Insurance Notes

Insurance - an agreement whereby one undertakes for a consideration to

indemnify
another against loss, damage or liability arising from an unknown or
contingent
event.
Elements:
1. The insured has an insurable interest;
2. The insured is subject to a risk of loss by the happening of the
designated peril;
3. The insurer assumes the risk;
4. Such assumption of risk is part of a general scheme to distribute
actual losses among a large group of persons bearing a similar risk;
and
5. In consideration of the insurer's promise, the insured pays a
premium

Section 3 of the Insurance Code states that any contingent or unknown

event,
whether past or future, which may damnify a person having an
insurable
interest against him, may be insured against. Every person has an
insurable
interest in the life and health of himself.

Enriquez Case

Cognition theory

Article 1262 of the Civil Code providing that an acceptance made by letter shall not bind the person
making the offer except from the time it came to his knowledge. The pertinent fact is, that according
to the provisional receipt, three things had to be accomplished by the insurance company before
there was a contract:

There had to be a medical examination of the applicant; (2) there had to be approval of the
application by the head office of the company; and (3) this approval had in some way to be
communicated by the company to the applicant. (so that a contract may be deemed perfected)

Cases where offer is rendered ineffective: Refusal, Insanity, Death

(effective only for offer)

Acceptance has a different case.

Eternal Gardens Case

EFFECTIVE DATE OF BENEFIT.

The insurance of any eligible Lot Purchaser shall be effective on the date
he contracts a loan with the Assured. However, there shall be no
insurance if the application of the Lot Purchaser is not approved by the
Company.

The second subject policy is construed to be a resolutory condition which

would lead to the cessation of the insurance contract. Moreover, the mere inaction of the insurer on
the insurance application must not work to prejudice the insured; it cannot be interpreted as a
termination of the insurance contract.

Requisites – memorize this.

Philamcare Case

Ernani Trinos, deceased husband of respondent Julita Trinos, applied

for a health care coverage with petitioner Philamcare Health Systems,
Inc. In the application form, he declared that had n ever been consulted
nor been treated for high blood pressure, heart trouble, diabetes, cancer,
liver disease, asthma or peptic ulcer. During the period of his coverage,
Ernani suffered a heart attack and was confined at the Manila Medical
Center (MMC) for one month beginning March 9, 1990. While her
husband was in the hospital, respondent tried to claim the benefits
under the health care agreement. However, petitioner denied her claim
saying that the Health Care Agreement was void. According to
petitioner, there was a concealment regarding Ernani's medical history.

Issue: Whether insurance is void for the misrepresentation of Ernani

Section 3 of the Insurance Code states that any contingent or unknown

event, whether past or future, which may damnify a person having an
insurable
interest against him, may be insured against. Every person has an
insurable
interest in the life and health of himself. Section 10 provides:

Every person has an insurable interest in the life and health:

 (1)of himself, of his spouse and of his children;

(2) of any person on whom he depends wholly or in part for education or

support, or in whom he has a pecuniary interest;

(3) of any person under a legal obligation to him for the payment of
money, respecting property or service, of which death or illness might
delay or prevent the performance; and

(4) of any person upon whose life any estate or interest vested in him
depends.

Although false, a representation of the expectation, intention, belief,

opinion, or judgment of the insured will not avoid the policy if there is no
actual fraud in inducing the acceptance of the risk, or its acceptance at a
lower rate of premium, and this is likewise the rule although the
statement is material to the risk, if the statement is obviously of the
foregoing character, since in such case the insurer is not justified in
relying upon such statement, but is obligated to make further inquiry.

The fraudulent intent on the part of the insured must be established to

warrant rescission of the insurance contract. Concealment as a
defense for the health care provider or insurer to avoid liability is an
affirmative defense and the duty to establish such defense by
satisfactory and convincing evidence rests upon the provider or
insurer.

Under Section 27 of the Insurance Code, "a concealment entitles the

injured party to rescind a contract of insurance." The right to rescind
should be exercised previous to the commencement of an action on
the contract. In this case, no rescission was made.

Pre-conditions required to effect a cancellation of insurance

1. Prior notice of cancellation to insured;

2. Notice must be based on the occurrence after effective date of the
policy of one or more of the grounds mentioned;
3. Must be in writing, mailed or delivered to the insured at the
baddress shown in the policy;
4. Must state the grounds relied upon provided in Section 64 of the
Insurance Code and upon request of insured, to furnish facts on which
cancellation is based.
Look at the obligations of the insurer to determine whether the subject
contract is a contract of insurance. Premium? code (read this)

PHILIPPINE HEALTH CARE PROVIDERS, INC. case

Subject Healthcare Agreement provides for a discount on medical services which

may be availed by employees. CIR levied taxes on the same arguing that it is an
insurance contract.

Whether Subject Healthcare Agreement is a contract of insurance  (a tax on documents,

instruments, loan agreements and papers evidencing the acceptance, assignment, sale
or transfer of an obligation, right or property incident thereto.)

Under the law, a contract of insurance is an agreement whereby one

undertakes for a consideration to indemnify another against loss,
damage or
liability arising from an unknown or contingent event. 14 The event
insured
against must be designated in the contract and must either be
unknown or
contingent.

Petitioner's health care agreement is primarily a contract of indemnity.

And in the recent case of Blue Cross Healthcare, Inc. v. Olivares, 16
this Court
ruled that a health care agreement is in the nature of a non-life
insurance
policy.

Under the health care agreement, the rendition of hospital, medical

and professional services to the member in case of sickness, injury or
emergency or his availment of so-called "out-patient services"
(including
physical examination, x-ray and laboratory tests, medical
consultations,
vaccine administration and family planning counseling) is the
contingent
event which gives rise to liability on the part of the member. In case of
exposure of the member to liability, he would be entitled to
indemnification
by petitioner.

Tiu Case
Pedro Arriesgado’s wife died from a vehicular accident involving a
petitioner’s bus and a stationary truck undergoing repairs. Tiu in turn
filed a complaint against Philippine Phoenix Surety and Insurance, Inc. (PPSII)

 if herein third-party plaintiffs will be adversely adjudged, they stand to pay damages sought
by the plaintiff and therefore could also look up to the Philippine Phoenix Surety and
Insurance, Inc., for contribution, indemnification and/or reimbursement of any liability or
obligation that they might [be] adjudged per insurance coverage duly entered into by and
between third-party plaintiff William Tiu and third-party defendant Philippine Phoenix Surety
and Insurance, Inc.;…12

The respondent PPSII, for its part, admitted that it had an existing contract with petitioner Tiu, but
averred that it had already attended to and settled the claims of those who were injured during the
incident.13 It could not accede to the claim of respondent Arriesgado, as such claim was way beyond
the scheduled indemnity as contained in the contract of insurance.

the existence of the insurance contract and the salient terms thereof cannot be dispatched. It must
be noted that after filing its answer, respondent PPSII no longer objected to the presentation of
evidence by respondent Arriesgado and the insured petitioner Tiu. Even in its Memorandum 56 before
the Court, respondent PPSII admitted the existence of the contract, but averred as follows:

