5sundiang Aquino Commercial Law Insurance

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b) Bill of exchange versus check.

G. Persons involved.
H. Distinctions.
I.
Requisites of negotiability.
J. Omissions and provisions that do not affect

negotiability.
K. Transfer and negotiation.
L. Holders.
M. Real and personal defenses.
N. Persons with secondary and primary liability.
O. How to enforce liability.
P. Bills in set.
Q. Discharge.
R. Checks.
III. Part 02 - Insurance Code.
A. Denitions. (Chapter 1 in Aquino.)
1. Contract of insurance.
a) An agreement where one undertakes for a
consideration to indemnify another against loss,
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damage or liability arising from an unknown or

contingent event.3
2. Contract of suretyship.
a) An agreement where a surety guarantees the
performance of another, a principal or obligor, of an
obligation or undertaking in favor of a third party
obligee. It is deemed an insurance contract if made
by a surety who is doing an insurance business.4
3. Doing an insurance or transacting an insurance
business.
a) A person is doing or transacting an insurance
business if he performs any of the following5:
(1) As insurer, making or proposing to make any
insurance contract;
(2) As surety, making or proposing to make any
contract of suretyship as a vocation, not as a
mere incident to any other legitimate business of
a surety;
2 Par. 2 ICP.
177 and 2 Par. 3 ICP.
2 Par. 4 ICP.
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(3) Reinsurance and similar acts, whose nature is

doing any insurance business;
(4) Any equivalent acts to the above either done or
proposed.
4. Mutual insurance companies.
a) An entity owned by policy holders which caters
only to their needs is still engaged in insurance
business. These entities have no capital stock. The
contribution of their members are their only source
of fund to cover expenses and losses.6
5. Bancassurance.
a) Presentation and sale to bank customers of
insurance companies of their products within the
premises of a bank and its branches, duly licensed
by the BSP.7
b) Bank cannot engage in insurance business in
bancassurance.
(1) The bank itself will not engage in insurance
business as it is prohibited under the general
banking law to engage in insurance business.
6
Republic v Sun Life / 158085 / 2005 October 14.
375 ICP.
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B. Characteristics. (Chapter 1 in Aquino.)

1. Characteristics (PURIAA):
a) Personal;
b) Uberrimae des;
c) Risk distributing;
d) Indemnity;
e) Adhesion or ne print;
f)
Aleatory.
2. Discussion of characteristics.
a) Insurance as a risk distributing device.
(1) Insurance, as a device, distributes the risk of
economic loss among as many as possible to
those who are subject to the same kind of risk.
This is because in paying a pre-determined
amount to insure a dened risk, each member
compensates the loss suffered by any
contributor. This is known as the principle of risk
distribution.
b) Contract of adhesion or ne print rule.
(1) Insurance is a contract of adhesion since its
terms is not a result of mutual negotiations but
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on terms prescribed by the insurer which is

usually a printed contract where the insured may
adhere or reject in its entirety.
(2) In view of such nature, doubt arising from
ambiguity of the contract is strictly interpreted
against the insurer and liberally in favor of the
insured.8
(a) When the terms itself are clear; there is no
room for interpretation so the courts are
bound to adhere to it although, it may be
onerous, as courts cannot make a contract for
the parties because the terms are clear and
unambiguous.
c) Aleatory.
(1) The nature of the obligation of the insurer is
aleatory as it only arises upon happening of an
event which is uncertain, or may occur at an
indeterminate time.9
(2) It is likewise commutative as there are still
exchange of equivalents, which in insurance are
8
Rizal Surety v CA / 336 SCRA 12 / 2000.
2010 NCC.
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the paid premiums by the insured and the

corollary protection given by the insurer.
d) Contract of indemnity.
(1) Insurance contracts are contracts of indemnity,
as it is the basis of property insurance. It means
that the insured has insurable interest over a
property but could only recover to the extent of
his actual loss and he must establish the amount
of such loss.
(2) Life insurance, exception to indemnity rule.
(a) The principle that insurance are contracts of
indemnity are only applies to property
insurance. This is because life insurance is
not a contract of indemnity as we cannot peg
an amount over the value of a life. From the
foregoing, we can say:
i)
There is no over insurance in life insurance;

(1) Over insurance is only present in
property insurance. If there is over
insurance of a property, the insurer is
liable to the extent of actual loss;
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ii) Insurance contracts are not wagering

contracts10;
iii) Exception, when life insurance becomes a
contract of indemnity.
(1) life insurance becomes a contract of
indemnity when a creditor insures the life
of his debtor as he can claim to the
extent of his credit.
e) Uberrimae des contract.
(1) This is a latin term which means utmost good
faith if not perfect good faith (Faith though, is
highly imperfect if not irrational.). This goes both
ways to the insured and insurer as they have
various reciprocal obligations.
(2) It is uberrimae des, from the point of view of the
insurer, since the applicant has to disclose
conditions, material facts, which he may know or
ought to know, that may affect the risk. As these
matters and circumstances can only be known
by the insured, he must disclose the same; so
104
ICP.
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the insurer would not be inveigled to the contract

without proper consideration of the risk involved.
f)
Personal contract.
(1) As the law presumes that consideration is given
to the personal qualications of the insured in
approving the insurance application.
C. Elements of insurance. (Chapter 1 in Aquino.)

1. Elements of insurance contract.
a) Insurable interest11;
b) Risk of loss12;
c) Assumption of risk13;
d) Scheme to distribute losses; and
e) Premium payments14.
2. Examples and critical ideas in given problems in the
book.
a) Examples.
(1) Contracts between a law rm and a client, paid
periodically in consideration of the former
1112
to 14 ICP.
12
51f ICP.
13
2 ICP.
14
77 ICP.
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representing the latter against lawsuits are not

insurance contracts.15
(2) Where a corporation contracted, for a
consideration of a stipulated amount, to defend a
physician at its own expense against
malpractice, the corporation is deemed engaged
in the business of insurance.16
b) Problems.
(1) Mind the elements of insurance contracts such
as in HMO agreements where the HMO, for a
consideration, pays the medical expenses of a
subscriber. In this set-up, there is no insurance
because:
(a) The agreement is centric to medical services
where, to avail of such services, it is simply
paid in advance or pre-paid;
(b) There may be risks too but it is not actuarial
risk contemplated by the IC; and
(c) There is no distribution of risk.17
15
PHCP v CIR / 167330 / 2009 September 18.
16
17
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D. Perfection. (Chapter 1 in Aquino.)

1. Perfection, discussed generally.
a) In perfection of insurance, we follow the cognition
theory, since it is consensual and thus perfected
upon the moment there is a meeting of the minds
with respect to the object and the cause or
consideration.18
b) Generally, insured is the one making an offer by
submitting an application and the insurer accepts
by approving it. Hence, mere submission without
approval do not result in perfection.19
(1) Exception, Eternal Gardens v Philam Life.20
c) Delivery of Policy.
(1) Since, issuance contracts are consensual,
delivery of the policy is not essential for
perfection. In contrast to formal and real
contracts.
d) Delay in approval of policy.
18
See 1315, 1318 and 1319 of NCC.
19
Great Pacic v CA / 89 SCRA 543.
20
2008 April 9.
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(1) Mere delay in acceptance os insurance

application do not result in a binding contract as
the court cannot impose a contract to nonconsenting parties.
(a) Exception, in proper cases, delay in the
approval of the policy may result in tort liability
to the insurer.
(b) In Eternal Gardens v Philam Life21, there have
been a prior agreement xing the date of
effectivity which is a year from the party's
purchase of the memorial lot, on installment
from the memorial park.
2. Cover notes.
a) Cover notes, concept.
(1) Persons who wish to be insured may get
protection before perfection of the insurance
contract, as it is perfected by notice of approval
form; by securing a cover note.
(2) The cover note issued by the insurer is deemed
an insurance contract under Section 1(1) of the
21
166245 / 2008 April 09.
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IC but subject to various conditions under

Section 52 of IC.
(a) Rules on cover notes22:
i)
Issued and renewed only upon prior

approval of the commission;
ii) Valid and binding for not more than 60 days

from issuance;
iii) No separate premium is required23;
iv) Can be cancelled by either party upon prior
notice to the other of at lease 7 days;
v) Policy should should be issued within 60
days after issuance of the cover note;
vi) 60 day period may be extended via written
approval of the commission;
(1) Approval is dispensed when certication
of the President, VP, GM of insurer that
the risks and premiums are not yet
determined and such extension do not
violate the IC.24
22
52 ICP
23
Pacic Timber v CA / 112 SCRA 119.
24
Insurance Memo Circular No. 3-75.
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3. Policy. (Chapter 5 in Aquino.)

a) Policy of insurance, generally.
(1) Written instrument where terms and conditions
of the contract of insurance are set forth.25
(2) The policy itself is not necessary for the
perfection of the contract. However, it cannot be
issued unless in the form approved the the
commission.26
(3) The code do not provide for a prescribed form
but requires certain provisions to be included in
the policy.27
b) Basic contents of a policy.
(1) Parties;
(2) Amount of insurance,
(a) Except in open or running policies;
(3) Premium rate;
(4) Property or life insured;
(5) Insurable interest in property if insured is not the
absolute owner;
25
49 ICP.
26
232 ICP.
27
233-237 ICP.
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(6) Risk insured against;

(7) Effectivity period of the insurance.
c) Rider.
(1) Rider, dened.
(a) An attachment to an insurance policy that
modies the conditions of the policy by
expanding or restricting its benets or
excluding certain conditions from the
coverage.28
(2) Rider, important concepts.
(a) Riders, together with other attachments such
as clause, warranty or endorsements are
generally not binding to the insured.
i)
Exception, it is binding when the descriptive

title or name is mentioned and written on
the blank spaces provided in the policy.29
(b) Riders and the like should be countersigned

by the insured or owner.
28
Black's Law.
29
50 ICP.
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Exception, when he was the one who

applied for the rider, clause, warranty etc.30
(c) When the requirements of the rider are

complied with; including clause, warranty or
endorsement; it is considered part of the
policy.
i)
Case law:
(1) A rider containing an automatic increase
clause, which increases the coverage
subject to the attainment of a certain age
of the insured is not a separate contract.
It is part of the original contract in a
nature of a conditional obligation.31
d) Cancellation of non-life policy.

(1) Grounds.32
(a) Cancellation by the insurer of an insurance
policy, other than life insurance requires:
i)
Prior notice to the insured;
ii) Any of the following grounds:

30
50 ICP.
31
Commissioner of IR v Lincoln / 119176 / 2002 March 19.
32
64 ICP.
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(1) non-payment of premium;

(2) conviction of a crime out of acts
increasing the hazard insured against;
(3) fraud or material misrepresentation;
(4) willful or reckless acts or omissions
increasing the risk insured against;
(5) physical changes in the property insured
making it uninsurable;
(6) discovery of other insurance coverage
that makes the total insurance in excess
of the value of the property insured; and
(7) d e t e r m i n a t i o n b y t h e i n s u r a n c e
commissioner that the policy would
violate the insurance code.
(2) Requisites for cancellation.33
(a) Prior notice of cancellation to the insured;
(b) Notice must be based on the occurrence after
effective date of the policy of one or more
grounds mentioned;
33
65 ICP.
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(c) Notice must be in writing, mailed or delivered

to the named insured at the address shown in
the policy, or to his broker,
i)
provided the broker is authorized in writing

by the policy owner to receive the notice of
cancellation on his behalf; and
(d) Notice must state the grounds relied upon

provided in Section 64 of the Insurance code,
i)
and upon request of the insured, to furnish

facts on which cancellation is based.34
e) Kinds of policies.
(1) Property insurance are classied into:
(a) Open policy.
i)
The value of the thing insured is not agreed

upon but left to be ascertained at the time of
loss.The amount of the insurance is
provided but it simply represents the
insurer's maximum liability.35
(b) Valued policy.
34
65 ICP / Philamcare v CA / 125678 / 2002 March 18.
35
60 ICP.
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When a denite valuation is agreed by both

parties and written on the face of the
policy.36
(c) Running policy.

i)
Contemplates successive insurances and

provides that the subject of the policy may
from time to time be dened.37
(2) Life insurance policies are always valued

policies.
f)
Reinstatement of the policy.

