.
me Insurance ‘Code; Supra, at. 116). ae ‘ (INSURANCE. CODE, ‘Sec. 16).. ve ee a

Insurable interest arisin from: e uitable title: ° . a Thus, ‘an. ~ Help has-.- no. insurable interest over
: a. Purchaser- ‘Of “property -before’ delivery - or properties that he will inherit.. ‘The: execution’ of'a last”
ne before: he.has Performed the conditions: of the _? - will’and: testament does. not vest to an heir, even.a. .-
. ‘sale; .- ae compulsory heir, insurable ‘interest.over the. ‘property
b; Mortgagee_ of, property, mortgaged; and - that-he will inherit.as stipulated. in-the will (SUNDIANG
.c. Owner. of| levied ‘or foreclosed: property. sold &, AQUINO, ‘Reviewer: on. Commercial ‘Law, supra: at :
on execution: during redemption period (id. at ‘ 92). ;
116-117). . ca ER 7 yo ea
oO " ee Meaéure, of: insurable. interest i in.1 Property. .
Insurable interest arising from obligation: - a It 48 .the extent ‘to which the’ -insured, . might, :bé
A carrier-or depository of any kind has’an: ‘insurable. daminified: by ‘loss’ or r injury thereof. (NSURANCE
interest in. .a ‘thing held. by: him as‘ such,:to the .~ CODE, Sec. 41). Tae.
extent of his liability but not: to.exceed the value
thereoff (INSURANCE CODE, Sec.. 15). _ Insurable interést. in property does: not’ riecessarily 7
- imply a property’ interest -in,. or: a. lien upon, .or
mt ony ‘possession of, the ‘subject matter. of the insurance,

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and neither title. nor a.beneficial interest is.a requisite 4. Transfer of interest by one of several partners,
to the existence thereof. It is sufficient that theinsured joint: owners, .or owners in common, who are
is so situated with reference to the property that he . jointly insured, to. others (INSURANCE. ‘CODE,
would. be Jiable to.loss should’ it be injured or Sec, 24);
destroyed by the peril against -which it is insured. . / Fe .
Anyorie .has an- insurable interest in property ifhe —'. Reason: ‘Such -persons are. privies to the
derives a benefit from its ‘existence or would suffer -insurance contract. The ‘several’ insurable
Joss’ ‘from its destruction (Gaisano Cagayan, Ine. v. - interests» merely’ united . in -one of . the joint
Insurance Comipany of North “America, G.R: No - insureds. * . -!
147839, dune 8, 2006). Oe : “ ,
oo nee 5. ‘Change’ of interest: by wil:
W or: ‘succession, -on the
Insurable, Interest of Beneficiary of _ Property mo “death of the insured. INSURANCE: CODE, ‘Sec. 7
‘Insurance mo 23); -
‘Iv property _ insurarice, the beneficiary. must have uo
- insurable. interest ‘over .the’ property’ insured Reason: same as.5 No. 4. The. heir is Privy: to the
(SUNDIANG & AQUINO, Reviewer: om Commercial _. insurance contractot by: operation of law. ° :
Law, supra: at 97}: o
6. When: a Policy i is 80.framed that it.wil ‘inure to the
Tinie. of Existence of. insurable . Interest. ‘in, benefit'of whomisoever, ‘during-thé.continuance of
! Property - vos : the risk, may becomé the. owner of the: interest’
Interest in.property. insured must. exist both when At : insured (INSURANCE CODE, ‘Sec: 57)
insurance: takes effect‘and-when the.loss occurs;’ but” ae .
need not’ exist ini the meantime (INSURANCE CORE, . . There. ‘is* _ express ‘stipulation Of
Sec. 19): + . oo, Br xcepti fepinding « on insurer.

_Change: of. Interest i inn Property é is ‘an express . Prohibition against

vi
General Rule:.A.change of interest ina the policy, in case of-alienation, :the
thifig insured, unaccompanied by” ; contract! of insurance ‘is. ‘not merely suspended
change: of, interest: ins *the - insurancey. ane CODE, Art: 1306);

a Sec: “20).,
. eS 4,i :
Excepitions: (LAST-Prow-Pe) %
1. -Life, , accident,-.. and’- health
a (INSURANCE CODE, Sec-20);:
Eee
Reason: They are not regarded. a conitfa |.’ ”f Insurable. ” " interést’
a “is| tnsurable interest in life}.
indemnity: and therefore, ‘insurable. interest need __|litnited. to. thé actual|is unlimited-(save jin life
"exist only at the ‘time. the. insurance takes effect -|vatue . of the.. interest insurance ‘effected by.a|
(DIZON, Insurance Code, supra,at 171). ° OG thereon, =... | ereditor on the life’ ofthe.

2. Change ‘of. interest’ in’:ithe. thing: insured: Opfter

". occurrence: ‘of an. injury: ‘which- results: in: a “loss ‘
ee (INSURANCE CODE, Sec. 2a Oe It must exist’ when the | It ncuigh that interest
fo, insurance “takes:.efféct/exists. af ‘the “time: the:
7 Reason: A‘jer the loss’ hag. Happened; ‘the’ liability 2 fand= -when . :the «loss |.policy: takes effect and
. Of the: irer_is already fixed? Therefore, the.- -occurs, but ;:need-: ‘not} need ° not: exist: at the} .
- ~ Insuréd: has. the. right to assign his:claim: against ~~ |exist’in the “meantime|time . of... the © :-loss! .
> :’+ the insurer as. any other moriey. claim. (DE: LEON, oy UNSURANCE CODE, INSURANCE CODE, ~
. Insurahice Code,. - Supra at 137). a - ‘|'Sec.. 19). i Sec. 19).
3, Change, ine interest in one .or “thore’ “of: Several - \ BeBNeS ey ad eae ee Rest) Cee
distinct things. separately, insured bY. one > policy . |The: ‘benefi iciary must [If- the.. insured: sécured
oS (INSURANCE CODE, See: 22) po have, an”. -insurable|the ~ policy," - the’
ne ’ finterest over. the. thing | beneficiary’: need. not}. .
Reason: The ‘contract : ‘is: divisible “(@IZON, ; . |instred. ;-: _thave. insurable : ‘interest |: |
Insurance Code, supta at 173). ne wg ie over. the --life. oF: the.
; Be on e ce Hinsured; ‘if, secured: by
the benefi iolary, the latter

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SAN BEDA LAW CENTRALIZED BAR OPERATIONS ~ MEMORY
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, “As their interests may appear”

The “ATIMA” clause is a-pre-obtained corisent fram
the ‘insured :- beneficiary to extend coverage to
must have. insurable additional unnamed-insured.parties without having to
interest over the life of disclose such interests.
thie insured.
(AQUING, insurance. Code, ‘supra, at 65-66). This clause. aiithorizés the insurer to pay “third
persons‘not expressly named as insured parties after.
Relative Insurable Interests of Mortgagor: ‘and. . such pérsons will have presented, proof of their :
: Mortgagee — ’ insurable interest after loss. :
As toa ‘mortgaged property, the. mortgagor. and the :
mortgagee. each have an independent insurable Thus; where a moitgaigor' s policy over. the thortgaged
interest therein. (AQUINO, Insurance Code, Supra: at property. contains the ATIMA clause, the mortgagee
70). may .enforce.-a right-to a” ‘portion: of the insurance
. proceéds to:the extent’of the insurable interest he is
Mortgagor’ ‘Ss Interest - able: to prove ‘in. his: claim.
Mortgagor’s interest is as owner of ‘such: property, to
_ theextent ofits entire value regardless. of the amiount Loss Payable Glause or Open Mortgage Ciause
of the: mortgaged debt. (Geagonia‘v. GA, G: R use: which: expressly names: and eridorses' thé
114427, February 6; 1998). : : a Bs ‘ins Perea benefits to another person who has an

‘Exception: .
J
Sle insthe. ‘same property and. thus authorizes
aE C Se — scenes DAY ms ént to such, named. “loss payée” to the extent of
The: insurable interest ‘of the . air ® hee ship. the© Be Re’ S: piers in the. policy. .
hypothecated by bottomry is- onlly ie saxéegs-of tS"
‘value over
(INSURANCE: CODE,
the amount
Sec: 193).
sSctivey
° v Py pjbottor
“By
oti n : Updora a Soe payable bluse, the.mortgagor endorses
@ insurance ‘bénefits, to the. mortgagee * as.a loss
Note: This: is because the. le f the, shi pw also” ‘payeet I extefitotithe Jatter’s interest: :

i Sth d morta ‘a mere assignee, the policy’ -

remains } he nafiiero the mortgagor and any act of.
‘the -- ca | rior tO the: ‘loss, ' which would.
myr ay oid i¢iSurance’ affects the mortgagee
S oats . eet
OD is.‘if the hands of the mortgagee: :
27; Februan’ ase OS CODE,“ee. 8).
@ property| onlyyes' in Ast ene swndardr
ror Usnio nMtortgage Clause.
unt (Id). . Ay 2O7 “Clay sé where b AE mortgagee directly « contracts
eens thy SE revand
rove béconies a: ‘principal party to’the.
U gages’ whio recovers fron a“Qi er: is dalioe is"sopposed: to being a’ ‘meré ‘secondary: Party .
not allowed to; retain: his: claim against the mottgagor. MA onstignos or. loss payee). : .
The: right. to" payment: of the: now unsecured debt"
“passes by subrogation. to. the, insurér to the extent‘of - Under, the Standard Mortgage « clause, the insurer: .
the
/ psurarigs money pee (Paleo ve Cosio;: G. R. No. . . undertakes to:pay the mortgagee: first, in Gaséof. Joss,
“_ to'the:extent-of his:interest before paying any excess.
‘benefit’ to the mortgagor... . ,

THe: respective: interests. of trthe. parties: to’ a mortgage “ Assignment: ‘or Transtér ‘of the. Policy .
may:be separately: insured by’ several policies: or may". . The mortgagor may- also: instead assign the policy to
: be insuredsi ma single poliey.. ..the mortgagee. ‘The ‘dssignment ‘or transfer of: the °
* Policy. effectively: substitutes. the ‘mortgagee ‘as the
A single policy may insure’ ‘both: interésté via: new’ insuited with. the mortgagor" obtaining “an
equitable: lien on ‘the procesds « ‘in excess of the a
ee senne

“AS their-interests:r ay. appear”. clause;

"Loss payable‘clause;-* mortgagee! s. interest.
- Standard: mortgage clause;-
. Aseparate assignment: ‘of the policy; ‘Nevertheless, being a-meree assignee of the. original
_ An assignment in pledge; or contract, the. mortgagee | shall still be bound by the
‘Establishment of an equitable| ‘tien: on. the : acts of the mortgagor: prior:to the loss:,
proceeds *of the -insurance (SUNDIANG © &
AQUINO,. ‘Reviewer on Commercial Law, supra.
at 96):-

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. SAN BEDA LAW CENTRALIZED.
BAR OPERATIONS- MEMORY AID.2019

Exception: Where, upon assignment, the. insurer “Primary Concerns of. the insurer
ahd, the mortgagee enter into a new contract .1. Correct. Estimation: of: Risk Prior’ to
(INSURANCE CODE, Sec. 9). Assumption of Risk {
An essential element of i insurance is-the’ exposure .
Mortgage Redemption Insurance (MRI) of the insurable interest to a peril. The cértainty of
It is -a contract of insurance ‘whéreby - the. insurer an-insurer’s liability, depends on the. certainty of
undertakes to apply the proceeds of the policy to-the loss or damage due to the peril: An. insurer may
~ extent-of the mortgagee’ ‘s remaining:interest upomthe - refuse to assume: afi. unacceptable risk createdd by
death of the mortgagor.(Great Pacific Life Assurance " the perceived peril.- . .
‘Corp: Vv. CA, G. R. Wo. 113899, ‘October 413, 1999).
~ Concealment.’ or” ‘misrepregéntation-. of . ‘facts
Note: MRI: is: differant. from.’ an. insurance over. a .Material to'the tisk: negatively: affects the insurer's
‘mortgaged: property. because: the risk.insured against ‘assessment of-risk' and ‘vitiates his .consent: The
is not thé loss" of’ the mortgaged property but, the - ‘basis: of the: rule vitiating: thé ‘contract ‘is ‘that ‘it -
--unexpected ‘death. of tthe: .mortgagee.. A mortgage ‘misleads or deceives: the - insurer into accepting.
rédemption.. insurancé therefore isa ‘life insurance “the risk, or accepting it a the rate of premium:
contract, itather, than. a property insurance. ‘contract, - agreed upon’ (Musfigi’'v..- West Coast .Life’
"because the; ‘mortgaged: property: 18 “redeemed”. by | dnsurance - Co., .G-R.° No: ‘L-41704, } “August 30, .
paying° the: ‘motigagee: UPON . the. death “of the 1938). : .
. morigagor-debtor-~ og
€
Limitation of- Risk: ;and. Liability Daring ‘the
- Period-of the Coverage :
. An insurer consents-only. the risk: ‘estimated’ and
egsonably foreseen, The introduction, of. hazards

. liability. y Ninsurer uses conditions, ‘warranties,

. Risk : a. a : and exception’ to limit. the isk assumed and
it is the” chance of loss, or. the. posit : ‘extent of iepilly. . 4
occurrence of-a joss, based: -on'kAdwn and ‘unknown
A tl Iner
factors (DE LEON, surance’ Cot e, » SUD)
x on that which ‘a party.
Pefil:- oe e ¢ ght” communicate | INSURANCE
The contingent or’ unkriowin. event Wheth ‘CODE, Sec. 26).
future, Which. may. Gamnity a. pare ‘
iit

-lts: existence: ‘creates 5 the ti8k, and1a ie Sedience .

results inMoss (DE fLEON, ‘Insurance Code, supra at Each party’ to” a contract ‘of! insurance anust :
201): - 5 communicate ‘to’ the . other, in good: faith; all- facts.
: within “‘his- ‘knowledige* “which: are. “material to the:
Past. Events As Perils: : , contract-and.as ‘to which he makes i no ‘wartanty;. ‘and:
As a general. rule, perils are2 future avents bécduise of which the other’ has not.the means ‘of: ‘ascertaining,
the. requirement that it be “contingent or unknown. ” foe (INSURANCE CODE, Sec. 28). ‘

OW past event that inay ba: desimiad: ‘asa ‘peril hoivever , “However; ‘the -dut “disclosure: anda wil
‘in. marine .insiirance. because. it ,is- possible. that an - completion and effec vity. of ‘the’ cohtract. Failure
insurance will be. taken on: a'ship, or cargo’ éven: after Communicate « information “acquired « after”
~ effectivity, of the. policy ‘will not bé' a- ground to ré8cind ©
, of. its. loss in, the udiial mode of transmission ‘and at the contract: Information is rio long i ‘matetialias it will “
--the’ ‘usual. rate.| 2of sommunication: | (INSURANCE: ‘No longeri influence: the otherpa 9 enter inte, such .
_ CODE, Sec. 111). oT, . contract (E Agos. v. The Philippine. American Life
Insurance Co., A Cc. Case No. 10, March 1 1, 1976).
Hazard. me : , .
It -is the condition. or factor, tangible or - intangible, Material MisrépresetitatioriFalse “Material ‘
which amay
: create or increase the chance’ofloss.from . ~ Representa , eS
a given Peril (INSURANCE. CODE, See.. 4 13 1). Arepresentation is—' °° oF :
- 4. ‘An oral or written: statement;
ew ‘2. Affirmative or promissory;
|

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SAN BEDA LAW CENTRALIZED BAR OPERATIONS - MEMORY AID 2019

3. Made at the time of or prior tothe | issuance6 of the Effect of Concealment or Misrepreséntation
policy; and ‘Material Concealment. or Misrepresentation .only
4. Related to the’ risk to. be insured (INSURANCE vitiates the consent. of the party misled by such. It
CODE, Secs. 36, 37, 39, & 45). '. entitles the prejudiced party to rescind the contract
‘due’ to the vitiation-of consent resulting from fraudi in
A representation is false when the facts, at.the time , esse > contr actus..
-the contract-becomes effective,. fail to correspond
with: its assertions .-or stipulations. (INSURANCE Burden of: Proof.
CODE, Sec. 42 & 44)... The party claiming the ‘existence “of concealment .
‘must, prove: that. there..was.. knowledge. :of the fact.
lf.a representation.is false in a material point, whether ‘concealed on -the, part of the “party
- charged with
_ affirmative or promissory, the injured, party is entitled,. concealment (Insurance Company: ve: “Gridley, 100
_ to. sescind the contract from .the .time-:when. ‘the US. 614° (1879). . .
, representation: becomes false. (INSURANCE CODE,
. Sec., 48). . / . . Note: Concealment’ as a ‘ground for rerescission, inust .
be Satisfactorily. and éonvineingly proved before. the |
However, the truth: or falsehood is determined at the: insurer:can validly: sue. for” rescission. ‘of insurance
date the ‘contract becomes effective (INSURANCE . contracts. The fraudulent. intent ‘on the: part of the ~
CODE, Sec. 42). eee ingured niust-be established to entitlé the insurer to:
gindethe
ii | contract (Manulife Philippines, Inc. v
A representation is. not false. if it is:true aie an
time t Phare
“i
GR,No. 204736, November 28, 2076).
contract takes effect: although false at oGtine &ith 4 sy w

