Cases

Tantuco Case

Philam

What is suretyship?

A contract of suretyship shall be deemed to be an insurance contract, only if made by a surety who or
which, as such, is doing an insurance business

Section 2 - The term doing an insurance business or transacting an insurance business, within the
meaning of this Code, shall include (a) making or proposing to make, as insurer, any insurance contract;
(b) making or proposing to make, as surety, any contract of suretyship as a vocation & not as merely
incidental to any other legitimate business or activity of the surety; (c) doing any kind of business,
including a reinsurance business, specifically recognized as constituting the doing of an insurance
business within the meaning of this Code; (d) doing or proposing to do any business in substance
equivalent to any of the foregoing in a manner designed to evade the provisions of this Code.

Section 3 - Any contingent or unknown event, whether past or future, w/c may damnify a person having
an insurable interest, or create a liability against him, may be insured against, subject to the provisions
of this chapter.

2207 cC - Art. 2207. If the plaintiffs property has been insured, and he has received indemnity from the
insurance company for the injury or loss arising out of the wrong or breach of contract complained of,
the insurance company shall be subrogated to the rights of the insured against the wrongdoer or the
person who has violated the contract. If the amount paid by the insurance company does not fully cover
the injury or loss, the aggrieved party shall be entitled to recover the deficiency from the person causing
the loss or injury.

5 elements of an insurance contract -

Characteristics of an insurance contract

a. Making or proposing to make, as insurer, any insurance contract;

b. Making or proposing to make, as surety, any contract of suretyship as a vocation and not as merely
incidental to any other legitimate business or activity of the surety;
c. Doing any kind of business, including a reinsurance business, specifically recognized as constituting
the doing of an insurance business within the meaning of this Code;

Doing or proposing to do any business in substance equivalent to any of the foregoing in a manner
designed to evade the provisions of this Code
Kinds of Insurance
Chapter 2
Life insurance
LIFE INSURANCE
Mutual agreement by which a party agrees
to pay a given sum on the happening of a
particular event contingent on the duration
of human life, in consideration of the
payment of a smaller sum immediately, or
in periodical payments by the other party.
Types of Life Insurance
Individual Life
insurance on human lives and
insurance appertaining thereto or
connected therewith (Sec. 181)
may be made payable on the death
of the person, or on his surviving a
specified period, or otherwise
contingently on the continuance or
cessation of life (Sec. 182)
Group Life
A blanket policy covering a number of
individuals who are usually a cohesive
group (ex: employees of a company)
No medical examination is required
of each person insured (in contrast to
individual life insurance) but a
specified number of persons is usually
required before the policy is issued
Based on the theory that by the law
of averages, only a determinable
percentage of the members of the
group would die within the
contemplated period
The policy need not be in printed
form and may be typewritten, but the
law prescribes the contents of such
policy
Industrial Life
It is tailored to suit the needs of the
urban industrial class of blue-collar
workers (Dobbyns).
Purpose: to cover the expenses for
the last sickness of the insured and
those for his burial
Face amount is relatively small.
Shall not lapse for non-payment if
due to the failure of the company to
send its representative/agent to the
insured to collect such premium.
A form of life insurance under which
(1) The premiums are payable either
monthly or oftener;
(2) The face amount of insurance
provided in any policy is
(3) not more than 500 times that of
the current statutory
(4) minimum daily wage in the City of
Manila; and
(5) The words "industrial policy" are
printed upon the policy (Sec. 235)
BAR QUESTION [2006]
Q: What is a mutual insurance company
or association?

A: A mutual life insurance corporation is
a cooperative that promotes the welfare
of its own members, with the money
collected from among themselves and
solely for their own protection and not
for profit. Members are both the insurer
and insured. A mutual life insurance
company has no capital stock and relies
solely upon its contributions or premiums
to meet unexpected losses, contingencies
and expenses (Republic v. Sunlife, G.R. No
158085, October 14, 2005).

Section 6
Every person, partnership, association, or corporation duly authorized to transact insurance
business as elsewhere provided in this code, may be an insurer.

Prohibited Actions

Lalikan case

Section 53
The insurance proceeds shall be applied exclusively to the proper interest of the person in whose
name or for whose benefit it is made unless otherwise specified in the policy.

Face Value

Section 11 Designation
The insured shall have the right to change the beneficiary he designated in the policy, unless he
has expressly waived this right in said policy.

Innocent spouse exemption

Forfeited share 10607

Persons who are disqualified as beneficiaries

The interest of a beneficiary in a life insurance policy shall be forfeited when the beneficiary is
the principal, accomplice, or accessory in willfully bringing about the death of the insured; in w/c
event, the nearest relative of the insured shall receive the proceeds of said insurance if not
otherwise disqualified.

Third person applying for insurance

Notice of assignment not required

Difference between insurance agent and broker

surance Brokers and Insurance agents both sell insurance. The key difference between insurance
broker and agent is that an insurance agent (also called captive agent) typically works for one
insurance company and thus can sell insurance policies of this company only. That limits
consumers options to compare different products.
Insurance broker on the contrary does not work for one insurance company but rather have a
distributor relationship with multiple insurance companies. That allows insurance broker to compare
several polices available on the market. When engaging an insurance broker to find an insurance
policy, a consumer should clarify upfront with how many companies insurance broker works.

There are also some differences in compensation of insurance agents and insurance brokers:
insurance agent typically receives a fixed salary and might get a sales bonus based on own sales
results. Insurance broker gets compensated through commission paid by an insurance company for
each policy sold (and sometimes some smaller amounts on policies which stay in place).