(1) This is a stipulation in a life insurance policy
giving the insured the privilege to reinstate it
upon written application. However, it does not
give the insured the absolute right to such
reinstatement by the mere ling of application
since the insurer can deny the reinstatement.
After death of the insured, the insurer cannot
reinstate the policy anymore since the conditions
36
61 ICP.
37
62 ICP.
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precedent to reinstatement can no longer be

had.38
4. Various case problems and doctrines found in Part 4
of the reviewer.
a) When an applicant to an insurance contract died
before receiving a notice of acceptance from the
insurer, his heirs cannot recover the premium paid
as there is no perfected contract. Under 1319 of
the NCC, acceptance of an offer by letter does not
bind the offerer except from the time it came to his
knowledge.39
b) When an insurance pool do not approve an
application for insurance, no insurance contract is
perfected; notwithstanding prior deduction of
insurance premiums from a contract of loan in
another transaction involving an agent of the
insurer. In which case, the agent is liable to third
persons if they are unaware of the limits of his
authority and there is attendant deception via nondisclosure of the same. Contrary, we cannot make
38
Lalican v Insular Life / 183526 / 2009 August 25.
39
Enriquez v Sun Life / 41 Phil 269 / 79 ICP.
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a principal liable for an entirely speculative insured

amount.40
E. Types of insurance contracts under the ICP.
(Chapter 1 Aquino)
1. Life insurance.
a) Individual life.
(1) Insurance on human life, appertaining thereto or
connected therewith41;
b) Group life.
(1) This is a blanket policy covering a number of
individuals. It is usual in health insurance
coverage of company employees.42 It do not
need to be in printed form and can be
typewritten43, but the law prescribes the contents
of such policy44. It is further modied by
RA10607 as this law provides that it must
contain a provision that those who are insured
40
DBP v CA / 231 SCRA 370.
41
181 ICP.
42
Pineda v CA / 226 SCRA 754 / 1993.
43
50 ICP last paragraph.
44
234 ICP.
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under such kind of insurance may have an

individual life policy issued to him to the extent of
the coverage of such group policy, if he is
insured in that manner; except, if it specically
states that the insurance ceases thereafter.
c) Industrial life.
(1) Form of life insurance where the premium is
payable monthly or oftener, if the face of
insurance is not more than 500 times than the
statutory minimum wage in Manila and its face
must have "industrial" printed on it and
described.
2. Non-life insurance.
a) Marine.
(1) 101 to 168 ICP.
b) Fire.
(1) 169 to 175 ICP.
c) Casualty.
(1) 176 ICP.
3. Contract of suretyship.
a) 177 to 180 ICP.
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4. Microinsurance.
a) It is a nancial product or service which meets the
protection of the poor where:
(1) The aggregate of its premium and charges do
not exceed 7.5% of daily minimum wage of nonagricultural workers in Manila;
(2) But the guaranteed benet is not more than
1,000 times of the current daily minimum wage
in Manila.
F. Parties to insurance contract. (Chapter 2 in Aquino.)
1. Insurer.
a) Insurer, generally.
(1) The person who undertakes to indemnify
another.
b) Who may be insurers.
(1) Insurers may be partnerships, associations or
corporations who are duly authorized by the
insurance commission to engage in insurance
business.45
45
190 to 193 ICP.
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c) "Insurers" do not include "individuals" so an

individual natural person cannot be an insurer.
d) The term "insurer" includes the following:
(1) Professional reinsurer.
(a) Any person, partnership, association or
corporation that exclusively transacts in
reinsurance in the Philippines.
(2) Mutual insurance companies.
(a) Insurance companies which insure each other.
See Section 280 of ICP for mutualization and
demutualization.
(3) Cooperatives.
(a) Must have sufcient capital requirements
under regulations issued by the commission.46
(b) Must have a certicate of authority issued by
the commission which should be renewed
every year.47
e) Foreign insurance corporations.
(1) The ICP now allows foreign insurance
corporations to conduct business in the
46
192 ICP.
47
193 ICP.
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philippines provided the following requirements

are met:
(a) Appointment of resident agent to serve
notices, proof of loss and summons;
(b) Unimpaired paid-up capital of 1 billion
pesos48;
(c) Deposit as security for policy holders and
securities to satisfy the commission;
(d) Investments should not exceed 20% of its net
worth or 20% of its capital.
f)
Certicate of authority.
(1) No insurance company can transact business in
the Philippines until it obtains a certicate of
authority. It is issued by the insurance
commissioner and expires on the last day of
December, 3 years after issuance and
renewable every three years thereafter.
2. Insured.
a) Insured, generally.
48
197 ICP.
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(1) The person with capacity to contract and having

an insurable interest in the life or property of the
insured.
(2) Public enemy cannot be insured.
(a) A public enemy cannot be insured49, which is
nation, including its citizenry which the
Philippines is at war. In case of corporations,
the litmus test is the composition of its
controlling stockholders.50 Property insurance
entered before the war loses its binding effect
the moment the insurer becomes a public
enemy.
(3) Minors.
(a) Minor cannot enter into insurance, but the
contract is voidable. In the NCC, contracts
entered by minors with capacitated persons
are voidable. It is valid and stands until it is
annulled and may be subject to ratication.
(4) Spouses.
49
7 ICP.
50
Filipinas Compaa v Christern Huenfeld / 89 Phil 54 / 1951.
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(a) The consent of the spouse is not necessary

for the validity of an insurance policy taken out
by a married person on the life of other
persons other than life of the spouses
themselves or his or her children.51
(5) Effect of death of the owner of the policy.
(a) In Section 3 ICP, it says that it automatically
vests in the latter but who is the latter?
UHAHAHA.
3. Beneciary.
a) Beneciary, generally.
(1) Person designated to receive the proceeds of
the policy when risk attaches.
b) Designation of the beneciary.
(1) General rule.
(a) When one insures his own life, he may
designate any person as the beneciary
whether or not the beneciary has insurable
interest in the life of the insured.
(b) Exceptions.52
51
3 ICP.
52
739 in relation to 2012 NCC.
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Made between persons guilty of adultery or

concubinage at the time of donation,
(1) Actual conviction is not necessary;
ii) Between persons found guilty of the same

criminal offense or in consideration of it;
iii) Made to a public ofcer, his wife,
descendants, ascendants by reason of his
ofce.
(c) The above exceptions are borrowed from the
rules on donation from the NCC since being a
beneciary in an insurance contract is no
different from a beneciary in a donation as
both are founded on liberality and would get
the corresponding benets.
(d) Note also that when the insurance falls in the
exceptions here, only the designation is void.
The contract itself is binding and the proceeds
will go to the estate.
c) When forfeited.
(1) Forfeiture in life insurance policy.
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(a) The interest of a beneciary in a life insurance

policy is forfeited when the beneciary is the
principal, accomplice or accessory in willfully
bringing about the death of the insured, in
which case, the forfeited share will be
disposed in the following order of priority:
i)
other beneciaries, unless disqualied;
ii) based on the stipulations in the policy;

iii) silent policy, estate.
d) Person insuring life of another.
(1) If a person will insure the life of another payable
to himself, he must have insurable interest on
the life of the person whose life he is insuring.
e) Beneciary in property insurance.
(1) In property insurance, the beneciary must have
insurable interest in the property.
f)
Generally revokable.
(1) The designation of a beneciary is revokable
unless the right to revoke is expressly waived in
the policy.53
53
11 ICP.
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(a) Various rules in revocability and irrevocability.

i)
The innocent spouse can revoke the

designation of the guilty spouse
notwithstanding stipulated irrevocability
after legal separation.54
ii) When the contract is irrevocable, the

insured cannot assign the beneciary as the
beneciary has a vested right.
iii) Without waiver of right to revoke based on
Section 181 of the ICP, the assignment of
the policy is considered as implied
revocation.
iv) If the insured refuses to pay the premiums,
the designated irrevocable beneciary may
continue the policy by paying the premium.
g) When premium is from conjugal funds.
(1) If premiums are paid from conjugal funds, the
proceeds are considered conjugal.
(a) However, when the beneciary is other than
the insured's estate, the source of premiums
54
64 FC.
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is irrelevant as it must go to the designated

beneciary.55
h) Minor as beneciary in life insurance.
(1) Who can act in behalf of minor.
(a) Generally, the judicial guardian. In the
absence of a judicial guardian, the father,
mother without necessity of a bond when the
proceeds do not exceed 500 thousand or in a
reasonable amount determined by the
commissioner.
(b) Powers that can be exercised.
i)
The rights that can be exercised is not an

exclusive enumeration. In the enumeration,
it includes, obtaining a policy loan,
surrendering the policy, receiving the
proceeds of the policy and consenting to
transactions in behalf of the minor.56
(c) Substitute of parents.

i)
In the absence or incapacity of father or

mother; the grandparent, eldest brother or
55
DelVal v DelVal / 29 Phil 534 . BPI v Posadas / 56 Phil 215.
56
182 ICP.
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sister at least 18 years old, or any relative

who has custody of the minor insured or
beneciary, shall act as a guardian without
need of a court order of a judicial
appointment as guardian as long as he is
not disqualied or incapacitated. Payment
made by the insurer to him, relieves the
insurer of any liability.57
i)
Illegitimate children as beneciary.

(1) The designation of an illegitimate children as
beneciary in a deceased father's
(perhaps
mother too) insurance policy is valid since there

is no legal prohibition that bars illegitimate
children from being designated as
beneciaries.58
G. Insurable interest. (Chapter 3 in Aquino.)
1. Basic concepts.
a) Life insurance.
(1) Codal provision of Section 10 ICP.
57
182 ICP.
58
Heirs of Maramag v Maramag / 181132 / 2009 June 5.
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(a) Every person has an insurable interest in the

life and health:
i)
Of himself, spouse and his children;
ii) Any person whom he depends in whole or

part for education, support, or in whom he
has pecuniary interest;
iii) Of any person under legal obligation to him
for the payment of money, property or
services whose death or illness might delay
or prevent the performance; or
iv) Of any person upon whose life any estate
or interest vested in him depends.
(2) Generally, the litmus test is whether the person
is interested in the preservation of the insured
life despite the insurance.
(3) The codal provision can be categorized as
follows:
(a) Mere relationship:
i)
in the rst enumeration.
(b) Pecuniary interest:

i)
last three enumeration.
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(1) Hence, the interest of the creditor over

the life of the debtor ceases upon full
payment.
b) What does insurable interest in property consist.
(1) Codal provision, Sections 13 and 14 of the ICP.
(a) Insurable interest in property is any interest
therein, or liability in respect thereof, and it
may consist in an existing interest, an
inchoate interest founded on an existing
interest, or any expectancy coupled with an
existing interest.
(2) Insurable interest in property, generally.
(a) In general, a person has an insurable interest
in the property, if:
i)
he derives pecuniary benet or advantage

from its preservation59;
ii) would suffer pecuniary loss, damage or

prejudice by its destruction;
iii) whether he has or has no title in it or
possession of the property.
59
Filipino Merchants v CA / 179 SCRA 638.
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(b) In property insurance, pecuniary interest over

the property is always necessary.
(c) The principle of estoppel cannot be invoked
against the insurer because the requirement
of the existence of insurable interest in
property insurance is a matter of public policy.
(d) A person having mere right of possession of a
property can insure its full value in his own
name, even if he is not responsible for its
safekeeping nor paying rentals. This is
because the existence of the thing benets
him which is pecuniary in character.60
(e) An heir has no insurable interest over
properties he will inherit because the
execution of a will do not vest its heir, even
compulsory ones, an insurable interest.
(f) During the redemption period over a property
levied upon in an execution sale: the original
owner has an insurable interest during such
period as he is still the owner during that time;
60
Harvardiac Collages v Country Bankers / CA 03771 / 1986 January 06.
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the buyer has an interest over the subject

property if the property is not redeemed since
he acquires insurable interest at time of
purchase.
(g) The carrier has insurable interest over the
goods being shipped.61
c) Various answers to problems in basic concepts of
insurable interest.
(1) Life insurance.
(a) Friendship or a dating relationship is not an
insurable interest in life insurance. A person
has insurable interest over the life of another
only if he has a pecuniary interest over the life
of such person except if the person is his
spouse or child. Hence, the insurer has no
obligation to pay. (Make this more accurate)
(b) A parent can insure the life of his child who is
no longer a minor or married since insurable
interest over the life of one's children is
61
Malayan Insurance v Philippine First / 2012 July 11.
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unqualied and imposes no distinction to a

minor or married child.
(c) A husband or wife can recover the insurance
upon the death of the spouse if he or she is
the designated beneciary since one has
insurable interest over the life of one's spouse
and it only needs to exist when the contract
takes effect.
(d) A decree of legal separation do not divest
insurable interest a spouse had over the other
spouse so one can still claim the insurance
proceeds as it insurable interest need only to
exist upon perfection.
(e) When a creditor took out a life insurance over
his debtor, he cannot recover anymore when
his debt has been paid in full since he has no
insurable interest by then; on partial payment,
the insurer is liable to the outstanding credit.
(f) The heirs of a debtor whose life has been
insured by the creditor do not have any
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insurance claim as there is no privity of

contract between them and the insurer.
(2) Property insurance.
(a) A purchaser of goods in a perfected contract
of sale, pending delivery already have interest
over such property notwithstanding that the
ownership is not yet transferred via delivery;
this is because insurable interest attaches
before actual receipt of the goods.62
(b) Mere hope or expectancy is uninsurable as it
must be coupled with existing interest based
on such expectancy; and moreover, founded
on an actual right to the thing or upon a valid
contract.
(c) A depositary can insure the things deposited
to him since he is responsible for the property
deposited to him and he is liable in case of its
damage or destruction; thus, this connotes
insurable interest as he will be damnied by
its loss.63
62
Filipino Merchants v CA / 179 SCRA 638.
63
15 ICP.
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2. Insurable interest in property compared to insurable

interest in life insurance.
a) Comparatives.
(1) Extent.
(a) Insurable interest in life is unlimited, unless
taken by the creditor on the life of the debtor.
(b) In property, it is limited to its actual value.
(2) Time when insurable interest must exist.
(a) In life insurance, it is sufcient that insurable
interest exist at the time the policy takes effect
and need not exist at the time of loss.
(b) In property, it must exist at the time the
insurance takes effect and when loss occurs,
but need not exist in the meantime.
(3) Expectation of the benet to be derived.
(a) In life, expectation of the benet to be derived
need not have any legal basis.
(b) In property, there must be a legal basis.
(4) As to beneciary's interest.
(a) In life insurance,
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if the insured himself secured the policy, the

beneciary need not have insurable interest
over the life of the insured;
ii) if the life insurance was obtained by the

beneciary, the latter must have insurable
interest over the life of the insured.
(b) In property, the beneciary is absolutely
required to have insurable interest over the
property.
b) Answers presented to problems in the comparative
of life and property insurance.
(1) A buyer of goods have insurable interest after
perfection of sale but before delivery because
upon perfection, equitable title is vested to the
vendee which is a sufcient basis of insurable
interest. This is regardless to the mode of
delivery as this issue is immaterial.
(2) In property insurance, the insured must have
insurable interest in the property at two points in
time, both must concur or one cannot recover:
(a) upon the perfection, and
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(b) time of loss.