made. But :one’ which is false: vataAhe lee Ot , Maitérs. Atay’ Be’ Omitted. Except Upon
contract's effectivity: is: false regar less opis. tnatrat ““Taquity:. (KnOW-PRINa)- ose
another time (before or-after), INSURANCE co KX
i Thdse whighe Atigjother Knows; -
Sec..42; ‘DE LEON, Insurange. Coe; supta at 188 I3 Thosewhih the ‘exercise of Ordinary. care, the
163). i pec: i * other: Sught toofkn
know and ‘of which, the-former has
. : “| ~ if pam on to ‘supposa him ignorant; *
“It is:for- this reason that a ,réprBentation may: stikbe oS rosea whicepithe other: Waives.
W communication;
alter prior ‘to the. contract's: pee. butynot « aft “ AxsThosd wh
which Brove: Py tend. to: -prove-the. existence
, (INSURANCE. ‘CODE, Sec. Ht oo " o of.ad 1 éclud
ifed by ‘warranty,-aiid which are‘not
slat
mM [hose which relate to a Risk
Requisites ~. of material CSFeonceaie é pied tedm théd policy and which are “not ,
: Misrepresentation: : ed phaterial (INSURANGE CODE, Sec. .
_ t. The assured had. kriowlede ¢ ofa fot: ‘and
2:.: The-fact is material:to the. ri8k; : ¢ f the ‘Nature:
Na or: arnount of the interest ‘
‘3. .Honesty,.good: faith,’and fairdealing cca
r Ste Toure
I eg” except if he is not the absolute
he should.communicate it to the ssurér Staya Owl er 4 OF she ‘property insured (INSURANCE
4, The-assured’ ‘designedly and inten I 0, NESS 34, & 51/2). ; .
4
': a. Withholds or.omits.such fact; or
: b. States a. fact ‘contrary or different. to sa “Watters that. Need ‘Not - be. ‘Disclosed Even in :
- (Ng.Gan ‘Zee: .v. Asia ‘Asian: .Crusader. Life. oO Answer to Inquiries: (WusG) ,
. Assurance. Corporation, GR. ‘No. L-30685, "4. Infarmation of his own Judgment, (INSURANCE
May 30; 1983). , . GODE; Sec.:35);.and:
2: .General causes which are. open. to his inquiry,
“Test of ‘Materiality’ - equally with: the other, and. all general, usages: of.
it is; determined. not by. ihe ‘event, but. solely by the - ne ‘trade. (INSURANCE CODE, Sec. 32).
- probable. and reasonable influence of the facts. upon
the party .to whom the: communication is due, in. : Good: Faith Not a: Defense i in Goncealment -
forming’ his. , estimate. of the advantages..of: the Good. faith is not. a-defense’in. concealment. because.
proposed contract, -. -in. making -his. inquiries , ‘concealment; ‘whether intentional: ‘or’ unintentional; :
' (INSURANCE. CODE, Sec. 31). entitles: the- ‘injured: party: ‘to rescind. the. ,contract* -of
ae
insurance: (INSURANCE: CODE, Sec, 27).. :
Note: Theinsured rieed not ‘die-of the. disease he-had:
-failed to disclosé to.the insurer. It is suffi cient that his ~ ‘Reason: If it were necessary for “the insurance
non-disclosure, misled. the insurer. in forming .his company, to show actual.fraud on: the part of the
estimates of ‘thé risks of the proposed. insurartte "insured; then-itis: plain. that ‘it would be impossible for.
policy:.or'.in making inquiries (Sunlife Assurance | ” it to protect itself arid.its honest policyholders against -
Company of Canada v. CA, ’G.R. No. 105138, dune. » fraudulent and i improper claims. It would be wholly at”
"22, 1995). the ‘mercy of anyone who. wished to apply for

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SAN BEDA.LAW CENTRALIZED BAR OPERATIONS~ MEMORY AID 2019

insurance, as it would be impossible to show
fraud except in the extreme casés (Saturnino.v: Phil.
American’ Life insurance Co., GR ‘No.. L- 16163,
February 28, 1963).
When Rescission is. ‘unavailable: (WAI) |
The. injured party cannot. rescind: the. polity on the
ground of false Fepresentation in the following’ ‘cases:
1. When there is a Waiver;.
2: When an Action has already been commenced;
and .- ‘ the polity’ (id: i).
3. When-. the-. Incontestable - » dlause:. applies
(AQUINO, Insurance Code, supra: at 12):
Waiver of: Iiiformation . wo
This is a type of estoppel done either:
. 1., By the terms.of.the contract (expressed); ory ¢
' 2. .By failure.to make .an: inquiry as. to: Such facts,. -
_ where. they: are: distinctly implied” in'-other-facts.
from:. which ~ information ‘is communicated on
(implied) (INSURANCE. CODE, See. 33):
Expréssions 0of# Opinion or’ Expectation v
actual . of the. falsity OF non-fulfillment, renders ‘the policy
voidable at the election of the i insurer (ld. at 226).
Purpose: To eliminate potentially increasing hazards
. which may either‘be due to the acts of the insured or
. to the change of the condition of the property OR ON, /
oo Insurance Code, supra at 385).
Reason: The. insurer took’ into consideration ‘the
’ condition: of the Property: at the time of effectivity of
:
. Kinds of Warranties: (EximA-Pro)
1. Express: —.an agreement expréssed in. a policy
“-: Whereby the insured: stipulates, that certain facts .
relating, tothe tisk: are. or’ shall, be: ‘true, ‘or certain
oe acts relating to. the same subject have-been-or
_ ‘shall'be done’ (DEL.LEON, Insurance Code; supra
; at 226); ,
Foriialities of Express: Warranty:
. “It must be containedj in the: policy; or «~
b It: may be. expressed in another: instrument
«provided . that, the separate. instrument’-is
by the insured and referred to in the
py (uence: CQDE, See. 70). :

2. Implied Aa Warranty which. from the very. nature .

ve of: the gon ra ch, or. fram. the géneral.tenor of the.
-words; galth« ugtino express warranty is mentioned’
is: nedessafly ein
embodied ‘in the policy as @ pait.
relying upon such statement, ‘b6 . theredt! i sh binds the. insured. as though:
further inguiry Srahemeare 8p , _expre: nithe “contract;
"3, Affirmative — one ‘which asserts. the existence of .
; ay fact. or condition’ at the time:it is: miade. The.
walseats continuing if it. is one that must be.
Persons: eSatiSHi red™ during the entire. coverage: of -the
- General ‘Rute: The. insured is : giver is 9 - "insurance; and ate
communicate to. the: insurer what he ‘Knows ofa, . 4: Promissory.— one ‘Where the cirisured stipulates .
“matter of which'he’ has no personal knowledge. tf: the - ‘that certain facts “or ‘conditioris: pertaiiihg ‘to the -
me representation. turas “out ‘to: be’ false, he is. not _ tisk shall exist or. that certain things with reference
responsible’ therefor: > provided: he gives: explanation, thereto: shall be. done or omitted (DE LEON,
“that he ‘does so: on: the information of others: (DE! oInsurarice Code; “supra atit 226-227). 5
LEON,. Insurance Code, “supra at. 164; INSURANCE
CODE, Sec. Ag. ” Example: ‘in maritié: insurance, seawoithifess ‘of
the vessel, non-deviation: from the agreed voyage .
- Ntustration: If the: ‘irisured ‘hiss - no: ‘personal m “or non-indulgence i in 1 legal ventures: :
knowledge ‘of the cause of thie death ‘of. his: parents ©
“because. they died when: the insured was still an Promissory Warranty. vee - Promissory
infant, he “may report information: obtained from - : Representation’
friends and relatives; expressly stating that he does - ‘Statements ~ promissory of conditioris to . exist ae
not possess knowledge’ personally but through’¢others subsequent to the compietion of. the contract. may be ..
(DE. LEON,’ ‘Insurance ‘Code, supra at 164). * conditions: or warratities.
‘Warranity | *. , . Promissory’ répresentations-aré limited to statements
Itis'a ‘statement or promise by the insured (or insurer) - of future fact’ material’ tothe ‘estimation of-risk: and
contained in’ the ;‘policy’ itself or’ incorporated : in .or thus, Must become true: and. factual : ‘at the time | the’
‘attachéd to ‘it ‘by proper reference, the falsity or none - ‘contract goes into effect.
fulfillment of which and regardless of ‘whether-or not
the-insurer has suffered loss’ or. prejudice as a result”

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 INSURANCE LAW
SAN BEDA LAW CENTRALIZED-BAR OPERATIONS ~ MEMORY AID 2019

Effects of Breach of Material Warranty Pool of Accredited Insurance Companies v.

General Rule: Violation of material watranty or of a Mindanao, Network, G.R. No. 147039, January 27,
material provision of a (policy will. entitle the other 2006).
party to rescind the contract (INSURANCE: GODE,
See. 74). Conditions
!t is an action that the'insured must take, orcontinue |
Exceptions: to take, for the insurance. policy to remain in force and -
1. The fulfillment of. warranty becomes unlawtul; the insurance company to process a claim (DIZON,
. 2. The fulfil lilment: of warranty becomes impossible;. insurance Gode, supra. at 384).
3. Loss -occurs .before.. the. time arrives, for the
' performance | of “the wartanty ” (INSURANGE Condition v.
\ ‘Warranty
CODE,. Sec. 19). A condition’ constitutes an. agreement to limit the
attachment: of the sisk.- . ae
Warrai nty v.s iredoibainon vs
A warranty does not limit the atiachment of the risk:

“Mllustration: : an
‘If ‘the policy contains: an. agteenient’ that. “the
Partof thé contract. ntire. econ Shall be: void: if the insured: building. -

ed, for more than 40: days;” it. is a:

‘Written 0)
. factually [ee
a ion.
“policy contains: a. staterient.’ that “the
“singurédy@rranta that the building. is or will reremain. o
reféreni pict ibis ) warranty. -

VoNG w

'|}Présumed material. °
tt

{Must ~be " “steely

complied: with. " . ote rh
‘donsider tion . paid: to an insurer “for
Ao indesnnify - the insured against . a
ae ril a Hnsuragca:CCode; , supra. at

ae
| Ralgity rs The, soy
o fulfiliment operates as a. void on’ “te
met aes oF

‘| breach of contract... . “| fraud,” a and,Carty Rule” Mey :

(DE LEON, Insurance Code, ‘Supra. at 2 Z ne NOtwit ist&nding -sany: agreement 0 : the. contrary, 1noo :
LB y or contract of insurance. issued by an, insurance
ExceptioniExeliision Clause~ ‘company. ig valid “and: biriding. unless ‘and yniil the. -
It-is-a provision jn. an insurance: wae that: indicates ~ premium, thereof: has, been * paid, INSURANCE ces
what is: denied Coverage (DIZQN,"t ‘insurance Code, -.CODE, See. 7). a

Reason: Payment: of insurance’ is essential ‘to: ‘the uO

tt ‘makes mofe definite th : pVetage. indicated bytthe : validity of thei insurance. VAN, insurer is ‘entitled, to the 7
general: ‘description: ofthe risk by excluding certain premium..as .soon.as there. is: exposure to the. peril
‘specified , risks that’ otherwise : “would” be: included. : insured’ against (DIZON, Jnsurance’ Code, SUR at
“under the: general language. describing. the: risks: ‘ 422). - - . :
4
assumed | (DE: LEON, insurance. Code, supra. ‘at 137).
oe Regular. Rules. of Payment Appiy re
An insurer. seeking to ‘defeat a : dlaim: ‘pacauge of an “A notice of, availability of.a. check, ‘by itself, “does. not
‘exception of limitation in ‘the policy has the: burden ‘of |. produce’ ‘the effect of payment ofa ‘premium, (Gaisano,
Proving that thée.loss.: comes within the. purview. of. the v. Development Insurance and ‘Surety ‘Corporation, -
exception .or limitation. if proof is. made of a Joss. G:R..No. 190702, February 27;.2017)1 Actual. delivery.
: apparently within a contract of insurance, the burden: ‘ofa check will not produce payment, ‘much ‘| less mere -
is upon the insurer to prove that :the- loss: arosé- from’ ' notice of its.issuance, without delivery (CIVIL COBE,
a cause of loss which:i is excepted ‘ or for. which itis not “Art, #249).
liable, or from a cause. which limits its liability (DBP

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SAN: BEDA LAW CENTRALIZED BAR OPERATIONS - MEMORY AID 2019

Exceptions: ‘(GrACIE) . dispute i its: acknowledgment but only for the purpose
4.-'Where a Grace period is granted under the of:reselving the. premium. due:and unpaid (id. ). :
policy; (INSURANCE CODE, Sec. 77)
. Effects of Non- -Payment of Premium instalments
2. Where there is ‘an ‘Acknowledgment in’ the 1. Non- Payment of First Instalment
contract’or policy of insurance that the- premium At. prevents, ‘the contract: from: becoming binding
had already. been paid (SUNDIANG & AQUINO; notwithstanding the acceptancé-of the application: or
Reviewer oni Commercial Law, supra ‘at 703), ‘the. issuance’ of the: policy -unless waived ,
(INSURANCE CODE, Sec. 77). . “
‘Note: ‘An acknowledgtnent i in apolicy or contract
_ of insufance or the: receipt premium. is.concltisive : 2. -Non-payment of Subsequent instalments
~ evidence. of its payment: so“far as .to make the: ‘ Non-payment of the balance of the premium: due
. _ policy binding,. notwithstanding -any- ‘stipulation : does not:: ‘produce the ¢ancellation-of the contract
therein, that ‘it.shall. not be’ ‘binding until: the '. unless; ‘by ‘express stipulation, itis: provided that the’
-* premium’ is actually paid (INSURANCE CODE, ‘policy: shall in that event be suspended or shall: lapse
os “See. 78).” (Philippiné Phoenix: ‘Surety -& Insurance, Co., Inc.’ v.
. Woodworks, : lne., “6. Re No. L- 22684, “August: 31,
3. Where a Credit ‘exténsion is given to pay: the’ 1967). a
Premium, (INSURANCE. CODE, Sea. 77)
-_ ‘Right to Return of# Premiums Paid
- Note? Where . thie extension:
- is granted. to: fa” “se Full Amount: (FRIED) . -
: licensed intermediary; such credit extension; shall if contract iS annulled. due* to Fraud": or:
. hot exceed 90:days' ° oe . Le role misrepreséntation: of the insurer or his agents
(INSRRABICE, CODE, Sec. 82); .
4. ff the parties have agreed to the payment 6f the f en’eeescssion is granted -due to: the
_ “premium in installments and partial, paymént has: jens: Preach of contract (CIVIL GQDE,
. , been made at. the time- of the loss‘ (INSURANCE: ' Lo! $385).
CODE. Sec. 77); yobs c..| If ng Ratt of. the Interest of the. thing insured
a. Where. the. Jnsurer agrees 40° . is jexposed - -to. any’.of.the’ perils insured
a panes (INSURANCE GODE, Sec. 80);
od. Jf confract is voidable oh account of facts, or
. (INSURANCE: COD Stth1; Existence” ‘of which,-the. insured was
_b. . Private < employees. .” nto : - Ig rants Without: his fault (INSURANCE
| agreements with ‘their: employér eee i - CODE, Séc.-82);
. a Payment; “OF Premium installments: y salary. ' “e.. When, by any Defautt of the insured other . -
foo , deduction. : Uday ‘than actual fraud, ‘the ‘insurer never incurred
OE liability (INSURANCE: CODE, See. 82).
2 By . Where the .parties | are. “barre by Es _ 2 Pro: Yata (DO): . .
- (SUNDIANG &.-. AQUINO,- Ret ewer ae! When: he- insurance: is. for: a Definite period :
. Commercial Law, ‘supra atJ 03)... “. \~ aiid. the insured: ‘surreriders-his™ policy: before
_’ .the termination thereof: (INSURANCE CODE,
. Effect ‘of Acknowledgment; of Receipt ofF Premium - ~ Sec. 80). 7
in: ‘Policy: : .
_Itis: conclusive evidence. of. its pa meni / . Ratable’ at of. “premium was ‘not
«te ‘make the “poli y. ‘binding, .. > twithstanding - any- expos od to risk’. oe =:
stipulation therein: that it shall’not be: binding untilthe -
premium jis§ actually aid: INSURANCE CODE, Sec. , : ” Exception: Surrender of life iinsurance policy
79). --. ‘before’ loss*:of | life insured: (DE. LEON, .
Mt Insurance ‘Code, supra | ‘at 271)... , ms :
Réason:. : Wher: the policy. coatains. ‘sush’ “written
. acknowledgment;- it:is presurned that the insurer has Réaeon ‘for Exception: A life i irisurariée ; is
. waived. the:condition of. prepayment, | It hereby creates ete not a divisible contract: Entire | Premium -
a. legal ficiction ‘of payment (DEL LEON. Insurance: . exposed to Fisk trom issuance: ..
Code,: ‘supra: at 273). .
ob “When. thers is “Over. insurance ; ‘by several:
, Note: The: conclusive: ‘presumption. extends only. to insurers’ (NSURANGE ¢CODE, ‘Sec. 83)...
” the: -question | on. the. binding effect of the:policy. As far.
as.the payment of.the-prémium: itself.is concerned,
the acknowledgment i is only.a prima facie evidence of - -
the > fact of stich payment. The insurer "may still
a : .

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 INSURANCE.LAW _
SAN BEDA LAW CENTRALIZED: BAR OPERATIONS~ MEMORY ‘AID 2019|

Devices Used to Prevent the Forfeiture of Over-Insurance

Premium Paid in a Life Insurance in Case of - The measure of an insurable interest in property is
Failure to Pay Subsequent listalments: “ the'extent to which-the insured.might be damnified by
(CAG-PER) | . loss:or injury thereof. (INSURANCE CODE, Sec. 17).
4.. Cash Surrender Value By: implication, any amount of insurance beyond the
A fractional amount of the insurance * beriefit the . insurable interest constitutes over-insurance.
insurér agrees to pay. the insured‘in exchangé for
surrendering the policy in the event’of inability or. Over-Insurance v. Double insurance:
unwillingness . to pay the outstanding-.premium.
{INSURANCE CODE, Sec. 2930).

2. Automatic Loan Clause

A ‘Stipulation in the policy providing that upon default When the afnount of the. | There may. be no - over:
in payment of premium, the same shall.be paid from insuranee. is. beyond the|insurance as when .the
the - Joan value. of the policy. until.- that. value” ‘is_ | value” of ‘the | insured’s sum total of the amounts
consumed. In such a case, the. policy is: continued i in. Insyrable interest. of the policies issued |
force as fully and effectively as'though.the premiums does not. exceéd the].
had béen paid by the insured from funds derived from” insurable interest ‘of the
other sources; insured .