Petitioner Tiu is insisting that PPSII is liable to him for contribution, indemnification and/or
reimbursement. This has no basis under the contract. Under the contract, PPSII will pay all
sums necessary to discharge liability of the insured subject to the limits of liability but not to
exceed the limits of liability as so stated in the contract. Also, it is stated in the contract that
in the event of accident involving indemnity to more than one person, the limits of liability
shall not exceed the aggregate amount so specified by law to all persons to be indemnified. 57

As can be gleaned from the Certificate of Cover, such insurance contract was issued pursuant to the
Compulsory Motor Vehicle Liability Insurance Law. It was expressly provided therein that the limit of
the insurer’s liability for each person was ₱12,000, while the limit per accident was pegged at
₱50,000. An insurer in an indemnity contract for third party liability is directly liable to the injured
party up to the extent specified in the agreement but it cannot be held solidarily liable beyond that
amount.58 The respondent PPSII could not then just deny petitioner Tiu’s claim; it should have paid
₱12,000 for the death of Felisa Arriesgado, 59 and respondent Arriesgado’s hospitalization expenses
of ₱1,113.80, which the trial court found to have been duly supported by receipts. The total amount
of the claims, even when added to that of the other injured passengers which the respondent PPSII
claimed to have settled,60 would not exceed the ₱50,000 limit under the insurance agreement.

De Maglana vs Consolacion

Lope Maglana was an employee of the Bureau of Customs. Lope Maglana was on his way to his
work station, driving a motorcycle owned by the Bureau of Customs. At Km. 7, Lanang, he met an
accident that resulted in his death. He died on the spot. The PUJ jeep that bumped the deceased
was driven by Pepito Into, operated and owned by defendant Destrajo. From the investigation
conducted by the traffic investigator, the PUJ jeep was overtaking another passenger jeep that was
going towards the city poblacion.
Consequently, the heirs of Lope Maglana, Sr., here petitioners, filed an action for damages and
attorney's fees against operator Patricio Destrajo and the Afisco Insurance Corporation (AFISCO for
brevity) before the then Court of First Instance of Davao, Branch II. An information for homicide thru
reckless imprudence was also filed against Pepito Into.

Petitioners filed a motion for the reconsideration of the second paragraph of the dispositive portion of
the decision contending that AFISCO should not merely be held secondarily liable because the
Insurance Code provides that the insurer's liability is "direct and primary and/or jointly and severally
with the operator of the vehicle, although only up to the extent of the insurance coverage."   Hence,
4

they argued that the P20,000.00 coverage of the insurance policy issued by AFISCO, should have
been awarded in their favor.

In its comment on the motion for reconsideration, AFISCO argued that since the Insurance Code
does not expressly provide for a solidary obligation, the presumption is that the obligation is joint.

The Court then proceeded to distinguish the extent of the liability and manner of enforcing the same
in ordinary contracts from that of insurance contracts. While in solidary obligations, the creditor may
enforce the entire obligation against one of the solidary debtors, in an insurance contract, the insurer
undertakes for a consideration to indemnify the insured against loss, damage or liability arising from
an unknown or contingent event.   Thus, petitioner therein, which, under the insurance contract is
11

liable only up to P20,000.00, can not be made solidarily liable with the insured for the entire
obligation of P29,013.00 otherwise there would result "an evident breach of the concept of solidary
obligation."

Similarly, petitioners herein cannot validly claim that AFISCO, whose liability under the insurance
policy is also P20,000.00, can be held solidarily liable with Destrajo for the total amount of
P53,901.70 in accordance with the decision of the lower court. Since under both the law and the
insurance policy, AFISCO's liability is only up to P20,000.00, the second paragraph of the dispositive
portion of the decision in question may have unwittingly sown confusion among the petitioners and
their counsel. What should have been clearly stressed as to leave no room for doubt was the liability
of AFISCO under the explicit terms of the insurance contract.

Villacorta case

Jewel Villacorta owned the subject vehicle which she brought to a

repair shop owned by the respondents for maintenance. The car was
however used by the respondents where is figured an accident.
Villacorta sues her insurance company for its refusal to perform its part
on the insurance policy.

The comprehensive motor car insurance policy for P35,000.00 issued by respondent Empire
Insurance Company admittedly undertook to indemnify the petitioner-insured against loss or damage
to the car (a) by accidental collision or overturning, or collision or overturning consequent upon
mechanical breakdown or consequent upon wear and tear; (b) by fire, external explosion, self-
ignition or lightning or burglary, housebreaking or theft; and (c) by malicious act.

Respondent insurance commission, however, dismissed petitioner's complaint for recovery of the
total loss of the vehicle against private respondent, sustaining respondent insurer's contention that
the accident did not fall within the provisions of the policy either for the Own Damage or Theft
coverage, invoking the policy provision on "Authorized Driver" clause.

The main purpose of the "authorized driver" clause, as may be seen from its text, supra, is that a
person other than the insured owner, who drives the car on the insured's order, such as his regular
driver, or with his permission, such as a friend or member of the family or the employees of a car
service or repair shop must be duly licensed drivers and have no disqualification to drive a motor
vehicle.

A car owner who entrusts his car to an established car service and repair shop necessarily entrusts
his car key to the shop owner and employees who are presumed to have the insured's permission to
drive the car for legitimate purposes of checking or road-testing the car. The mere happenstance
that the employee(s) of the shop owner diverts the use of the car to his own illicit or unauthorized
purpose in violation of the trust reposed in the shop by the insured car owner does not mean that the
"authorized driver" clause has been violated such as to bar recovery, provided that such employee is
duly qualified to drive under a valid driver's license.

Secondly, and independently of the foregoing (since when a car is unlawfully taken, it is the theft
clause, not the "authorized driver" clause, that applies), where a car is admittedly as in this case
unlawfully and wrongfully taken by some people, be they employees of the car shop or not to whom
it had been entrusted, and taken on a long trip to Montalban without the owner's consent or
knowledge, such taking constitutes or partakes of the nature of theft as defined in Article 308 of the
Revised Penal Code, viz. "Who are liable for theft. — Theft is committed by any person who, with
intent to gain but without violence against or intimidation of persons nor force upon things, shall take
personal property of another without the latter's consent," for purposes of recovering the loss under
the policy in question.

The Court rejects respondent commission's premise that there must be an intent on the part of the
taker of the car "permanently to deprive the insured of his car" and that since the taking here was for
a "joy ride" and "merely temporary in nature," a "temporary taking is held not a taking insured
against."

A unauthorized joy ride driver is guilty of theft when he takes possession of a vehicle belonging to
another, without the consent of its owner, he is guilty of theft because by taking possession of the
personal property belonging to another and using it, his intent to gain is evident since he derives
therefrom utility, satisfaction, enjoyment and pleasure.