(3) Bear in mind again that the original owner, in
cases where his property is levied, he only has
insurable interest during the redemption period
over such property and he loses such, after that
period.
(4) There can be recovery of insurance in case a
husband who took it, when the policy took effect
and when his wife died a few days after their
annulment since this is a life insurance so
insurable interest only need to exist at the time it
takes effect and need not exist thereafter.
Hence, subsequent annulment is no bar to
recovery.
3. Insurable interest of mortgagor and mortgagee over
mortgaged property.
a) Insurable interest of mortgagor and mortgage,
generally.
(1) Both the mortgagor and the mortgagee have an
insurable interest in the property mortgaged and
this interest is separate and distinct from the
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other. They may take out separate policies at the

same or separate times.64
b) Mortgagor.
(1) Since the mortgagor is the owner, he has
insurable interest to the extent of the value of the
property, even though the mortgage debt equals
(or maybe even higher) such value; because
loss of the property will not extinguish the debt.65
(2) The mortgagee may be made the benecial
payee in the following ways:
(a) As assignee with the consent of owner;
(b) As pledgee without consent of insurer;
(c) When the policy contains a mortgage clause;
(d) A rider making the policy payable to the
mortgagee, as his interest may appear, can be
attached as a loss payable clause;
(e) A standard mortgage clause containing a
collateral independent contract between the
mortgagor and the insurer, may be attached;
64
Rizal Commercial v CA / 289 SCRA 292 / 1998.
65
Geagonia v CA / 241 SCRA 152 / 1995.
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46
(f) When the contract, though payable to the

mortgagor, is procured under contract to
insure to the mortgagee's interest; hence, the
latter acquires an equitable lien.
c) Mortgagee.
(1) The mortgagee has an insurable interest in the
mortgaged property to the extent of the debt
secured which continues until it is extinguished.
(2) A mortgagee may procure a policy but the
mortgagor pays the premium. In this case,
though the mortgagee is the insured as he
applied for the policy, informs the agent of his
interest, pays premiums and obtains the policy
on the assurance that it insures him, it is a form
used to insure a mortgagor with "loss payable
clause.66"
d) Standard or union mortgage clause compared to
loss payable mortgage clause.
(1) Acts or mortgagor.67
(a) Standard or union mortgage clause.
66
Geagonia v CA / 241 SCRA 152 / 1995.O
67
8 and 9 ICP.
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The subsequent acts the mortgagor do not

affect the mortgagee.
(b) Loss payable mortgage clause.

i)
The mortgagor do not cease to be a party to

the contract.
(2) Nature of loss payable clause.68

(a) In the policy obtained by the mortgagor with
loss payable clause in favor of the mortgagee
as his interest may appear,
i)
the mortgagee is only a beneciary under

the contract, and recognized as such by the
insurer,
(1) but not made a party to the contract itself.
ii) This kind of policy covers only such interest

as the mortgagee has at the issuance of the
policy.
e) Answers to problems in the subsection and the
underlying critical ideas.
(1) Both mortgagor and mortgagee have insurable
interest over a mortgaged property. The
68
Geagonia v CA / Supra.
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mortgagor, to the extent of the value of the

house since loss will not extinguish the loan. The
mortgagee, to the extent that he can be
damnied.69
(2) When the mortgagor and the mortgagee
procures insurance contracts independent of
each other, for their respective individual
benets, the independent contracts do not inure
to the benet of the other. This is because
insurance is a personal contract.
(a) A personal contract takes effect:
i)
A personal contract takes effect only

between the contracting parties, their heirs,
successors and assignees, unless it
contains a stipulation in favor of a third
person.70
(b) Exception, mortgagee has equitable lien.

i)
While an insurance procured by a

mortgagor do not inure to the benet of the
mortgagee, the mortgagee has a lien on the
69
8 and 17 ICP.
70
1311 NCC / 53 ICP.
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proceeds of the policy under Article 2127

NCC.
(3) The mortgagee loses insurable interest when the
obligation of the mortgagee have been fullled,
he cannot recover from the insurance anymore
since he is not a party to the insurance contract.
(4) When a property is insured for the purpose of
securing a mortgage and the mortgage is
extinguished, the former insured cannot recover
anymore as he has no insurable interest is
anymore.
(5) Query, so why the fuck would one cunning
person insure a house for a particular
transaction only?
4. When interest retained by mortgagor.
a) Codal provision, Section 8 ICP.71
(1) Unless the policy otherwise provides,
(a) where a mortgagor of property effects
insurance in his own name providing that:
71
PJ: I surmise that this is the general rule as it is more rational to retain the interest on the part
of the mortgagor.
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the loss shall be payable to the mortgagee,

or
ii) assigns a policy of insurance to a

mortgagee,
(b) the insurance is deemed to be upon the
interest of the mortgagor,
i)
who do not cease to be a party to the

original contract, and
ii) any act of his, prior to the loss, which would

otherwise avoid the insurance, will have the
same effect,
(1) although the property is in the hands of
the mortgagee,
(c) but any act which, under the contract of
insurance, is to be performed by the
mortgagor, may be performed by the
mortgagee therein named, with the same
effect as if it had been performed by the
mortgagor.
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b) Application of the above to Great Pacic v CA72

case.
(1) In a group insurance policy, DBP insured the
housing loan of its mortgagors. Mortgagors paid
the premiums but it is payable to the bank. The
court said that it was to the mortgagors interest
and they are parties to the contract. Hence, if
DBP forecloses a mortgagor's property, it can no
longer resort to the insurance. The heirs of the
mortgagor can recover since they did not cease
to be a party to the contract.
c) Indorsed insurance to mortgagee, cannot be
garnished or levied to the extent of debt.
(1) If the mortgagor takes an insurance over the
mortgaged property endorsing the same to the
mortgagee, apply Section 53 of ICP. In this case,
the insurance proceeds apply exclusively to the
person whose benet it was made, tersely, to the
beneciary-mortgagee. To that end, the
72
316 SCRA 677.
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insurance cannot be levied or garnished to the

extent of the debt to the mortgagee.73
5. Insurable interest of beneciary and assignee of
policy.
a) Property insurance.
(1) The beneciary and assignee must have
insurable interest.
(2) The consent of the insurer must be secured
before the assignment.
b) Life insurance.
(1) If the insured takes the insurance on his own life,
he can designate anybody who does not have
insurable interest.
(2) If a third person takes the policy, the beneciary
must have insurable interest.
(3) In case of assignment, the assignee need not
have insurable interest.
c) Critical problems and ideas presented in insurable
interest of beneciary and assignee of policy.
73
Rizal Commercial v CA / 289 SCRA 292 / 1998.
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(1) An provision in a contract of lease, making the

lessee the automatic owner of an insurance
contract procured by the lessee is void because
it is contrary to law and public policy. Hence, the
lessee - auto assignee (if such a term exists),
cannot recover.74
(2) An insured, taking an insurance in his own life;
can designate any person as his beneciary. In
this case, the beneciary can recover the entire
amount, regardless of their relationship. Hence,
when a debtor makes a life insurance, making
the creditor the beneciary, the creditor can take
the entire amount.
(a) However, if a creditor takes an insurance
policy over the life of his debtor, he only has
insurable interest to the extent of his credit
and can only recover to such extent.
6. Expectancy not insurable unless coupled with an
interest in the thing from which it shall arise.
74
Cha v CA / 277 SCRA 690.
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a) Insurable interest in property need not be an

existing interest. It can exist as an inchoate or
expectant interest.75
(1) However, the expectancy must be coupled with
an existing interest in which such expectancy
arises.
(a) Example.
i)
An owner of a business can insure against

a contingency which may cause loss of
prots resulting from the cessation or
interruption of his business.
7. Effect of change of interest in the thing insured

unaccompanied by a change of interest in insurance.
Exceptions.
a) General rule.
(1) A change in interest in any part of a thing
insured, unaccompanied by a corresponding
change of interest in the insurance, suspends
the insurance to an equivalent extent, until the
75
14 ICP.
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interest in the thing and the interest in the

insurance are vested in the same person.76
b) Exceptions.
(1) Life, health, accident insurance;77
(2) Change of interest:
(a) after occurrence of injury resulting in loss78,
(b) one or more several distinct things which is
separately insured79,
(c) via will or succession upon death of the
insured80;
(3) Transfer of interest by one or several partners,
or co-owners, jointly insured, to the others81;
(4) The policy is framed in a manner that it benets
whoever is exposed in the continuance of a
dened risk82.
76
20 ICP.
77
20 ICP.
78
21 ICP.
79
22 ICP.
80
23 ICP.
81
24 ICP.
82
57 ICP.
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(a) In this case, those who are exposed are the

owners of the insured interest.
c) Stipulation against alienation, effect. Freedom to
stipulate applied in insurance contracts.
(1) When there is an express prohibition against
alienation in the policy, in case of alienation, the
contract of insurance is not merely suspended
but avoided.83
H. Risk insured against.
1. Risk insured against, generally.
a) The risk insured against may be84:
(1) any contingency or unknown event:
(a) the happening of which will damnify a person
having insurable interest, or
(b) will create a liability against him.
(2) Fortuitous events can be insured against.
2. General rule.
a) Only a future event can be covered by an
insurance contract.
3. Exception.
83
1306 NCC.
84
3 ICP.
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57
a) Marine insurance.
(1) If the loss of the vessel in the past may not have
been known by ordinary means of
communication, as the loss here transpired in
the past.
(2) Query: why in the fuck would an applicant insure
a ship he cannot communicate to? That's funny.
Unless it is an "as you like it" insurance contract.
I.
Premium. (Chapter 4 in Aquino.)

