Beneficiary:
GR: An individual who has secured a life insurance policy on his or
her own life may designate any person as beneficiary provided
that such designation does not fall under the enumerations
provided in Article 739 of the Civil Code.
Article 739. The following donations shall be void:
(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;
(3) Those made to a public officer or his wife, descendants
and ascendants, by reason of his office.
With regard to the beneficiary:
In life insurance, if the insured procured insurance on his own life,
he can designate anyone as beneficiary except those disqualified to
receive donation, even though the latter has no insurable interest in
the life of the insured.
When the owner of the policy insures the life of another –
the cestui que vie- and designates a third party as
beneficiary, both the owner and the beneficiary must have
an insurable interest in the cestui que vie.
A person can take an insurance on the life of another person
and designate himself as the beneficiary provided that he
has pecuniary interest in the person he is insuring. The
insured must be any of Sex 10 d
In property insurance, the beneficiary (or assignee) must have
insurable interest over the property insured and such insurable
interest must be covered by the insurance policy.
With regard the property:
In life insurance, it is enough that insurable interest exists at the
time when the contract is made but it need not exist at the time of
the loss.
In property insurance, an interest insured must exist when the
insurance takes effect and when the loss occurs but need not exist
in the meantime.
Concubine
If a concubine is made the beneficiary, it is believed that the
insurance contract will still remain valid, but the indemnity must go
to the legal heirs and not to the concubine, for evidently, what is
prohibited under Art. 2012 is the naming of the improper
beneficiary.
It is only in cases where the insured has not designated any
beneficiary, or when the designated beneficiary is disqualified by
law to receive the proceeds, that the insurance policy proceeds shall
redound to the benefit of the estate of the insured
The proceeds should be payable to the estate which includes not
only the spouse but the children as well.
It is evident from the face of the complaint that petitioners are not
entitled to a favorable judgment in light of Article 2011 of the Civil
Code which expressly provides that insurance contracts shall be
governed by special laws, i.e., the Insurance Code.
Section 53 of the Insurance Code states that “the insurance
proceeds shall be applied exclusively to the proper interest of the
person in whose name or for whose benefit it is made unless
otherwise specified in the policy.” From the petition filed before the
trial court that, it is clear tat although petitioners are the legitimate
heirs of Loreto, they were not named as beneficiaries in the
insurance policies issued by Insular and Grepalife. Thus, they are not
entitled to the proceeds thereof.

Heirs of Loreta Maramag v Maramag, there is no legal proscription
in naming as beneficiaries the children of illicit relationships by the
insured.
Property insurance
For the beneficiary to recover on the fire or property insurance
policy, it is required that he must have an insurable interest in the
property insured.
Insurable interest,
is that interest which a person is deemed to have in the subject
matter insured, where he has a relation or connection with or
concern in it, such that the person will derive pecuniary benefit or
advantage from the preservation of the subject matter insured and
will suffer pecuniary loss or damage from its destruction,
termination, or injury by the happening of the event insured
against.
Insurable interest in property
Sec. 14 of the Insurance Code provides that an insurable interest in
property may consist in (a) an existing interest; (b) an inchoate
interest founded on an existing interest; (c) an expectancy, coupled
with an interest out of which the expectancy arises. Furthermore,
such an insurable interest in property must exist when the
insurance takes effect, and when the loss occurs, but need not exist
in the meantime
Incontestability clause
o Sec 48 : After the policy of life insurance made
payable on the death of the insured shall have been
in force during the lifetime of the insured for a
period of two (2) years from the date of its issue or
its last reinstatement, the insurer cannot prove that
the policy is void ab initio (construed as voidable) or
is rescindible by reason of the fraudulent
concealment or misrepresentation of the insured or
his agent
o Otherwise stated, raising the ground for
cancellation or rescission are barred when the
policy have been effective within the lifetime of the
insured for 2 years from date of issue or last
reinstatement
o After 2 years from date of issuance of the policy or
last reinstatement, the insurer must make good on
the policy, even though the policy was obtained by
fraud, concealment, or misrepresentation
o Requisites:
 The insurance is a life insurance payable on
the death of the insured
 The policy is in force for at least 2 years
from its date of issue as appearing in the
policy or of its last reinstatement
 Reckoned not from date of receipt
but from date of issuance of policy
or last reinstatement
o Rationale: regulates the actions of both the insurer
and insured
 Gives the insurer enough time to inquire
whether the policy was obtained by fraud,
concealment or representation
 Forewarns individuals that their attempts at
insurance fraud would be timely uncovered
– thus deterring them from doing the same
o 2-year period may be shortened but cannot be
extended by stipulation
o Not absolute
o Defenses that are not barred by incontestability