3. Grace period ZBvA be :

After default, the insured is entitled js a 8 pe re mayabe, one or There are, always more
within whieh to. pay before forfeituWn. feigghrers spewed. ‘than one _- - insurers].
—_ ae
Ss et
Tishers
ne
XM,
aX involved. ° ;
4..Paid Up Clause a sE a GRE LEO, Insurgnte Code, ‘supra at abe.
Payments ‘already: made shall; ‘be.“Ges ed ds if it was Ae
_ the fuil and final premium initially assessed 1 resulting, illustratién: if thé irfubsble interest of A’in a house ~
‘in, rediction of the amount: of innsira ce ben refit, while © ‘is Re 2,000} 000 an che ngured it ‘with ABC Insurance
retaining the: period of coverage # éd mpany for P2} 0.900. there is ovér-insurance.
but there nis no AOE Blé. Insurance. If A insures the
5..Extended Insurance ; iahs me,.:f
se Wi to ABE Insurance ‘Company - for ¢
The’ insurance continues evenzafter défi al sa ‘00 yand, tDEF # Insurance: Company. for
period allowed by.-the cash 4 6a 00, there” is- ‘dg Suble: insurance but there is.
already paid... foe \ealg surance, If insures the same house. with
BE \ineurayice ‘Coinpany for P1,500,000 and DEF
6. ‘Reinstatement “STENRehab i¢e*Company for .P800,000, ‘there is double -
Provision that the-holder of the. poliey shal et and over-insurance. ‘ ‘
to reinstatement: of: the ‘contract. at®zany Ean
tip eer
three. years.from the date of default in:the.pa bos,
of i Babenko by Double Insurance |
premium-on due proceedings (INSURANCES M
DE, - ™ ‘it BxistS Mswhere there are two or more pdlicies o on the .
Sec. 233()). “samé. adventure and. interest OF any Part. of it, and the.

of an unvalued policy or the value fixed byt the: ‘policy

in the case of.an unvalued policy or the value‘fixed' by
“DOUBLE, INSURANCE | the ‘policy in the case of a valued polloy (DIZON,
Insurance Code, supra at 526).
/ Double. Insurance| “ Additional or
¢ Other Insurance Clause
It exists. where the'same. person is insured by’ several
The - rationale. behind - the.. incorporation of "other:
.. insurers separately, sin respect to. the samé subject. insurance” clausé in-firé policies ‘is: to- preverit: over-
and. interest’ (INSURANCE. CODE, “See. 9)
‘insuraneée: and:‘thus avert the: perpetration of ‘fraud: -
‘ When-a property owner obtains insurance policies
‘Requisites (TIRIS):,
‘from two or more insurers’ in a total’ amount that:
.: TWo.or more insurers insuring separately; exceeds the property's. value, the insured ‘may ‘have
: Same: Insured person;
‘an. inducement to destroy the property for the purpose
eee

. Same Risk or peril insured. against; of. collecting the-insurance. The public as well as the
. Same Interest insured; and,
insurer is interested in preventing a situation in which
. Same. ‘Subject: matter. (Malayan Insurance Co., a fire would. bé profitable to the insured (Geagonia v..
Iné. ¥. Philippine First Insurance -Co., G.R. No. : CA, G. R, No: t 14427, Fabhiay 6 6, 1995). |
* 184300, , July 11, 2012):

264 | 2019-SAN'BEDALAW GENTRALIZED BAR ©PERATIONS = -

 INSURANCE LAW
SAN'BEDA LAW CENTRALIZED BAR OPERATIONS. - MEMORY:AIO 2019

It is lawful and specifically allowed since a policy may In case. the fire should destroy the house completely; .
declare that a violation of a specified provision thereof what is the extent ‘of the liability of the insurance ~
shall avoid it, otherwise the breach of an immaterial _ companies among themselves?
provision does, not avoid it (INSURANCE « CODE, Sec.
75). an “The ratable contribiition of each insurer “will be
determined based on this formula : :
Violation: of Other Insurance Clause ,
"In order: to ‘constitute a violation of the clause, the Amount of Insurance per policy :
“other insurance must be- upon the same subject Foo a * Loss = Contribution,
Total Amaunt of Insurance TS ae "
“matter, the. same. interest therein, and the same risk.
Thus, éven: though the multiple. insurance’ policies . Using the foregoing formula, the exient of the Habinty
‘involved -were all. issued in the name of the same ’ of each insurer.out of the. total: loss of P600, 000. 00.
.” assured, over: the same: Subject.matter: ‘and covering- . are as follows: mw , ot!
‘the sameé-risk, it was: ruled that there was no violation |
ofthe “other insurance, clause”. since there was .no x= P200, 000= ((400,0 000/1,200 000) x ‘600; ,000) °
‘double insurance (Malayan: ‘Insurance. Co:, Inc: v: - _ ¥= P100,000= ((200,000/1 200,000) x 600,000)...
i Philippiné: First Insurance Go., G. Re No.1 84300). Zs P300, 000= ((600, 0001, 200;000)x 600 1000)"
Principle of Contribution. or Contribution, Giause (SUNDIANG & AQUINO, ‘Reviewer on Commercial
‘It-is, ‘required ‘that each’ insurer ‘contribute ratably- to = Law, supra at 123)
the loss- or damage: considering ‘that .the several’.
insurances cover. the’ samé--subject. matter; ‘and’ Ay Ratable Return of Premium
. interest against. the same perl (INSURANCE COR in case of -over-insurance by ‘double: insurance, the
Sec. 96(e)). insured is ‘entitled ‘to a ratable return’ of'the premium,
, ‘ Me
Rules. for Payment whére’ ‘there i is Over-Insurance '
portidned: 6 the amount by which the aggregate:
‘by Double.Insuranée: sum insored’itkall: the policies exceeds the insurable
1. The. ingured, unless the policy oth value of the fhing at risk. (INSURANCE CODE, Sec.

nple- aoe since each: insurer wais liable -

orily. for: 50% f ‘the the
amounts. insuréd, ee are each° .
bound iet
2. Where’ the policy u under which’ the i
- isa@ valued4 policy: any sum receiv
za

the‘subject matter insured;. :

3. Where ‘thie policy under which the in
‘Reinsurance’ i Reinsurance Cessiona: wf .
sindér’ any policy: shall be deducted aga e fi ‘His-a’ contract by which the’ insurer’ procures: a third
. insurable ' ‘value; for arty. sum received by him ’ person-to insure:him againstioss: or fiability by. reason:
_” under.any policy;. : of an original. insurance: (INSURANCE CODE, See.
4: Where the insured receives. any sum in excess of 97).
"the valuation” in the | case: of valued policies “or of 4

~ ‘thé: insurable, - value’ “in. the’. ‘case’. of unvalued - Parties to. a- einsurance: ‘Contract: me -
‘policies, ‘he must’ hold. ‘such ‘sum in trust: for. the ~ 4. ‘Reinsurer. ~.the gne- -who agrees. to indemnify
- insurers, according to’ their Fight - of contribution. ~ another (reinsured); either if whole: or, inpart,”
‘among: themselves; and, . : against. ‘Joss ° ‘or liability ‘which: the. latter: ‘Tay-
5, Each insurers bound, as ‘pativeen hiiseif ahd the > sustain. or: incur. under a. separate. and: original
‘other insurers. to contribute ratably to the loss in | _ ‘contract of-insurance with. a ‘third party tthe
‘proportion. to the: amount for which: he- is liable.. original insured); and . °
under his. contract (INSURANCE CODE, See. 96). 2. -Reinsured= - the original i insurer’ (e )
Formula. for Determining Insurer’ s Contribution
Retrocession (Reinsurance of Reifisurance)”.
_Suppose. that -Kit ‘owns’ a “hoitise- valued . ‘at
It. is a transaction whereby the: reinsuref, in ‘turri;. .
P600;000.00- and’ insured the: same. against fi
fire:‘with’
passes ‘to another . Jnsurer, a portion of the: tisk,
three i insurance. companies:
reinsured. . .
X-P400,000 ~ -
“Y= P200;000:-
Z- P600, 000. ,
_ Total: amount oFj insurance = P4 200, 000

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 INSURANCE LAW
SAN BEDA LAW CENTRALIZED BAR OPERATIONS ~ MEMORY AID 2019

Reinsurance Treaty: : are material to the risk. (INSURANCE CODE, ‘Sec. |

Normally, reinsurance may be obtained separately on 98).
each. policy. A facultative. reinsurance contract
similarly grants the [re--insurer] the right to accept or - Example: A polay may be: avoided where _ the
refuse participation in’a risk. (Equitable ins.- & reinsured conceals the fact’ that a loss has taken
Casualty Co. v.-Rural ins. & Surety Go., -Inc.,.G.R..No. place or ‘that the property is over-insured where he
L- 17436, danuary 31, 1962). , has knowledge thereof’ (PE! LEON, insurance Code,
supra at 319).:
Instead of “negotiating individual. or facultative
reinsurance policies, such that.each risk is negotiate | : Reinsurance is . Liability Insurance .
: Separately, Insurance companies may instead enter A. reinsurance is: presumed to ‘be. a contract of ~.
.into, reinsurance treaties whereby the re- ‘insurer. indemnity against: liability, and -not..merely against ,
" .agrees to: ‘accept the risks.of a pre-determined, class damage (INSURANCE: CODE; Sec. 99).
of policies ceded by the origina! insurer (DE LEON,
Insurance: Goede, supra at 318). "OA. reinsurer’ insures the reinsured: from any: liability the: .
jJatter may- be’. held: for: aS a result’.of ‘the -risk
Example: xX Co. cedes 50% of the risks it underwrites participated «in. Damage’ to -the reinsured. is not ‘the
on -ail-of the’ fire policies it issues between ‘2000 to . subject o'¢ he reinsurance contract.
.2050 to.¥.inc. who-receives a premium | in exchang
. for accepting the broad risk. i In Spbidence arcs
Contract

--Limit 6f Single: Risk ve ROS

~ No. insurance: company, other. shan. life
foreign or domestic, shall: retain/any isk oR apy-orn aS: a-geiierats ie, Nts original insured has no ‘claim
’ subject; of insurance.in an amoiintiexceéding. 20% of oa against tthe rFein Ssuirer of the risk involved. ‘There i is no
-its ‘net worth, (INSURANCEeae 2H). oe privity b

ea OR
Involves
interest
pole RG
aASe D Lathan -
ENELite eurancay
efit
; igsyrgnce uipon. life or: health) may: pass by
"le egret
as) Rete
hes wi) ir succession, ‘to any-person,:, whether
rable. interest or not,. and. such person

. ‘nisuirer remains: in. such Insurer becomes “the! P=

capacity: . _ insured: “relation “to;
réinsurer. ° S : “Note: Nitice to. an. insurer. ‘oF: a S treigeting or: ‘bequest
thereof iis‘ “not. necessary to. preserve the varity of a

insured | is:‘the: ‘party. in Original insured'has* no}.

/yinterest= othe "two | interest. -¢- in <:-the!
‘insura ce > contracts. freinsurarice e contract. 2 “Property: insurance
~ Consent REQUIRED.
‘ insured has. 0 give “his | “Reason: The only: beneficiary:‘allowed in property
consent. S -N6céssary.: insurance isa party with insurable interest. oe
’ (DE LEON, Insurance: Code, supra at 315
Transfer of Claim. ‘After Loss: on ‘ :
Duty of Reirigured to. Disclose Facts An agreement. not to transfer: the claim of ihe insured ‘
against: the ‘insurér: after: the joss. has. happened, is
‘Where. an‘insurer'’‘obtains. reinsurance, except under - .
‘reinsurance’ treaties, ‘he must communicate. all. the _ void’ if-made before the loss . except -as otherwise
representations’ of the original insured, and also all - provided in the case of life insurance @ (INSURANCE .
the knowledge and ‘information he -possesses, _ CODE, Sec. 85). . .
- whether previously or subsequently acquired, which

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' SAN BEDA LAW CENTRALIZED BAR-OPERATIONS < MEMORY.AID 2019 |.

Reason: . &. Discovery of Other jnsurance coverage that

At the moment ‘of’ Joss, the right to réceive the °* makes the total irisurance:in excess of the value
insurance benefits accrues: to the ‘beneficiary as a _ of the property insured; or
liquidated. credit. .Such :credit is the property. of the . 7. Determination by the Insurance Commissioner.
. payee which is‘in his full right to aliefiate.-A stipulation that.the policy would Violate the Insurance Code
of this nature impels such Property’ right.” - (INSURANCE CODE, ‘Sec. 64). °

Note: Nos. 2-5 are- called “grounds | to resting” in|

‘other parts of the Céde- (material, concealment,:
material.’ misrepresentation, breach of miaterial
warranty or. conditions, alteration of property | insured, -
: etc.) oS oo
Cancellation | ” . I

Itis teriviination or‘rescission, by either thei insurer or

c : “presgrigtion of Right to. Cancel
_ the insured,:.of a «policy of“ insurance: before. its Whenever a: right to réscind'a contract ofi insurance is :
3 expiration, (DE. LEON, Insurance »-Gode, supra at 222).. given’ to” ‘the’. insurer, such. right: must beexercised —
. previous to: the: commencement: of. an action: onthe /
Right to Cancel: ‘Policy: “ Se Sly ast : contract’ (UNSURANGE ‘CODE, Sec. 48, par. 4): ‘
The insurer: has. the. Voht. to cancel, a ‘policy’ of-
insurance other than life (INSURANCE CODE, Sec," CANCELLATION | _OR RESCISSION . OF UFE
64-65): . rai INSURANCE_
Incontestability: Clause’: ’
Cancellation of.life insurance’ policies i is subject to; E Raising. the ‘ground for: cancellationirescission are,
Mandatory . Incontestabilty "Clause. (INSURANG ' the policy shall have been. effective”
CODE, Sec. 48): oy ime ¢of the insured: for ‘two years from .
the. Of Its issue. or ‘its last reinstatement.
. Requisites: of Cancellation of Polic’ Ph een ee “Sec.. 48).
‘1. Notice must ‘be in-Writing, : inaile
- ‘the insured: at-the. address. shown ‘Beyond’such period, the insurer cannot. prove that the
.to his. broker: provided. the brok policy is: void 1b initio, or. is rescindable: by the reason
writing . by. -the” policy: of fraudul lent conce
ont Bere or misrépresentation of the
- cancellation on his - behall({n 6 his, ;A9EN t'Elorendo vs. Philarn Plans, G. Re
-. Sec. 65); - SF Febr22, 2012). ,
- 2. Notice. must.be baséd on the oésurrénc ceAl :
' _efféctive.date ofthe. policy” of: -orie: or. more ‘of ‘the ; Reinstatement of ‘an insurance. ‘policy - should be.
‘grounds mentioned, (INSURANCES QDE;’ Sec. eckonied. from ‘the. date’ whén the’ insurer’ ‘approved -
64); ‘i @Saine (The Insular Life Assurance: Company, Ltd:
Sy

3. Prior’: Notice: of cancellation . toe the: ie v. Khu, G. Re No. 195176, April 18, 078).
" S(NSURANCE¢ CODE, Sec: 64);. and: ‘ie wih .
4. Notice must state..the -Grourids’ relied ti‘tipon, ‘and . Change of’ term. of licontestability’ . Bo
. Upon ‘request’ of: the insured. to’ ‘furnish. facts..on The
period ‘of..two years: maybe ‘shorténed but’ it .
which cancellation is.
| made (INSURANCE CODE, . + cannot, ‘pe’ ext énded by stipulation: (Tan vi Court’ of .
' Sec: 65), hiro , o Appeals, GR No. 8049,. Junie 29; 1989)...

‘Grounds. for Cancellation: (Non-Con-FrAPOW) . When: “Instited. Dies Before" Setting ot

, 1. Noni-payment. of premiums; °
Note: The’ premium referred tor must be: a’ premiutn
' subsequent’ to“ the -first. instalment, because: it
- speaks:of non-payment' “after.the-effective date. ‘of
the,policy" (DE LEON, Unsuranice Cade, supra at
~223)." . : Deb ae os
2. Conviction. of a, crime - out of. acts,$increasing the :
‘ hazard insured. against;- f « That the Fraud
3. Discovery of Fraud or-matérial: misrepreseritation: :
4, Willful, or reckless Acts ‘or omissions. increasing
-the risk insured against;
5. Physical changes i in the property insured ‘making ,
it
‘ uninsurable;
- Incontestability
When the insure es: “within. the: 2-year peiiod; the. °
_: insurer must make geod: ‘on: the: policy;. even though.
- thé policy was obtained -“by fraud, . concealment, OF.
misrepresentation’ (Manila ‘Bankers Life Insurance
_ Corp. v. Aban, VOR. No, 175666, July 29, 2013). .
. ‘Defenses Not Barred: -by: Incontestability Clause: ,
(FAB. P?C2).
is, Of: ‘a. particular: vicious’ type: S
7 x That the Action was not brought within the’time
* specifiéd;
: _3. That the Beneficiary flied to furnish proof of death
“4 orto ‘comply‘with any. conditions imposed ‘by the. .
’ policy after the loss has happened;

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4.. That the. Person taking -the insurance lacked Reason: One of the -purposes for taking out:
: insurable interest as required by law; _insurance is to protect the insured against the
5. That the Premiums have not been-paid; consequences of his own negligence and that.of
6. That the. ‘Cause. of the death. of the insured is an his. agents, Hence, carelessness and negligence
excepted risk;and. , of the insured or his’ agents is Not a ‘defense on
7. Thatthe Conditions! of the. policy relating ‘to military the part of the. insurer . (FGU Insurance”
or naval service. have been violated (Id. at 176). Corporation v. CA, G.R. No: 137775, March .31,
2005). ,
Renewal of Non-Life. Policies.
- In.case of insurance other than fife, unless thei insurer “When the Insurer is. NétLiable: (ACER)
at least 45. days in advance. of the: end Of the: policy 4. Loss© by the. insureds. willful. ‘Act or. gross
period mails ar delivers to: the named insured at the . negligence (INSURANCE CODE,"Sec. 89); ‘
address shown i in the: policy notice ofits intention net 2. Loss due to. the. Connivance: of : the. insured
te renew the’ policy: ‘or.to condition its. renewal upon (INSURANCE: CODE, Sec. 89); and: :
‘reduction of limits - or. elimination of ‘coverage, : the 3. Loss where: the:. Excepted peril is the proxithate-
“named ‘insured shall be. entitled to renew the. policy : . ‘Cause, although the- immediate cause of the:loss
* upon: payment.of the premium due ‘on, the effective was a’peril which was not excepted (INSURANCE ,
/ date of the renewal (INSURANCE CODE, Sec. 66). : ‘CODE, Sec. 88); and
4... Loss ‘whére. the peril. insured- aginst: ‘was: only: a
Remate ocause (INSURANCE: CODE, See. 86).
KT} £ Pe :
2roximate Gaur e.