03/03/22

Risk distribution scheme – risk is distributed among parties who availed

the services of the insurance company. How is the risk distributed
among the parties?

Compare situations where you have insurance in relation to someone

who has no insurance.

Ex. Everyone bears the risk of losing a house. If you are the unlucky
one, then you alone will bear the loss
If everyone subscribes to an insurance, the funds will be pooled which
will be used to pay the party who loses his house. In effect, the risk is
distributed among the parties who availed the insurance.

Insurance will only indemnify your losses. Babalik ka lang sa dati, hindi
ka kikita.

Perfection – consensual or real

Form – required to be written, signed, in a public instrument. Do
insurance contracts require a form? No. Only insurance policy requires
form.

Personal contract – cannot be assigned without consent of the owner.

We take note of the circumstances of the parties that will be involved
in the contract.

Liability of insurer is direct and primary. Both insurer and tort feasor
may be sued. Insurer liability is usually limited. You vs Tort Feasor then
Feasor files a 3rd party complaint vs insurer.

Solidary liability is not accurate as not all rules therein are applicable
to the insurer

Read premium code. Read cases CAREFULLY!!!

Insular life vs Ebrado – legal wife is entitled to proceeds

Nario vs PhilAmLife – minors as beneficiaries must consent to the use

of insurance proceeds if the same insurance has a face value of >2K
If divorced, the facts will depend on the divorce policy

Stepchildren –

Does insurability require actual support or legal obligation to support

shall suffice

10c – you need a legal obligation, there must be a contract for this to
apply.

10d – interest in any property that you are currently enjoying, the
death of a person extinguishes the enjoyment of the property.
(example: usufructuary)
In persons, except A, it is the loss that will be compensated. It is
related to the pecuniary loss that you may suffer. (contemplates a
property)

Shareholder has an inchoate interest in the properties of the

corporation.

Rights of first refusal with tag along rights.

B&C - Look at the property then look at inchoate interest then

expected interest. Either of these interests must be considered in case
of loss which in turn must be insured.

What happens in case the marriage becomes void ab initio.

Focus on the issue of designation of beneficiary. If the delegation of

insurance to the beneficiary is invalid, another set of rules.

Beneficiary must also have an insurable interest on the life of the

insured. Else, the law may be circumvented. Also, to avoid moral
hazard.

Rules on assigning beneficiary in case of property insurance:

Does beneficiary need to have an insurable interest over the property?

Loss of the property,

If beneficiary secures the mortgage, only until the extent of the loan.
What happens to the principal loan in case insurance gets paid? Is the
debtor still bound to the same loan?

Number of possible scenarios. Beneficiary cannot have double

recovery. The beneficiary’s right to the second insurance may be
subrogated to the insurance company who pays first.

Next week. Premiums but you may exclude cases.

Parties to an insurance contract

Insured
 – the person who applied for and to whom an insurance policy is
issued to cover his life, property, or the life of or property of other
person/s in whose life or property he has insurable interest or liability
to other persons.

In insurance, a capacitated party may enter into an insurance contract

insuring the life of an incapacitated person like a minor.

So, the law provides that a married woman can enter into insurance
contracts on her life and her children without the consent of the
husband.

Insurer

Beneficiary
-may be the insured himself. May be a third person not privy to the
insurance contract. A third party named beneficiary in the policy has
the right to file an action against the insurer in case of loss.

In life insurance, if there is a named beneficiary and the designation is

not valid, it is the designated beneficiary who is entitled to receive the
proceeds and not the heirs of the insured.

When there is no beneficiary due to the designation being void or by

express provision, the laws of succession will apply.

If the funds of the conjugal partnership of gains are used to pay the
premium, the proceeds of the policy constitute community property if
the policy was made payable to the deceased’s estate. If there is a
designated beneficiary, the beneficiary is entitled to the proceeds of
the policy. The source of premium is immaterial.

The interest of a beneficiary in a life insurance policy shall be forfeited

when the beneficiary is the principal, accomplice, or accessory in
willfully bringing about the death of the insured.

Disqualification from being a beneficiary similar to disqualifications

from receiving a donation

Specifically, grounds for disqualification from being a beneficiary

 1) Those made between persons who were guilty of adultery or
concubinage at the time of the donation
2) Those made between persons found guilty of the same criminal
offense, in consideration thereof

Premiums:
- The insurer is entitled to payment of the premiums as soon as the
thing insured is exposed to the peril insured against.
- Non-payment of the premium will result to the policy not going to
force
- The obligation of the insurer will not become valid and binding if
the first premium has not been paid.
- If the subsequent premiums have not been paid, the policies
issued will be deemed to have lapsed.
- The insurer has no right to sue the insured for non-payment of
premiums

Exceptions to the general rule of non-payment of premiums

1) When the grace period applies in case of life and industrial life
policy
2) When there is an acknowledgment in the policy or receipt that
the premium has been paid
3) When there is an agreement that the premium shall be payable
on installment
4) When there is a credit extension; and
5) When the equitable doctrine of estoppel applies

Grace period – period after the date the premium is due during which
the premium can be paid with no interest charged and the policy
remaining in force

Acknowledgment is conclusive payment of the premium. The same

acknowledgment may also be used in an agreement to pay premiums
on an installment basis

The same principle of allowing installment basis of premium

payment allows the grant of credit extension in favor of the
insured in relation to the premium. (i.e., the right to defer
payment of debt

Cash surrender value – return of a portion of the premiums paid

Insurance policy follows the owner of the property in case the
owner of the policy dies. This holds true even if there is a different
beneficiary

Insurance is ambulatory, may be changed as long as you live. If it

is changed through a will, the change may be questioned.

If one of the many beneficiaries die, the remaining beneficiaries

will receive the proceeds of the insurance policy

Effect of judicial presumption of death.

Secure consent

What if a lessor with credits due, insures the property of the

lessee in default? Is it valid.

Can insured change the beneficiary of a property insurance

without the consent of the insurer?

Spouses Cha case - Sec. 25. Every stipulation in a policy of Insurance for
the payment of loss, whether the person insured has or has not any interest
in the property insured, or that the policy shall be received as proof of such
interest, and every policy executed by way of gaming or wagering, is void.

Sec. 18. No contract or policy of insurance on property shall be enforceable

except for the benefit of some person having an insurable interest in the
property insured.