clause
 That the person taking the insurance lacked
insurable interest as required by law;
 That the cause of the death of the insured is
an excepted risk;
  That the premiums have not been paid
 That the conditions of the policy relating to
military or naval service have been violated
 That the fraud is of a particularly vicious
type;
 That the beneficiary failed to furnish proof
of death or to comply with any condition
imposed by the policy after the loss has
happened; or
 That the action was not brought within the
time specified
Based on Aban and Sibya cases, there are now 2 incontestability
clauses,
1. 2 years had lapsed from issuance of the policy or last
reinstatement
2. The insured died within 2 years from issuance of the policy
Manila Bankers Life Insurance Corp v Aban
 After the 2-year period lapsed, or when the insured dies
within the period, the insurer must make good on the
policy, even though the policy was obtained by fraud,
misrepresentation, or concealment
 if the insured died within the 2-year period from the
issuance of the policy, the insurer can no longer rescind the
policy on account of misrepresentation and/or concealment
Sun Life of Canada v Sibya
 even assuming that there was concealment, the insurer
must make good on the policy because the insured died
within the 2-year period, citing Aban
“during the lifetime”
 The right of the insurer to rescind is only lost if the
beneficiary has commenced an action on the policy. There is
no such action in this case
 The phrase "during the lifetime" found in Section 48 simply
means that the policy is no longer considered in force after
the insured has died. The key phrase in the second
paragraph of Section 48 is "for a period of two years.
 In other words, the clause can be invoked even after the
death of the insured and not just during his lifetime. The
rescission need not be always done during the lifetime of
the insured.
Concealment
 It is well settled that the insured need not die of the disease
he failed to disclose to the insurer. It is sufficient that his
nondisclosure misled the insurer in forming his estimate of
the risks of the proposed insurance policy or in making
inquiries.
 It is not material that the insured died of a different cause
than the fact concealed. The fact concealed, that is heart
ailment, is material to the determination by the insurance
company whether or not to accept the application for
insurance and to require the medical examination of the
insured.
Mortgagor-mortgagee
Interest of the Mortgagor and the Mortgagee in the mortgaged
property is separate and distinct from the other. In case both of
them take out separate insurance policies on the same property, or
one policy covering their respective interests, there is no double
insurance.
Mortgagor, as owner, may insure the property mortgaged to the full
value of such property.
Mortgagee can insure the same only to the extent of the amount of
his credit.
If the mortgagor obtained an open policy, then he could claim an
amount corresponding to the extent of the damage, but not to
exceed the face value of the insurance policy. If he obtained a
valued policy, then he could claim an amount based on the agreed
upon valuation of the property.
Sec 8 the mortgagee is bound by the acts of the mortgagor and
cannot recover. Insurer is not liable if the mortgagor deliberately set
the insured property on fire.
If the mortgagor and mortgagee separately obtained fire insurance
and the mortgagor designated the mortgagee as beneficiary in the
fire insurance, any act done by the mortgagor that will avoid the
insurance is binding is binding on the mortgagee but the latter can
still recover on the fire insurance he separately insured.
If the mortgagor obtained fire insurance but the loss occurs after
the redemption period, the mortgagor can no longer recover
because he has no more insurable interest at the time of the loss.
Insurable interest
 More than one insurable interest may exist in the same
property
 Existing:
 legal title
o trustee, as in the case of seller of property not yet
delivered
o mortgagor of property mortgaged
o lessor of property leased
o assignee of property for the benefit of creditors
o executor, administrator, trustee, receiver – already
has sufficient insurable interest for the purpose of
taking out insurance on the property under his
control, but any proceeds from such insurance are
to be held for the benefit of those for whose benefit
the representative is acting
 equitable title
o purchaser of property before delivery or before he
had performed the conditions of his sale
o mortgagee of property mortgaged
o mortgagor, after foreclosure but before expiration
of the period within which redemption is allowed
o beneficiary under deed of trust
o creditors under deed of assignment
o buildings and constructors pending payment of
construction price
o judgment debtor whose property has been seized
under execution until the right to redeem or the
right to have the sale set aside has been lost
 inchoate:
o stockholder – inchoate interest in the property of
the corporation of which he is a stockholder, which
is founded on an existing interest arising from his
ownership of shares in the corporation. His II is
limited to the extent of the value of his interest or
to his share in the distribution of the corporate
assets upon dissolution
o partner
 expectancy
o farmer as to future crops
o binding contract:
 workman in a building he may contracted to
repair
 artist as to the interior decoration which he
had been employed
Life v Property insurance
 In property insurance, the actual value of the interest
therein is the limit of the insurance that can validly be
placed thereon. In life insurance, there is no limit to the
amount of insurance that may be taken upon life.