Bz
The* “proxirfiate™ egal, cause -is- that acting fifirst ‘and
““producing:thé | injury either immediately. or by. seiting
Loss in. Insurance. . : ALven hee i at er events\in.« fttion, all constituting a natural and
it is the injury, damage, sustgiried b eOntinuoys chaigi ‘of, avents, each having a close
consequence of the happeni 9 of one or ‘of. Lin causal. c6
sgonectog ins -immediaté predécessor,
accidents or misfortune ag: i.St-which the wnsurer in” ithe final’event inktHe.ch: qin immediately effecting the .
consideration . of the prem “ha is. und rtaken 0; <inijuky’ ‘as q naturaland; | probable: result of the cause - |
' indemnify.the insured.
tr oe (0S., ings, Vv. ‘Mor i: which first acted vjurider ‘Such circumstances’ ‘thatthe |
G. R. No. 1-20853,. ‘May 29, (ea (person.ine
re prudat FoF:tthe first event’ ‘should, as' an
ayia es intelligent « person, have

4. Interest must be sod by ine

2) There: must be Loss;. ve ore
3. Insured must have| Insur ble. inte est. ‘eshene oy. vs No. 110126, October 22, 1957).
-. subject matter;
4 ‘The loss’ must he Bioniniaton, cause fig) the nee ESseer
proving that the loss comes within’ing ofeat Sion MM Sudyesests: proximity’ in time. to the loss. Whati is ‘usually
‘ (DIZON, insurance Code, Supra, at 499 Y Lechtemplated is.a situation -where at Jeast- 2: causes
are‘ involved; one cause ‘Occurs ‘after’ ‘the: other
When Insurer I is Liable. for. Loss: (PPe-RuN) : AQUING, Insurance: Code, supra: cat: 179):
1. -Loss, ‘the. Proximate. cause of: which; ‘is ‘the. peril -
. , insured against (INSURANCE. CODE, Sec. 86); © “Remote Cause |
2, Loss, due’ to. a, Peril. not.insured against, where li is that‘cause which some independant force. merely -
.** the’ thing insured ‘is; rescued frorn.a: peri insured _ » took advantage of to accomplish something ' which is
against that'would othefwise: have. caused ‘loss, . not the natural’ effect ther8of. (id. at 178). :
-. ifin the course of-rescue, it permanently deprives: .
~ “the. insured of its possession, in .whole® or.in part : .Notice: of Loss
(INSURANCE CODE, Sec. 87);- The insurer: Cannot. be héld-: liable to pay’ as claim. .
3. Loss caused: by’, efforts’ to. Reséue the: thing. - unless-he receives. notice of ‘that ‘claim: Under the law,
insured - from a-- peril. ‘insured - against if notice of loss is.‘not. given ‘tothe insurer-by-the
. (INSURANCE ' CODE, Sec. 87); person insured or by the person: entitled to-the. benefi it
4S ‘Loss, the Immediate’ cause of which, ‘is ‘the peril . Of the insurance; without unnecessary delay,-or in a. -
insured against. except where’ the . proximate. timely manner, . the-. insurer .is ‘exonerated
cause: is an excepted peril (INSURANCE: CODE, . "(INSURANCE CODE, Sec: 90).
. Sec. 88); ‘and-
' 5. Loss through the. Negligence of the wisuded, or
¢ of
the. insurance agents or others (INSURANCE
CODE, Sec. PD. .

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Purposes: (TAP) “3: , Failing ‘to adopt and implement reasonabie

1. To_be -able. to Take ‘such actions as may bé.
. necessary. to’ protect its, interest from fraud or
imposition; | 4. Not attempting in good faith to Effectuate prompt,
2. Fo Apprise the insurance * company with the
_ s Occurrence of thé loss;‘and
3. In.the case .of Property . insurarice, to ‘prevent
:. further: loss to the property (DE LEON, dnsurance
"7 Code, supra at 298).
Proof of Loss.
“When: a preliminary proof of. loss .is’ required by a
policy, the insured iis. not bound to give such proof as
_ would-be necessary ‘in a court’ of justice; but: it ‘is Tinie for: Payment ofClaims
sufficient for: him-to give. the best ‘evidence which he
has in his power ‘at that time (INSURANCE CODE, .
Sec. 91).
ee
. Form of Notice or. Proof of Loss’
“In the absence of any stipulation in thé ‘policy, notice, oy
. or’ proof may be given orally or-irt writing. However, ity te Bf
_ i8 ‘advisable ‘to”give -the notice. or’ proof of logs in
’ writing° for the protection of the’ insured’ ot (his
beneficiary. (DE. LEON,” Insurance Code,
(301).
nk
' Standards for. the prompt investigation of claims
- arising under its policies;
_fair‘and equitable. settlement of claims submitted
- in which. liability has ‘become’ reasonably clear: or
5. Compelling policyholders. to: institute ‘suits to
, recover’ amounts die ‘under ‘its policies. by.
: offering: ‘without justifi able: .réason ‘substantially
“ess: than the samounts’ ultimately recovered ‘in
‘Suits brought by. them (INSURANCE CODE, See.
247), . - :
1. Lie Policies | -
Maturing. upon the. expiration of the term —
- , The proceéds are immediately payable to he.
- ‘insured. (INSURANCE CODE, Sec. 248).
Exception: ‘If the proceeds are payable. in
~ installments or annuities, it “shall be paid as
they become due (INSURANCE: CODE, Sec.
' 248),
b.- . Maturing | “at the death ‘of . the. insured, |
ipa prior to”‘the expiration of the term—

When Delay'i in Presentation of Notiée Tr

Loss | is Deemed Waived: OF) pee { a “of ‘the proof, of death
fe INSURANCE CODE, Séc. 248)
2 “By: Failure “to take. ‘objection eicnth -and 2... Non-fife: oli ies” ,
= Specifically upon that gfound. :QNSURANCE' . . The; /proci eds" shall be paid within’ 30 days after,
* CODE, Sec. 93). “sHieltseeceiptb BiSiisurer.of the ‘ yO
a. Prot OLEOSS; and
b.. Ascertainment of the loss. or damage ' by
. agreement. of: the parties ‘or ‘by. arbitration
a NSURANCE ¢ CODE, Seé. 249).
os

Note: If the ascertainment i is not. had: or made: within

Claim
“Itis.a demand f for. the. satisfaction: of a. 1088" Suffered ,
“within, the ‘purview: of: an insured's policy. It may-be
made :by the party insured; ‘the. insurer with: the right
- of. subrogation, ora non-party: but with. ‘a right- against ‘
_ the. insured Et LEON, insurance Code, Supra At :
284).
: ‘Unfair Claini Settlement Practices
Any. of the following acts. by an’ insurance company; if.
. ‘committed ‘without just cause. and performed with
such: frequency as: to. indicate: @.genéral business. |
practice, | shall ‘constitute « ‘unfair’ claim settlement
practices: (MASEC)..
- 1. .Knewingly’ Misrepresenting to: claimant. pertinent _
' facts-or-policy: Provisions, relating to coverage at.
: issue; '
2. Failing. to - Acknowledge. "with _reasonable
promptness. pertinent’ communications’
respéct to claims arising under its policies;
60° days after the’ receipt of the: ‘proof of joss, the
- loss/damage: shallbe paid within-90.days from the
receipt of the Proof oof loss (INSURANCE. CODE, Sec. .
a 249)..’ 3 a : oo .
: Duty to Determine: Unreasonable é Delay
In case ‘of any’ litig ion ‘for:‘the: enforcement of any .
, : policy’ of contract’ of ihsurarice, it’ Shall-bé. the duty of
, the: Commissioner or the Court, as. the case may be, -
’ to make"a“finding as to whether the payment of the
claim of the. insured. has. been: ‘unreasonably’ deriied
or withheld (INSURANCE CODE, Sec. 200). ° ns
Presumption of. Unreasonable Delay *:
- There is prima facie presuiription. of unreasonable
delay jf the insufer fails to pay. any Such- claim within
_ the time© prescribed |in 1 Sec. 248 and 249: (ld. ).
°
with: -

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Penalty for Delay i in Claims Settlement Incapacity of the insured will not affect the capacity of
In case. there is an unreasonable delay/denial i in the. the subrogee because capacity is personal to the
payment of the insured’s claim by: ‘the insurer. The holder (Lorenzo Shipping v. Chubb and & Sons, Inc.,
insured can recover:. (I-ACE) | . GR No. 147724, June 8, 2004).
1. Interest at double. the legal interest. rate fi xed by
the monetary. board;, . Subrogation is by Operation: of Law
Atiorney’s fees; . .The presentation of the marine insurance policyis not
eee

Amount of the Claim; and _ indispensable before

- the insurer. may recover from
Expenses . incurred by reason - Of the the common.carrier the insured. value of thé lost. cargo
unreasonable Withholding - (Zenith: Insurance ‘in the exercise of its. subrogatory right. The
. Corp. Vv. CA, G.R. ‘No. 85296, May. 14, 1990). ‘- subrogation receipt, by itself, is sufficient to’ establish
the relationship of the insurer and. the- client. The right
. When. ‘Delay Reasonable , of subrogation. accrues simply upon, payment of the’
When the refusal or failure ,to pay. is-- -based on the . , ‘insurance claim (Asian Terminals -inc., v. Malayan
. ground that the” claim is fraudulent (INSURANCE : Insurance Co., dne., G.R. No. 471406, April 4 2011):
CODE, Sec. 249).
a Extent of Subrogation
Criminal Liability for. “Fraudulent. ‘Claims ‘of - The insurer is subrogated only to.the extent of the
insured; * . bo nsec amount paid.’ If the amount paid by. the insurance
It is unlawful for.an insured to: ms ie q SaNY.: does not fully. cover the injury, of loss, the
41. Present- -or causs to:be presented pry Ffratituilent a Beers, party.. shall be entitled- to: recover the ..~
claim for the payment of a loss underac rire of deficiéncy,P rormthe. ‘person causing. the: loss or injury
Insuranog, and | LP sic — 2 VISCO! EAE 2207)._
NN oe
gage

eae osch ar és Of Sul iodation: (RDT)

4& To make the 4 Nt who caused
.
the lossS legally .

prevent he S0rs Yrom, being free from

ee

vjiless andjis this! founded, on'considerations | -

j ie pale (OE LEON; : _Insurarice Code,
Ta t 9) NG
z | Mes .
= Subrogation a ae o

It.is: thé. substitution: of ons person in. phie Ss bre bation if Not Available: (OWN:LE)’
with. referencé,to a- lawful: claimor rights 0 that: ne * 4, BV ythe ‘insyfed
: ‘by hisOwn.act releases the
who is: substituted succeeds to the: fights
ae or sats er ¢, off third. ‘party: liable ‘for. the Joss -or
in relation to a debt or claim, including itsre edies or eae aa” di ie oslo _
securities (Lorenz _ Shipping. Corporation, Vise Chubb ik
‘and Sons, ne., G. No. :147724, June- 8, 3004) Pn seek
‘Note? . The insurer .can be subrogated: only. to’
such -rights. asthe’ insured may haye' ‘(Manila
“Right of Subrogation - - - “Mahogany. Mig. Corp. | v CA,. GR. 'No- 52756,
If the plaintiff's property: has: een ingured, and He: has 7 : October 12;: 1987). . ‘: ae .
_.eceived indemnity from the. insurance, company for Mees
the injury,or. to $s arising ‘out.of, the wrong, or. breach’ of , 2 Where ‘the i insurer pays. the insured the value of
-contract complained. of, the: insurai e mpany shall .the:loss: Without notifying the. cairier Who. has in.
pe: subi \gated to the-rights of the insured against the. . - good’ faith settled thé: -insured’s:’claim: for 4oss
wrongdoer’ or. the » person. who. -has wiclsted © ‘the - me \.(Pan: Malayan. insurance’. Company: v cA, G. R.
contract. (CIVIL CODE, Aut. 2207). “. No..81026, April3, 199O)Pi
"3. Where:the insurer-pays: 4 sured for. a1 loss c or -.
The: principle of subrogation: is a. ‘normal: incident of f risk.Not Coveréd:by. the policy: (Id. yon ,
indemnity. insurance as.a. legal. effect-of. payment, dt °4. 0 In, Life - insurance (AQUINO; ‘insurance’Code, ‘
_ ‘inures 'to:the insurer without: any. formal. . assignment : supra at 206); ‘and
‘or.any express, stipulation to. that, effect i in the: ‘policy: . ..5, For: recovery’ of loss in: Excess. of. insurance.
Said: Tight i is not: dependent upon: nor.doés it grow oitt. “coverage (DE LEON, Insurance Code, supra at
? of -any’ private ‘contract. Payment’ to the insured: . 1m . — .
makes the insurer a: -subrogee’ in. equity (Malayan
Jnsurance. Co.,. Inc: Vv. CA, GR. “No., L-36413,
‘September 26, 1988).

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PRceIrrve PERIOD |
Rules on. Prescription’
1. The: parties to a contract, ofi insurance may validly -
’ agree -that an-action on the-policy should be
brought within a limited period _of time, provided
such period . isnot: less ‘than one year from the:
time: the.:cause. of action: accrues.- If the period:
agreed: upon is: Jess. than.1 -year-from the time the ©
‘cause of action. accrues, suchagreement is: void.
“INSURANCE: CODE, Sec, 63).

When Prescriptive. Period Begins’

Protects ‘against “loss Prétécts “apainat, *fss, |:
4 resuiting . from death: of liability, “or expenses |
a. The stipulated prescriptive: period ‘shall begin
‘to run ‘from. thé. date, of the insurer's ejection
another : resulting from
f iinjury. ori}.
. : ;fReaith”
“of the claim filed by the insured or beneficiary
Whefe'a contract: insures:
and not from. the tirie of the loss. ‘
risk’ from: death. caused’ Where a éoitract insures a
. Inv case:-the- cla as. ied, by 3 the. insurer vy
but. ‘the: insured filed: .. a. petition . ;for? 3
by accident, . such }risk’ ‘frdm ‘injury, and loss’
reconsideration, the. prescriptive . period \ insurance coverage is| and.
\, fregarded . as. - . life
expenses.
necessarily” consequent
should be counted from the date the. font
‘genienl-a at the first{ instance. and not, fro insurance. * . — ““Itheréto, © caused‘' by]
So yey FV aeident,Such ins rance
° coverage | regarded as

4A clliss of
coe
iit ol Nn.
ts lan. indemnity OF casualty
contract.

<
(aes, GR No. L268, Api 2 29,
aaayas .
:

Types “of | Life Insurance. ‘expressly

cognized:by law. or Jurisprudence; (IER)
- otherw is ‘brought within one yearifr . Industrial Life.
”. (Vda... De“ Gabriet ve CA, GR. 4 “That -forni: of. life insurance. under. which. the
. ‘Navember’ 14, 1996). premiums are payable_either; monithly. or ‘oftener;

aN
4. The suit for damages, either with the proper court ifthe
. face amount: of. insurance. provided in. any .
’ or with thé Insurance. Commissioner, ‘should be
filed Within-one: ‘year frorit:the date-of:the. denial.
. of the: claim by thei ‘insurer; otherwise, ‘claimant’s
. City. of Manila,: ‘and if the words: ‘industrial policy
"right: of- action. shall’ Prescribe, (INSURANCE are... “printed upon’ ‘the| policy - as part” of the:
iF“CODE, See. 397, 3 . . - descriptive: matters: UNS RANG. CQBE,- Se '
* 235); .

Weta: i iti is ir surance. néimally offered sind

~ LIFE AND‘HEALTH | - workers. ‘or rank 3 file” employees . who need, -
fo -,ENSURANCE ~ vas
‘some form of life. ins rance: but: are unable ‘to
afford higher : ‘premiums. or:: :because- they are’
a unable to pay..in lump. sums, are benefited by.
Soe generous. ferms of Premium: Rayment. °
, Life Insurance -
It: is the irisurance on: human lives: ‘and insurance 2. Endowment Policy oy ‘
° appertaining ‘thereto: or ‘connected: therewith; which ‘insured ‘pays. premium: for specifi ied. period: ithe -:
wee may be made payable | oni the death of the pérson, or ouilives the period, thée:face value of the policy is
on. his ‘surviving: a ‘Specified’ ‘period, or: otherwise
: paid: to‘him.. If not, his. benefi iciaries, receive the.
contingently on the continuance’ or: cessation of life benefit . (Villanueva v. Oro, . GR No. L-2227,
(INSURANCE CODE, ‘Sec. 187- -182). August 31,7 ac
x

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3. Retirement Pension Trusts _ self-defense; or insanity of theberieficiary (DE LEON,

- A contract .or undertaking for the payment of insurance Code, supra at 112).
“annuities including contracts for the payment of / .
jump. sums under a‘retirement program where a . Premiums Paid from Conjugal. Funds
life insurance company manages or acts as a If the beneficiary of ‘the policy is -the estate of a
trustee for ‘such retirement ‘ ‘program ~ . married person: and: premiums. were spaid from
(INSURANCE CODE, Sec. 787). Lo conjugal.funds, ‘the: proceeds of fife insurance. policy.
. , / constitute community property with half‘belong to-the -
Trangfer of Policy _ ; . estate of. each spouse: lf the premiums were paid |
The: policy ‘of life insurance’ may ‘be the object of . partly with paraphernal ‘and. partly -with conjugal
voluntary and involuntary transfer. Insurable interest -. funds,.the proceeds are in like proportion paraphernal
‘on the. part:of the transferée is:not necessary. Notice in part. and: conjugal in part (Bank of the Philippine
to. the insurer is also not necessary (INSURANCE ~ Aslands-v v. Posadas, G. Re No.. L-9374, February 16, -
CODE, Secs. 184-185). . / on, 1915). ° . .