Gaisano case – insurer behaves similar to a surety

In an insurance contracts case, find out all the parties to the same contract
and know the circumstances of each contract.
Next mtg. – premiums + cases
A running or "floating" policy provides indemnity for property which cannot be covered
by specific insurance because of its frequent change in location and quantity

Cash and Carry Rule

 “cash and carry rule “ in a contract of insurance. Under this rule, there is no valid and
binding insurance contract unless premium is paid. The payment of premium is
imperative for the validity of the policy. It is a condition precedent to, and essential for,
the efficaciousness of the contract. 

a) in case of life or industrial policy accident whenever the grace period provision
applies;

b) when the insurer acknowledges receipt of premium in the policy event if there is a
stipulation that it shall not be binding until the premium is actually paid, thus creating a
legal fiction of payment;

c) when the premium is payable on installment basis and the loss occurs after partial
payment has been made, in which case, the insured is entitled to recover the full amount
of insurance without prejudice to his obligation to pay the balance of the premium;

d) in case of suretyship, when the obligee has accepted the bond despite non-payment of
premium;

e) when the insurer grants the insured a credit period (generally not to exceed 90 days) to
pay the premium and the loss occurs prior to the expiration of the credit period;

f) when the parties are barred by estoppel, that is by practice or arrangement, the insurer
has been accustomed to receiving premium payments even after policy issuance; and,

g) when the insurer issued a cover note (which means temporary coverage pending
issuance of the policy not to exceed, however, 60 days) and the loss occurs during that
period.

There should be initial payments despite agreement on paying

premium by installments

G.R. No. 190702 – check cases

Even if loss occurs during the credit period, insured is still entitled to policy. Generally,
no premium means no policy. Since there is an agreement, the policy occurs under a debt
of the insured to the insurer.

If there is no payment of premium despite the lapse of the credit

period, the policy is suspended until payment or rescission of one of
the parties.
If there is loss prior to the expiration of the term, insured must pay
within the credit term. Failure to pay would bar recovery because lack
of payment essentially makes the contract ineffective.

Inconsistent application of exceptions to the cash and carry rule. We do not require payment of
the premium when there is no loss despite lapse of credit term.

Policy (Sec. 49)

Insurance Policy – document of insurance

Cover notes – temporary insurance. Evidence that the insurance is already in effect. Its purpose
is to give temporary insurance protection coverage to the applicant pending the acceptance or
rejection of his application. Provisions of the cover note are to be stipulated by the parties where
the same provisions are to be included in the policy.

Claims from cover notes can be deduced from the external evidence but cover notes will be moot
upon issuance of the policy.

Open policy is usually with property insurance because loss will always be based on the actual
loss of the property where the same loss will be assessed and compensated.

Valued Policy is usually found on life insurance.

Running Policy, the quantity of the property is what changes. (ex. Insured are the properties in
the warehouse, a depositary insuring the contents of its deposits)

Ground for cancellation of policy

1) Non-payment of premium
2) Conviction of a crime arising out of acts increasing the hazard
insured against;
3) discovery of fraud or material misrepresentation;
4) discovery of willful or reckless acts or omissions increasing the
hazard insured against;
5) physical changes in the property insured which result in the
property becoming uninsurable; or
6) a determination by the Commissioner that the continuation of the
policy would violate or would place the insurer in violation of this
Code.

5 & 6 does not require the fault of the insured to cause cancellation of the insurance. 5 is usually
used

Other insurance clause –

Overinsurance – pro-rata return of premium
Determine the rates of return or premiums in case of over insurance

Read GR 184300

Compute by proportionate he paid in total and the amount paid for his
loss.

Add then divide then multiply the ratio

Binding Receipt – Grepalife case. SC allows upholding of its conditions before the contract will
be upheld. Binding receipt does not override the rules on payment of premiums.

Multiplicity of Suits is avoided so the no-action rule is void.

Double Insurance Rules:

"Section 95. A double insurance exists where the same person is insured by several insurers
separately in respect to the same subject and interest.

"Section 96. Where the insured in a policy other than life is over insured by double insurance:

"(a) The insured, unless the policy otherwise provides, may claim payment from the insurers
in such order as he may select, up to the amount for which the insurers are severally liable
under their respective contracts;

"(b) Where the policy under which the insured claims is a valued policy, any sum received by
him under any other policy shall be deducted from the value of the policy without regard to
the actual value of the subject matter insured;

"(c) Where the policy under which the insured claims is an unvalued policy, any sum
received by him under any policy shall be deducted against the full insurable value, for any
sum received by him under any policy;

"(d) Where the insured receives any sum in excess of the valuation in the case of valued
policies, or of the insurable value in the case of unvalued policies, he must hold such sum in
trust for the insurers, according to their right of contribution among themselves;

"(e) Each insurer is bound, as between himself and the other insurers, to contribute ratably to
the loss in proportion to the amount for which he is liable under his contract.

Life Annuity pays you when you live longer than you expect to while life insurance guarantees
income in the event of your death.
 1. The absent spouse has been missing for four consecutive years, or two
consecutive years if the disappearance occurred where there is danger of
death under the circumstances laid down in Article 391 of the Civil Code; 
2. The present spouse wishes to remarry;
3. The present spouse has a well-founded belief that the absentee is dead
4. The present spouse files for a summary proceeding for the declaration of
presumptive death of the absentee.

If the subsequent marriage is terminated by the reappearance of the absent spouse, Article
43 of the Family Code provides for the effects of the termination of the subsequent
marriage:

(1) The children of the subsequent marriage conceived prior to its termination shall be
considered legitimate;

(2) The absolute community of property or the conjugal partnership, as the case may be,
shall be dissolved and liquidated, but if either spouse contracted said marriage in bad faith,
his or her share of the net profits of the community property or conjugal partnership property
shall be forfeited in favor of the common children or, if there are none, the children of the
guilty spouse by a previous marriage or in default of children, the innocent spouse;

(3) Donations by reason of marriage shall remain valid, except that if the donee contracted
the marriage in bad faith, such donations made to said donee are revoked by operation of
law;

(4) The innocent spouse may revoke the designation of the other spouse who acted in bad
faith as beneficiary in any insurance policy, even if such designation be stipulated as
irrevocable; and (5) The spouse who contracted the subsequent marriage in bad faith shall
be disqualified to inherit from the innocent spouse by testate and intestate succession.

Transfer of ownership is necessary to affect insurable interest of a

party over a property

Loss of insurable interest renders the policy unenforceable

If the insurance is a property insurance and the beneficiary does not

have an insurable interest, the insurance is valid but only the property
owner may enforce the contract.

Concealment

Four Primary concerns:

1) Correct estimation of the risk (premium value purposes)
 2) Determining the limits of the risk
3) Control of the risk
4) Determining whether the loss has occurred

Concealment - the neglect to communicate that which a party knows and ought to
communicate
 Insurance policies are contracts of utmost good faith

Concealment must be material and fraudulent, or intentionally

withheld.

So it is decided that under a stipulation voiding the policy for concealment or misrepresentation of
any material fact or if his interest is not truly stated or is other than the sole and unconditional
ownership the facts are unimportant that insured did not intend to deceive or withhold information as
to encumbrances even though no questions were asked. – a stipulation voiding the policy for
concealment is no longer necessary as concealment itself defeats the policy being a contract of
utmost good faith

The BASIS of the rule vitiating the contract in cases of concealment is that it misleads or deceives
the insurer into accepting the risk, or accepting it at the rate of premium agreed upon

It therefore follows that the assurer in assuming a risk is entitled to know every material fact of
which the assured has exclusive or peculiar knowledge, as well as all material facts which directly
tend to increase the hazard or risk which are known by the assured, or which ought to be or are
presumed to be known by him.