 In property insurance, an interest insured must exist when
the insurance takes effect and when the loss occurs but
 need not exist in the meantime. In life insurance, it is
enough that insurable interest exists at the time when the
contract is made but it need not exist at the time of loss.
 In property insurance, the beneficiary (or assignee) must
have insurable interest over the property insured and such
insurable interest must be covered by the insurance policy.
In life insurance, if the insured procured insurance on his
own life, he can designate anyone as beneficiary except
those disqualified to receive donation, even though the
latter has no insurable interest in the life of the insured.
Other insurance clause
 Other Insurance Clause in a policy is a condition which is not
proscribed by law. Such a condition is a provision which
invariably appears in fire insurance policies and is intended
to prevent an increase in the moral hazard.
 However, in order to constitute a violation, the other
insurance must be upon the same subject matter, the same
interest therein, and the same risk.
Accident
 Boxing
o Can claim
o Proximate cause of the death was the boxing
contest
o Death sustained in a boxing contest is an accident
o An accident because the insured did not expect to
die by entering such contest
 where the death or injury is not the natural or probable
result of the insured’s voluntary act, or if something
unforeseen occurs in the doing of the act which produces
the injury, the resulting death is within the protection of the
policies insuring against death or injury from accident
 no accident when a deliberate act is performed, unless
some additional and unforeseen happening occurs that
brings about the injury
 no "accident" in the context of an accident policy, if it is the
natural result of the insured's voluntary act, unaccompanied
by anything unforeseen except the injury.
Authorized driver clause
 the proviso “that the person driving is permitted in
accordance with the licensing, etc.” qualified only a person
driving the vehicle other than the insured at the time of the
accident
 under this clause, an authorized driver must not only be
permitted to drive by the insured but it is also essential that
he is permitted under the law and regulations to drive the
motor vehicle and is not disqualified from doing so under
any enactment or regulation
 the requirement applies only when the driver is driving on
the insured’s order or with his permission. It does not apply
when the person driving is the insured himself.
 In liability insurance, the parties are bound by the terms of
the policy and the right of the insured to recover is
governed thereby
Subrogation
 Article 2207. If the plaintiff's property has been insured, and
he has received indemnity from the insurance company for
the injury or loss arising out of the wrong or breach of
contract complained of, the insurance company shall be
subrogated to the rights of the insured against the
wrongdoer or the person who has violated the contract. If
the amount paid by the insurance company does not fully
cover the injury or loss, the aggrieved party shall be entitled
to recover the deficiency from the person causing the loss
or injury
 Always remember if there is unjust enrichment
 Release claim – insured can recover from the insured unless
the release was with the consent of the insurer
  In marine insurance, while subrogation takes effect by
operation of law the moment the insurer validly pays the
insured, the document evidencing the right of subrogation
should nevertheless be presented to prove the right of
subrogation unless the defendant fails to timely put it in
issue
Prescription
 2013 – Vector doctrine
o 10 years from the date it indemnified the
insured
o Art 1144; obligation based on law
 2019 – Henson doctrine
o Quasi-delict; 4 years from the time it paid the
insured; no fresh period; enforce against the
wrongdoer only for the remaining period
o The rule now is following the principles of
subrogation, the insurer only steps into the
shoes of the insured. No new obligation is
created between the insurer and the
wrongdoer. The rights of a subrogee cannot be
superior to that of the subrogor. Therefore, for
purposes of prescription, the insurer inherits
only the remaining period within which the
insured may file an action against the
wrongdoer. The indemnification of the insured
by the insurer only allows it to be subrogated to
the former’s rights and does not create a new
reckoning point for the cause of action that the
insured originally has against the wrongdoer.
Thus, applying prospectively, the prescription
period to claim indemnification form a
tortfeasor is only 4 years.
Loss
 The complete physical destruction of the rice is not
essential to constitute an actual total loss.
CMVI
 Direct liability but not solidary liable with car owner
 The liability of the insurer is based on the contract,
specifically, the terms of the insurance policy, that of the
insured is based on tort.
 If the insurer were solidarily liable with the insured, it could
be made to pay more than the amount stated in the policy
contrary to the principles underlying insurance contracts.
 Accrues immediately upon occurrence of injury or event
upon which the liability depends and does not depend on
the recovery of judgment by the injured party against the
insured.
 Have the option either to claim from the insurer and the
balance from the insured or enforce the entire judgment
from the insured subject to reimbursement from the insurer
to the extent of the insurance coverage
 where the insurance contract provides for indemnity
against liability to third persons, the liability of the insurer is
direct and such third persons can directly sue the insurer.