A policy: of i insurance upon life or heaith may.pass 5 by Cash Surrender Value Son
transfer, will,.or succession to any. person, whether. -- As applied to a life insurance policy, it is: the amount
he has. an insurable interest.or not; and such person _—-_the insured, in case of default, after the. payment of at
may recover upon it whatever. the ingured. might have. least 3 full annual premiums,’ js entitled to receive if
. recovered (INSURANCE. CODE, Sec: 184) ) ce he‘slirrenders the’policy and. releases his claims upon .
. 2 ee ne aXe ‘itEIWISPREINEE CeCODE, Sec: ‘233())).
Measure of Indemnity : EX y . SN
‘Unless the interest ofa person innsdied susceptible. . Mandatory Health surance i
‘of. exact pecuniary measurement; th feasure"OF “4 “Alkeitizens.6oft
fihe PBhil
Hilippines'shall be covered? by the
indemnity. under a policy of ins iar ce” upon: life yor 5 NationahtHealth: tfSurance Program. (R:A. No. 7875,
health. is the. sum: fixed in the policy” (INSURANEE An ‘Sbe. ‘6, as ame ee by.R.A. No. 10608, See. 4).
‘CODE, Sec. 186). . i f 14
:. . rr, i| oe —" IRIS the Bi licy- of the @ Sta e to adopt an integrated and —
Liability. for ‘Suicide i A KES é€oinprehénsive 2 h to health development
Insurer is liable even1 fl if ns samé: A nd oil gon @ make essential.goods, health
_ committed; | sd Yh Ct 30: ial servicesjavailable:to all the people at
‘4... After the policy becomes. incantest whethe a ble..£ 30st Brine rovide| free: medical. care to
_ “after lapse of statutory 2byeadrpariod sn horte Owards thigjend, the State Shall provide
period provided iri.the policy; or \ Sis pesibang healthy care. services to all: Filipinos
2. ae if during contestable ‘period Peo es ‘ Gialized/ ealth’ihsurance program that
“Ina state of insanity; an cin rigg ittze the health care needs. : of... the
b. . Suicide is not — an’ nexcep SSCTED
a neroraileas »gf Sick, elderly, . persons.©. “with
- (INSURANCE CODE, Sec. 783) re 1 ates (PV Is), ‘women and children.and
(RA. No.provide
7875, — “
M e s care services to: indigents
OL:
Intention to Commit ‘Suicide oe amended by RA, Ne, 10606, ‘Sec. 4.
’ Even: if. a life: insurance policy. is taken wan ‘the
_ intention: to commit suicide, ‘the insurer is ‘liable ifitis : ‘inpleientation, ‘ ~ ”
“not. an excepted peril (INSURANCE CODE, ‘Sec. .. In accordance. with. the principles of universality and
' 183). : ; . _compulsory. coverage; implementation ofthe program
. ‘ , rn ' shall - ensure .;-sustainability.. of. coverage-. and
Killing of the Insured bytthe. beneficiary So te continuous © erihanéement of the quality of -service:.
- The interest ofa beneficiary in a life insurance policy” . (RA. No, 7875, Sec. 5, as amended ty R:A: No. .
shall. be forfeited when the beneficiary iis the principal, 10606, Sec. 4). .. .
accomplice or accessory in willfully
w bringing aboutthe . ~ : :
death of the insured: In such case, the share'forfeited “The: prograin. shalt be cornpillsory i in.“all provinces; .
shall pass. on to’ thé other: béneficiariés, ‘unless cities and municipalities nationwide; notwithstanding’
"otherwise disqualifi ied.. In the absence of other’ ‘the existerice of LGU-based’. health insurance .
‘benef ciaries, - the- Proceeds: “shalt be -paid in. programs (R:A.'No.: 10606,. See. 6).
‘accordance. with ~the policy: contract. If’ the policy.- .
contract is -silent, the proceeds shall be paid tothe: — ‘Variable’ Unit. Linked insurance oo
estate of the insured (INSURANCE CODE, See. 12). It is:that form of life: insurance contract under-which.
the benefits, payable upon: -death or.surrender, and/or
Note: It follows: ‘that’ unintentional killing. ‘dees not “the premiums vary with. the:investment performance.
disqualify. a benefi iciary such as in accidental Killing; of the assets derived fromthe sale of those contracts.
. It is ‘a new product: developéd in the insurance

272 | 2019 SAN BEDA LAW CENTRALIZED

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business, designed to .combiné . the traditional c. Excluding buildings, their furniture, and
protection and savings functions of life insurance with . furhishings, fixed contents and supplies: held |
the growth. ‘potential. associated. ‘with- equities, ~~ in storage. (INSURANCE CODE, Sec. 101).
particularly:common stock. It evolved.in response to
- a number of market forces including’ risifig income. Cargo can be the subject of marine insurance, and
. levels, heightened: awareness of the’néed "to protect once itis entered into; the implied warranty of
purchasing power in the face of inflation, and.greater ‘seaworthiness. immediately attaches. to. whoever is
‘consumer-awareness of altérnative forms of personal : _- insuring ‘the cargo, whether he be ihe. shipowner or .
savings and investmenit- (DE LEON, insuréince Code, not (Roque Vv. IAC, G:R..No: L-66938, November 14,
, supra at $90). , ; . _ 1985). , .

Risk Insured Against :

: The insurer undertakeés-to jnsure against perils ofthe
- Sea.and similar perils, not against perils of the Ship. -
There must, in order’ to make. the insurer liable, be .
“some casualty, ‘something ‘which *. could. et be.
Transportation Insurance” oe . a ‘foreseen as one-of the necessary incidefits: of’ the ©
It-is concerned with ‘the< perils -of- property’ in “(or ‘adventure. The--purpose’ of the policy is to secure:an _
incidental to) ‘transit as opposed to ‘property’ perils at indemnity: against accidents which may. happen, not . -
_ a generally fixed: tocation - (DE’ LEON, ‘Insurance’ against. events -which must ‘happen (Tiaoco y
Code, supra at 327). oh Meee oe we Hermanos v:- Union “Insurance Society ‘of’ ‘Canton,
Ltd., GR. No. 13983, » September 1, 1919).
4. ‘Ocean’ marine “insuranée — en _forms

328).
2. Inland marine insurance —an i 2.Extraordinary faction of wind and wave; and -
_ Covers ‘primarily the” ‘Yand* or. . Other - tlabrdinary - causes’ connected with ~
: transportation perils -of _ Propertys: $1 .o navigation a ae Insurance: Code, supra at
railroads, ’ motot trucks,” air ales, 4a, 331). j | ft
means of ‘transportation if
Code, “Supra at. 327- -328).\: Pin, the course of. the voyage is
r e2:in View of the effects of the: wind, °
Scope of Marine insurance a - waterand salt conditions: (Cathay Irisurance Co. v.
“1. Loss; damage,.or liability pertiinet to ‘tabi ‘of iG-R. No, 76145, June 30, 1987).
. marine transportation of persons: ‘OL cargo, arid Le
- marine navigation including breac! ‘ladin ‘ayid-
charter parties; j hy . A loss which inthe ordinary course of events, results S
2.. Loss, damage, or expense, incident t ownership, ‘ from the: (NON) » :
operation, -chartering; | maintenance, use; “repair, ‘Natural arid inevitable. action of the'sea;
or canstruction of any vessel, craft or.: 4 Ordiriary wear. and tear of the ship; or, . :
instrumentality in.- ‘use of: ocean : or . inland Be Negligent failure of the ship's owner: to provide the ©
“waterways. * vessé], ‘with proper equipment to” ‘convey the cargo
3. Loss; - damage, or liability sertinesit to. the risks. of under. ordinary’ conditions (AQUINO; Insurance MS
“ inland - trafisportation of ‘persons, ‘cargo, ‘or’ | Colle, supra at 245). :
baggage: | excluding© risks: ‘covered.. “by dife.
insurance, surety contracts, and’ ‘CMVLI Special: Marine- Insurance Contracts, and Clauses o
4. Loss. or ‘damages to: precious: stones, . jewels, 4.0 AI-Risks Policy'— insurance ‘against all causes ,
Jewelry, “precious °metals, whether, Jin course” of. OF conceivable loss or. damage (let at 241):

5. Los$ or damages'to. ‘bridges, ‘tunnels: arid ‘other: - Except:

: my ~ : Ls
a instrumentalities. 7 Of: transportation - cand - . _As otherwise: excluded i in thé poligy;-0 or
_communication : > ‘Due.to fraud. or. inténtional misconduct on the |
a. . Including ‘piers, wharves, docks.. and ‘slips, ’ ‘part. of:the insured (Choa Tiek Seng ve CA, ,
‘,and: ~other ’ aids. navigation -and o "GR. No. 84507, March 15, 1990). aa
us transportation; we
‘bi Including~dry docks: ‘and -marine- railways, ‘Burden, of Proof: . ae
‘dams ‘and appurtenant, facilities- for ‘the . The insured has the initial burden’ of proving s'that
_ control of waterways _ : eo - the cargo was in good condition when the policy ~
attached and that the cargo was damaged when

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unloaded from the vessel; thereafter, ihe burden Sources of Freightage:

shifts to the insurer to show. the exception to the 1. The chartering of the ship;
coverage’ (Filipino. Merchants: Insurance v. CA, .2, Its employment for the carriage of his ownn goods;
G.R. No. 85141; November 28, 1989). : and
3... Its employment for ‘the ‘carriage ‘of the goods of
2. ‘ Barratey Clause | =~ clause which, provides that : other (DE LEON, Insurance. Gode, ‘supravat: 349).
there:can be no.récovery on ‘the policy.in case of
any- -willfut. misconduct on the part of the master . When Insurable Interest ‘on, Freightage Exists ,
or...ckew | in: pursuance of - some unlawful or if a price.is to. be paid: for the carriage’ of goods it
fraudulent purposé without consént of owners, exists when ‘they are. actually’ on board, or’ there. is: °
and ‘to the. prejudice of ‘the owner's interest ‘some contract -for putting them on board, atid both .
(Roque. v: JAC, G. R. no. & 66935, November 4IW - ship and goods are ready, for the specified voyage
1985). . ‘ (INSURANCE CQDE, See. 106). ; : :

'3.. Sug: and Labor Clause <- Where iit ‘is:stipulated: Thus, there is ho insurable interest i in:‘freight:
in the. policy that the-insured.- shall:labor:for ‘the 4. Where there‘is.no contract and ‘ho part of the’ goods 7
mo recovery, ofthe property, thei insurer:is liable for . - expected to be carried 3 are on board; and...
2. Where the vessel-is.a mére “‘séeking: ship,”. car a vessel
the. .expeérise.. incurred ° _ thereby - (INSURANCE
GODE, ‘Sec. 165). - - _ looking-for. cargo. to be transported;-on-goods, not
h. raatloaded: (DE LEON, Insurance Code, “supra at. 345) |
insurable interest i in Marine.‘Insurange’ EY 7 ey
Corcealme it, in Marine Insurance
Marine insurance .is- invalid ,unléss., ee by; an:
= “Back: ‘party.in i a .arine insurance: contract i is bound to
insurable interest, in the ‘thing insured ° DEEN, eC cate the following: bos Ly .
. insurance ©Code, supra at 3:339). Jory ae,yee
ate aii m in Sec.,28; .
. mg f Al 9, fo Nich he possesses thatetial to
1. Shipowner ,
» Over the vessel to. the extent of itsvahie: ; wh truthi in‘relation to all matters
if.hartered; theitécov.weTy iis: only lip to the IP pected ‘upon: inquiry.. discloses’ or |
woof : amount. - not: ree epee -froms:
aoayres aes
to (INSURANCE CODE, Sec.
- chafterer |
. Sec.102);.. : fp
ulf hypothecated b OF hen Ganieatisncdes Not Vitiate. Contract
‘difference. ua By— xy «GSINicesimént inia marine insurance, in | respect to any
os
and, the. amount ‘of loankyinSie z ee flowin moron ne‘not. vitiate thé entire
CODE, Sec. 103); and °
b.: On expected freightae’ 100-7 10

2 “Cargo owrier. a
_a..Over the ~cargo “and. expe ee
4», INSURANCE: CODE, Séc. 107);. ‘and a5. Aaa ot ,
. If -hypothecated - “by: . reSpandentia;. : Liability to seizure from Bieach of orion laws: of :
. difference between the valuie.of: goods and: the: 7 trade’ - . a
ur Of loan: “INSURANCE * ‘CODE, . 4. .Wahtof. Necessary documents; and”
5. "Use of. false or simulated papers (INSURANCE
“3. Charterer: Be
a _ Over: ‘the.amount: ‘ed is:liable to. the'shipowner:
‘if the. ‘sbip is Jost:or damaged: during the | |
voyage (INSURANCE. CODE,';Sec:108); and | a
‘. Dy ‘Over his ‘expected ‘profits of freightage if, ‘he, : Be tae ——
accepts cargoes from other persons: Tor a fee
_ (NRURANCE CODE, See.©. 108):

Freightage Co
All the -benefi ts: derived by the owner, -éither from
chartering ‘of the ship or its employment for carriage:
-of his own goods:of those of others8 (INSURANCE .
CODE, ‘Sec. 104). , be communicated : ‘lof the “insured: -whose |.
(INSURANCE CODE; ‘duty: ‘is. -to give’
See. 110). information. Se

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unseaworthy for the purpose of jnsurance upon the

cargo (INSURANCE CODE, See. 721). .
The concealment of ariy Concealment - any| .
.fact-in relation to. any of ‘material fact wih ‘Vitiate . Period:of. Seaworthiness
the ‘matters -stated in| the .entire contract, . . General Rule: The warranty of. ‘seaworthiness is
Sec. 112 does not vitiate whether or not the loss ‘complied ‘with if the ship be seaworthy at the time of
‘the entire . contract: But results from. the risk the commencement of the risk INSURANCE CODE, —
merely - exonerates the concealed . See. 117). wy
insurer from .a- -risk
rresulting from. the fact : Exceptions:
concealed.. . 1.° Time’ Policy - the’ ‘ship! must be seaworthy atthe
(AQUING, Insurance Code, ‘Supra at 260) “commencement of every, voyage that she may
“undertake during the period, of the coverage; ’
3 Representation jin Marine Insurance / ’ . , 2. Cargo: Policy . =. each Vessel upon: which: the
ha représentation: by a: person insured by a contract - _. @argo vis. shipped “or jtransshipped jhust be
. Of: ‘marine: ‘insurance, ‘is’ ‘intentionally: false in any ‘ ‘Seaworthy cat-<the° commencement: of © each.”
material ‘respect,“or in: respect.of-any fact on which _ Baiticular. voyage; a .
‘the. character and nature: of*:the’ risk: dépends, the: 3. Voyage: Policy: ‘contemplating a voyage - in
’ insurer.may rescind the ‘entire contractot (INSURANCE. ” - differenit: stage$.— the ship must be‘seaworthy ; at
CODE, Sec. 713);:. ‘the comimencement of each stage. of the: voyage;
“cand. :
Effect of False Repreventation: by Insured | £ . Port Policy. = the “ship méist be seaworthy: at the
1. Intentional +.any: misrepresentation ofa mat F . time the vessel is.exposed:to‘any:risk at the port .
‘fact made with fraudulent:intent avoids the a Insurance Code, supra at 329). uo
2. Not: intentional ' ‘but: material’ to ‘the: risk: the
- _ irisurer may also rescind the contract: from the” the Warranty of Séaworthiness: .
time’ the represeritation beconies”“false (DE. Conuitiod’s
1 of the structure of the ship; :
LEON; Insurance: Code, “supra at 353): Lo 2. It mirst Bey ‘properly laden::
wi : Sune dd wile ‘cofmpetent master;

- “Expectation "
The: veventual - oe i of, a sane «and ¥ equipment; and:
. ecessary . or: ‘proper. ‘stores and
: implements for the: voyage (INSURANCE CODE,
Sec: 1 18). .