It does not seem to be necessary that the suppression of the truth should have been willful.' If it were
but an inadvertent omission, yet if it were material to the risk and such as the plaintiff should have
known to be so, it would render the policy void.

REQUISITES
(1) A party knows (actual knowledge) or at least ought to know (presumed knowledge) a fact which
he neglects to communicate or disclose to the other;
(2) The fact concealed must be material;
(3) Such party concealing is duty bound to disclose such fact to the other (there must be a duty to
disclose);
(4) Such party concealing makes no warranty7 of the fact concealed; and
(5) The other party has not the means of ascertaining the fact concealed.
As a rule, failure on the part of the insured to disclose conditions affecting the risk of which he is
aware, makes the contract voidable at the insurer’s option.

A non-disclosure may be considered as a concealment, misrepresentation and a breach of

material warranty.
 - A change of location which increases the hazard of the property insured is considered a
non-disclosure which may be considered concealment, misrepresentation and a breach of
a material warranty.

The knowledge of the agent of the insured can be imputed to the latter under the following
circumstances

(1) It was the duty of the agent to acquire and communicate information of the facts in question, and;

(2) It was possible for the agent, in the exercise of reasonable diligence, to have made such
communication before the making of the insurance contract.

INCONTESTABILITY CLAUSE - a life-insurance policy shall be incontestable after two years

from the date of issuance, regardless of any mistake, fraud, concealment or misrepresentation.
Under Philippine laws, it may only be contested on the ground of nonpayment of premiums.

GR No. 121917

Cut-off period of concealment is when it takes effect

Before perfection of contract, facts may be divulged. If effectivity, the

policy may be circumvented.

Warranty – different grounds to determine it as false.

When warranty is breached, its just a promise. A standard deviation of

truth

Misrepresentation, different standards

Concealment, absolute

In normal contracts, concealment needs to be fraudulent to annul the

contract. Insurance is different, it does not discern

MISREPRESENTATION (active form of concealment)

• It is a fact stated by the insured with knowledge that it is untrue and with an intent to deceive
or which he states positively as true without knowing it to be true and which has a tendency
to mislead. Such fact must be material to the risk.
Misrepresentation – makes contract voidable
But the remedy is rescission.

Abuse terminologies, if remedy is generic then there is.

Degree of falsity -
Concealment - As long as it is true when the contract takes effect.
Except when there is a stipulation of specific date. Essentially the same
with misrep. Because they are both vitiations of consent to enter a
contract to your advantage.

Limitation of period for the rescission

When can you rescind the contract. Before being sued

Concealment and misrep can still be used as a affirmative defense

Have you ever been hospitalized? If no but reality is yes. Then its
concealment. (There is no positive assertion)

Law favors insurer in concealments

Promissory vs Affirmative

The Insular Life Assurance Co., Ltd. v. Heirs of Alvarez, G.R. Nos.
207526 & 210156,

If there are chunks of words with no citations, be wary of their

credibility. Read it well.

If rescinded on concealment, misrep, there is no return of premiums.

By division, not en banc

If literal interpretation will result to absurdity then depart from literal

interpretation

Alvarez Case

Alvarez and his wife, Adelina, owned a residential lot with

improvements. On June 1997, Alvarez applied for and was granted a
housing loan by UnionBank. This loan was secured by a promissory
note, a real estate mortgage over the lot, and a mortgage redemption
insurance taken on the life of Alvarez with UnionBank as beneficiary.
Alvarez was among the mortgagors included in the list of qualified
debtors covered by the Group Mortgage Redemption Insurance that
UnionBank had with Insular Life.
Alvarez passed away on April 17, 1998. Unionbank sought to collect
from the mortgage redemption insurance. Eventually, the claim of
Unionbank was rejected by Insular Life arguing that Alvarez is
disqualified as an insured for being beyond the age of 60 at the time of
the approval of the loan.

With the claim's denial, the monthly amortizations of the loan stood
unpaid. UnionBank sent the Heirs of Alvarez a demand letter, giving
them 10 days to vacate the lot. On October 4, 1999, the lot was
foreclosed and sold at a public auction with UnionBank as the highest
bidder.

On February 14, 2001, the Heirs of Alvarez filed a Complaint for

Declaration of Nullity of Contract and Damages against UnionBank, a
certain Alfonso P. Miranda (Miranda), who supposedly benefitted from
the loan, and the insurer which was identified only as John Doe. The
Heirs of Alvarez denied knowledge of any loan obtained by Alvarez.

The Heirs of Alvarez claimed that after Alvarez's death, they came
upon a document captioned "Letter of Undertaking," which appeared
to have been sent by UnionBank to Miranda. In this document,
UnionBank bound itself to deliver to Miranda P466,000.00 of the
approved P648,000.00 housing loan, provided that Miranda would
deliver to it the title of the subject property free from any liens and/or
encumbrances.

The Complaint was later amended and converted into one for specific
performance to include a demand against Insular Life to fulfill its
obligation as an insurer under the Group Mortgage Redemption
Insurance.

In its defense, UnionBank asserted that the Heirs of Alvarez could not
feign ignorance over the existence of the loan and mortgage
considering the Special Power of Attorney executed by Adelina in favor
of her late husband, which authorized him to apply for a housing loan
with UnionBank.

RTC – foreclosure nullified, InsularLife to pay the proceeds arguing that

there was no indication that Alvarez any fraudulent intent when he
gave UnionBank information about his age and date of birth. It
explained that UnionBank initiated and negotiated the Group Mortgage
Redemption Insurance with Insular Life, and that "ordinary customers
will not know about [insurance policies such as this] unless it is brought
to their knowledge by the bank.

Issue: Whether the subject mortgage redemption insurance is valid

Ruling: Yes. Fraudulent intent is not necessary for a concealment to

entitle the insurer for the rescission of the contract. The concealment
however must, in the absence of inquiries, be not only material, but
fraudulent, or the fact must have been intentionally withheld.

Section 26 defines concealment as "[a] neglect to communicate that

which a party knows and ought to communicate." However, Alvarez did
not withhold information on or neglect to state his age. He made an
actual declaration and assertion about it.

What this case involves, instead, is an allegedly false representation.

Section 44 of the Insurance Code states, "A representation is to be
deemed false when the facts fail to correspond with its assertions or
stipulations." If indeed Alvarez misdeclared his age such that his
assertion fails to correspond with his factual age, he made a false
representation, not a concealment.

Section 45 provides that if a representation is false in a material point,

whether affirmative or promissory, the injured party is entitled to rescind
the contract from the time when the representation becomes false.