1. Premium, generally.
a) Premium is the consideration paid to an insurer for
undertaking to indemnify the insured against a
specied peril.
2. General rule.
a) General rule:
(1) No insurance policy, issued or renewed, is
binding until actual payment of premium. Any
agreement to the contrary is void.85
b) Exceptions:
85
77 ICP.
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(1) Grace period provision in life and industrial life

insurance86;
(2) Acknowledgement in the contract that premium
has been paid87;
(3) Agreement of payment by installment where an
installment was paid before occurrence of loss
or injury88;
(4) There is a credit term agreed despite knowledge
of Section 77 of ICP89, in a 60-90 day credit
extension;
(5) When parties are estopped.
c) Credit extension.90
(1) Credit extension, generally.
(a) A 90 day credit extension may be given when
it is under a broker and agency agreement
with a duly licensed intermediary.
(b) Requisites of credit extension:
86
77 ICP.
87
78 ICP.
88
Makati Tuscany v CA.
89
UCPB v Masagana Telemart.
90
77 ICP.
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It must be provided under broker and

agency agreements; and
ii) The credit extension should not exceed 90

days from the date of issuance of the policy.
d) Salary deductions from government employees.91
(1) Insurance and loan obligations can now be
made via salary deduction pursuant to an
agreement between the insurer and the
government employee. The deduction will then
be respectively remitted. A reasonable fee can
be charged by the government for such
transaction.
e) Various rules on agency.
(1) Where an insurer authorizes an insurance agent
or broker to deliver a policy to the insured, it is
deemed to have authorized such agent to
receive a premium in its behalf.92
91
78 ICP.
92
306 ICP.
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60
(2) T h e i n s u r e r i s b o u n d b y i t s a g e n t ' s
acknowledgement of receipt of payment or
premium.93
3. Effect of payment of the premium by a postdated
check.
a) Check dated subsequent to loss.
(1) Payment of premium via postdated check, that
has a stated maturity subsequent to the loss is
insufcient to put the insurance into effect.
b) Check dated prior to loss.
(1) A check or note, accepted by the insurer, dated
prior to the loss, assuming it is sufciently
funded, is sufcient. It is still binding
notwithstanding that the check is not cashed
upon loss as encashment retroacts to the date of
the instrument.94
4. When insured entitled to return of premium.
a) Thing insured was never exposed to the risk
insured against95;
93
American Home v Chua.
94
Vitug, Pandect on Commercial Law.
95
80 ICP.
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b) Contract is voidable:
(1) because of fraud or misrepresentation of the
insurer,
(2) because of existence facts which the insured is
ignorant without his fault
c) Insurer never incurred liability96;
d) Insurance is for a denite period and the insured
surrenders his policy before termination;
e) Over-insurance97;
f)
Grant of rescission due to insurer's breach of

contract; and
g) A n n u l m e n t o f c o n t r a c t b e c a u s e o f
misrepresentation of the insurer or his agent, or
because of facts where the insured is ignorant
without his fault98.
5. Suretyship.
a) Premium in suretyship, rule.
(1) Premium is also necessary in order for the
contract of suretyship or bond to be binding.
96
82 ICP.
97
83 ICP.
98
82 ICP.
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b) Exception.
(1) When the obligee accepted the bond, it is
binding even if the premium has not been paid
subject to the right of the insurer to recover the
premium from its principal.99
6. Non-default options insurance in life insurance.
a) Default, generally.
(1) When an insured defaults, he forfeits the
benets of the insurance contract.
b) Hence, to prevent the lapse of life insurance policy,
the insured may avail the following:
(1) Grace period;
(2) Automatic policy loan from the policy's cash
surrender value;
(3) Application of dividend;
(4) Reinstatement clause.
c) Reinstatement of a lapsed policy of life insurance.
(1) Policy holders in life insurance shall have the
policy reinstated at anytime within 3 years from
the date of default of premium payment.100
99
179 ICP. Phil Pryce v CA / 230 SCRA 164 / 1994.
100
233[j] ICP.
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(a) Unless;
i)
the cash surrender value has been duly

paid to the insurer, or
ii) the extension period has expired.

(b) Requisites to exercise reinstatement:
i)
proof of insurability,
ii) payment of overdue premiums and any

indebtedness plus interest.
J. Transfer of policy.
1. May the policy be transferred without the consent of
the insurer?
a) Life insurance, yes.
(1) In 184 of the ICP:
(a) A policy of insurance upon life or health may
pass by transfer, will or succession to any
person, whether he has an insurable interest
or not, and such person may recover upon it
whatever the insured might have recovered.
b) Property insurance, no.
(1) Property insurance cannot be transferred without
insurer's consent since his approval is based on
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the personal qualication and insurable interest

of the insured.
2. What is the effect of transfer of the property
insurance policy without the consent of the insurer?
a) The insurance policy is suspended, not avoided,
until the interest in the thing and the interest in the
insurance are vested in the same person.
K. Devices used for ascertaining and controlling risks
and loss. (Chapter 6 in Aquino.)
1. Four primary concerns of the insurer. (Categorically
dichotomized.)
a) Risk:
(1) Correct estimation, if he will approve it, and at
what premium;
(2) Delimitation;
(3) Control and guard against its increase.
b) Determination if loss occurs and its respective
amount.
2. Devices used by the insurer to ascertain and control
risk.
(1) List of devices.
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(a) Concealment;
(b) Representation;
(c) Warranty;
(d) Condition; and
(e) Exception.
(2) General discussion of the devices.
(a) Concealment, generally.
i)
A neglect to communicate that which a

party knows and out to communicate.101
(b) Representation, generally.

i)
Factual statements of the insured prior to

issuance of the policy in form of information
that induces the insurer to enter into the
contract.
(c) Warranty, generally.

i)
Statements or promises included or

referenced in the policy which makes the
policy voidable if it is not true or not fullled.
It can be express, implied, afrmative or
promissory.
101
26 ICP.
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66
(d) Condition, generally.

i)
Various conditions which take form of either

conditions precedent or subsequent which
must be fullled. Example: requirement of
submission of immediate notice and proof
of loss in a given period.
(e) Exception, generally.

i)
This makes insurance contracts more

denite by excluding certain specied risk
from a general description which may
otherwise be insured.
(1) The burden of proving the loss caused by
an excepted peril lies with the insurer.102
In a case, an insurer cannot outrightly
deny a claim on a ground that stocks
were burned by the NPA as they failed to
prove that such peril is exempted.
3. Concealment.
a) Test of materiality.
102
Country Bankers v Lianga Bay / 136914 / 2002 January 25.
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67
(1) Materiality is determined, not by the event. by

the probable and reasonable inuence of the
facts upon the party from whom the
communication is due, in forming his:
(a) estimate of the disadvantages of the contract,
or
(b) making his inquiries, or
(c) xing premium rate.
(2) Various case law.
(a) Maters relating to the health of the insured are
material and relevant.103 Moreso, when
waived in a non-medical insurance contract.
(b) Matters relating to health affects the insurer as
it may be approved but with a higher premium
or rejected.104
(c) Where matters of opinion or judgment are
called for and answered in good faith and
without intent to deceive will not avoid the
policy though untrue.105
103
Sunlife v CA / 246 SCRA 268.
104
Florendo v Philam / Ibid.
105
Philam v CA / 125678 / 2002 March 18.
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68
Applied:
(1) Where an applicant who is not a doctor is
asked regarding the medical history of his
wife, when asked about history of highblood, heart trouble, diabetes, ulcer, liver
disease and asthma; who categorically
answered no; the policy was not avoided.
b) Effects of concealment.
(1) Concealment vitiates the contract and entitles
the insurer to rescind, even if the death or loss is
due to a cause not related to the concealed
matter.106
c) Cause of loss.
(1) The matter concealed need not be the cause of
loss.
(2) It is sufcient that non-disclosure misled the
insurer in forming his estimates of the risks of
the proposed insurance policy or in making
inquiries.107
(a) Applied:
106
27 ICP.
107
Sunlife v CA / 105135 / 1995 June 22.
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69
The insurer can deny an insurance claim

where the insured two weeks prior to his
application, did not disclose the fact that he
had renal failure; since various medical
questions were posed to him and he denied
any medical attendance except for u and
colds.
d) Is good faith a defense in concealment?

(1) Good faith is no defense in concealment
because:
(a) C o n c e a l m e n t w h e t h e r i n t e n t i o n a l o r
unintentional entitles the injured party to
rescind a contract of insurance108;
(b) The materiality of the facts concealed do not
depend on state of mind of the insured but on
probable and reasonable inuence of the facts
upon the party to whom communication
should have been made.109
e) Waiver and estoppel.
108
27 ICP.
109
Vda. de Canilang v CA / Supra.
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70
(1) An insurer may be estopped from raising

concealment as well as exclusionary conditions
or warranties as defense in the following
instances:
(a) When it accepted premium payments and
issued the policy even if the insured supplied
facts or informations which can hardly be
overlooked in the application form110;
(b) When the insured supplied information which
requires further inquiry but the insurer failed to
do so. (Just given in the reviewer.)
(2) Instances where estoppel do not operate against
the insurer.
(a) Insurer cannot be estopped from raising
concealment as defense if there was
connivance between the insured and the
soliciting insurance agent as well as the
medical examiner. In which case, the agent
performed acted ultra vires and is personally
liable.111
110
Edillon v Manila Bank / 117 SCRA 187 / 1982.
111
Insular v Feliciano / 74 Phil 468 / 1943.
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71
Application.
(1) Insurer cannot be liable where the
insured signed in blank answered
negatively on questioning about suffering
any lung ailment and died from a
concealed tuberculosis, where the agent
and examiner colluded. As he asked the
agent to write for him, in turn, an agency
is created in his favor and are party to the
concealment.
f)
Case law.
(1) Florendo v Philam.
(a) SC ruled that even if the agent is aware that
the insured has a pacemaker, there is still
concealment since the duty not to conceal is
imposed on the insured.
g) Various answers and ideas presented under

concealment.
(1) Where X a laundry woman, who negatively
answered all medical queries, died of cancer, the
beneciary cannot collect from the insurer as
PJG
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72
she concealed her illness. Despite her lack of

knowledge about her medical condition, it is no
excuse since Section 27 of the insurance code
makes concealment an available defense to the
insurer, whether the concealment is intentional
or not.
(2) Where Juan in negativing medical queries but
forgot to mention connement in a kidney
hospital; His spouse cannot maintain a suit since
Juan is guilty of concealment of material fact.
Matters relating to health of the insured are
material and relevant. In fact, waiver of medical
examination in non-medical insurance makes it
more material as the information supplied by the
applicant may make or break the contract
itself.112
(a) E x c e p t i o n , c o n c e a l m e n t b a r r e d b y
incontestability.
i)
In the Juan above. The wife can claim if the

insurance has been in force for 2 years
112
Sunlife v CA / 246 SCRA 268 / 31 ICP.
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from the date of issuance. The insurer

cannot anymore prove that the policy is void
ab initio or rescindable by reason of
fraudulent concealment.113
4. Representation.
a) Representation, dened.
(1) It is an oral ow written statement of fact or
condition affecting the risk, made by the insured
to the insurer, tending to induce the insurer to
assume the risk.114
b) Kinds.115
(1) Afrmative.
(a) Afrmation of a fact when the contract begins.
(2) Promissory.
(a) Promised to be performed after the policy was
issued.
c) Test of materiality.
113
48 ICP.
114
36 ICP.
115
39 ICP.
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(1) It is determiend by the probable and reasonable

inuences of such facts on tha party on whom
communication is due, in forming his:
(a) Estimate of the contract;
(b) risks; and
(c) premium.116
d) Effects of misrepresentation.
(1) The injured party is entitled to rescind from the
time when the representation becomes false.
e) Estoppel, immaterial in misrepresentation.
(1) Acceptance of the premium will not estop the
insurer from rescinding the policy on the ground
of misrepresentation.117
(a) As aptly observed by Aquino that the
RA10607 omitted a part making estoppel
applicable herein.
5. Warranty.
a) Warranty, dened.
(1) A statement or promise set forth or referenced in
the policy which when not true or not fullled,
116
31 and 46 ICP.
117
45 ICP.
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regardless if it is prejudicial to the insured,

renders the policy voidable.
b) Kinds.118
(1) Express.
(2) Implied.
(a) Warranties which are deemed included in the
contract though not expressly mentioned.
(b) These are only found in marine insurance.
(3) Afrmative.
(a) Asserts the existence of a fact or condition at
the time it is made.
(4) Promissory.
(a) The insured stipulates that certain facts or
conditions shall exist or something shall be
done or omitted.
c) Effect of breach of warranty.
(1) It gives the insurer the right to rescind.119
(a) Exceptions, insurer cannot rescind:
i)
Loss occurs before the time of performance

of the warranty;
118
67 ICP.
119
74 to 76 ICP.
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ii) The performance becomes unlawful; and

iii) Performance becomes impossible.120
d) Immaterial provisions.
(1) Immaterial provisions, concept.121
(a) Not all breach of the provisions in the policy
may give the right to rescind the policy.
(b) Immaterial provisions do not avoid the policy.
(2) Exception, immaterial by stipulation becomes
material.
(a) When the parties stipulate that violation of a
particular provision, though normally
immaterial, shall avoid the policy. In effect, the
parties converted the immaterial provision into
a material one.
6. Distinctions.
a) Warranty v representation.
(1) Part of contract.
(a) Warranty is a part of the contract,
(b) representation is a collateral inducement.
(2) Writing.
120
73 ICP.
121
75 ICP.
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(a) Warranty is written in the policy or a valid rider

or attachment,
(b) representation need not be in writing.
(3) Conclusive.
(a) Warranty is generally conclusively presumed
to be material,
(b) representation should be established as
material.
(4) Compliance.
(a) Warranted facts should be strictly complied
with,
(b) r e p r e s e n t a t i o n r e q u i r e s o n l y t o b e
substantially true.
7. Other insurance clause.
a) Other insurance clause, dened.
(1) It is a warranty that entitles the insurer to rescind
in case of breach.122 Usually stipulated by the
insurer.
(a) Relevant ICP provision.
122
General Insurance v Ng Hua / 106 Phil 1117.
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There is a ground to rescind the policy in

property insurance upon discovery of other
insurance coverage that makes the total
insurance in excess of the value of the
property.123
(b) Application in case law.