Wher the.ship t becomes’ unseaworthy during

1 Presence. of: insurable’ ‘interest i : the voyage’, to. “which :an ° ‘insurance relates, ‘an
- * . CODE, Sec. 102); _. unreasonable. delay’ in ° repairing’ :the defect.
2: Against- : improper. “deviation: UINSURANGE exoneratés the:insurer.on:ship or Shipowner' 's interest
. CODE, Sees. 126, 127 and 128);-- “from- liability : ‘from. any-- loss arising | therefrom
vO 3... Against ‘Ailegat: veriture; (SUNDIANG | & AQUINO) . ‘(INSURANGE. CODE, ‘Sec, 420)».
‘ .” Reviewer on ‘Commercial Law, supra at: 267);
Ae. Neutrality: = the ; -ship-. will’ Garry.the “requisite : implied: Warranty’ of ‘Seaworthiness" Applied to
"documents of-nationality of: neutrality. of.the ship Cargo. Owner «020 .
” :OF-cargo: where - such nationality or’ neutrality; is’ ~ _ ott becomés the obligation ofa a cargo. owner to lookfor *,
3S Wairertod “WNSURANCE:, ‘CODE, ‘a-reliable. common carrier, which Keeps its vessels jn
. See. 122); and.. ; . ~ . $eaworthy’ ‘conditions: “The. shipper may have ‘no
- Ba. Seaworthiness of thé ‘ship at the incéption. of the : ‘+ control -over:: ‘thé: vessel: but héchas control .in::the |
- insurance (INSURANCE, CODE, Sec. 415), _ - choice. of the common. carrier ‘that will transport’ ‘his’
. “goods (Roque Vv. IAC, supra): .
‘Seaworthiness a 6 ‘
‘Whether. oF:not the ship: is. reasonably fit. to perforin Waiver ! ‘of. Warranty is “Not Admission ‘of ‘
the service and to.encounter the.ordinary. perils. of the: . Seaworthiness: a
“voyage: (INSURANCE: CODE, Sec. 1 @). While the: paynient by. ihe: insurer. for the insured °
~ value. of the Jost:cargo' operates as a waiver. of thé -
. Seaworthiness. ve ‘Gargoworthinéss. insurer's: right: to enforce the term of :the implied
A: ship. whichis, seaworthy. for: the purpose - of an* / , warranty. . against- the: insured. under the marine
_ insurance. upon ‘the: ‘ship . may, - nevertheless, by ‘insurance policy, the. same. cannot be’ validly
reason’ of# being -unfitted : to © receive the cargo. be ~ interpreted as an automatic admission of the vessel's

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seaworthiness by the insurer as toforeclose recourse iii. Total destruction; or

against the common carrier for any liability under the . iv. Other. event ‘which effectively deprives
contractual obligation as such common carrier ' the owner of-the possession, at the port.
(Delsan Transportation Lines v. CA, G.R. No.. of .destination, ‘of ‘the ‘thing . insured
127897, November 15,-2001). (INSURANCE CODE, Sec.132). —

Deviation Complete physical destruction of the subject -

It is. the departure from the course of the voyage matter is not essential to constitute an actual
insured, or an unreasonable delay in pursuing the total loss. Loss may exist where the form and
voyage, or the.commencement of an entirely different specie of the thing is destroyed although. the.
“voyage (INSURANCE CCODE, ‘Sec.. 128). . materials. of which it consisted still exist (Pan.
' . Malayan insurance Corp.’ ve CA, G. R. ‘No:
Instances: (D°UC) - . 95070, September 5, 1991).
' 1. Deviation from the agreed voyage;
2. Departure of vessel from the course of the: sailing . Actual loss. ‘may: be presumed from. the
fixed by. mercantile usage (INSURANCE CODE, - '. continued. absence of a ship without being’
. Sec. 123); heard (of: The iength of time whichis
3. Departure: of. véssel from. the most natural, direct, _sufficient-to raise this presumption.depends
and advantageous. route ‘if not-fixed ‘by mereantile.- on ‘the ‘circumstances. of the case
- usage (INSURANCE CODE, Sec.-1 24), oo) a “SUNSURANCE CODE, Sec. 134).
i AN i) —
4. Unreasonable: delay in -pursyj jnig: joao 36 ‘
. ‘(INSURANCE .CODE, Sec. 125)ae ee mab cb sthuctive or Technical.
'5..Commencement of..an ental ciffeton a oS ve onstructive Total Loss .is a loss not* yet
(INSURANCE CODE, Sec: 1p8, : actual ® ain character. but gives: the. insured a
Tightto apanien (INSURANCE: CODE, Sec.
Kinds. of Deviation: BI).\4 7
A ey
a
4. Proper (CANS)
a. When Caused by’ oinhlis
Btafces. ofttiae ye!
En PARMAR acc bg
T, ere is: “Constructive Total - Loss when:
_ Control ofthe_ship: cagteirvan iship tee
b. When made-in ‘good a i? Acubtiosd 4 f more a than % 75%) of the :
existing/ ‘assumed pe
c. When Necessary to: cere
.to-avoid a:peril (real:p Aang
d. When made in.good faitp-to SAN e aP , offnore than % @5%) of the value of the
: an ale é A ; Ship or cargo; ’
eee ,
or. to’ relieve . another\ vessel
- (INSURANCE CODE, Sec{26)._ "90 Expensé of transshipment wil exceed %
= _ Effect i in case: of: Loss/injury: Thesi SE «eo of value‘of cargo”.
men Mage: reducesthe value: of the ‘vessel:
liable. The efféct-isas if ‘there. was soutton ME AWS ee of cargo ‘by tiofe: than: . (75%)
(DE: LEON, insurance Code, supra at BEA (NSURANCE CODE, See. 141).

2. Improper -< Every: deviation, which is. not Broper

vr . 2. Partial: — that which: is not: t6tal- (INSURANCE :
(INSURANCE CODE, Sec.1 27). - CODE, Sec. 130). :
Effect'in case: of Loss/hjury: The insurer iis: no. 4 ‘ Soe

longer llable UNSURANCE; CODE, Sec: 428). Abandonment os \ ,

. itis an.actofthe insured by: which; ‘tier a gonstructive
Note: The fact that the deviation did’ ‘not increase total loss, .he declares‘ the relinquishment to the :
the .risk -or ‘in any: wise” ‘contribute. to the Joss. insurer ‘of his interést- in- the. ‘thing insured -
suffered.-is immaterial: OE -LEON,, Insurance ne _ INSURANCE CODE, Sec. 140}.. Co
‘ Code, ‘supra. at: 368).
Requisites for Validity (PEN- FACT):
Loss i in ‘Marine. Insurance. ™ The abandonment must: be neither. Partial, hor ..
1. Total ; , ‘eonditional (INSURANCE: CODE, Séc: 142); °
a. Actual ~. , 2. The notice of. abaridonment must bé Explicit and
‘There is. Actual41 Total Loss When (DITO). ‘must specify “the © . particular: cause: of |
i. ‘ the Damage renders: the ‘thing valueless abandonment (INSURANGE CODE, Sec.146);
to the, owner for the:purpose for which he . 3. It must be made by givitig Notice ‘thereof-to the
held it: - insurer which maybe. done: orally or in writing
ii: there ‘is Irretrievable loss. caused. by -_ - (INSURANCE: CODE, Sec. 146);
sinking or breaking up;

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- Note: If notice is ‘done orally, a written notice. of . Effects of Acceptance: (ESIF2)

_abandonment must be submitted within 7 days - 1. Insurer admits the Existence. of the loss |
‘fram such oral’ notice (INSURANCE | GODE, Sec. "(INSURANCE CODE, Sec: 153); :
‘ 148). 2. Insurer: admits: ‘the. ‘Sufficiency * the|
- abandoanient. (INSURANCE CODE, see. 18S)
4. It must’ “be. Factual (INSURANCE ‘CODE, 3. Abandonment becomes: Irrevocable, unless. the
Sec. 144); . ground ‘upon which it-was made ‘prove to be
5. There must be. an Actual relinquishmnent by the . unfounded (INSURANCE CODE, Sée"154); ° *
person.insured of his interest in the Abing. insured 4.5 Freightage earned previous’ to. the loss belongs -
‘ (INSURANCE ‘CODE, ‘Sec. 140); | to the insurer of said freightage (INSURANCE
6. ‘There. must be. .a Constructive total loss : CODE, Sec. 158); and. ~
(INSURANCE: CODE; Se6.141); and." 5 Freightage’ subsequently earned belongs. to- the
Be _ It must be made: within: a. reasonable.Time after ‘insurer, of the: ship: {INSURANCE CODE,. ‘Sec.
- receipt ° of’ reliable’ information.” of, the Joss~ 185).
_ (INSURANCE CODE, Sec. 143).
‘Loss. of Profits : Separately Insured .
Effetts ‘of Acceptance of Abandonment: “Where profits are sepafately. insured in a contract of
4. ° Pransfer..of Interest — it’ is. -equivalent..to a. _marine insurance, the’ irisured.is entitled to recover,: .
-transfer by’ the insured of ‘his interest to “the ‘in case of loss; a proportion of such: profi ts equivalent ©
insurer with ‘all the. chances. of- recovery - and.) ° to the | proportion which-the value of the. property lost
‘Indemnity (INSURANCE CODE, Sec. 148). DK, ‘bears.to the value of the whole (INSURANCE C CODE,
Sec.160).
2 Transfer ofAgency — acts. dorie in- good fail Oy.
those-who were’agents of:the insured. in. respect } Formula npgermtinatthe Amount of Recovery:
. to thé-thing insured, subsequent to: the. loss; are. Vales
wake,
atthe’ risk.of the .insurer, and for- nis“ benefit” roperty 16s “Amount of: , Aniount
(INSURANCE CODE, Sec. 150). Ci Ca : ‘Value of whole- -X > profit =: 2 of |
“> proper ee “insured “Recovery
at ‘Effect of Failure to. Abandon ‘ my -insuréd }a
if ‘the: insured fails. to ae
- nevertheless- recover “his “oe

(INSURANCE CODE, Sec. 4: aunt ‘of the profits insured is

f of the whole: cargo: from which
. Quasi:Abandonment 5 are oo to be. Tealized is P80,000,.
. If a-rvarine insurer pays for-a: loss: sag if i tw
actual total loss; he. is‘ entitied: to. Whatever may :
Temain of: the thing, insured; or ‘its: “proceeds
' -salvage, as if there had been a. formakabando
AINSURANCE CODE, Sec. 149). we 49,000. a
P80,000 “oF 0.60.x"- 200, 000 = . P12, 000"
‘Aéceptance _
Where notice of abandonment i is property given, the. : (08 LEON, insurance Code, supra’ at 398-304)
rights ¢ of the irisured are‘not préjudiced: bythe fact that -_
. the insuier’réfuses® to ‘accept: the abandonment. eo «presumption. of Loss of. Profits oe BG .
INSURANCE, CODE, Sec. 151).. When: profits are ‘valued: ‘and: insured’‘by. a ‘cGhtract of |
L marine “insurance,” a: loss.-of “them is “conclusively /
- Note: ‘By’ iniplication; acceptance or. réfisal. has: no , - ‘prestimed: from. a: loss’ of ‘the: property’ ‘out of which’
‘effect ‘ort a Valid ‘abandonment. Even if there’ is no _ they are expected to. arise; . and the’ ‘valuation’ fi ixes ;
accéptance, a ‘valid abandonment, if ‘not revoked, ~ their amount (INSURANCE CODE, Sec. 182).
- absolutely: gives the. insured the’ right to claitn as’ if ;
-there was actual total loss. ‘The refusal, to accept of “Average ; . ae : .
thei insurerer only ‘prejudices the.i insurer. (See Discussion’ ‘on Average in Transportation Lew) .

If an insurer refuses to accept a2 Valid abandonmenit; : Right of the Insured in ‘General Average my
he. is still.tiable upon ah actual total loss, deducting Insurer. may be held jiable for the-insured’s" proportion .
from the Amount any proceeds of.the‘thing insured _ of all general average ‘loss assessed upon the: thing ,
.which may have come ‘to. the hands of the insured ; "insured. {INSURANCE CODE, See: 138).
| ONSURANCE. CODE, Sec. 156). S

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Option of the Insured .Formula for Co-Insurance:

The insured may either— . » . | Amount of : ue
1. hold the insurer directly liable for the whole of the _.Partial Loss Amount of Share of
“insured vatue ‘of the property sacrificed for the Value of X Insurance the
general benefit, ‘subrogating ‘the insurer to the interest in: Insurer
insured’s: right. of contribution, or Property .
2. demand contribution from the other interested
parties as soon as the vessel arrives, at her . (AQUINO, Irisurance Code, supra at 349),
destination (INSURANGE C CODE, Sec. 167).
Note: In’ marine’. insurance,. with ‘or without a
Liability of the Insurer , stipulation in-the policy; the principle of co-jnsurance
' -4.. The insurer's liability-for the general: average idss cee always applies. In--other. types’ of insurance, co-
sis limited. to: ‘the. .pfeportion. .of. : contribution:. “insurance of the’‘insured. may apply: only. when there
. attaching to -his policy Value where this ‘is less is- express stipulation (DIZON, insurance Code, supra
*. than the contributing value of the’thing ingureq at 633).
(INSURANCE CODE, ‘Sec. 1 66). oes .
Mustiation: 2 ‘ ,
2. The. liability of the ‘insurer. shall be: less than ‘the Kit is the owner of- cargo valued at P100, 000. insured
‘ amount’ of the insurance: in. case ‘the’ requirede=:an:-with X. Co. in the amount of P70,000. Part of the: cargo:
ca contributory valle. exceeds that policy, valle, they isto’ assessed: to be around P10, 600..
- insured: is liable to contribute. ratably: with, t the’,
insurer to the indemnity of the,geriera ay yetage=* Ailed Seatidhnts0, X will be liable toj pay P10,000
. fNSURANCE CODE, Sec, 186, Ke (se eaith
er aoa ‘of his, liabilitys. ‘However; '
i: Px Seetionst59, X is: ohlyiliable for-70% ‘of:
‘3. The insurer shall be- fiablé-<CBO | paflial logs, - A ny y batt at se “Kit: shouldering the: other 30%,
only for such proportion. of the emu ‘sured by 22 Se he was a cd:
him: as the. loss bears. ty ihe vvalue, ofthe wwhole #S
. interest of the insured jin Ane Aproper ty.insured
“in | %
ae 4
(INSURANCE, CODE; $Sée-759). = a A Id Rul : :
eh 7 pam ae f ship or. its equipment, the
| Discharge of Insurer’ rom Shey LAN sens an
4. After the: ‘separation. ne igs res alk ble. - ta¥ ise:stipulated,‘the insurer. is
‘ eortribution; and ‘y LARS, I fe Femaining. cost ofi repairs after —
2. _ When the insured has nb lectec or: vaived his "excep! ‘that anchors: must-be. ‘Paid in
» ‘Fight... to’, contribution.-off SURANGE .” eh
- Sec. 167). me . : : "
oe
Sw NCE“oaCODE, See:voces HOB),
Right of insured i in Particular Aven ae fo
- The instired can only. claim from his. owning rand J - i <

cannot: demand. contribution (DE. LEON, "Rlornce SV

Code; . Supra at 378). a a
Fire Insurance | :
‘Free from. Particulaé Averagé (FPA ‘Clatise)’_ - Iti is.a contract by which, thei insurer for’a. Gonsideration
“A clause agreed upon ina policy: ‘of marine’ insurance . : agrees . to, indemnify the insured, against loss -of,. or..
in-which itis stated that the ingurer:shall not-be liable. damage:to, ‘property by. hostile fire, ‘i including Joss, by.
fora “particular average-but-he shall” ‘continue to be : lightning, - Windstorm, ‘torhado: or ‘earthquake ‘and .
liable: forhis Proportion of all:general average: lossés - other allied:-risks,, ‘when such: ‘tisks .are:, (covered: by-.
assessed: upon the thing. insurer (INSURANCE ‘ “exténsion to fire insurance policies. or. ‘under sepaiate
‘CODE, Sec. 138). . . ~ policies (INSURANCE CODE, Sec, 169)...
alee
fy

Exception: When there is a total deprivation on.1 the

- part of the ifsured..of: the:possession:,of ‘the thing | ; ee
insured (INSURANCE CODE, ‘See. 138).

, Co-Insurance. ‘ ,
‘A marine insurer is flablet upon a. partial loss, only: for :
such proportion ‘of the. amount insured :by him-as the |
loss’ bears to the value of the wholé interest of the.
‘insured ih the property insured (INSURANCE: CODE,
Sec. 459).

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_ SAN'BEDA LAW CENTRALIZED
BAR OPERATIONS - MEMORY AID 2019 -

' Hostile Fire v. Friendly Fire As such,. when such alteration does noti increase the ,
‘tisk, the’ policy is unaffected (INSURANCE CODE, .
Sec 171). .

Similarly, if the alteration is within the’ imitations

- expressly- stipulated - in” the ‘coritract, éven: if
' in¢reases:.the’ risk .or ‘becomes the, ‘Cause of the lose
the, policy is unaffected INSURANCE ¢ CODE; Seo.
ought. tobe: ‘It ‘can aigo | 172).
be a fire that started. as’
friendly. fire’ but-escapes| ° : Where the increased i in risk is occasioned by. accident
from its original place or} ~ or by cause over which the insured. has no coritrol,
‘it becomes too: ‘Strong as; the’ policy i is unaffected (DE. LEON & DE ‘LEON Jr,
‘supra. at 408).

‘Fall-of-Building:Clause.
itis: ¢ommon clause:i ‘ina
.the ‘building or any “part
résult of. firé; ‘the- policy
. (Nichols vs: Sun’ Mut. Ins.
fire institance policy that if
theréof falls, : ‘except as. a
‘shall immediately céase -
Co (Miss. de 14 So: 263).

Option to Rebuild Clause

he patties may ‘Stipulate on. the repairing;:-irebuilding

ged" or destroyed i in'liew’ of payménté .

loses, caused by the following risks:
He loss(INSURANCE CODE, sec. 174).
Lightning; . woe i
APRON+

.Windstorm; ,
insurance ~shall- be - ‘pledged,
Tornado;
hypothecated,, OF ratisferred. to aiiy person, firm, ‘or
Earthquake; and. :
acts as _agent for .or : otherwise
Other “Allied Risk aii oft rs' = NK issuwing company, anid. any’ “such
a M
‘shall be: void" nd ‘oft iio effect: insofar. as it'may |affect :
Greditors of. the insured’ NSURANCE CODE,
policies to alow. the ‘insured to ecoven ite Shey
therefrom,HINSURANGE CODE, See.
mR _ The: fire.insurance. ‘policy: carinot, “be, transferred.
. without’ ‘the “corisent’ of the’ ’“insurer. Even’ if" the
alienation is allowed in ‘thei insurance policy; itis’ also :
‘required. that: thé transféree ‘has insurable: interest .
- over the irisured: property (AQUING, insurance, Code, .
o supra at: 301-302).

re or: .cpidition. is beyond . that. expresely
. allowed. by the Limitations in the policy; .
3.. The ‘alteration. Increases. the risk; and.
~ 4> The alteration is-.made -by Means. within: ‘the
control of. the insured INSURANCE CODE,. Sec
1 2): Loe,
. Gasualty/Accident Insurance’ / , .
- Itis an. insurance covering.loss:or liability. aarising from’
accident ‘or mishap, : -excluding®. those: sfalling |under’ .
a ‘other. types:, of. insurance:. such | as. fire or marine,
. (INSURANCE | CODE, ‘Set. 176).
- Note: Aside from: ‘compulsory factor vehicle ‘ability .
insurarice, ‘casualty: ‘insurance ‘is:.governed: ‘by the.
general: -provisions | ‘applicable .. ‘to all types. of ©
insurance; and. outside of-such’. statutory, provisions,
‘ ‘the rights |and - ‘obligations of the parties ‘must -be |

2018 SAN BEDA LAW CENTRALIZED BAR.OPERATIONS | 279°

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SAN BEDA Law CENTRALIZED. BAR OPERATIONS - MEMORY AID 2019

determined by their contract, taking . into Right of injured Third- Party to Directly Sue
consideration its purpose and always in accordance: Insurer _ me
_with the general principles of insurance law (Fortune “4. Third Party Liability| Insurance .
Insurance. v. CA, G.R. No. 115278, May 25, 1 1988) “Injured third party can directly sue ® the | insurer?