Read more: https://insureye.com/difference-between-insurance-broker-and-agent/#ixzz4nvB1RYmL

NO. Health Maintenance Organizations are not engaged in the insurance business. The SC said in June
12, 2008 decision that it is irrelevant that petitioner is an HMO and not an insurer because its
agreements are treated as insurance contracts and the DST is not a tax on the business but an excise on
the privilege, opportunity or facility used in the transaction of the business.

Petitioner, however, submits that it is of critical importance to characterize the business it is engaged in,
that is, to determine whether it is an HMO or an insurance company, as this distinction is indispensable
in turn to the issue of whether or not it is liable for DST on its health care agreements. Petitioner is
admittedly an HMO. Under RA 7878 an HMO is an entity that provides, offers or arranges for coverage
of designated health services needed by plan members for a fixed prepaid premium.

The payments do not vary with the extent, frequency or type of services provided. Section 2 (2) of PD
1460 enumerates what constitutes doing an insurance business or transacting an insurance
businesswhich are making or proposing to make, as insurer, any insurance contract; making or
proposing to make, as surety, any contract of suretyship as a vocation and not as merely incidental to
any other legitimate business or activity of the surety; doing any kind of business, including a
reinsurance business, specifically recognized as constituting the doing of an insurance business within
the meaning of this Code; doing or proposing to do any business in substance equivalent to any of the
foregoing in a manner designed to evade the provisions of this Code.
Overall, petitioner appears to provide insurance-type benefits to its members (with respect to its
curative medical services), but these are incidental to the principal activity of providing them medical
care. The insurance-like aspect of petitioners business is miniscule compared to its noninsurance
activities. Therefore, since it substantially provides health care services rather than insurance services, it
cannot be considered as being in the insurance business.

White Gold v Pioneer G.R. No. 154514. July 28,

2005
J. Quisimbing

Facts:
White Gold procured a protection and indemnity coverage for its vessels from The Steamship Mutual
through Pioneer Insurance and Surety Corporation. White Gold was issued a Certificate of Entry
and Acceptance. Pioneer also issued receipts. When White Gold failed to fully pay its accounts,
Steamship Mutual refused to renew the coverage.
Steamship Mutual thereafter filed a case against White Gold for collection of sum of money to
recover the unpaid balance. White Gold on the other hand, filed a complaint before the Insurance
Commission claiming that Steamship Mutual and Pioneer violated provisions of the Insurance Code.
The Insurance Commission dismissed the complaint. It said that there was no need for Steamship
Mutual to secure a license because it was not engaged in the insurance business and that it was a P
& I club. Pioneer was not required to obtain another license as insurance agent because Steamship
Mutual was not engaged in the insurance business.
The Court of Appeals affirmed the decision of the Insurance Commissioner. In its decision,
the appellate court distinguishedbetween P & I Clubs vis--vis conventional
insurance. The appellate court also held that Pioneer merely acted as a collection agent of
Steamship Mutual.
Hence this petition by White Gold.

Issues:
1. Is Steamship Mutual, a P & I Club, engaged in the insurance business in the Philippines?
2. Does Pioneer need a license as an insurance agent/broker for Steamship Mutual?

Held: Yes. Petition granted.

Ratio:
White Gold insists that Steamship Mutual as a P & I Club is engaged in the insurance business. To
buttress its assertion, it cites the definition as an association composed of shipowners in general
who band together for the specific purpose of providing insurance cover on a mutual basis against
liabilities incidental to shipowning that the members incur in favor of third parties.
They argued that Steamship Mutuals primary purpose is to solicit and provide protection
and indemnity coverage and for this purpose, it has engaged the services of Pioneer to act as its
agent.
Respondents contended that although Steamship Mutual is a P & I Club, it is not engaged in the
insurance business in the Philippines. It is merely an association of vessel owners who have come
together to provide mutual protection against liabilities incidental to shipowning.
Is Steamship Mutual engaged in the insurance business?
A P & I Club is a form of insurance against third party liability, where the third party is anyone other
than the P & I Club and the members. By definition then, Steamship Mutual as a P & I Club is a
mutual insurance association engaged in the marine insurance business.
The records reveal Steamship Mutual is doing business in the country albeit without the requisite
certificate of authority mandated by Section 187 of the Insurance Code. It maintains a resident
agent in the Philippines to solicit insurance and to collect payments in its behalf. Steamship Mutual
even renewed its P & I Club cover until it was cancelled due to non-payment of the calls. Thus, to
continue doing business here, Steamship Mutual or through its agent Pioneer, must secure a license
from the Insurance Commission.
Since a contract of insurance involves public interest, regulation by the State is necessary. Thus, no
insurer or insurance company is allowed to engage in the insurance business without a license or a
certificate of authority from the Insurance Commission.
2. Pioneer is the resident agent of Steamship Mutual as evidenced by the certificate of
registration issued by the Insurance Commission. It has been licensed to do or transact insurance
business by virtue of the certificate of authority issued by the same agency. However, a Certification
from the Commission states that Pioneer does not have a separate license to be an agent/broker of
Steamship Mutual.
Although Pioneer is already licensed as an insurance company, it needs a separate license to act
as insurance agent for Steamship Mutual. Section 299 of the Insurance Code clearly states:
SEC. 299 No person shall act as an insurance agent or as an insurance broker in the solicitation or
procurement of applications for insurance, or receive for services in obtaining insurance, any
commission or other compensation from any insurance company doing business in the Philippines
or any agent thereof, without first procuring a license so to act from the Commissioner