The direct liability of the insurer under indemnity contracts
against third party liability does not mean, however, that
the insurer can be held solidarily liable with the insured
and/or the other parties found at fault, since they are being
held liable under different obligations. The liability of the
insured carrier or vehicle owner is based on tort, in
accordance with the provisions of the Civil Code;55 while
that of the insurer arises from contract, particularly, the
insurance policy. The third-party liability of the insurer is
only up to the extent of the insurance policy and that
required by law; and it cannot be held solidarily liable for
anything beyond that amount.56 Any award beyond the
insurance coverage would already be the sole liability of the
insured and/or the other parties at fault
 claim may be made against one motor vehicle only. In 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
Double insurance
 Sec 95 A double insurance exists where the same person is
insured by several insurers separately in respect to the
same subject and interest.
 Requisites:
o Person insured is the same
o 2 or more insurers insuring separately
o Identity of subject matter
o Identity of interest insured
o Identity of risk or peril insured against
 Only applies to property insurance
 No law prohibiting double insurance. What is prohibited is
over insurance, for the insured to receive more than his
interest or value of the property as this will violate the
indemnity principle of an insurance contract
 Sec 96 "(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
 Sec 96 (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 – co-insurers
All risks
creates a special type of insurance which extends coverage to risks
not usually contemplated and avoids putting upon the insured the
burden of establishing that the loss was due to the peril falling
within the policy’s coverage. The burden rests on the insurer to
prove that the loss is caused by a risk that is expressly excluded. In
this case, there is no stipulation as to what losses are excluded.
It is insurance against all causes of conceivable loss or damage.
Except:
1. As otherwise excluded in the policy; or
2. Due to fraud or intentional misconduct on the part of the insured
(Choa Tek Seng v. CA, G.R. No. 84507, 1990)
0-;.ol,CivRev 2
Six topics check elearn
1 - succession
2- obli
Sales
Lease
Agency
Partnership
Reviewers from up, san beda, Ateneo

The law on life insurance prohibits double insurance  Succession – mode of acquiring ownership
FALSE. Insurable interest in life is unlimited. Thus, the danger of  Next meeting what is a will, forms, witnesses, qualifications
overinsurance which may be by virtue of double insurance is, legally etc
speaking, not present in life insurance.

SpecCom
 Divina book
 Insurance next meeting
 Then transpo
  Volume 1 first
 Comprehensive quiz every meeting
 Quiz next meeting insurance
 30 mt 30 finals 40 recits etc
 4 absences
INSURANCE
 Insurable interest –
o most basic of all requirements in insurance
o interest which the law requires the owner of the
insurance policy to have in the person or thing
insured
o pecuniary in nature –
 that person insuring will derive a pecuniary
or financial benefit or advantage from its
preservation and will suffer pecuniary loss
or damage from its destruction,
termination, or injury by the happening of
the event insured against
 expectation of pecuniary benefit in the life
of the insured, that is, risk of actual
monetary loss
life of his married children – no. Sec 10 must be obliged
to support each other
life of his wife separated in fact – yes, still obliged to
support each other. Blood or material relationships
fir the concept of insurable interest. Article 195 FC
life of his debtor – yes, under legal obligation to him;
insurable interest of creditor in the life of his
debtor. For the purpose of protecting his debt but
only to the extent of the amount of the debt and
the cost of carrying the insurance on the debtor’s
life. Or such amounts as remain unpaid at the time
of the death of the debtor. Principle of indemnity
applies.
Property mortgaged to him – mortgagee
Sec 13, 14
Insurable interest arising from legal
equitable title
Mortgagee of the property mortgaged
Property under usufruct of which he has naked title –
Yes? Considered an existing interest in
property; has legal title
 Cash and carry
o GR: No policy or contract of insurance issued by an
insurance company is valid and binding unless and
until the premium thereof has been paid. Any
agreement to the contrary is void. Sec 77
o XPN:
 A policy is valid and binding even when
there is nonpayment of premium:
 When there is an agreement
allowing the insured to pay the
premium in installments and
partial payment has been made at
the time of loss
 When there is an agreement to
grant the insured credit extension
for the payment of the premium
and loss occurs before the
expiration of the credit term
 When estoppel bars the insurer to
invoke non-recovery on the policy.
 In case of life or industrial life policy
whenever the grace period
provision applies, or whenever
under the broker and agency
agreements with duly licensed
intermediaries, a ninety (90)-day
credit extension is given. No credit
extension to a duly licensed
 intermediary should exceed ninety
(90) days from date of issuance of
the policy (IC, Sec. 77).
 When there is acknowledgment in
a policy of a receipt of premium,
which the law declares to be
conclusive evidence of payment,
even if there is stipulation therein
that it shall not be binding until the
premium is actually paid. This is
without prejudice however to right
of insurer to collect corresponding
premium (IC, Sec. 77).