Risks that May Be Govered: Purpose: To protect injured person against the
1. Theft, Robbery, arid Burglaiy -Insurance: - insolvency of the insured wh6 causes, such-injury
insurance : against loss of.- property. by the (Shafer v. RTC, G.R. No. 78848, November 14,
depreciation of: burglars and. thieves: (Fortune 1988). ;
Insurance . ve CA, GR. No. ‘115278, May (23,
1995); 2. insurance for ‘Actual Loss or Payment. by ,
Insured
“Exception: Persons i in. the. insureds service
¢ and: Third party has - no cause of action. against the
employment ((Forturie Insurance ve CA, G R. No. insurer. The third person’s: recourse-is. limited to
. 115278, May: 23, 1995). , . ‘the insured: alone’ (INSURANCE : CODE; Sec. 53;:
Bohifacio’ Bros: Ve ‘Mota, G.R. No. L-20853, (May
. Purpose. of the Exception: To. guard against - 29, 1967). , C : noe.
‘liability should ‘theft’ be committed by one.having
unrestricted: access to: the property (Fortune: Basis. and Extent of insurer’s Liability.
"Insurance v. CA, GR. No. 118278, Mey 3] ji Fhe, ifisurer jis not solidarily liable -with., the:= inauréd,
1996). Theli ingurel*s, liability.is based on contract while that
epee sbthe ingureds
Nis- -based on ‘tort. Furthermore, , the
2, ‘Compulsory Motor Vehicle
seuhonsonenui nce
~ contract. of insurance ‘against ppbsenaer-and
Bs
. third-:party liability for déattt:
Welep diy injuries and. © eae GC. Ri NOSE.Til Sa 26, 7988).
damage to'-property -arising: fo Pot r. vehicle.
accidents (INSURANCE; CODE, {Sec.. 786(f); Ads Accident! ‘ \ ox .y
Fad mrgperneea
‘3. Plate Glass: Insurancef- ‘ips
‘insurance. against "Tees Anrugeresceabia and. uhexpected turn of events. that
’ from agcidental-breakin geri , acausés Igss'i in valtie, jury, ‘and increased liabilities. .
doors, show-cases, etc! (Black (s:Law Dictionary, gine. event. is ngthdell iberately caused and.’ is. ‘not
; gna Ed. ) : nt awe _ } Black's Law ictionary,- ‘6” Ed. )..
“4, Personal Accident
| - In ura’ i We pp tet
—. insurance - neuer ier o bw a yap ens bY é hance or fortuitously; without
indemnify, the assured.a ainst, cipent cakes 0 tH éntio
tionyor design, which is unexpected, unusual and.
--time, and - . Suffering: resiilting | roan. acci Bde oe“anifotes seen fSun Insiirance ‘Onficg Ltd.” ve CA, GF R.
causing him physical iy (alacg® SOT aeAQ; 2383/ dally 17g 1992)." :
. Dictionary, 2°4 Ed.);- dian “
we oe
‘5. Employer's - "Liability. ands, wares
Ah gis
.dnsuranee .- insurance. on the. “Wail IF the
assured to. make: compensation or pay ‘damag jes ee
‘ ‘for; an accident, injury: or. death, occurring’ 7 oMESs is -an * gecident.. - The: " insured. was
Oo ‘servant. or. other. employee, in the: course of: his unquestionably negligent ‘but -it- will not prevent his
: employment under ‘statutes- imposing such: beneficiaries. from recovering .undeér. the insurance
+ liability on employers (Black's Ss Law Dictionary, and ‘ ‘policy (Suni Insurance Office Ltd. ve CA, GR, No.
.Ed.); and - / 92383, July 17, 1992). : : .
"6. Other Substantially -‘Siniilar Kinds” - pollution |
- ‘liability. insurance; . garage. insurdnce;. medical - In the present case,’ while. the participation of the. .
. Malpractice insurance, Pharmacist «: ; Mability - ” insured in’ the boxing contest is ‘voluntary, if without
insurance; etc: the’ uniritentional slipping ‘of the deceased, ‘perhaps
received ‘the head and
Third: Party: Liabitity lisurance: ’ would not have died. Where ‘the death or injury is not :
The: insurer’ assumes: ‘the obligati ion. by payirig.| the : _ the ‘natural. or’: probable result of: the: insured’s
‘injured ‘third. party:'to: whom: the: insured is.liable, Prior voluntary act, -which, produces ‘thejinjury, the resulting
payment by the insured” tothe: ‘third person: is not: - death ‘is within: the protection © of ‘policies | insuring
; necessary inorder that the obligation i may arise. 'The ‘against the death or injury ‘from accident-(Dela Cruz:
moment the insured becomes. liable to third persons, | veo Capital: Insuranice,- GR No, L-24874; Jurie 30.
the insured “acquires an’ interest ‘in. the’ insurance. 1966). .
contract which may be garnished fike’ ‘any other credit
(Perla. Compania de Seguros, Inc v: Ramolete, G. R.
No. L- 60887, November.13, 1997).

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SAN BEDA LAW CENTRALIZED BAR OPERATIONS ~ MEMORY AID ‘2019

intentional Persons Subject to the CMVLI Requirement:

‘Implies tthe exercise .of the. reasoning faciilties, . 1. Motor Vehicle Owner -'one who is the actual
consciousness ‘and volition. Where a provision‘of the . legal owner of a motor vehicle.in' whose hame
policy excludes. intentional injury, it is.the intention of » such vehicle is. registered with the ‘Land
the. person. inflicting the. injury that is controlling. If the - Transportation Office (INSURANCE CODE, Sec:
injuries suffered by the insured clearly resulted from ” 386(d)); and’
the. intentional act; [even that] ‘of a:-third-person , the” —' 2. Land Transportation Operator- orie who is the .
insurer is relieved frorn liability as stipulated. (Biagtan owner of a motor Vehiclé-or véhicle beirig:used
v.:- The ‘Insular Life. Assurance Co., Etd., GR. No. L- - for. conveying ‘passengers.° for. compensation .
25579, Maréh 29, 1972). ot . ‘including sefiool buses (INSURANCE. CODE,
ad
. Sec, 386(e))- ‘ .
There. is no accident when - a. deliberate. “act. is -
‘performed or. when the: injury isthe: natural and. |: “Compulsory Statute - : .
probable. ‘result of such. deliberate. act ‘(Dela Cruz Vv." The | land transportation -operator or a » motor vehicle
- Capital Insurance, G. R. No; L-21574, June 30 ) 1966). owner cannot operate his vehicle in public’ highways’
if there is no: policyi insurance or guaranty ‘i in cash or
No. Action Clause.’ eo = surety ‘bond jin force to-indemnify the death or’ injury
_ It is-a ‘requirement ina poliey of ‘Viability‘insurance “and/or: damage. to’: property of the ‘third. paity or
which provides. that. suit and final judgment be first: passenger (INSURANCE: CODE, See. 387). ss
obtained. against the ‘insured;.that only: ‘thereafter can
‘the person injured recover on the policy. (Guing Payinent, of Premiums coe
-Del Morite,n G. R. No. L-22042, August T 7 7, 1987) Premiumis.are paid by the operator or owners s of the
4 vehicle. It shall’ be unlawful to require’ ‘their drivers or

avoiding:3g matiplicity ofssuits (Shafer v.

78848, November: 14, ’ 988)... ;

“ P100,000

If. Common. Carrier. ~ P100,000"°

. ‘Motor vehicle . Death
th. Indemnity | -P70,000..
It.is-any vehicle propelled by any p
. muscular: ‘power using the’ public hig al and Funeral. Expenses, o P30, ,000.
. 4136, ‘See. 3(a))- . " , Note:”. the “parties. may : however enter into ‘an
insutance “coniract which provides | for -a’ bigger
Exceptions: Road rollers, trolléy Cars, . street-
“coverage (IMC. No.4-2006, dated July 26, 2008).
. Sweepers, sprinklers, lawn .mowers;: bulldozers, :
graders, fork-lifts, amphibian: ‘trucks, and cranes. if not.
Registration of | Motor Vehicles
_used on ‘public highways, vehicles. which run only.on -
* All ‘motor- ‘vehicles ° ‘and other - -yéhicles _must be
rails - ‘or, tracks, and ‘tractors, trailers... and. traction
- vengines, ¢ of all’ kinds. used’ exclusively f for ‘agricultural "_Fegistered: (RA. 4136, Sec. 5). : _
_ Purposes (RA. No. 4136, Sec: 3(a).
“Any registration of maior Vehicles not renewed ‘on
| or -
Compulsory: Motor Vehicle Liability: inpsuraiies _. a . before the.date fixed ‘for ‘different ‘classifications, as
The: purpose: of CMVLT i is to give immediate. fi nancial provided. hereunder’ shall. beconie delinquent and
assistai cé to’victims of motor: vehicle. ‘accidents‘and/ . invalid: wy, ,
~ On. “their: dependents, especially . they ‘are poor: For. hire motor: vehicles £ ‘on ‘or before the.fast
- regardless of the fi inancial capability of motor ‘vehicle working day of: February; * .
Owhers ‘or, operators responsible for: the: accident "2. Privately-owned motor vehicles- from: March 1
sustained: (Shafer v. RTC, ° GR. No.. "78848, to the last: working day: of May;- ;
" . November.14, 1988). :3.: Ail other motor:vehicles- from June 1 to the -
“ Jast:working day of June: except. when’ ‘the plates
, Scope:. Wt. applies ‘ to all vehicles: whether public or of suth motor ‘Vehicles are réturned - to the ~
’ private. Itis the only, compulsory ‘insurance
i coverage Commission in Quézon City‘or'to the’ ‘Offi ce ofthe —
-undér ‘the Insurance Code (INSURANCE | ‘CODE, - Moto?’ Vehicles: Registrar in the provincial. or city
Secs. 386- 402). ‘
agency of the Commission on or before the last °
sy

2019 SAN BEDA LAW CENTRALIZED BAR OPERATIONS | .281

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SAN BEDA LAW-CENTRALIZED BARAR OPERATIONS = MEMORY AID: 2019

working ‘day of December of the year of issue¢ b. In any. other case, claim shall lie against the
(R.A. 4136, Sec. 5(b)). +. insurer of the directly. ‘offending vehicle.
(INSURANCE CODE, ‘Sec. 397)...
whe May. Claim under. CMVLI
Passenger The claimant is not free to choose from which insurer
He is any fare-paying person baling: transported ‘he will claim the “no fault ‘indemnity’ as the law makes :
_ and: conveyed ‘in ‘and by a: motor vehicle for | it Mandatory that the claim shall lie against thei insurer
transportation’ “of. passengers for: compensation, _ of the’ vehicle «in -which the occupant. is. riding,
. Including-persons expressly: authorized by law or. mounting or’ dismounting from. That said. vehicle
by the -vehicle’s operator: or ‘his agents: ‘to ride might not be.the one that caused the accident is of rio
without fare (INSURANCE CODE, Sec, 386(5)). ’ moment sincé the law itself provides that the: party
. paying may’ recover against the-owner of ‘the vehicle
2. Third: Party responsible ‘far ‘the accident- - (Perla, ‘Compania’: de
He is. any: person. ‘other. than the ‘passenger, Seguros, Inc. Vv. “Ancheta, G.R. iL 49699, August 8,
“excluding | a member. of..the- household . or. a 1988). °
member.of the family within the second degree of
. ‘consanguinity: or affinity, ofa moter: vehicle. owner - No Fault: Claim Does Not Cover Property’ Damage ,
‘or. Jand- tranispoitation operator, : or: “his: employee. ‘This no-fault -claim: does. not: apply" to . prope arty
in respect of ‘death or bodily injury arising. out,of.-- «Aamage. An insured | may ° choose to avail of an
and in the course of employment (ONSURANCE C, deny policy’ ‘which may, cover: damage to.
CODE, ‘Sec. 386(¢)): fuse ae a Brope ofa, third- -party or “passenger, as the, case
Dt 4 macy a if i ipis*effered by an insurer subject ‘to the
No Fault. Clause” ee aor payiient. OF Ais > eemputed 9premiums as may: ‘be ‘
Any: claim: for-‘death- or: injury. C&S
any, ‘| nsu i
third-party pursuant to ‘the...pf avision Sol oy
shall be paid without the: necessity'of provi seete HR XY e 3
negligence of any: ‘Kind:ONG ERANS E CO i MG an tp Faure
391). Ley OP fe ie No “Hault ‘Indemnil Y, is..without prejudice to. the
Lae ve i er- dgterminalion of the: proper party at fault from. . . ,
Purpose: ‘To ‘guarantee:= et spilty fortde i ee may: be demanded (PD. ”
to injured’ ‘persoris ‘in. motor Vv
LEON,. dnsurance ‘Code, sunka af 0) yas é Ie . le al |
nClau Jes in’G MVLI: (CAT)
Limitations of. No- Fault’cial : ‘ te erat} on Clause .

om
4. The total ‘indemnity i in réspéct Of’ an\ypers in’ A oheas which Jjprovides’ ‘in essence . that:‘the .
" not:be. {more} ;than P15,000% 0. Ry ‘shall’ ive all such. inforrnation’. ‘and
siaficg, “the insurer. may, require,* ‘usually.
Note: the origivial; provision
ribet AGRI 35 cre — an gateendance at.trials or hearings (Waste
mt not be. less.onvele15,000. " This sé fort h an iN Watope inent, Inc: -v. Inter. Suprius line. Ins. Co.,
aren! E.2d 322, 1991).
\ ur mit.
2. ‘Authorized, Driver Clause .
\ en. submitted . ‘- As the term itself: implies; this. means ‘that the:
‘insurér will’ be liablé- only’ if ‘th “driver “is an’. ~
“authorized. driver” -at: thé time -of ‘the! ‘accident:
(AQUINO, Insurance. Code, s or
b. Bipot of Injury:or Death. o
Death certificate and. ‘evidence 2Authorized Drivers:.
‘ . torestablish: the proper payee: or oa ‘The insured ‘himself; ‘or
. Medical report and: evidence of medical or.
_ hospital, disbursemént:i :In, respect. of. which. ~ permission, . 3whi
~.refund.is claimed. Be a _ drivers: and have hino ation. ‘to’ ‘drive st.
:
3.. No.double.recovery- oat oa ’ motor vehicle - ‘Willacorta v. Insurafice. .
‘Claim may be- made ‘against one motor. Vehicle. ‘Commissioner, “G.R. No.: L-84971; ‘October
- only:in.case -two or more? vehicles, are: involved: . 28, 1980).
a. Hf. ‘cJaimant. is: the occtipant, of a vehicle, ‘the
Note: The ‘tequirement: that the- driver .be-2 duly. - “
~claim. isto be made -on the. insurer ofthe
vehicle in, which he was.an’occupant, licensed’ and have no disqualifi ication 'to drive: a
~ motor vehicle. applies. only’ when . the driver. is
.driving ‘on. the insuréd's order or. with his

“282° | 2019 SAN’ BEDA LAW ‘CENTRALIZED BAR OPERATIONS -

 INSURANCE LAW
SAN BEDA.LAW CENTRALIZED BAR OPERATIONS ~ MEMORY AID ‘2019

permission. It.does not apply ‘when the person . Note: The clainiant | shall ‘not be required te
. driving is the insured himself (Palermo v. Pyramid execute any quit.claim or document: releasing the
. Insurance Co.; ines, G:R- No, ‘L- 36480, May 37, ’ insurer.frorm liability under the. policy of insurarice
1988). © Se . or'surety bond issued (INSURANCE CODE, Sec.
ff net . . my . , - 398).. . .

BL Theft Clause a
The motor vehiclei insurance may contain a theft’ Cancellation Of. CMVLT. .
' . elausé that’ makes theft ‘a risk: insured against .° A written notice of* cancellation of, policy must be
(AQUING;: insurance Code, ‘supra at 348). : _ given. to-the land transportation operator or owner of
oo |, the vehicle or'.Land ‘Transportation ‘Commission at
nee Note: ‘The. taking: ofa: wehicle by ariother person © least 15 days ‘prior to -the intended .effective, date
‘without ‘the: pérmissi6n .or- authority. from : the — (INSURANGE CODE, See 393).., tt
owner thereof is‘suffi cient to“place it within the |
- ambit 6f the word -theft.as: contemplated. in the. _. ‘Change. of Ownership. re
policy, . ‘and is therefore,” . compensable _ Transfer-of. ownership: does: not susperid. the policy
- . (Paramourit Insurance . Gorp: Vv; Remondeulaz, provided that: .
, * GRe ‘No. 173773, November 28, 2012), Coa! 1...The insurance coinpany shall agree |to ‘eontinue
wo such. policy:
, Notice of Claim So , , 2.. The change of ownership or of ‘the engine. ‘shall
Any person: ‘having any claim: upon ‘the cMvtt policy, ~. . be ‘indicated: in an endorsement ‘by’ the: insurer,
~ shall without: unnecessary delay .present to ;the/ Af and:
insurance company concerned: a- written notide Of. \ CA ane tuplicate of ‘the endorsement. is. filed
. claim -within 6 months from the date of the accident; ;
. otherwise, ‘the claim- will’ be deemed: waived.”
. (INSURANCE CODE, Sec. 397): Le .
ee ” M
ra . UF

cbBien: and Boe afig

~ 2. One year — period for+ bringing Gin actior®
a Sréuits in ‘Suretyshib ° } re
. the. proper. cases ONSURANCE®, BBQDE, Set jor Hon une Seoye one 5 calléd. the surety, uibually
397). : me & fapice Cor pany undertakes to-answer, under
terms'2 nd" Coriditions, “for the debt, default,
Note:: The ‘4-year prescriptive peri i fs ; or miscarriage of another (principal or, obligor) in favor
run’ only. upon the: denial of the claint bythe i ingurance £ of.Cattthird party (obligee): (NSURANCE: CODE, Sec.
company (Summit Guaranty & Irisuranice:Co., lng.
Arnaldo, ‘GB.RNo. L-48546, Pebmuary *%
vA ee --. Itis! ‘considered an insurance. contract if iti is,. executed
There ‘is: ‘absolutely “nothing. in: the pylaw which: - . - by the: suréty..as a. vocation; and: hot incidentally
= (INSURANCE CODE, Sec. 2:
: rnandates. ‘that the two periods must always: concur, -
as the. law makes’ ‘use@: of the phrase “ in the proper
cases" (Summit ‘Guaranty & Insurance: Co., Ine, Me ‘ : Undertakings: within -the ‘Scope. of Suretyship- -
»Amaldo, G:RNo. ‘L-48546, February 29, 1988). It'includes. official. recognizances, stipulations, bonds
,

_ OF,, undertakings” issuéd. under..Act No. 536;*.as.