Concealment applies only with respect to material facts. That is, those
facts which by their nature would clearly, unequivocally, and logically
be known by the insured as necessary for the insurer to calculate the
proper risks. Rescission under Section 45 remains subject to the basic
precept of fraud having to be proven by clear and convincing evidence
as misrepresentation is an affirmative defense of the insurer. As an
affirmative defense, the duty to establish such defense by satisfactory
and convincing evidence rests upon the insurer.

a) dolo incidente, or those that are committed in the performance of pre-

existing obligation; and b) dolo causante, or the fraud to induced the
other party to enter into a contract.

American Home Case vs Tantuco Enterprises

The two oil mills were separately covered by fire insurance policies issued by petitioner American
Home Assurance Co., Philippine Branch. The policy for the new oil mill provides for the insurance of
the mill itself as well as to the accessories and equipment for oil production therein. The new oil mill
also complied with the corresponding requirement of fire response equipment. A fire that broke out in
the early morning of September 30,1991 gutted and consumed the new oil mill. Respondent
immediately notified the petitioner of the incident. The latter then sent its appraisers who inspected
the burned premises and the properties destroyed. Thereafter, in a letter dated October 15, 1991,
petitioner rejected respondent's claim for the insurance proceeds on the ground that no policy was
issued by it covering the burned oil mill as the subject policy covers a different oil mill.

Inaccuracy of description can be trumped by the manifest intent of the insured to insure a subject
matter.

Warranties strictly construed against the insurer, but they should, likewise, by themselves be
reasonably interpreted.24 That reasonableness is to be ascertained in light of the factual conditions
prevailing in each case. Here, we find that there is no more need for an internal hydrant considering
that inside the burned building were: (1) numerous portable fire extinguishers, (2) an emergency fire
engine, and (3) a fire hose which has a connection to one of the external hydrants.

Prudential Case vs Trans-Asia

On 1993, Prudential Insured M/V Asia Korea, owned by Trans-Asia, for

loss/damage of the hull and machinery arising from perils, inter alia, of fire and explosion for the sum
of P40 Million. During the same year, a fire broke out when M/V Asia Korea was undergoing repairs
in Cebu. Prudential rejected the claim arguing that the warranty of trans-asia that the vessel is clean
and class maintained was breached. In 1995, Trans-Asia collected from a loan and trust receipt
issued in its favor which provides for entitlement to a loan without interest repayable only upon
collection of Trans-Asia from the actual policy. The policy was renewed until 1996.

RTC – ruled that warranty is violated arguing that the warranty must be present at all times
CA – ruled that it is the burden of prudential that TRANS-ASIA breached the warranty, which burden
it failed to discharge. PRUDENTIAL cannot rely on the lack of certification to the effect that TRANS-
ASIA was CLASSED AND CLASS MAINTAINED as its sole basis for reaching the conclusion that
the warranty was breached.

Sec. 74 of the Insurance Code which provides that, "the violation of a material warranty, or other
material provision of a policy on the part of either party thereto, entitles the other to rescind." It is
generally accepted that "[a] warranty is a statement or promise set forth in the policy, or by reference
incorporated therein, the untruth or non-fulfillment of which in any respect, and without reference to
whether the insurer was in fact prejudiced by such untruth or non-fulfillment, renders the policy
voidable by the insurer."25 However, it is similarly indubitable that for the breach of a warranty to
avoid a policy, the same must be duly shown by the party alleging the same. We cannot sustain an
allegation that is unfounded. Consequently, PRUDENTIAL, not having shown that TRANS-ASIA
breached the warranty condition, CLASSED AND CLASS MAINTAINED, it remains that TRANS-
ASIA must be allowed to recover its rightful claims on the policy.

Third, after the loss, Prudential renewed the insurance policy of Trans-Asia for two (2) consecutive
years, from noon of 01 July 1994 to noon of 01 July 1995, and then again until noon of 01 July 1996.
This renewal is deemed a waiver of any breach of warranty.

Qua Chee Gan case

QCG seeks to claim from the fire policies he had for his bodegas and
properties therein. Payment is however due to a breach of warranty
found in a rider pasted. The warranty provides that the insured are to
have water access and hydrants which the insured failed to comply
with.

The insurance company was aware, even before the policies were issued, that in the premises
insured there were only two fire hydrants installed by Qua Chee Gan and two others nearby, owned
by the municipality of TAbaco, contrary to the requirements of the warranty in question. 

05/19/22 notes

EXCEPTION: For concealment pertaining to information of matters tending to prove or tending to

prove the falsity of a warranty, the concealment must be INTENTIONAL and FRAUDULENT to
entitle the insurer to rescind the contract. (Section 29) Hence, the element of fraud and intention must
be proved in this kind of concealment (as compared to an ordinary concealment).

Is there future concealment? Does it work? How is the system.

Age, at the filing of the policy. Misrepresentation needs fraudulent intent

Material, False, and Misrepresented

If breaches are not serious, insurer usually waives the breach

05/26

Check policy
Check how the fire occurred
Check if peril is the proximate cause of the loss

Proximate cause is heavy

Immediate cause may be considered

Proximate cause - An act from which an injury results as a natural, direct, uninterrupted
consequence and without which the injury would not have occurred.

Except when exempted peril, the proximate cause was not a result of the negligence of the insured,

IMMEDIATE CAUSE – the cause or condition nearest to the time and place of injury. It
suggests proximity in time to the loss. It usually contemplates two causes: one cause occurs
after the other.

REMOTE CAUSE – that cause which some independent force merely took advantage of to
accomplish something which is not the natural effect thereof. The insurer shall not be liable if
the peril insured against is merely a remote cause. (not treated carefully, stab wound worsened)

#2 example – fire started, thing is rescued from water destruction

#3 example – fire started; thing saved but stolen

Concurrent causation – not fleshed out

ACC’s – covered peril with exempted peril, no liabilities

Insurance law – looking at the effect of the loss itself

Notice of Loss –

Defect in the policy would be considered requirement waived

Proof of loss -

Re-appraiser/Adjusting –

For life insurance, the proceeds of a life insurance policy shall be paid immediately upon
maturity of the policy, unless the proceeds are payable by installments or as an annuity, in
which case installments or annuities shall be paid as they become due. However, if the policy
matures by the death of the insured, payment should be made within 60 days from presentation
of claim and filing of proof of death

For property insurance, payment should be made within 30 days after proof of loss is received
by insurer and ascertainment of loss or damage is made either by agreement or arbitration but if
such ascertainment is not had or made within 60 days after receipt by the insurer of the proof of
loss, then loss or damage shall be paid within 90 days after such receipt. Otherwise, the
beneficiary shall be entitled to collect interest on the proceeds of the policy for the duration of
the delay at the rate of twice the ceiling imposed by the Monetary Board of the Bangko Sentral
ng Pilipinas

in light of Circular No. 799 issued by the BSP on June 21, 2013 decreasing interest on loans or
forbearance of money, the rate of 12% per annum has been reduced to 6% per annum from the
time of the circular’s effectivity on July 1, 2013. (computed from lapse of the 60-day period until
fully paid) (If there is an interest by court decision, apply interest on rules on judgment)

Since the penalty is pegged at twice the legal rate, then the insurer is liable to pay 12% interest
on the insurance proceeds for the duration of the delay. The monetary consequences of delay
hopefully deter inordinate processing of insurance claims.