 When the public interest so
requires, as determined by the
Insurance Commissioner. Example:
In compulsory motor vehicle
insurance, if the policy was issued
without payment of premium by
the vehicle owner, the insurer will
still be held liable. To rule otherwise
would prejudice the 3rd party
victim.
 Incontestability clause
o Sec 48
o After the policy of life insurance made payable on
the death of the insured shall have been in force
during the lifetime of the insured for a period of
two (2) years from the date of its issue or its last
reinstatement, the insurer cannot prove that the
policy is void ab initio (construed as voidable) or is
rescindible by reason of the fraudulent
concealment or misrepresentation of the insured or
his agent
o Otherwise stated, raising the ground for
cancellation or rescission are barred when the
policy have been effective within the lifetime of the
insured for 2 years from date f issue or last
reinstatement
o 2-year period may be shortened but cannot be
extended by stipulation
o Not absolute
o Defenses that are not barred by incontestability
clause
 That the person taking the insurance lacked
insurable interest as required by law;
 That the cause of the death of the insured is
an excepted risk;
 That the premiums have not been paid
 That the conditions of the policy relating to
military or naval service have been violated
 That the fraud is of a particularly vicious
type;
 That the beneficiary failed to furnish proof
of death or to comply with any condition
imposed by the policy after the loss has
happened; or
 That the action was not brought within the
time specified
 Co-insurance
 Loss Payable or Open Mortgage Clause
o Provides for the payment of loss, if any, to the
mortgagee as his interest may appear and under it,
the acts of the mortgagor affect the mortgagee
 No-fault clause
o Sec 391
o Any claim for death or injury to any passenger or
third-party pursuant to the provisions on cmvi shall
be paid without necessity of proving fault or
negligence of any kind. Purpose is to guarantee
compensation
o Shall not be more than 15000

May a person insure:
a. The life of his married children
 No. Married children not anymore entitled to support from
parents. Unless shown that the child is engage in schooling
or training for some profession, trade, or vocation.
o Art. 194. Support comprises everything
indispensable for sustenance, dwelling, clothing,
medical attendance, education and transportation,
in keeping with the financial capacity of the family.
o Art. 105. Subject to the provisions of the succeeding
articles, the following are obliged to support each
other to the whole extent set forth in the preceding
article:
(1) The spouses;
(2) Legitimate ascendants and descendants;
(3) Parents and their legitimate children and the
legitimate and illegitimate children of the latter;
(4) Parents and their illegitimate children and the
legitimate and illegitimate children of the latter; and
(5) Legitimate brothers and sisters, whether of full
or half-blood
b. Life of his wife from whom he is separated in fact
 Yes. Still obliged to support each other. There still exists a
valid legitimate marriage. Mere separation in fact does not
dissolve or terminate the vinculum juris.
c. Life of his debtor
 Yes, under legal obligation to him; insurable interest of
creditor in the life of his debtor.
 For the purpose of protecting his debt but only to the
extent of the amount of the debt and the cost of carrying
the insurance on the debtor’s life. Or such amounts as
remain unpaid at the time of the death of the debtor.
Principle of indemnity applies.
"Section 10. Every person has an insurable interest in
the life and health:
xxx
"(c) Of any person under a legal obligation
to him for the payment of money, or
respecting property or services, of which
death or illness might delay or prevent the
performance; and
Xxx
d. The property which was mortgaged to him
 Yes. A mortgagee has an insurable interest arising from
equitable title (beneficial ownership) in the property
mortgaged
o "Section 13. Every interest in property, whether real
or personal, or any relation thereto, or liability in
respect thereof, of such nature that a contemplated
peril might directly damnify the insured, is an
insurable interest.
o "Section 14. An insurable interest in property may
consist in:
"(a) An existing interest;
xxx
e. The property under usufruct of which he has naked title
 Yes. Usufructuary has insurable interest arising from
beneficial ownership.
o "Section 14. An insurable interest in property may
consist in:
"(a) An existing interest;
xxx
Chua is the consignee of the shipment of fishmeal loaded on board
SS Elon from Taiwan to Manila. When the shipment arrived, the
shipment was partially damaged. The shipment was insured with
insurance company Musk Insurance Co. Chua claimed for damages
from the insurance company, but the insurance company denied
the claim for lack of insurable interest. The insurance company
offered to reimburse the premiums paid by Chua. Does Chua have
insurable interest over the shipment?
 Yes. Chua has an insurable interest over the shipment.