i)
A clause in the policy that provides that the

policy shall be void if the insured procures
additional insurance without the consent of
the insurer. The purpose is to avoid overinsurance and avoid perpetration of
fraud.124
ii) Other insurance clause may be waived but

it must be express, if implied, there must be
clear intent to waive such right. There must
be clear showing that the insurer knew
about the violation of the clause.125
8. Various answers to problems in warranty, condition
and representation.
123
64[f] ICP.
124
Pioneer Insurance v Yap / 61 SCRA 426 / 1974.
125
Ibid.
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79
a) Where jose insured his building warranting not to

store ammable materials and ammable materials
are discovered in unburned portion; breach of
warranty is available defense although not a cause
of loss, since non-fulllment of the warranty itself
makes the contract voidable regardless if the
insurer is prejudiced.
b) When the face of the policy has the annotation "coinsurance declared" the insured can recover from
the policy despite requirement of notication of
other insurance he may avail since that annotation
is a form of notice of existence of other insurance
contract on the property insured.126
c) Where Julie had her business burned (wait whut!?)
and she is claiming insurance, insurance
companies interjected breach of policy against
double insurance, denying her claim. She argued
that the agents knew of the double insurance.
Knowledge of the agents are not valid defense
126
General Insurance v Ng / L-14373 / 1960 January 30.
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80
because the contract itself is what is binding and

violation of it denitely bars one from recovery.
L. Incontestability clause. (Chapter 6 in Aquino.)
1. Denition.
a) After a policy of life insurance made payable on the
death of the insured shall have been in force
during the life of the insured for 2 years from
issuance or last reinstatement, the insurer cannot
prove the policy as void ab initio or rescindible
because of fraudulent concealment or
misrepresentation of the insured or his agent.127
2. Requisites.
a) Life insurance policy payable on the death of the
insured.
b) The same has been in force during the lifetime of
the insured for at least 2 years from date of issue
or last reinstatement.128
(1) The two year period can be shortened but not
lengthened by stipulation.
127
48 ICP. Florendo v Philam / 186983 / 2012 February 22.
128
48 ICP.
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3. Defenses that are not barred by the inconstestability

clause.
a) The person taking the insurance lacked insurable
interest in cases required by law;
b) The cause of death of the insured is an excepted
risk;
c) The premiums have not been paid129;
d) Fraud of a particularly vicious type;
e) The beneciary failed to:
(1) furnish proof of death,
(2) comply with any condition imposed by the policy
after the loss happened; and
f)
The action was not brought within the time

specied.
4. Various answers to problems in incontestability.

a) It is immaterial if the insured died within the two
year period and the contract was not rescinded yet.
As long as the contract is still contestable, it can be
rescinded since to allow otherwise would allow
129
77, 233[b], 234 [b] and 236 [b] of ICP.
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policy holders to collect eveb if ths insured

fraudulently concealed material facts.130
b) Where the insured realized he made mistakes in
answering the application form, he sent corrections
to the same via mail which was lost. 2 years after,
he died. The benets can still be claimed as by
then, the insurance contract already became
incontestable and may not be questioned anymore.
M. Double insurance and reinsurance. (Chapter 9 and
10 of Aquino)
1. Double insurance.
a) Double insurance, generally.
(1) It exists when the same person is insured by
several insurers separately in respect to the
same subject and interest.131
(a) It is not prohibited by law but it may be
prohibited by thru "other insurance clause."
(b) No double insurance in life insurance since it
is not a contract of indemnity.
(2) Requisites of double insurance.
130
Tan v CA / 174 SCRA 403 /1989 June 29.
131
95 ICP.
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83
(a) Same:
i)
Person insured;
ii) Subject matter;

iii) Insurable interest;
iv) Risk or peril insured against;
(b) Two or more insurers insuring separately.
2. Effects and rules of double insurance and
overinsurance.132 (Sundiang, these rules have no
application on the part of the insured as these are
only applicable on the side of the insurers.)
a) Insured can claim payment from the insurers in the
order he selects, up to the amount for which the
insurers are severally liable;
b) In a valued policy, the sum he received shall be
deducted from the value of the policy regardless of
the value of subject matter, from sum received;
c) In an unvalued policy, the sum he received shall be
deducted against the full insurable value, from sum
received;
132
96 ICP.
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84
d) In a valued policy where insured received sum in

excess of valuation or insurable value in unvalued
policy, he must hold the sum in trust for the
insurers in accordance to their right of contribution
among themselves;
e) Each insurer is ratably bound to the proportionate
amount of his contribution.
(1) Liability of insurer = ((Amount of policy / Total
Insurance taken) x loss))
3. Reinsurance
a) Reinsurance, generally.
(1) Contract where the insurer procures a third
person to insure him against loss or liability by
because of the original insurance, also known as
reinsurance cession.133
(a) The original insurance and reinsurance is
distinct and covered by separate policies.
(b) Grounds for cancellation are similar to
ordinary insurance.
b) Reinsurance, how made.
133
97 ICP.
PJG
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85
(1) Treaty.
(a) A prior agreement where the reinsure accepts
the reinsurance ceded by the reinsured/
original insurer.
i)
Quota share - proportion.
ii) Surplus share - only the excess.

iii) Excess of loss - maximum is dened.
iv) Reinsurance pool - pool of insurers.
(2) Facultative.
(a) Where reinsurer may refuse to accept the
ceded policy.
c) No privity between original insured and reinsurer.
(1) Original insurer has no interest over the
reinsurance as there is no privity of contract.134
(2) As a general rule, the original insured cannot
claim from the reinsurer because of the absence
of priviry.
(a) As exception, the insured can sue the
reinsurer if the reinsurance policy contains a
134
100 ICP.
PJG
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86
stipulation pour autrui specically in favor of

the original insured.
4. Distinctions.
a) Insurance v reinsurance.
(1) Policy of insurance is the written document
embodying the original insurance contract. #
Reinsurance is the procurement of a third
person to insure the insurer against liability over
the original insurance.
(2) The policy of insurance and reinsurance is
covered by separate policies.
b) D o u b l e i n s u r a n c e 135 ( D I ) c o m p a r e d t o
reinsurance136 (RI).
(1) Interest.
(a) DI - involves the same interest,
(b) RI - insurance of different interests.
(2) Relations.
(a) DI - insurer remains an insurer,
(b) RI - insurer becomes insured in relation to the
insurer.
135
95 ICP.
136
97 ICP.
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87
(3) Party in interest.

(a) DI - insured in the 1st contract is a party in
interest in the 2nd contract.
(b) RI - original insured has no interest in
reinsurance contract.
(4) Subject.
(a) DI - subject of insurance is property,
(b) RI - subject of insurance is original insurer's
risk.
(5) Consent as requisite.
(a) DI - insured has to give his consent.
(b) R I - c o n s e n t o f o r i g i n a l i n s u r e d i s
unnecessary.
5. Problems and answers in chapter of double
insurance and reinsurance.
a) Pussy has a burat house worth 600k, he had re
insurance over it as follows: X400k, Y200k and
Z200k. No order of demand from policy, from
whom can he recover?
PJG
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(1) Pussy can recover from any or two or all

insurers as long as the total amount recovered
to not exceed the loss.137 Permutations:
(a) Z alone for 600k.
(b) All insurers, 200k each.
(c) Combo:
i)
400k from X.
ii) 200k from both Y or Z.

b) Same problem, all are open policies and the value
of the burat house are said to be 2.4 million. How
much can he collect from X/Y/Z?
(1) Pussy can recover the full amount from each
insurer as all policies are open policies. In open
policies, the actual value upon loss is the
reference amount for claiming the loss.
(a) But in the given problem, the maximum
coverage is given so pussy can recover from
each to their respective coverages: X-400k,
Y-200k and Z-600k. This only totals to 1.2
million.
137
97 ICP.
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89
c) Same problem. But the policies are valued policies

and the value of his house is pegged at 1 Million.
How much can he recover from X is he obtained
full payment from Y and Z.
(1) Burat can only recover 200k. The underlying
reasoning is that in valued policies, the valuation
of the property is binding on the parties and it is
unnecessary to determine actual value. In other
words, the valuation itself is the actual value.138
d) Same problem, Burat collected from Y and Z. Can
he keep the amount he collected from them?
(1) No. This is because there is a surplus of 200k
over the value of the property which is only
600k, as he collected a total of 800k. Burat can
only be indemnied of his loss. The excess is
then held in trust by Burat as prescribed by
law.139
e) Same problem, what is the extent of liability of the
insurance companies among themselves?
138
par. [b], 96 ICP.
139
96 ICP.
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90
(1) Each is pro-rata liable in proprotion to each's

liability in their respective contracts. We follow
the formula:
(a) ( [ amount of policy / total insurance taken ] x
loss ) = liability of each insurer.
(b) Magically solved:
i)
X-200k
ii) Y-100k
iii) Z-300k
(c) PJ - i cannot stress the importance of knowing
simple fractions here.
N. Loss and claims settlement. (Chapter 7 and 8 of
Aquino)
1. Preliminaries.
a) Loss is the damage sustained by the insured.
(1) In property insurance, this consists of cash value
depending on extent of loss.
(2) In life insurance, it occurs upon death.
(3) In health insurance, it occurs upon injury or
disability.
b) Kinds of causes.
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(1) Proximate - cause which produced the injury,

unbroken by any efcient intervening cause. (DS
says that only proximate cause will make the
insurer liable as it is stated in the codal
provision.)
(2) Remote - force which took advantage of the
natural cause of events, the insurer is not liable
for this one.
(3) Efcient - efcient enough proximate to the loss
in terms of efciency, insurer is liable here.
(4) Immediate - proximate in time to the loss.
(5) Concurrent - two causes, but liable as long as an
insured risk.
(a) If not separable, dominant cause bear liability.
When separable, liability will be rated.
c) Note that the rules for tort and insurance laws are
not the same.
2. Proximate cause and immediate cause.
a) Denitions:
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(1) Proximate cause - cause that is legally sufcient

to produce the liability unbroken by supervening
cause.
b) Insurer is liable if:
(1) The proximate cause of loss is the peril insured
against140;
(2) The cause of loss is an immediate cause which
is a peril insured against, except if the proximate
cause is an excepted peril141;
(3) The cause of loss in the negligence of the
insured,
(a) except when the gross negligence amounts to
a willful act;
(4) When upon being rescued from a peril insured
against, the thing is exposed to a peril not
insured against resulting in absolute deprivation
of the thing.142
c) Insurer not liable:
140
86 ICP.
141
88 ICP.
142
87 ICP.
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93
(1) Loss is by insured's willful act or gross

negligence;
(2) Loss due to connivance with the insured143;
(3) Loss where the proximate cause is an excepted
peril.
d) Liability of insurer if insured is committing a felony.
(1) Acts of negligence resulting in criminal acts are
insurable as those are accidental. Such as
homicide thru reckless imprudence in a car
accident;
(a) although gross and attended by criminal
consequences, these are not void as against
public policy.
(2) Deliberate criminal acts are not insurable.
3. Notice and proof in re insurance.
a) Notice.
(1) In case of loss, notice should be given without
unnecessary delay, otherwise, insurer is
exonerated144;
143
89 ICP.
144
90 ICP.
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94
(a) T h i s i s h i g h l y d e p e n d e n t o n t h e
circumstances, as the law do not demand the
impossible, it contemplates a reasonable time
decided in favor of the insured.
(b) In the same manner, substantial compliance is
sufcient.
(c) Notice is waived in case the policy is null and
void.
(d) All defects not raised by the insurer in the
notice and proof is considered waived.
(e) Effect of delay:
i)
Waived when not promptly objected by the

insurer;
ii) Delay excused:

(1) Attributable to the insurer;
(2) No prompt objection;
(3) Objection is based on a different ground.
b) Proof.
PJG
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95
(1) If proof of loss is required, providing the best

evidence in insured's power is sufcient as it is
not a court proceeding145;
(a) Substantial compliance is always sufcient,
even if a kind of proof is specied in the
contract.146
c) Notice of settlement.
(1) A stipulation requiring the consent of the insurer
must rst be obtained before any payment by
the person responsible for the loss in the
settlement is valid so as to avoid collusion
between claimant and insured.147
4. Claims settlement.
a) Preliminaries.
(1) Liability of the insurer attaches when loss occurs
via the risk insured against.
(a) Role of adjuster is not required in claims
settlement. Adjuster can be independent, in
behalf of the insurer; or public which
145
91 ICP.
146
Finman v CA / 138737 / 2001 July 21.
147
Perla v CA / 185 SCRA 741.
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96
advertises on behalf of insured and engages

of public solicitation.
(2) Unfair claims settlement policies.
(a) Misrepresentation:
i)
coverage of policy.
(b) Failure to:

i)
acknowledge communications promptly;
ii) provide investigation standards;

