REYNA DUMAGUING

JD 3A
ASSIGNMENT 1 FINALS
Instructions: Answer using ALAC (if applicable). Keep it Short and Simple (KISS).
Submit the softcopy of your answers on or before 5pm of November 23, 2023. As
to the printed copies, kindly submit them at the Dean’s Office on or before 12pm
of November 24, 2023.
File Format: PDF File
File Name: Surname-Assignment 1-Insurance-Final

1. What is the difference between the “authorized driver clause” and the
“theft clause” (Read: Villactora vs. Insurance Commission G.R. No. 54171,
October 28, 1980)

The authorized driver clause 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.

On the other hand, the theft clause is where a car is 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 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.

On the other hand, the theft clause is that which includes the theft as
among risks insured against. Where a car is unlawfully and wrongfully taken
without the knowledge and consent of the owner, such taking constitutes theft,
hence, covered by the theft clause of the insurance policy.

2. Siomai insured with Soya Insurance a sedan under a comprehensive motor

vehicle insurance policy for one year. During the effectivity of the insurance, the
sedan car was unlawfully taken. Soya refused to pay and maintained that it is not
liable for the loss, since the car cannot be classified as stolen because Siomai
actually entrusted the possession thereof to Siopao who took possession thereof
 to add accessories and improvements thereon. Is this case covered by the
theft clause of the insurance policy? (Read: Malayan Insurance Co., Inc. Vs.
Alberto, G.R. No. 194320, February 1,2012,664 SCRA 791)

The case is covered by theft clause of the insurance policy.

Under the Insurance Law, the theft clause is that which includes the theft
as among risks insured against. Where a car is unlawfully and wrongfully taken
without the knowledge and consent of the owner, such taking constitutes theft,
hence, covered by the theft clause of the insurance policy.

Here, the insured car is entrusted with Siopao to add accessories and
improvements thereon. The taking is unlawful because Sioami did not consent
nor have knowledge that Siapao took the car which constitutes theft.

Thus, the case is covered by the theft clause of the insurance policy since
the unlawful taking constitutes theft which the clause sought to cover.

3. Sec. III of the insurance policy states that Insurer shall not be liable for any
malicious damage caused by the insured, any member of his family or by a
person in the insured’s service. It turned out that the insurer instructed her driver
to bring the said vehicle to a nearby auto shop for tune up. However, her driver
never returned and despite diligence efforts of finding the vehicle, the same could
not be found. Is the insurer still liable? (Read: Alpha Insurance vs. Castor,
G.R. No. 198174, September 2,2013)
Yes, the insurer is liable.
Under the Insurance Law, when the terms of the insurance policy are
ambiguous, equivocal or uncertain, such that the parties themselves disagree
about the meaning of particular provisions, the policy will be construed by the courts
liberally in favor of the assured and strictly against the insurer.
Here, the insurer takes exception by arguing that the word "damage,"
under paragraph 4 of "Exceptions to Section III," means loss due to injury or harm to
person, property or reputation, and should be construed to cover malicious "loss"
as in "theft."
Therefore, since there is ambiguity within the terms, the
insurer will be liable to pay for the insurance policy. When the terms of
insurance contract contain limitations on liability, courts should construe them in
such a way as to preclude the insurer from non-compliance with his obligation.
 Being a contract of adhesion, the terms of an insurance contract are to be
construed strictly against the party which prepared the contract, the insurer.

4. Is non-presentation of the policy fatal to an insurance claim? (Read: Asian

Terminals, Inc. vs. First Lepanto-Taisho Insurance Corp., G.R. No. 185964, June
16, 2014)

No, the no-presentation of the policy is not fatal to an insurance claim. The
subrogation is the substitution of one person in the place of another with
reference to a lawful claim or right, so that he who is substituted succeeds to the
rights of the other in relation to a debt or claim, including its remedies or
securities. Thus, the subrogee has the right to claim even if there is non-
presentation of the policy.

5. Sec. 10 of the General Conditions of the CAR Policies provides that if a claim is
in any respect fraudulent, or if any false declaration is made or used in support
thereof, or if any fraudulent means or devices is used by the insured or anyone
acting on his behalf to obtain any benefit under the policy, or if a claim is made
and rejected and no action or suit is commenced within twelve months after such
rejection or, in case of arbitration taking place as provided herein, within twelve
months after the Arbitrators have made their award, all benefit under the policy
shall be forfeited. When does the twelve month period commence? (Read:
H.H. Hollero Construction Inc. v. GSIS, G.R. No. 152334, September 24,2014)

The prescriptive period of 12 for the insured’s action for indemnity should
be reckoned from the final rejection of the claim. The final rejection simply means
denial by the insurer of the claims of the insured and not the rejection or denial by the
insurer of the insured’s motion or request for reconsideration. The right of the insured
to the payment of his loss accrues from the happening of the loss. However, the
cause of action in an insurance contract does not accrue until the insured’s
claim is finally rejected by the insurer. This is because before such final rejection
there is no real necessity for bringing suit.
6. What is concealment? (Read: Ng Gan Zee v. Asian Crusader Life Assurance
Corp., G.R. No. L-30685, May 30, 1983)

Concealment is where the assured had knowledge of a fact material to

the risk, and honesty, good faith, and fair dealing requires that he should
communicate it to the assurer, but he designedly and intentionally withholds the
same. It has also been held that the concealment must, in the absence of
inquiries, be not only material, but fraudulent, or the fact must have been intentionally
withheld.

7. Is the transfer of the location of the subject properties, without notice and
without the insurer’s consent, after the renewal of the policy tantamount to
concealment? (Read: Malayan Insurance Co., v. PAP Co., G.R. No. 200784,
August 07,2013)
Yes, the transfer of the location of the subject properties, without notice
and without the insurer’s consent, after the renewal of the policy tantamount to
concealment.

Under the Insurance Law, A neglect to communicate that which a party

knows and ought to communicate, is called a concealment.
Here, the insured transferred subject properties to another location,
without notice and without Malayan’s consent, after the renewal of the policy.
PAP clearly neglected to communicate a material information to the insurer which
constitutes concealment, misrepresentation and a breach of a material warranty.
Therefore, transfer of subject properties to a different location without
notice and consent of the insurer tantamount concealment.
8. What is the remedy of the injured party in case there is concealment?
(Read: Sec. 27 and Sec. 170 of the Insurance Code)
The remedy of the injured party in case there is concealment is to rescind
the contract.

9. How is the materiality of information concealed determined? (Read: Sunlife

Assurance Company of Canada v. CA, G.R. No. 105135, June 22, 1995)
Materiality is to be determined not by the event, but solely by the
probable and reasonable influence of the facts upon the party to whom communication
is due, in forming his estimate of the disadvantages of the proposed contract or in
making his inquiries

10. The insurer gave notice that it was rescinding the policy due to concealment and,
simultaneous thereto, tendered refund of premium. Should compensatory
interest be paid also? (Read: Sun Life of Canada (Philippines), Inc. vs. Sandra
Tan Kit, G.R. No. 183272, October 15,2014)
No, the compensatory interest should not be paid.
 Under the Insurance Law, compensatory interest refers to the penalty
or indemnity for damages imposed by law or by the courts.
Here, the insurer gave notice in rescinding the policy due to concealment
and tendered refund of premium. The insurer was not proven to have failed to comply
with his obligation. In fact, properly complied with its obligation under the law and
contract.

Hence, it should not be made liable to pay compensatory interest.