Existing interest – legal interest/title. The absolute owner of
a property has an insurable interest thereon.
o "Section 14. An insurable interest in property may
consist in:
"(a) An existing interest;
Xxxxx
3. Your wealthy client wants to take an insurance on his own life
and designate his girlfriend as beneficiary. Your client is also the
registered owner of a commercial building. In addition to the
life insurance, he wants to take a property insurance on the said
property and designate his girlfriend as the beneficiary. Your
wealthy client asks for your advice if these conditions on the
insurance contract are valid. What will your advice your client?
 As to the life insurance:
o Yes, a person may take an insurance on his life for
the benefit of another. It is not necessary that the
beneficiary designated in the policy should have any
interest in the life of the insured. Sec 10
o Sec 11 as to the beneficiary
 A person may take out a policy of insurance
on his own life and make it payable to
whomsoever he pleases, irrespective of the
beneficiary’s lack of insurable interest.
o In life insurance taken by a person on his won life, it
is not necessary for the beneficiary to have an
insurable interest in the life insured Sec 10, 19, 184
 As to the property insurance: - no diay
o Yes, he may take an insurance on his commercial
building since he has legal right over it as owner.
Sec 19
o As to the designation of his girlfriend as beneficiary,
yes. There are three kinds of beneficiary, one being
a third person through mere bounty of the insured.
o Sec 18
Suicide – Sec 183
 Liability of the insurer in case of suicide
The insurer shall be liable in case of suicide by the insured if:
o 1. The suicide is committed after the policy has
been in force for a period of 2 years from the date
of its issue or of its last reinstatement.
o 2. The suicide is committed within a shorter period
as provided in the policy.
o 3. The suicide is committed in the state of insanity
regardless of the date of commission
a. Proximate cause – Sec 86 – still liable even if immediate cause;
unless proximate cause is an excepted peril
b. Negligence – Sec 89
c. installment – insurer liable still. One of the exceptions to Sec 77 is
when there is an agreement allowing the insured to pay the
premiums in installements and partial payment has been made at
the time of the loss. Basic principles of equity and fairness would
not allow the insurer to continue collecting and accepting the
premiums, although paid on installments, and later deny liability on
the lame excuse that the premiums were not paid in full.
d. Cosmetic changes –
 Sec 171
 There is not an increase of risk and the policy is not avoided
where a different use is made of the insured premises,
which use if not of a dangerous character and does not
differ materially from the use specified in the policy, even
though an additional or increasedpremium may be
demanded therefor.
Compulsory Motor Vehicle Insurance
Theft Clause - It is that which includes theft as among the risks
insured against. Where a car is unlawfully and wrongfully taken
without the knowledge and consent of the owner, such taking
constitutes “theft” and it is the theft clause, not the authorized
driver clause which should apply (Perla Compania de Seguros,
Inc. v. CA, supra). The “Theft Clause” of a comprehensive motor
vehicle insurance policy has been interpreted by the Court in
several cases to cover situations like (1) when one takes the
motor vehicle of another without the latter’s consent even if
the motor vehicle is later returned, there is theft- there being
intent to gain as the use of the thing unlawfully taken
constitutes gain or (2) when there is taking of a vehicle by
another person without the permission or authority from the
owner thereof
 Insurance company liable under the theft clause.
 Where the insured’s car is wrongfully taken without his
consent by an employee of the machine shop to which its
entrusted for repairs, the insurer is liable and must pay the
insured for the total loss of the insured’s vehicle under the
theft clause of the policy – Villacorta v Insurance
Refund for premium; perfection of contract
 The insured is entitled to a return of the whole premium:
o if the thing insured was never exposed to the risks
insured against
o when the contract is voidable due to the fraud or
misrepresentation of the insurer
o when the insurer never incurred any liability
Premium – agreed price for assuming and carrying the risk – the
consideration paid an insurer for undertaking to indemnify the
insured against a specified peril
 No binding contract. No payment of premium had thus
been made at the time of the loss of the vehicle. While they
were indeed informed that the check was ready for pick-up,
the notice of the availability of the check, by itself, does not
produce the effect of payment of the premium. At the time
of the loss, there was no payment of premium yet to make
the insurance policy effective. Also failed to establish the
fact of a grant by of a credit term in his favor, or that the
grant has been consistent.
 Sec 77
Concealment
 Section 26
 Requisites:
o The matter concealed must be material
o There must be an obligation for the insured to
reveal the concealed matter to the insurer
 Matter relating to the health of the insured are material and
relevant to the approval and issuance of the life insurance
policy as they definitely affect the insurer’s action on the
application
 It being sufficient that his non disclosure misled the insurer
in forming his estimates of the risks of the proposed
insurance policy or in making inquiries
Double insurance; Over insurance
 Sec 95
 Sec 96
There is double insurance and over insurance
1. not valid kay prohibited. However, a policy which contains no
stipulation against afftitional insurance is not invalidated by the
procuring of such insurance
2. Deemed co-insurers. several or solidary liability of insurers under
their respective contracts – may claim from each of them in
such order as he may select up to the amount for which each is
liable under its contract

1. May a person insure (a) the life of his married children;
(b) the life of his wife from whom he is separated in fact;
(c) the life of his debtor; (d) the property which was
mortgaged to him; (e) the property under usufruct of
which he has the naked title? Explain.