Running of: Prescriptive Period | amended Agt No. 2206BS YINSUBANGE c CODE, See.
--Preseription’ start run from: the first denial. of the. -
177): eo te
claim, : not from “the--denial * of: ‘the: request for
reconsideration (Sun Insuranée: Offi ice Limited vv.-CA; , Liabitity of: Surety © . Hoa
GR. No; 92383, Sly 1 Z, (1992). . Although. thé contract of: a suietyship: is.
i in ‘essence
: secondary only-to.a valid principak:- obligation; the
‘Paythent of Claims: : . . . -Surety.becomes. liable forthe debt or-duty of another
A. ‘With ~ ‘agreement - insurance’ * conipariy’ shall : ‘although’: it. possesses no’ direct or: personal’ interést
- .ascertain the truth ‘and extent, of the’claim and. ‘. ever the obligations. rior. doés:it receive any. benefit
.'make “payment. within... five “working Says. therefrorn. -Notwithstanding’ the fact: ‘that the surety
(INSURANCE CODE, Sec. 398).’ . contract'is. secondary. to the principal ‘obligation, the
2: No. agreement — insurer to pay‘only under the no * suréty, assumes. liability. asS-.a régular_party:to the
fault’ indemnity without: prejudice tothe Claimant - undertaking’ . (First. .Lepanto-Taisho’. Insurance
-. from pursuing his claim ‘further (INSURANCE Corporation - v.. Chevron. Philippines; Ane, GR ‘No.
an CODE, Sec. 398). ‘ . L 177839, January 18, 2012): - Le :

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 INSURANCE LAW
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lilustration: : ‘2. Fidelity Bond-— one which pays an employer for

To better.understand the relationships between the loss growing out of a dishonest act of his _
-creditor, debtor. and surety: Think of a triang}e: employee, which may either be an: .
a. Industrial. bond —.one required ‘ by private—
A ‘” employers to cover loss through dishonesty
CREDITOR; | . b.
of employees; ora.
Public official. bond -one required of public
_ Officers for the faithful: performance of their
‘duties and.as a coridition of entering upon ‘the
duties of their offices.
DEBTOR - “SURETY 3. Judicial bond —-one.required in- corinection with.
judicial proceedings (DE LEON, Insurance Code,
oo supra : at 443-444). - .
- AB: Contract between Creditor and Debtor; i.e. Loan:
’ AG: Contract between Creditor. cand Surety, : ‘ie. ‘Continuing Surety’ a .
Surétyship. tis an agréement: ‘whereby: the S principal places. itseif ;
Ber Contract between’ Surety and. Debtor, ie. in a position to, énter into a. projected: series of |
Indemnity Agreement. transaction: With its creditor, without executing a -
noveseparate’
ee surety contract of bond for each financing .
You have a first contract between the.
J Debtor? ey Ja Or: credit. accommodation’ extended to the principal
the Creditor “A, ” say, a Contract of Loan débfor)(Totane v. China Banking: Corporation, G.R.°
osocloe 179880, “eKery: 19, 2008).
But before A would grant. the loarr,in BS et os
We
' ‘would have to be: protected so.h¢ scent omiéoneelses™ gn
“C,” to act as-a-surety..lf C aardesytherr héfe will be js they
2 "consid raed tor’ fumishing the bond or ‘the
€& second contract between f* anag The. second d diaranty, sethe 2 eo abi to pay premium
contract is that of Suretyshipf, . 2 Phen
\ gaa for as aga oe Hablty of. the surety shalt

~ But before: Cc would agree te lef ivesRa

would also like to be protecté od. S C. “= wilted ‘a thi ee
4
- coritract between’ B and C. This contra Us Salled ant
an
Indemnity Agreement. ; AD Saymerit: ah
YF
émiuin ‘be: ee} jes.a debt as soon as the
Nature of Liability of surety. % as neot ‘2 “suret ip..or bond-is perfected. and

S O E
1. Solidary: (joint and several}. “

e oe
oe the obligor (INSURANCE CODE,

: e e
.2. Limited to the amount of the*b¢ ond;: cant
3. Detérmined strictly by the tern Spi thenest he soo track Ot suretyship or: ‘bond. Shall not be
suretyship in relation.to: the p ‘pifiding: ‘unless and .until the: premium
. between the’. obligor and blige. M
ea ie Aw Tr as been paid (INSURANCE CODE,
(INSURANCE CODE, Sec. 178): See’ err o
ecg3°"Where the ‘obligge: has, accepted. the bond, it shall
Note: The. surety‘has: no: sright for intervenié- in® the "be valid” cand enforceable notwithstanding. the. ~
principal contract because the.‘Surety’ posséssés' no: non-payment of premiums (INSURANCE CODE,
direct: or pérsonal “interest-.over -the ” ‘obligations. - Sec. 179); .
" (Stronghold ‘Insurance ‘Company, Ine. : Vv -Tokyu 4. If ‘the contract . of “suretyship or. bond: is not
Construction vompany, Ltd.,
| G. R. Nos. 15882021; 7 ‘ accepted by-or fi ied withthe: ‘obliges, the surety:
‘June 5, 2009). , '.. Shall collect ‘only..a- reasonable amount, “riot
, exceeding 50%. .of. premium... due ‘thereon: as
Types of Surety. Bonds: (CFJ) -. service:fee” (INSURANCE CODE, Sec:'179); and
1. «Contract Bond~ one connected with const iction a 5, ‘If the non-acceptance of the-bond be due tothe —
“and: supply contracts. for thé- ‘protection ° if the’ “’. fault or negligence ‘of the surety, no'service fee;
* | owner -against, |‘a: possible: -défault by. the) ay stamps, or:taxes inipdsed shall.be.-collected by
“eoritractor. to ‘cornply: ‘with’ his ‘contract or- his , -the ‘éurety (INSURANCE CODE, Sec.. 4 7). “
possible’ failure to ‘pay, material men, laborers, .
: and ‘$ub-coritractors, which may either be a: ” , Reimbursement... :
' Performance bond *—' one: covering, “the “A surety: who’ paid’ the obliges can ‘recover what he
: : faithful perforrriance of the contract;:or a _ Paid .from; the’ principal. The.-right is covered-by a
b. Payment bond —'one covering the:‘payment _. separate. indernhity agreement whereby. ‘the principal
of laborers and material men. expressly, agrees to. reimburse: the:‘Surety whatever

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the amount thai it will be required to a the obligee " Features of Microinsurance: ,
(AQUINO, insurance Code, supra.at 377). 1.- Premiums, contributions; fees, or- - charges are
: collected/deducted prior to- the Oceurrence ‘of a
‘Note: Pertinent provisions of the. Civil Code of the - contingent-event; and a
Philippines Shall be. applied: i in.a.suppletory character 2. Guaranteed benefits’ are ~ provided - upon
whenever necessary in- interpreting the provisions of occurrence ofa contingent event (la. at 467)
a contract of: ‘suratyship, (INSURANCE GQDE, Sec.
4 0). Product Requirements: :
aks tO es sot . : -
Itisa financial: ‘product or'service- that meets. the risk
‘Surétyship Property wiéande , protection. needs of the: poor where: oe
‘4. The amount of contributions, premiums, ‘fees or
: charges, - ‘computed; ‘on “a'daily -basis,, ‘does not
* exceed 5% of the current daily ‘minimum Wage
- > rate for nohagficultural workers: * Metro: ‘Manila;
Vand: : . :
. The. maximum. sum of guaranteed benef ts j is ‘hot
more than’500 times of the: ‘current. daily minimum
| Two.(2) parties: | -. wage rate for nonagricultural. ‘workers, in: Metro
‘| 4. | Insurer; --- Manila (Mc No: 001 “40: dated Ja analy 29, 2070):
12. . Insured,
_ Financial Reporting. Framework. , : .
x, It is'a set of accounting and feporting principles,
‘standards’ ‘interpretations and pronouncements that
t be adopted in ‘the preparation, ‘and submission
hérrstathtery financial statements: and ‘reports
req ed-by: commission. Itis not the same. as the
financial reporti ig framework. -used. “pr I
financial stater ents: . that“ ‘the* “Securities “and
Exchange {Cojnmijssion may. require 2 (INSURANCE
CODE, ‘Spe. 179). A an .

Or; resent. important: information

‘|obligee,” of” risk .and solvency . situation. of
_ jor ork : insurerss (INSURANCE CODE; Sec. 189). . .

ss Sbinpapies regulated : by the Comimniggion” ‘unless

isrwise re quired by law,.-should comply with the
‘financial: reporting” frameworks . adopted by’ the
_ Commissién: ‘for purposes .of creating the, statutory:
. financial : feports and, the. annual statements to. ‘be

| premium ‘paid -be ingoes

‘|the nature” “ofa” service fratab
fee. A e (7 orrimnon fund,
: et LEON, ‘Insurance Code, “supra at 499-440).

“ ~ Requisites Prior: to Operation

‘Ae ‘Certificate of Authorit and Paymént of Feés ‘
“Nov insurance ‘CO ipany, ” whether’ domestic. or
_-foreign, - “can: “transact any business in the.
“Microinguraice . o ‘Philippines - until, after’ it shall: ‘have™ obtained: a.
- It is. an activity .. _ providing. specifi ic insurance, -certificate® ‘of authority. for. th: t purpose ‘from’ the
- insurance-like- cand.” other “similar. . products” ‘and - . “Insurance ’ Commissioner: “Upon | ‘ application.
.. services. that: meet the néeds: of the low-income: oo therefor: and payment-by: ‘the, company concernéd..
sector-for tisk protection and relief. against distress, * ‘of the ‘fees. prescribed Py the Code. (INSURANCE: :
‘misfortune, and.other contingent events. (IMC. No. CODE, Séc, 199).".
001-10 dated January +29, 2040). . .

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The Insurance Commissioner has the discretion to. 3. Filing of Necessary Documents
refuse the issuance of a certificate of authority on A certified copy of the last annual statement.
the’very broad ground that.“such refusal will best showing the. condition’ and affairs of such
promote the interest-of the people of this ‘country” company must be filed ‘with. the insurance
(INSURANCE CODE; Sec. 792). Commission (INSURANCE CODE, ‘Sec. 195).

Requisites of Certification: . if incorporated under Philippine Jaws, a copy of

a. The applicant, is qualifi ed. under Philippine . the articles of incorporation and’ by-laws, and
“laws, to transact business in the country; and ‘amendments thereto, certified-by the SEC to be©
b. The grant of.such authority. of the. organizers ‘.a copy of: that which is ‘filed in its office
-and: ‘administrators: ‘the financial organization (INSURANCE CODE, Sec. 195)..
and the amount of capital reasonably assure
‘+ the ‘safety and interests: of the: policyholders A "Additional . ‘Requirenients "for ~ dolelgi
and the public (INSURANCE; CODE, Sec.. ‘Corporations ;
193). a. Secure: a license from the SEC’ to - -do:
me business 1 in the Philippines by following the
2.° Capital Requirement , ‘requirements: of: the Corporation Code
(INSURANCE CODE, Sec. 191); .
;- File a: copy of the SEC certificate showing
||Paid-up Capital~ P4,090;690,000 fl y » “sthat it is“ duly registered ‘(INSURANCE
ANS PCQBE E, Sec. 195);
‘Net. Worth: fm Sy sscef Sneae CL caboratedh
iiincorber it must file a-certified copy. of
(by June 30, 2043) | £0} PSeplobort;000 Y Oy,
Seat ses »,0f incorporation and: its by-laws,
Additional Net Worth x oC . ete ‘bythe SEC as a copy of that filedi in.
‘its Giice: (INSURANCE: CODE, Sec:'195);
’ December 31, 204 6. “if —¥/;P306, 000, | / not inéorpotated; ‘file a certificate setting
TL . Ads. ~ne thet | ature and‘ character’ of ' the:
December
31, 2019 fe Pose gf&fF Pas,pi000s¢:000. ie “pisiness. .{0cation of its principal office,
December 31, 2022; «| Pg P40, 0003000. FS ; Ag er: the names -cof.the - persons’ composing. the
., " <_. 4 “RE Parerstie For b¢sociation, the ‘amotint.of the
s a r toe
Note: The Commissioner nay," “as a ‘ 4
Jars’ i -émplo'
he oyed ‘and the names
ate managing of. the
the. business.
Fequirement of a-néw insura (eiefeompanyr
_-to the paid-up: capital'stock, Nec
equire. the: as
16. certifi catey must be‘ verified by” the
fiday it of the éhief Officer, or the manager or.
‘, to pay in, cash-to the: company in. pro ortion
. . Subscription interests a contrib ted su lus ng/ compat accompanied’ by a
not less than’ P100, 000, 800 OR ‘ boa of thes fitten’ articlés of said’ “company,
ee al y.(INSURANCE- CODE, .Séc. 195);

mS
Sec. 194).
Aa * fulfil: ‘the same: capital. requirements ; as:
Reinsurance
, Goniipanies ne© ae vestic companies ‘and: if: addition, - must
eposit with-the ‘Commissioner’ securities for
They must havea capitalization of at. least P3 ion no
paid i in-cash of which:at least 50% is-paid- up ‘and the: -the ‘benefit and ‘security: of ‘its policyholders
remaining: ‘portion thereof is contributed. ‘surpius, J “and creditors: (Republic. v. Del: Monte Motors,
‘which in-no- case’ shall be-léss than P400 Million’ or
GR, No. 156956, October:9, 2006). | :
such. capitalization ‘as: “may - be: determined. ‘by the’
Secretary of. Finance, upon the Fecommendation: of:. - Note: ‘Security deposits. Shall-be: 8
the Commissigner. ‘Provided: That 25% of ‘the paid- .
is tAnswerable for all the’ obligations. of the
" .Up..capital’must bé-invested'in securitiés Satisfactory . : depositing insurer under" ‘its insurance
. to the Cominissioner consisting “Of bonds’ -or other. . : contracts;’
- instruments” Of - “debt: of +t -Governmer i: At. all’ times” free” “frém any. liens . or
“encumbiance; ‘and ° :
=, or.
‘Exempt -from. levy. : by any - claimant
. (C&pital Insurance. and Surety Co., inc. v.
. Del Monte. Motor. Works, inc., GR. No.
: 159979, December 9, 2018).
Sane may: ‘be allowed. and permitted by. the. -.
Commissioner, which: securities. shall. at all.times ‘be
maintained. free -from " any lien or ‘encumbrance
. (INSURANCE CODE, Sec. 289). ° =

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SAN BEDA LAW CENTRALIZED BAR OPERATIONS ~ MEMORY AID 2019

The .right to. lay..claim on the
dependent on the solvency.of the iinsurer and
is subject to all other obligations. of the
company. arising. from its insurance
contracts.. Thus, claimant’s.intéerest is merely
inchoate. Being a mere expectaricy,
‘no attribute: of property: (Capital ‘Insurance
and Surety. Co., -Inc. v. Del..Monte “Motor
Works, inc., GR. No. 159979, .December 9,
2016). Mh
fo Must set aside an. ‘amount. cortéspianding: to
the legal reserves of the policies'written in the
“Philippines and invest the same only in: such
_. | Classes. of.Philippine securities. as déscribed-
Soe bythe Code which securities cannot:be taken.
out-of the céuntry without thé written. consent
of the Commissioner: (INSURANCE CODE,
“Sec. 199); and~
*g. File with the. Commissioner a written. power 7%
of, attorney: designating ‘some person whi yt
must be a’ resident: of the Philippines: ds;
*“ general agerit, oi ‘whom: any. notice, <
summons or legal processes may.bé setved
It must also sign. an agreement that incase,
~ shall be without any. agent, the: “Service® Lipo
fund is Note: Where the amount exceeds P5 Million,
the'RTC has jurisdiction.
‘Note: The. Insurance Commissioner .. has ne
jurisdiction to. decide the legality of a contract ‘ol
it. has agency entered into between. an-. insurance
company and its agent. The same is not covered
by the’ term ‘doing or ‘transacting ° insurance
business” under. Sec. 2 of the’ Insurance Code,
neither is it covered by Sec. 416 of the. s$ame.Code
which grants the Commissioner. ‘adjudicatory
powers (Philippine American Life insurance Co. v.
Ansaldo,.G.R. No. 26452, July 26; 1994) :
Doctrine’ of Adherence: ‘of Jurisdiction *
‘The filing of a coiplaint with the. Commissioner
“.shall- préclude: civil courts form taking cognizance
_ Of the case (INSURANCE CODE, Sec.
$ 439).
‘2. “Administrative/ Regulatory
a. Enforcement of insurance laws;
b. Issuance, - suspension or revocation | _ of
’ certificate of authority; “”
Power-to examine *books:and records, “ate:
: Rule-ma} ing authority; and = «
rami
, nance CODE, Sees. 437-438).
oc

Executiong % ~ , -
_ A decis'joni has become. final may be the
, “subject of alwriftof execution: which may be’served
andwl enforced bya stsheriff (INSURANCE: CODE,

Insuranige Commission:: °
It‘ is an administrative:. agency * vesté rs with} wide.
latitude- of: discretion, “to--regulate thé insurance °
‘industry: so ‘as.‘to protect “tt rene public: ‘OF ...
- LEON & DE LEON Urs supra at’6789).

Functions: : : a ee
4 Adjudic¢ato Quasi-Judicial.
a. ‘Exclusive jurisdiction | ; ,
- Any: dispute inthe enforcement of any’ “policy *
issued: pursuant’ to:.\CMVLI INSURANCE
- CODE, Sec. 398(2)). . oe

b: Concurrent original jutisction | (with the

‘. RTC). .
_ Where. ‘the maxirium. amoutit involved’ in: any.
-: single claim’ is PS, 000, 000: _ENSURANGE.
- . CODE, ‘See. 439).

Exception: In ‘ease’ of. maritime insurance *

. . Whichis within the jurisdiction of the MTC or the
‘. RTC depending on-the value involved (BP ,
-* 429, Sec. 1963).

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