(c) Settlement in bad faith;
(d) Compelling suits to recover insured amount.
(3) Fraudulent claims are prohibited.
(a) Mere presentment of the claim;
(b) Causing to le the claim;
(c) Preparation with intent to present and/or allow
to present such claim;
(d) Subscription and in writing to the claim or
allowance to its presentment.
b) Life insurance.
(1) Should be paid immediately upon maturity f
maturity date is stipulated;
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97
(2) When policy matures upon death, it must be

paid upon 60 days after presentation of claim
and ling of proof of death of insured.
(a) Refusal or failure to pay entitles one for
damages unless delay is caused by fraud.
c) Property insurance.148
(1) Proceeds shall be paid within 30 days after proof
of loss is received by the insurer and
ascertainment of the loss or damage is maid
either by agreement or by arbitration.
(2) When no ascertainment is made within 60 days
after receipt of proof of loss, it must be paid
within 90 days of such receipt.
d) Effects of delay of insurer.149
(1) When the prescribed period above is not
followed in life or property insurance the
beneciary may be entitled to:
(a) Interest for the duration of delay at 6%;
(b) Attorney's fees and litigation expenses;
(c) Appropriate damages:
148
249 ICP.
149
250 ICP.
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98
Moral damages;
ii) Exemplary damages;

e) When insurer is liable to pay damages and
interest.
(1) Only upon nding of the court or commissioner
that there was, on the part of the insurer in
payment of the claim, @6% interest150 based on
Article 2209 of the NCC:
(a) Unreasonable delay;
(b) Unreasonable refusal;
O. Period of prescription.151 (Chapter 8 of Aquino)
1. In absence of stipulation, action will prescribe in 10
years.
a) Exception:
(1) Parties can agree to a shorter period as long as
it is not less than 1 year from the time the cause
of action accrues.152
150
Legal interest is pegged @6% by BSP. So it is immaterial that the claim itself do not arise
from a loan or forebearance of money.
151
63 and 97 ICP.
152
63 ICP.
PJG
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99
(a) Cause of action accrues from the nal

rejection of the claim of the insured not from
the time of loss.
(2) Hence, you can surmise that the general rule is
the agreement of the parties as it follows the
principle of autonomy of contracts. Otherwise, if
the stipulation is avoided as per ICP rule, 10
years prescriptive period should be followed.153
2. Policy provides for a prescriptive period.
a) The prescriptive period runs from the moment the
claim is denied.
(1) Resolution or motion for reconsideration of the
insured is not contemplated herein since it may
be a scheme to waste time and destroy
evidence.154
3. CMLVI, rule on prescription.
a) In 397 of ICP: notice of claim must be led within 6
months from accident date; otherwise, it is waived.
153
Sundiang.
154
Sun v CA / 195 SCRA 193.
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100
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Denial of claim herein, suit must be brought within

1 year, otherwise, it prescribes.155
P. Right of subrogation. (Chapter 8 of Aquino)
1. Principle of subrogation.
a) Payment to the insured automatically makes the
insurer an assignee in equity. Such is the legal
effect of the payment, even without stipulation
because it is a normal incident of indemnity of
property. This right is do not grow out of privity of
contracts.156
(1) Requisites of subrogation:
(a) Property insurance;
(b) Loss from risk insured against;
(c) Insured receives indemnity;
(d) Indemnity is covered by the policy.
(2) The effects of this principle are as follows:
(a) No need for a formal assignment or
stipulation, as it is the legal effect of payment;
(b) The insurer can only recover to the extent the
insured could have recovered. Hence, there
155
DeGabriel v CA / 1033883 / 1996 November 04.
156
2207 NCC.
PJG

101
of 146
can be no recovery if the insurer voluntarily

paid even if the loss is not covered by the
policy.
i)
Recovery is however, discretionary as the

insurer can decide not to exercise his rights.
(c) Insurer cannot recover from the offending

party unless there is deciency. The deciency
herein is not covered by the right of
subrogation.
(d) Insurer must present the policy as evidence to
determine the extent of coverage.157
2. Cases when there is no right of subrogation.
a) When the insured releases the person liable thru
his own acts;
b) When the insurer pays the insured for a loss or risk
not covered by the policy;158
c) Life insurance;
d) For recovery of in excess of insurance coverage.
Q. Marine insurance. (Chapter 11 in Aquino.)
1. Coverage.
157
Wallem v Prudential / 152158 / 2003 February 07.
158
Pan Malayan v CA / 184 SCRA 54.
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102
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a) Marine insurance covers risks connected with

navigation during a certain voyage or a xed period
of time which includes: ship, cargo, freightage,
prots, and other insurable interest in movable
property.
(1) Cargo is also subject to marine insurance. When
entered, implied warranty of seaworthiness
automatically attaches to whoever insured the
cargo though he has no control over the vessel
because as shipper, he can control the choice of
the vessel regardless of he owns the ship or
not.159
b) In the present laws, inland marine insurance is
covered.160
c) Section 101 of ICP provides a comprehensive
coverage. Reproducing below:
(1) Insurance against loss or damage to:
(a) Vessel, craft, aircraft, vehicles, goods,
freights, cargoes, merchandise, effects,
disbursements, prots, moneys, securities,
159
Roque v IAC / 139 SCRA 596.
160
101 ICP.
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103
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choses in action, evidences of debt, valuable

papers, bottomry, and respondentia interest
and
2. Implied warranties in marine insurance.
a) Seaworthiness of ship at inception.161
b) No deviation from agreed voyage unless proper.162
(1) Sundiang: rules on deviation?
c) Not engaging in illegal venture.
d) Warranty possession of documents of neutrality.163
e) Presence of insurable interest.
3. Insurable interest in marine insurance.
a) Shipowner.
(1) Value of the vessel;
(a) if charterer agreed to pay in case of loss,
shipowner can recover the difference from the
insurer164.
161
115 ICP.
162
123 to 126 ICP.
163
122 ICP.
164
102 ICP.
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104
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(b) When hypothecated by a bottomry loan,

insurable interest is only to the excess of the
value of the vessel over the loan.165
(2) Over expected freightage.
b) Cargo owner / shipper.
(1) Over the cargo and expected prots.166
c) Charterer.
(1) Over the vessel, to the extent of the value he is
liable to the owner if the ship is damaged or lost
during the voyage;167
(2) Over his expected prots or freightage if he
expects cargo from other persons for a fee;
(3) Over his own and client's cargo.
4. Perils of the sea versus perils of the ship.
a) Perils of the sea or navigation include casualties
due to unusual violence or extraordinary causes
connected with navigation which human prudence
cannot overcome; as contrasted to ordinary wear
165
103 ICP.
166
107 ICP.
167
108 ICP.
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105
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and tear suffered by the vessel because of her

being unseaworthy.
b) Perils of the ship is a loss in the ordinary cause of
events:
(1) Ordinary, natural, and inevitable action of the
sea;
(2) Wear and tear of the ship;
(3) Negligence of ship owner in properly equipping
the ship to convey the cargo under ordinary
conditions.
c) General rule, insured only perils of sea.
(1) General rule.
(a) In the absence of stipulation, the risks insured
against are only perils of the sea.168 The
insured to prove that the cause of loss is a
peril of the sea.
(b) Perils of the ship to be insured, must be
stipulated.
d) All risk policy, all risks are covered. Exception to
insured only perils of sea.
168
Go v Union Insurance / 40 Phil 40.
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(1) In an all risk policy, all risks are covered unless

expressly excepted. The burden rests on the
insurer to prove that the cause of loss is an
excluded cause.169
e) Barratry, willful misconduct of master or crew may
be covered.
(1) Barratry which is the willful misconduct on the
part of the master or crew in doing an unlawful
act against the owner's interest and consent,
may be covered by the policy.170
(a) No honest error of judgment or mere
negligence unless criminally gross, can be
barratry.
(b) If expressly covered, the proof of willful and
intentional act is necessary.
5. Concealment.
a) Opinions and beliefs.
(1) In marine insurance, matters of belief, judgment,
expectation of a third person and opinion are
169
Filipino Merchants v CA / 179 SCRA 638 / 1989.
170
Roque v IAC / 139 SCRA 596 / 1985.
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material when referenced to a material fact and

must be disclosed.171
(a) This is an exception to the general rule in
immateriality of opinion unless made by
experts.172
b) In marine insurance, there may be concealments
which do not vitiate the contract unless it caused
the loss.173
(1) This is an exception to the rule that concealed
matters need not be the cause of the loss.
(2) The enumeration below, when concealed and
caused the loss, vitiates the contract:
(a) National character of the insured;
(b) Liability of insured thing to capture or
detention;
(c) Liability to seizure from breach of foreign laws;
(d) Want of necessary documents;
(e) Use of false or simulated papers;
171
108 ICP.
172
35 ICP.
173
110 ICP.
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6. General average loss compared to particular average

loss.
a) General rule.
(1) Insurer is liable only for general average
contribution, not for particular average.
(a) Only the insurer of the damaged cargo or
vessel is liable for particular average if
covered by the policy.
(2) General average loss.
(a) Damages and expenses deliberately caused
by the master of the vessel or in his authority
to save the vessel or cargo or both form a real
or known risk. Hence, it is borne by all interest
concerned in the venture.
i)
Requisites to claim general average

contribution:
(1) Common danger to vessel or cargo;
(2) Sacrice;
(a) Made deliberately;
(b) For common safety or benet of all;
(3) Made by master or his authority;
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(4) Must be:

(a) Necessary;
(b) Successful.
(3) Particular average loss.174
(a) Includes all damages and expenses caused to
the vessel or cargo that do not inure to the
benet of all persons interested.
(b) Refers to losses, in circumstances, which do
not entitle the unfortunate owners to receive a
contribution from other owners in the venture.
i)
Example, when vessel runs aground and

destroyed after the cargo is saved.
(4) Liability on partial loss.

(a) Marine insurer is liable upon partial loss for
the proportionate amount insured by him. This
is because the loss bears the entire interest of
the insured.
(5) Problem:
(a) A owns a P5 million vessel, en route to
singapore to deliver goods owned by X/Y/Z,
174
138 ICP.
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each valued at P1 million, so P3 million total.

Typhoon came so the captain jettisoned the
cargoes of X. Cargo of Y and Z arrived safely.
Vessel insured with RR insurance for full
value. Cargo of Z fully insured with SS
insurance. Can X recover from RR and SS?
i)
Yes. X can recover from RR and SS. The

casse involves a general average; hence,
those who benetted are liable to the one
who incurred the loss for general average
contribution. A/Y/Z are all liable for
contribution as their respective properties
were saved. Consequently, this makes the
insurers of A and Z also liable.
7. What is co-insurance clause?

a) This principle is applicable when a property is
insured for less than its value; in which case,
insured is a co-insurer over the difference.
(1) Marine insurance is susceptible to co-insurance
whenever the requisites are present under
Section 159 of ICP which are:
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(a) partial loss;

(b) amount insured is less than the value of the
property.
b) In re insurance, there has to be an express
stipulation to such effect.
c) Formula to determine insurer's liability:
(1) ( [ loss / value ] x insurance ) = insurer's liability
d) Problems and answers in con-insurance.
(1) A vessel worth P1 million is owned by X is
insured at P800k with A. It was damaged to an
extent of P200k. How much can X recover from
A?
(a) X can recover P160k applying the formula to
determine co-insurer's liability. Co-insurance
applies since the vessel is insured for less
than its value and there's only partial loss.
Section 159 ICP: a marine insurer is liable
upon partial loss only in proportion of the
amount insured by him as the loss bears to
the value of the whole interest of the insured
in such property.
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(2) Same problem. Suppose there is total

destruction of the vessel, how much can X
recover?
(a) X can recover P800k, which is the full amount
of the property since there is total loss. Coinsurance is inapplicable.
(3) Will your answer to the rst question be the
same if the insurance is re insurance and the
property involved is a building?
(a) No, if there is no co-insurance clause in
provided in the policy. There is no coinsurance is re policy unless expressly
stipulated.
8. Seaworthiness.
a) Seaworthiness, generally.
(1) Seaworthiness connotes reasonable tness to
perform the service and encounter ordinary
perils of the voyage as contemplated by the
parties to the policy.175
175
116 ICP.
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(2) Hence, it is prudent to consider the nature,

voyage and service of the ship.176
(3) Warranty of seaworthiness extends to the ship's
proper lading, competent master, sufcient
stafng; equipments such as ballasts, cables,
anchors, cordage, sail, food, water, fuel, lights
and other necessities of the voyage.177
(a) In this regard, seaworthiness extends beyond
the structure of the ship itself.
b) When ship should be seaworthy.
(1) General rule, implied warranty of seaworthiness
is complied if the ship is seaworthy at the
commencement of the risk.
(a) Exceptions, when warrant seaworthiness
varies.
i)
Time policy.
(1) As the specied time operates as
requirement that the ship be seaworthy
during every voyage.178
176
Caltex v Sulpicio / 315 SCRA 709 / 1999.
177
118 ICP.
178
117[a] ICP.
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ii) Transshipment.
(1) The commencement of each voyage, as
per custom dictates, in each transshipment, the ship must be seaworthy.179
(a) Routes: terms of policy, description of
voyage, established custom.
iii) Portions of voyage contemplated.
(1) Whenever contemplated that there will be
different portions of the voyage, the ship
must be seaworthy in each portion.180
iv) Unreasonable delay in repair.
(1) As an unreasonable delay in repairing
defects exonerates the insurer from
liability arising therefrom. Though, the
ship be seaworthy on the onset of the
voyage.181
c) Applicability of implied warranty of seaworthiness
to cargo owners.
179
117[b] ICP.
180
119[b] ICP.
181
120 ICP.
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(1) Ignorance of unseaworthiness of the cargo