2. Chua is the consignee of the shipment of fishmeal
loaded on board SS Elon from Taiwan to Manila. When
the shipment arrived, the shipment was partially
damaged. The shipment was insured with insurance
company Musk Insurance Co., Inc. Chua claimed for
damages from the insurance company, but the insurance
company denied the claim, for lack of insurable interest.
The insurance company offered to reimburse the
premiums paid by Chua. Does Chua have insurable
interest over the shipment? Explain why or why not.
3. Your wealthy client wants to take an insurance on his
own life and designate his girlfriend as beneficiary. Your
client is also the registered owner of a commercial
building. In addition to the life insurance, he wants to take
a property insurance on the said property and designate
his girlfriend as the beneficiary. Your wealthy client asks
for your advice if these conditions on the insurance
contract are valid. What will you advice your client?
4. Jimmy is the registered owner of a 2012 Toyota
Fortuner. On 1 June 2015, ABC Insurance issued a
comprehensive commercial vehicle policy to Jimmy for
one year, from 1 June 2015 to 1 June 2016. To pay for
the insurance, Jimmy issued a check and informed the
insurance agent that the check is ready for pick-up. The
insurance agent was unable to pick-up the check on that
day but informed Jimmy that the check shall be collected
the next day. In the evening of 1 June 2015, the car was
stolen. The insurance agent picked up the check the next
day and an official receipt was issued. When Jimmy filed
a claim for loss with ABC Insurance, the insurance
company denied the claim on the ground that there was
no insurance contract. Can Jimmy claim from the
insurance contract for the loss of the vehicle? Explain.
6. On 1 July 2017, Dennis took out an insurance on his
own life designating his children as beneficiary. On 1 July
2020, due to mental anxiety brought about by the COVID
Pandemic, Dennis committed suicide. The insurance
company refused to pay on the ground that Dennis
caused his own death. Can the beneficiaries claim?
Explain.
7. In one of the claims submitted by an insured whose
property was covered by an insurance against fire, it
would appear from the report submitted by investigators
that ---
a. The proximate cause of the loss was an explosion and
that fire was merely an immediate cause of the loss.
b. The insured’s negligence caused the explosion that
triggered the fire;
c. The premium was paid in installments, which was the
accepted practice between the insured and the insurer;
and
d. The insured made cosmetic changes on the condition
of the property which did not increase the risk, but
without notifying the insurance company.
Discuss whether each of these findings are relevant in
determining whether or not the insurer is liable based on
the policy.
8. TRUE OR FALSE – Explain briefly your answer.
(a) Double insurance is the same as over-insurance. –
false. p 313
(b) Three years from the date of issue, the insured, while
sane, commits suicide. The beneficiaries cannot claim
from the insurer. – false. 2 years. Sec 183
(c) If the proximate cause of the loss is an excepted peril,
then the insurer is not liable. – true sec 86
(d) A running policy is one which expresses on its face an
agreement that the thing insured shall be valued at a
specific sum. – false; valued. sec 62
(e) An alteration in the use or condition of the thing
insured which does not increase the risk avoids the
contract of insurance. – false – sec 171
9. Anne owns a house worth P5Million. She insured it
against fire for P2.5Million for the year 2019. The house,
however, was sold at public auction on April 1, 2019.
Bernadette bought the house at public auction for
P1.5Million. Bernadette then insured the house against
fire from April 1 2019-March 31, 2020. On May 1, 2019,
the house was lost by fire. Can Anne claim on the policy?
What about Bernadette? Explain.
 Anne, as owner, can claim on the policy.
The insurable interest of Anne existed
inspite of the sale at auction of the house
because the property, being real property,
still had 1 year period of redemption
 Bernadette as buyer at the auction ay also
recover on the policy. She has an inchoate
right founded on an existing right. Hence,
an insurable interest in Anne’s house, even
while the period of Bernadette’s redemption
was running, up to the extent of the amount
paid at the auction.