The cause of action accrues from the rejection of the claim. The insured should not file a court
suit unless the insurer has acted on his claim and denied it. Otherwise, his case may be
dismissed for prematurity.

At the time of the demand, not at the time of the delay. Depends. Sometimes judgment is ruled
itself. Stick to express provisions of the law.

10% of the monetary award

30 days by agreement of the parties or arbitration

60 days

90 days from proof of loss

Open policy values the law.

Agreement then 30 days to pay. If fixed, 60 days to investigate then pay. If no agreement, 30
days after the 60 days.

Rules on non-payment may also apply on partial payment

Failure to pay, there is presumption of unreasonable delay. Trial Court must also make findings
for unreasonable delay when no proof was presented by the parties. If there is semblance of
validity in the delay, insurer may not really need to pay claims.

*Memorize dates and consequences for the delay

In fire insurance, time is really needed.

Double Insurance

Mortgagor, Mortgagee.

Liabilities of parties

Prohibition on over-insurance

Pro-rate liabilities as among themselves. As to the insured, he may choose among the insurers.
Return of premiums are also prorate

Valid, Open Policy.

Aspects as an insurance policy. Re-insurance

Concerned object, re-insurance, automatic re-insurance

Limits as to what may be reinsured.

Relate to insurance plan payment.

Read causation and think of the possibilities

Willfully causing the damage vs suicidal

Double interest rule is not a general rule. Look at the special laws concerning the interest of
insurance

Assignment is

06/02/22

Marine Insurance (Sec 99)

Can parties choose which type of insurance will cover a property in a vessel?

Overlapping coverage, note this

If Insurer pays the loss, will the right of the insured to the proceeds from the charterer be
subrogated

Forum non-convenience – labor staff

Implies Warranties

Vessel Itself
Personnel
Supplies
Cargo seaworthiness

Implied Warranty in the middle of a voyage considers unreasonable time of repair

Improper Deviation – when the vessel deviates from the route. This may be justified. (As long as
you deviate from the route)

If there is no stipulation to the route to be taken, course fixed by mercantile usage will apply.

What if there is no fixed route in course fixed by mercantile usage, the most advantageous route
determined by a master of normal skills and discretion will be followed. – breach from these
procedures will result to deviation

(a) When caused by circumstances over which neither the master nor
the owner of the ship has any control;
(b) When necessary to comply with a warranty, or to avoid a peril,
whether or not the peril is insured against;
(c) When made in good faith, and upon reasonable grounds of belief in
its necessity to avoid a peril; or
(d) When made in good faith, for the purpose of saving human life or
relieving another vessel in distress.

If there is improper deviation, insurer is exonerated for the for losses happening after the
deviation

Even if the ship returns to the proper route after the deviation, the insurer will still not be liable

Loss Section – read this

Abandonment in transpo is not abandonment in marine insurance

In insurance = the act of the insured by which, after a constructive total
loss, he declares the relinquishment to the insurer of his interest in the
thing insured. (Abandon to the insurer)

In Transportation law = the ship is abandoned in relation to the limited

liability rule. (Abandon ko na tapos bahala na kayo mag-away sa
makukuha niyo)

If insured abandon the thing insured, the vessel abandoned will be held
by the insurer.

Next meeting – Fire Insurance, Surety,

Entire ship is considered for the 75% value for the insurance.

Losses – reasoanable time. Case to case basis

If insured will not elect abandonment, he will not be entitled to the full amount. Insured gets
more from the abandonment

If abandoned, full value. If not abandoned, value of the ship

Partial loss – co-insurance concept?

If underinsured, try to take partial. If co-insured for the full, abandon

General average – contribution of the benefactors to the jettisoned property in proportion to their
interest and what was saved

Particular average – one that is borne by the owner of the lost or damaged property. Bear your own
loss

Look at the liability of the insured to know insurer would be liability. Look at who is insured at what, gen
or particular ave. If liable, then insurer may be liable unless insurer is excluded to a certain liability

Know the fractions. Especially general average

Measure of indemnity – who is entitled to the freightage. Extent of loss, look at rules on insurable
interest

Fire Insurance

Fire insurance – not only fire. Allied risks too. Be careful what specific risks are covered

No policy of fire insurance shall be pledged, hypothecated, or transferred to any person, firm or
company who acts as agent for or otherwise represents the issuing company, and any such pledge,
hypothecation, or transfer hereafter made shall be void and of no effect.
Non-alienation clause

Alteration to be a ground of cancellation of the policy

(1) The use or condition of the thing is specifically limited or stipulated in the policy;
(2) Such use or condition as limited by the policy is altered;
(3) The alteration is made without the consent of the insurer;
(4) The alteration is made by means within the control of the insured; and
(5) The alteration increases the risk.

Grounds for the cancellation of the policy

(a) Nonpayment of premium;

(b) Conviction of a crime arising out of acts increasing the hazard insured against;

(c) Discovery of fraud or material misrepresentation;

(d) Discovery of willful or reckless acts or omissions increasing the hazard insured against;

(e) Physical changes in the property insured which result in the property becoming uninsurable;

(f) Discovery of other insurance coverage that makes the total insurance in excess of the value of the
property insured; or

(g) A determination by the Commissioner that the continuation of the policy would violate or would
place the insurer in violation of this Code.

If value depreciates in its course, you will only be entitled to the depreciated value. – is commensurate
value applicable to marine insurance? Yes – I think for profits and open policy

Hostile fire – It is hostile when it occurs outside of the usual confines or begins as a friendly fire and
becomes hostile by escaping from the place where it ought to be to some place where it ought not to
be.

Friendly fire - So long as a fire burns in a place where it was intended to burn, and ought to be, it is to
be regarded as merely an agency for the accomplishment of some purpose and not as a hostile peril.
It is a friendly fire.

Find damages arising from friendly fire –

Next Mtg. Life insurance hanggang dulo.

Casualty, memorize. Know this too. This is very asked.

284/312
Look at the restrictions and what may be done.

Alterations and warranties and what may be done. Valid endorsements or valid warranties.

Read cases

Malversation = diversion of funds for personal purposes

Technical Malversation = appropriating a dedicated public fund for a project to another project

06/16/22

Endowment Policy – the payment is just a feature of the insurance contract. Payment during the lapse of
the contract, is just a feature of the contract of life insurance paying for the death.

Suicide is generally not compensated, until the lapse of two years of the contract. An exception to the
two-year rule is if the insured went insane during the two year period or there is an express stipulation

Suicide shall be proven by insured. Insurer has the burden to prove there is no suicide.

What if a third party killed the insured? Is that suicide?

What is the third party liable of? Murder or assistance to suicide?