owner or the shipper is not a valid defense to
recover over the insurance policy as the ball is in
his court in the selection of a carrier. The issue
of ignorance of a ships seaworthiness itself is
immaterial in ascertaining the seaworthiness of
the ship, hence its invalidity as defense.182
(a) In this case, the shipper can apply for an
insurance covering sea and ship peril.
d) Liability of insurer to cargo when cargo owner is
unaware of unseaworthiness.
(1) Repetition of the above, as the shipper have
control in the selection of the common carrier.
e) Effect of payment.
(1) Payment operates as a waiver to the implied
warranty of seaworthiness.
(a) Exception:
i)
Waiver extends only to the insured and can

never be waived against the carrier; as the
insurer can claim payment from the carrier
182
Roque v IAC / 139 SCRA 596.
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based on the principle of subrogation,

where breach of contract will be the basis.
9. Deviation.
a) Deviation, dened.
(1) Departure of the vessel from the course of the
voyage; or an unreasonable delay in pursing it,
or commencement of an entirely different one.183
b) General rule, deviation exonerates an insurer.
(1) Exception, cases of proper deviation:184
(a) Due to the circumstances outside the control
of captain or owner;
(b) Done to comply with a warranty;
(c) Made in good faith to avoid a peril;
(d) To save human life or distressed vessel.
c) Answers to problems in deviation.
(1) A master of a ship who diverted its course
because of a belief that PAGASA report of a
storm is true and the ship was damaged; the
insurer cannot deny claim for improper deviation
183
125 ICP.
184
126 ICP.
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because there is good faith here which is

believing to the information given by PAGASA.
10. Loss and abandonment.
a) Actual total loss:185
(1) Total destruction;
(2) Sinking;
(3) Damage rendering the thing valueless;
(4) Total deprivation of owner of possession of thing
insured.
b) Constructive total loss.186
(1) In these cases, there must be abandonment of
the goods or the vessel to the insurer in order to
claim for the entire value. Without abandonment,
only partial loss may be claimed.
(a) Actual loss of more than 3/4 of the value of
object;
(b) Damage reducing value by more than 3/4 of
the value of vessel and cargo;
(c) Expense of shipment exceeds 3/4 of value of
the cargo.
185
132 ICP.
186
133 in relation to 141 ICP.
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c) Abandonment.
(1) Act of the insured which after a constructive total
loss, he declares relinquishment to the insurer of
his interest in the thing insured.187
(a) Requisites of a valid abandonment.
i)
Actual relinquishment by the person of his

insured interest in the thing insured;188
ii) There must be constructive total loss;189

iii) Absolute abandonment, neither partial nor
conditional;190
iv) Made in a reasonable time after receipt of
reliable information of loss;191
v) Must be factual;192
vi) Made by giving notice to the insurer orally
or in writing;193
187
140 ICP.
188
140 ICP.
189
141 ICP.
190
142 ICP.
191
143 ICP.
192
144 ICP.
193
145 ICP.
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vii) Notice of abandonment must be in explicit

terms specifying the particular cause of
abandonment.194
R. Fire insurance. (Chapter 12 in Aquino.)
1. Fire insurance.195
a) Contract of indemnity for a consideration where the
insurer agrees to indemnify the insured or loss or
damage to property by re.
(1) It may include loss by lightning, windstorm,
tornado, earthquake and other allied risk when
covered by an extension or separate policy over
the original insurance.
2. Extent of liability under open policy.
a) As a rule, the total indemnity will be determined by
the actual loss due to the insured.196
(1) Exception, the total indemnity shall not exceed
the total value of the policy.
b) Answers to problem in extent of liability under open
policy.
194
146 ICP.
195
169 ICP.
196
DIC v IAC / 149 SCRA 62.
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(1) A constructed a house in 1987 worth P200k at

that time and insured for that amount too. When
it was subsequently renewed, it was worth
P400k but the insurance amount is still P200k.
1/4 of the house was destroyed by re. How
much can he recover?
(a) Depends:
i)
Valued policy - as the pegged value is

P200k, 1/4 of it which is P50k;
ii) Open policy - present value is reckoning

point so 1/4 of P400k or P100k.
3. Alteration.
a) Alteration, generally.
(1) Alteration in the use or condition of the thing as it
is delimited in the policy, without the insurer's
consent, within the control of the insured which
increases the risk, entitles the insurer to rescind
the contract of re insurance.197
b) Effect of alteration in use or condition of thing as
delimited in the policy, re insurance.
197
170 ICP.
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(1) General rule, insurer may rescind following the

below requisites:
(a) Use or condition;
i)
Delimited in the policy;

(1) Designated as material provision which
must be violated;
ii) Altered;
(1) Alteration is without consent of the
insurer;
(2) Alteration is within the control of the
insured;
(3) Such alteration increases risk.
(2) Examples of material alteration:198
(a) Conversion of residential to factory;
(b) Transfer of machineries without consent as it
changes the nature of the thing insured.
4. Friendly re versus hostile re.
a) Friendly re.
(1) Fire that burns where it is supposed to or in a
controlled manner.
198
Malayan v PAP / 2013 August 07.
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b) Hostile re.
(1) Fire that burns and escapes where it is not
supposed to, or
(2) May be friendly re which went out of control or
became too strong.
S. Casualty insurance. (Chapter 14 in Aquino.)
1. Casualty insurance.
a) Insurance covering loss or liability arising from
accident, mishap but excluding other types of
insurance such as re or marine.199
2. Intentional versus accidental insurance.
a) Intentional.
(1) Intentional injuries are usually excepted since it
implies consciousness and volition over the act.
To invoke this exception, it is the intention of the
person inicting the injury which is necessary.
This is because intentional acts of a third person
relieves the insurer from liability.200
b) Accidental.
199
176 ICP.
200
Biagtan v Insular Life / 44 SCRA 58 / 1972.
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(1) Accident and accidental are generic terms

without technical meaning. Hence, as long as
the action is bereft of design or intent, unusual
and unforeseen, without fault, recklessness or
negligence of third parties; insurer may be
liable.201
(a) But this is different from "no fault," as these
concepts merely distinguish between
intentional or malicious acts.
3. Third party liability.
a) Casualty insurance itself may provide for third
party liability in cases where a stipulation pour
autrui is present. In which case, the third party may
sue the insurer but the insurer is not solidarily
liable with the tortfeasor.202 Subrogation operates
when the insurer pays the third person.
b) Without a stipulation pour autrui, no third person
can sue the insurer as only the insured can
recover.
c) Liability of insurer arising from felony.
201
Pan Malayan Insurance v CA / 184 SCRA 54.
202
First Integrated Bonding v Hernando / 199 SCRA 769 / 1991.
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(1) Insurer may be liable if such felony is accidental

which arises from negligence although there is
criminal liability, such as crimes made thru
reckless imprudence.
(a) However, crimes committed with deliberate
intents are not insurable.
T. Compulsory motor vehicle liability insurance.
(Chapter 14 in Aquino. Many kinds are not covered
in that chapter.)
1. Mandatory insurance.
a) Legal impetus.
(1) The insurance code makes it unlawful for a land
transportation operator or owner of a motor
vehicle to operate their vehicles in public
highways unless there is an insurance or
guaranty to indemnify the third party or
passenger arising from the use of such
vehicle.203
203
389 ICP.
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(a) To that end; registration of any vehicle will not

be made or renewed without complying with
the insurance requirement.204
b) Forms of compliance.
(1) Protection may be complied by using any of the
following:
(a) Insurance policy;
(b) Surety bond;
(c) Cash bond.
c) Denitions.
(1) Motor vehicle.
(a) Any vehicle as dened in Section 3 Paragraph
(a) of RA4136 or the Land Transportation and
Trafc Code.
(2) Passenger.
(a) Any fare paying person transported and
conveyed by a motor vehicle for transportation
of passengers for compensation. It includes
persons expressly authorized by law or
204
389 ICP.
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vehicle's operator or his agents to ride without

fare.
(3) Third party.
(a) Any person other than a passenger. It
includes member of the household, family
member up to second degree of afnity and
employee in the course of his employment of
a motor vehicle or a land transportation
operator.
(4) Owner or motor vehicle owner.
(a) The actual legal owner of a motor vehicle in
whose name such vehicle is duly registered
with the Land Transportation Commission.
(5) Land transportation operator.
(a) Owner or owners of motor vehicles for
transportation of passengers for
compensation, including school buses.
2. Purpose of CTPL.
a) Immediate nancial assistance to victims of motor
vehicle accidents or their dependents regardless of
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the nancial capability of motor vehicle owners or

operators responsible for the accident.205
3. No fault clause.206
a) The injured third party or passenger may le a
claim for death or injury without proving fault or
negligence but under particular conditions given
below:
(1) T h e t o t a l i n d e m n i t y d o n o t e x c e e d
P15,000.00.207
(2) Claim may be made against one motor vehicle
only.
(3) A proof of loss submitted under oath is sufcient
to prove the claim when with:
(a) Police report of accident; and
i)
Death certicate and evidence sufcient to

establish the proper payee; or
ii) Medical report and evidence of medical or

hospital reimbursement in respect of which
fund is claimed.
205
First Integrated Bonding v Hernando / 199 SCRA 746.
206
391 ICP.
207
391 ICP.
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4. From whom should the injured recover.

a) Occupant of vehicle.
(1) Claim lies against the insurer of the vehicle
where he is riding, mounting or dismounting
from.
b) Not occupant of vehicle.
(1) Claim lies directly to the insurer of the offending
vehicle.
c) All cases.
(1) The right of the party paying the claim to recover
against the owner of the vehicle responsible fro
the accident shall be maintained.
5. Time to le and process claim.
a) Period to le notice.
(1) The written notice of claim; detailing the nature,
extent and duration of the injuries as certied by
a duly licensed physician; must be presented
within six (6) months from the date of the
accident; otherwise, the claim is deemed
waived.208
208
397 ICP.
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b) Prescriptive period.
(1) The action must be led in court or insurance
commission within one (1) year from the denial
of the claim.209
c) If there is an agreement.
(1) The insurance company shall ascertain the truth
and extent of the claim and pay within ve (5)
working days after reaching an agreement.210
d) If no agreement is reached.
(1) The insurance company shall only pay the "nofault" indemnity without prejudice to the claimant
from making further claims. In this case, the
claimant cannot be required or compelled by the
insurance company to execute a quitclaim or a
document releasing the insurer from liability
under the insurance policy or surety bond
issued.211
6. Liability of insurer.
a) May a third person sue the insurer directly?
209
397 ICP.
210
398 ICP.
211
398 ICP.
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(1) Depends:212
(a) Policy provides for indemnity against liability:
i)
The insurer can be sued directly.
(b) Policy provides for reimbursement after actual

payment by the insured or indemnity against
loss:
i)
The third person has no cause of action.
b) Is the insurer solidarily liable with the insured?

(1) No. While the insurer's liability is direct, it do not
mean that the insurer is solidarily liable with the
insured. First, the insurers' liability is based on
contract while the insured is based on tort;
second, the insurer has a limited liability to the
extent of the amount of the insurance
coverage.213
c) May the proceeds of a third party liability insurance
be garnished?
(1) Yes. This is because the insurance itself is just
like any other credit which can be garnished.
The insurer is obligated to pay the injured party
212
53 ICP.
213
Pan Malayan v CA / 184 SCRA 54.
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and he is liable when liability attaches to the

insured, from which point, the insurance amount
partakes the nature of an interest as credit which
may be garnished.
(a) It is not necessary that summons be served to
the insurer as a notice of garnishment is
sufcient. By such service, the garnishee
becomes a virtual party or a forced
intervenor.214
d) Coverage and extent of liability.
(1) Coverage.
(a) P100,000.00.
i)
Plus P100,000.00 if what is involved is a

public utility.
(2) Death indemnity.