YES. When there is double insurance and over
insurance results, the insured can claim in case of
loss only up to the agreed valuation or up to the full
insurable value from any, some or all insurers, without
prejudice to the insurers ratably apportioning the
payments. The insured can also recover before or
after the loss from both insurers the excess premium
he has paid (Sec 94, ICP). What is prohibited is over
insurance wherein there is only one insurer, where the
insured takes insurance beyond the value of his
insurable interest. In this case, there is no over
insurance because the insurable interest in each
insurance policy availed of by the owner did not
exceed the value of the property. Double insurance
resulting to over insurance is allowed provided that
the beneficiary can claim only up to the full insurable
value from any, some or all insurers, as in the case at
bar. b. YES. The owner may demand indemnity from
Eastern Insurance alone since the valued policy
covers the total amount of the loss incurred by the
property insured. Sec. 94 clearly provides that in case
of double insurance, the owner may recover from any,
two or all of the insurers provided that the total
amount that he will recover does not exceed his loss.
10. On 1 Jan 2020, Myra insured with ABC Insurance her
2020 Toyota Landcruiser under a comprehensive motor
vehicle insurance policy for one year. On 1 February
2020, Myra reported to the police that her car was stolen.
Myra alleged that she entrusted her car to a mechanic for
repairs. After conducting the repairs, the mechanic took
the car for a test drive. However, the mechanic did not
return. As a result, Myra notified the insurance for
reimbursement of the value of the lost vehicle. The
insurance company refused, stating that there is no theft
because lawful possession was given to the mechanic. Is
the insurance company correct?
11. Mr. X devised a house and lot to A and B, wherein
the usufruct of the house is vested in A, while the naked
ownership of the lot shall belong to B. In his will, Mr. X
further directed that, in case B dies, the usufruct and
naked ownership of the land will be vested in C. Can A  By 24 partnership
insure the life of B?  Then corporation
Yes. A can insure the life of B. A has an insurable
interest in the life of B for A will suffer pecuniary loss by  What are common carriers
B’s death. P 101. Sec 10 d. One may insure the life of a o not a vehicle, it’s the operator
person where the continuation of the estate or interest
vested in him who takes the insurance depends upon the  “offering their services to the public” – where the definition
life insured. hinges
 De Guzman v CA
 FPIC v CA
12. supermarket  Sideline – see case refrigerators
 a clause in a policy to the effect that the procurement of  Narrow segment of the population – considered as public
additional insurance without the consent of the insurer because still indiscriminate as to that segment
renders the policy void is a valid provision.” o Spouses Nicolas case
 The parties may validly provide that other o TMBI v Feb Mitsui Marine Insurance – customs
insurances taken by the insured without the broker
consent of the insurer will ipso facto avoid the o Still considered public since whoever wants can
contract avail
 The obvious purpose of the aforesaid requirement in the  Episodic
policy is to prevent over-insurance and thus avert the  Is grab a common carrier? – if you follow the customs
perpetration of fraud where a fire would be profitable to broker case thinking, it follows that grab is a common
the insured.“ carrier. But not a settled issue
 Private carrier
 Common v private
o 4 common distinctions
A person may take out a policy of insurance on his won  Applicable provisions in Civil Code
life and make it payable to whomsoever he pleases,  Degree of diligence
irrespective of the beneficiary’s lack of insurable interest,  Presumption of negligence
provided he acts in good faith and without intent to make  Stipulations invalid for common carriers
the transaction merely a cover for a forbidden wagering may be valid for private carriers
contract. o Mr A entered into contract with B whose business is
hauling goods anywhere from cdo to any point in
Mindanao. From cdo to davao, when it arrived in
davao, there is already damages to the goods. Does
2/8/22 the plaintiff have to show how the loss or damage
 Stopped at policy, cover notes, riders was caused?
o What do you mean by breach?
2/17/22  Governing laws
 Causes of action – note ani pls
o Can you sue the operators for culpa criminal?
o Can you sue operators for culpa aquiliana?
o Criminal case filed against drivers. Drivers cannot
pay. What’s the remedy of the passenger?
 Can owners use as defense selection and
supervision of employees?
 Extraordinary diligence
o Unitrans intl v icna
 Practice arguing for the carrier’s side
o See contributory negligence
 Case where the person puts their arms outside the window
while riding. Who is liable?
o Not the absolute insurer of the safety of passenger
 Hijacking case – npa/rebels
o Not liable. Carrier not an absolute insurer of the
safety of passenger
o Could not have been foreseen
o Common carrier not an insurer of all risks
o Unreasonable to add additional expense if were to
employ a security guard, guard cant even stop the
hijacking
 Aleson shipping v cgu
o Maritime tort
o Code of commerce provisions
 Duration of extraordinary diligence
o Fedex v Antonino
o Lrt v Natividad
o La Mallorca case
 Extraordinary diligence
o Acts of fellow passengers/strangers - see slide
o GV Florida
 Contributory negligence
o Extension seat – not contributory negligence
o Hangs on to the vehicle – not contributory
negligence
 Defenses next meeting
 Judge will record nalang para maka move sa other topics