If insured voluntarily or willfully injures himself, the insurer is not liable

Mandatorily covered, but voluntary compliance

Fidelity Insurance covers direct financial losses as a result of dishonesty by your employees. – a

casualty insurance

Employees are excluded in theft insurance. – Employees have a different risk

Legal Expenses – stipulation

There are certain stipulation where death is caused by an accident, there may be double indemnity if
there is a stipulation

Robbery – covered by theft insurance

Fencing –

As long as there is unlawful taking, theft insurance may operate. Theft in a generic sense

Compulsory Motor Vehicle Insurance Law

CMVIL is just attached to the registration of device.

CMVIL covers liabilities of insured (owner of the motor vehicle) against passengers, third persons,
 - to indemnify the death, bodily injury, and/or damage to property of a third-party or
passenger, as the case may be, arising from the use thereof.

Passengers - any fare paying person being transported and conveyed in and by a motor vehicle for
transportation of passengers for compensation, including persons expressly authorized by law or by
the vehicle's operator or his agents to ride without fare.

Kahit pasakay or pababa, passenger siya. The assumption of the purpose of the party on why board
the vehicle

THIRD PARTY is any person other than a passenger. Shall also exclude a member of the household,
or a member of the family within the second degree of consanguinity or affinity, of a motor vehicle
owner or land transportation operator, as likewise defined herein, or his employee in respect of death,
bodily injury, or damage to property arising out of and in the course of employment.

(a) In the case of a land transportation operator, the insurance guaranty in cash or surety bond shall
cover liability for death or bodily injuries of third-parties and/or passengers arising out of the use of
such vehicle in the amount not less than Twelve thousand pesos (P12,000.00) per passenger or third-
party and an amount, for each of such categories, in any one accident of not less than that set forth in
the following scale:

(1) Motor vehicles with an authorized capacity of twenty-six (26) or more passengers: Fifty thousand
pesos (P50,000.00);

(2) Motor vehicles with an authorized capacity of from twelve (12) to twenty-five (25) passengers:
Forty thousand pesos (P40,000.00);

(3) Motor vehicles with an authorized capacity of from six (6) to eleven (11) passengers: Thirty
thousand pesos (P30,000.00);

(4) Motor vehicles with an authorized capacity of five (5) or less passengers: Five thousand pesos
(P5,000.00) multiplied by the authorized capacity.

Provided, however, That such cash deposit made to, or surety bond posted with, the
Commissioner shall be resorted to by him in cases of accidents the indemnities for
which to third-parties and/or passengers are not settled accordingly by the land
transportation operator and, in that event, the said cash deposit shall be replenished
or such surety bond shall be restored within sixty (60) days after impairment or expiry,
as the case may be, by such land transportation operator, otherwise, he shall secure
the insurance policy required by this chapter. The aforesaid cash deposit may be
invested by the Commissioner in readily marketable government bonds, and/or
securities.
(b) In the case of an owner of a motor vehicle, the insurance or guaranty in cash or surety
bond shall cover liability for death or injury to third-parties in an amount not less than
that set forth in the following scale in any one accident:
(1) Private Cars
(i) Bantam: Twenty thousand pesos (P20,000.00);
(ii) Light: Twenty thousand pesos (P20,000.00); and
(iii) Heavy: Thirty thousand pesos (P30,000.00).
(2) Other Private Vehicles
(i) Tricycles, motorcycles and scooters: Twelve thousand pesos (P12,000.00);
(ii) Vehicles with an unladen weight of 2,600 kilos or less: Twenty thousand pesos
(P20,000.00)
(iii) Vehicles with an unladen weight of between 2,601 kilos and 3,930 kilos: Thirty
thousand pesos (P30,000.00); and
(iv) Vehicles with an unladen weight over 3,930 kilos: Fifty thousand pesos
(P50,000.00).

§ The third party liability coverage of P100,000.00 with additional P100,000.00 coverage
for passenger liability for public utility vehicle.
§ Death indemnity is P70,000 while indemnity for burial and funeral expenses is 30,000.
§ Maximum indemnity;

Damage is per passenger ideally, but in practice, insurers can set a limit of number of passengers
which must be complied for the same insurer to compensate.

If passenger rides A and hit by B for accident, passenger should proceed against A as his carrier

If third person, the insurer of the directly offending vehicle. Kung sino yung nakabangga

NO FAULT INDEMNITY CLAUSE; Any claim for death or injury to any passenger or third-party
pursuant to the provisions of this chapter shall be paid without the necessity of proving fault or
negligence of any kind: Provided, That for purposes of this section

(a) The total indemnity in respect of any person shall not be less than Fifteen thousand pesos
(P15,000.00);

(b) The following proofs of loss, when submitted under oath, shall be sufficient evidence to
substantiate the claim:

(1) Police report of accident; and

(2) Death certificate and evidence sufficient to establish the proper payee; or
(3) Medical report and evidence of medical or hospital disbursement in respect of which refund is
claimed;

(c) Claim may be made against one motor vehicle only. In the case of an occupant of a vehicle, claim
shall lie against the insurer of the vehicle in which the occupant is riding, mounting or dismounting
from. In any other case, claim shall lie against the insurer of the directly offending vehicle. In all
cases, the right of the party paying the claim to recover against the owner of the vehicle responsible
for the accident shall be maintained.

NFIC – claim sa carrier (passenger) or sa directly offending vehicle (third party) (auto claim). The general
rule, you need to prove fault.

Claiming for insurance does not bar the right of the claiming party to file suit
To provide assistance to the aggrieved party. So they can claim faster
Two aspects, mandatory insurance and no fault indemnity clause

Prescriptive Periods

6 months – time to claim

1 Year – time to file suit

232 – specific provisions provided in an insurance

Casualty insurance – look at who is the person insured and what is his liability. Is he liable to the
aggrieved party?

Is X liable, then insurer is liable

Insurer is subrogated to the rights of the insured (generally)

Security and Regularities Commission.

contracts providing for benefits or values which may vary according to the investment
experience of any separate or segregated account or accounts maintained by an insurance
company.

Variable Contract – built in in an insurance contract, part of the premium will be invested in a
mutual fund (hedge fund)

Hedge Funds are then invested.

Investment contract – you offer something people will gain benefits from the efforts of another.
- Investment contracts are to be registered to SRC before they can be sold.

Variable contracts are expressly excluded from investment contract. Investment contracts are
usually securities.

Commissioner Funa article

Jurisdiction of Insurance Commission – settlement of insurance claims not exceeding X amount.

Concurrent jurisdiction with the RTC.

Pre-need contract -

Pre-need plans” are contracts, agreements, deeds or plans for the benefit of the planholders
which provide for the performance of future service/s, payment of monetary considerations or
delivery of other benefits at the time of actual need or agreed maturity date, as specified therein,
in exchange for cash or installment amounts with or without interest or insurance coverage and
includes life, pension, education, interment and other plans, instruments, contracts or deeds as
may in the future be determined by the Commission.

Read the restrictions. Like capitalization requirements (increased)

You can only insure persons in the Philippines as a Philippine insurance company, foreigners
cannot be insured.