(a) P70,000.00 plus P30,000.00 for funeral
expenses.
(3) Case doctine.
(a) The insurer's maximum liability will not exceed
P100,000.00, plus another P100,000.00 or
214
Perla v Ramolete / 203 SCRA 487.
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P200,000.00, regardless of the number of

passengers killed or injured.215
7. Other rules concerning motor vehicles.
a) Authorized driver clause (ADC).
(1) ADC, generally.
(a) It is a stipulation in a motor vehicle insurance
which provides that the driver , other than the
insured owner, must be duly licensed to drive
the motor vehicle; otherwise, the insured is
excused from liability.216
(2) Meaning of ADC clause.
(a) An ADC means that the insurer indemnies
the insured owner against loss or damage to
the car but limits the use of the insured vehicle
to the insured himself or any person who
drives on his order or with his permission.
(3) Various ADC rules.
(a) The insured do not need to prove that he has
a driver's license at the time of the accident if
he was the driver.
215
First Quezon City v CA / 218 SCRA 525.
216
Villacorta v IC / 100 SCRA 467 / 1980.
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(b) If the claimant present's a drivers license, it is

presumed genuine.
i)
Even if it is established that the driver do

not know how to read and write, the validity
of the license will be sustained provided
there is no proof of invalid issuance.217
(c) A driver, not the insured himself, who holds an

expired driver's license is not an authorized
driver.218
b) Theft clause.
(1) Nature of theft clause. ADC inapplicable. Thief
has no driver's license immaterial.
(a) The risk insured against in the policy may
include theft. In which case, if the vehicle is
unlawfully taken, the insurer is liable under the
theft clause as the ADC is inapplicable. The
insured can recover even if the thief has no
driver's license.219
217
CCC Insurance v CA / 31 SCRA 264.
218
Gutierez v Capital Insurance / 130 SCRA 618.
219
Perla v CA / 208 SCRA 487 / 1992.
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(2) Theft clause where driver using the car before

car-nap have expired license immaterial.
(a) Where the motor vehicle is unlawfully or
wrongfully taken without the owner's consent
or knowledge, we apply the theft clause
instead of the ACD; whether or not the driver
is using the car before it was car-napped and
had an expired drivers license is of no
moment.220
(3) Theft clause when employee commits theft or
joyride.
(a) There is theft if an employee or any person
without juridical possession takes the vehicle
of his employer without consent. The
employee is liable to the insured for damage
to the vehicle even if he has no driver's
license. Theft clause is usually present in a
comprehensive policy unless excepted. Theft
clause operates and not the ADC when an
220
Perla v CA # Palermo v Pyramids / 161 SCRA 677.
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employee of a repair shop took the car that is

being repaired for a joyride.221
(4) When theft clause applies.
(a) Generally.
i)
There is theft under the theft clause if the

vehicle is taken with intent to gain without
the consent of the insured-owner. Note that
under criminal law, intent to gain is
presumed upon the taking of the thing.
(b) Hence, there is theft even if:

i)
The vehicle was returned;
ii) The vehicle was stolen by the driver of the

insured222;
iii) The vehicle was taken to the owner of a
repair shop for the purpose of repair and in
order to attach accessories223.
U. Suretyship. (Chapter 15 in Aquino)
1. Suretyship.
221
Villacorta v Insurance Commission / 100 SCRA 469.
222
Alpha Insurance v Castor / 198174 / 2013 September 02.
223
Paramount Insurance v SpsRemondeulaz / 173773 / 2012 November 28.
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a) An agreement where the surety guarantees the

performance of another of an undertaking or an
obligation in favor of a third party.224
b) Forms or kinds.
(1) Fidelity Bond.
(a) Contract of insurance against loss from
misconduct.
(2) Fidelity bond guaranty insurance.
(a) A contract where one, for a consideration,
agrees to indemnify the assured against loss
arising from the want of integrity, delity, or
honesty of employees or other persons
holding positions of trust.
V. Life insurance. (Chapter 13 in Aquino.)
1. Life insurance.
a) I n s u r a n c e o n h u m a n l i f e a n d i n s u r a n c e
appertaining thereto or connected therewith which
includes every contract of pledge for payment of
endowment or equities.225
2. Effect of death of insured through suicide.
224
177 ICP.
225
181 ICP.
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a) General rule, the insurance itself may be claimed

upon death or maturity, depending on the kind of
insurance.
(1) General rule, suicide do not make the insurer
liable as it must coincide with peculiar conditions
such as when the contract became incontestable
or when committed in a state of insanity.226
b) Insurer liable in cases of suicide in the following
cases:227
(1) When policy have been in force for a period of 2
years from date of issue or reinstatement; in
short, when it has become incontestable; unless,
the policy provides for a shorter period;
(2) Commission of suicide in a state of insanity,
regardless of commission date;
3. Kinds of life is insurance.
a) Ordinary life, general life, old line policy.
(1) Insurer pays premium every year until death.
Surrender value after 3 years.
b) Limited payment policy.
226
DS: Will a sane person commit suicide?
227
183 ICP.
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(1) Payment of premium for a limited period. Death

within the period, beneciary gets paid; when
outlived, insured do not get anything.
c) Endowment policy.
(1) Premium is paid for a specied period. When
period is outlived, insurer gets face value; if not,
the beneciaries receives the benet.
d) Term insurance.
(1) Insurer pays premium once and is insured for a
specied period. Death within the period,
beneciaries get the benets; outliving it will give
nobody any benet.
e) Industrial life.
(1) Life insurance entitling the insured to pay
premiums weekly, or where premiums are
payable monthly or oftener.
W. Variable contract. (Chapter 1 in Aquino.)
1. Variable contract, dened. Insurance contracts are
variable contracts.
a) Any policy or contract on either group or individual
basis issued by an insurance company providing
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for benets or other contractual payments or

values thereunder to vary as to reect investment
results or any segregated portfolio investment.228
X. Powers of the insurance commissioner. (Chapter 17
in Aquino.)
1. Power of Insurance commissioner (IC).
a) The duty to regulate insurance ocmpanies is
vested with the insurance commissioner. The
insurance of commissioner is appointed by the
president for a term of six (6) years without
reappointment, and he will serve until a successor
have been appointed and qualied.229
2. Adjudicatory or quasi-judicial powers.
a) Concurrent or conuent jurisdiction with civil
courts.
(1) Where a single claim do not exceed ve million
pesos (P5,000,000.00) involving liability arising
from the following insurance contracts:
(a) Insurance contract;
(b) Suretyship contract;
228
238(b) ICP.
229
437 ICP.
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(c) Reinsurance contract;

(d) Membership certicate in mutual benet
associations.230
b) Primary and exclusive jurisdiction.
(1) Claim for benets involving pre-need plans
where the amount of benets do not exceed
P100,000.00.231
c) Inclusive authority in adjudicatory or quasi-judicial
powers.
(1) For any proceeding under Section 416 of ICP,
the commissioner is empowered, provided it is
material or relevant to the inquiry to:
(a) Administer oaths and afrmations;
(b) Subpoena witnesses;
(c) Compel attendance of witnesses;
(d) Take evidence;
(e) Require the production of any books, papers
documents or contracts or other records.
230
439 ICP.
231
55 / RA9829 Pre-need Code.
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d) Do the IC have jurisdiction to decide the legality of

a contract of agency entered into between an
insurance company and its agent?
(1) No as it is not covered by doing or transacting
business under Section 2 or by Section 439
which is the grant of adjudicatory power to the
insurance commissioner under the ICP.
3. Revocation of certicate of authority.
a) The certicate authority issued to the domestic or
foreign company by the Commission may be
revoked or suspended for any of the following
grounds232, when the company:
(1) Is in an unsound condition;
(2) Failed to comply with law or regulations;
(3) Condition or method s of business is hazardous
to public or policy holders;
(4) Paid-up capital stock in domestic stock
company, or cash assets in a domestic mutual
company, or security deposits in a foreign
company, is impaired or decient;
232
254 ICP.
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(5) Margin solvency is decient.

b) Upon revocation, suspension or disability of
authority, no new business can be engaged by the
company without restoration of such authority. This
extends to all the agent of the corporation.
c) Before restoring authority, the IC can require the
company to submit a business plan which shows
estimated receipts and disbursements, with
accompanying basis, for the next succeeding three
(3) years.
4. Insolvency.
a) When the company is determined insolvent by the
IC or cannot resume business, he may order its
liquidation if public interest requires it.233
b) In contrast to a conservatorship where the
company is continually unable or unwilling to
maintain solvency or liquidity to protect the policy
holders or creditors. In this case, the conservator
will take charge of the management of the
company.234
233
256 ICP.
234
255 ICP.
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5. Other persons regulated by the insurance

commissioner.
a) Insurance agent.
(1) A p e r s o n w h o s o l i c i t s i n s u r a n c e f o r
compensation in behalf of an insurance
company or transmits to another person an
application for insurance or acts in negotiation of
the same.
b) Insurance broker.
(1) A person who aids, solicits, negotiates, placing
the risk, taking out the or procures for a
compensation in making the insurance contract
on behalf of the insured.
c) Reinsurance broker.
d) Non-life company underwriter.
e) Adjuster.
f)
Actuary.
g) Rate organization.
h) Self-regulatory organization.
IV. Part 03 - Business Organizations.
A. Basic types of organizations.
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1. Individuals and sole proprietorship.

a) Business name.
b) Merchants.
c) Disqualication to engage in commerce.
d) Disqualications under the constitution.
2. Partnerships.
a) Partnership
b) Registration
3. Joint accounts.
a) Concept.
b) Distinguished from partnership.
4. Business trusts.
a) It is a legal relation where one person, called the
trustor, conveys a property to another for the
benet of a person called the beneciary. The
person in whom condence is reposed as regards
the property is called the trustee.235
5. Joint venture.
a) Joint venture.
6. Cooperatives.
235
1440 NCC.
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B. Corporation code of the Philippines.236

C. Securities regulations code and other related laws.
V. Part 04 - Banking Laws.
A. General banking law and law on secrecy of bank
deposits
B. Other related laws.
VI. Part 05 - Credit Transactions.
A. Warehouse receipts law.237
B. General bonded warehouse act.238
C. Letters of credit.
D. Trust receipts law.239
E. Bulk sales law.240
F. Mortgage.
G. Recto law.241
H. Financial rehabilitation and insolvency act of 1020 and
concurrence and preference of credits.242
236
BP 68.
237
AN 2137.
238
AN3839 and RA247.
239
PD115.
240
AN3952.
241
1484 NCC.
242
RA10142 and 2241 to 2244 NCC.
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VII. Part 06 - Laws on Transportation and Public Utilities.

A. General concepts.
B. Maritime law.
C. Warsaw convention and civil aviation laws.243
D. Public service act.
VIII.Part 07 - Intellectual Property Code.244
A.
243
RA9497 and RA6235.
244
RA8293.

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b) Bill of exchange versus check.

J. Omissions and provisions that do not affect

damage or liability arising from an unknown or

177 and 2 Par. 3 ICP.

(3) Reinsurance and similar acts, whose nature is

Republic v Sun Life / 158085 / 2005 October 14.

B. Characteristics. (Chapter 1 in Aquino.)

on terms prescribed by the insurer which is

Rizal Surety v CA / 336 SCRA 12 / 2000.

the paid premiums by the insured and the

There is no over insurance in life insurance;

ii) Insurance contracts are not wagering

the insurer would not be inveigled to the contract

C. Elements of insurance. (Chapter 1 in Aquino.)

representing the latter against lawsuits are not

PHCP v CIR / 167330 / 2009 September 18.

PHCP v CIR / 167330 / 2009 September 18.

PHCP v CIR / 167330 / 2009 September 18.

D. Perfection. (Chapter 1 in Aquino.)

See 1315, 1318 and 1319 of NCC.

Great Pacic v CA / 89 SCRA 543.

(1) Mere delay in acceptance os insurance

166245 / 2008 April 09.

IC but subject to various conditions under

Issued and renewed only upon prior

ii) Valid and binding for not more than 60 days

Pacic Timber v CA / 112 SCRA 119.

Insurance Memo Circular No. 3-75.

3. Policy. (Chapter 5 in Aquino.)

(6) Risk insured against;

Exception, it is binding when the descriptive

(b) Riders and the like should be countersigned

Exception, when he was the one who

(c) When the requirements of the rider are

d) Cancellation of non-life policy.

Prior notice to the insured;

ii) Any of the following grounds:

Commissioner of IR v Lincoln / 119176 / 2002 March 19.

(1) non-payment of premium;

(c) Notice must be in writing, mailed or delivered

provided the broker is authorized in writing

(d) Notice must state the grounds relied upon

and upon request of the insured, to furnish

The value of the thing insured is not agreed

(b) Valued policy.

65 ICP / Philamcare v CA / 125678 / 2002 March 18.

When a denite valuation is agreed by both

(c) Running policy.

Contemplates successive insurances and

(2) Life insurance policies are always valued

Reinstatement of the policy.

precedent to reinstatement can no longer be

Lalican v Insular Life / 183526 / 2009 August 25.

Enriquez v Sun Life / 41 Phil 269 / 79 ICP.

a principal liable for an entirely speculative insured

DBP v CA / 231 SCRA 370.

Pineda v CA / 226 SCRA 754 / 1993.

50 ICP last paragraph.

under such kind of insurance may have an

190 to 193 ICP.

c) "Insurers" do not include "individuals" so an

philippines provided the following requirements