Aug.
18
 (Insurance)
1. Is RA 10607 the complete source of insurance law?
 No - Civil code and Special law also
2. In relation with each other, when there is a conflict between
RA 10607 and for example, a special law regarding insurance
for government employees, which will be followed?
 If the special law is more specific, follow the special
law; general law < special law
3. What are some provisions in the Civil code relate to insurance?
 Art. 2207 - subrogation of an insured for liability
 Law on contracts (enforceability, validity, rescission,
etc.)
4. Suppose insured my life with the insurance company and I am
killed so the insurer paid out the beneficiaries; can you sue the
perpetrators?
 No - Art. 2207 is the general rule (property), the
exception being life insurance; the insurer cannot sue
the perpetrators
5. Suppose the insured motor vehicle was destroyed by flash
flood, will there be subrogation?
 It depends - there will be subrogation only if there is a
person you can sue
6. Suppose I insured my condominium unit for fire and one day,
somebody who doesn’t like me smashes and destroys my unit
and the insurance company paid the claim (even if it wasn't
fire), in this case, would the insurer be subrogated with the
rights of the insured?
 No - Under Art. 2207, there is no subrogation since he
was insured for fire, not physical damage
7. Let's say the property was worth 1M and the insurance paid
out is 800K and insurer paid full amount of 800K to the insured,
how much can he go after the wrongdoer for?
 Up to the full amount of 1M
8. The insured was able to collect 800K from the insurer, can he
go against the wrongdoer for the remainder?
 Yes - the deficiency of 200K from the value of the home
of 1M
9. As a general rule, after this, can the insured go after the
wrongdoer for 500K instead of 200K?
 No - he can only go after up to the extent of the
deficiency
10. A contract of insurance is a contract of indemnity, what do
you mean by that?
 It would only be up to the damage or loss caused, it is
only for restitution
11. Does indemnification clash with the concept of making a
profit?
 Yes - you cannot make a profit from a contract of
indemnity
12. Why would one seek to insure his property?
 To be restored to his status prior to the loss in case of
loss in terms of monetary value?
13. Can people enter into insurance as a profit venture?
 No, well, you can, but you will only be restored the
value of the car; there is a hard limit as to how much
you can collect, such is the essence of insurance law as
a contract of indemnity; you cannot make money from
an insurance contract
14. Do contracts of insurance have to expressly provide for
subrogation rights?
 No - Subrogation right is granted by law (Art. 2207) - it is
read into the contract
15. Is Art. 2207 legal or conventional subrogation?
 Art. 2207 is an equitable assignment and not subject to
consent; it is a legal subrogation and occurs by
operation of law, consent of the wrongdoer is not
necessary
 Conventional subrogation is by contract
16. What is a contract of insurance?
 Sec. 2 - Contract of insurance is an agreement
whereby one undertakes for a consideration to
indemnify another against loss, damage or liability
arising from an unknown or contingent event
17. What does the definition above fail in (according to De Leon)?
 The concept of indemnity for death (no value of life)
18. When does a surety become an insurance contract?
 It has to be that the Surety is engaged in the insurance
business
19. What is a contract of suretyship and how would you distinguish
it from a contract of insurance?
 Surety - Contract where one person undertakes to
guarantee an obligation of another; there is privity of
contract with 3rd party
 Insurance contract - cannot sue the insurer directly;
there is no privity of contract with 3rd party (exception:
there is a stipulation pour atrui)
20. How does the code define doing an insurance business?
 Sec. 2(b)
21. What does it mean when an insurance contract is
"consensual"?
 It requires the meeting of the minds of the parties
22. What does it mean when an insurance contract is "voluntary"?
 Parties may incorporate terms as they please
23. What does it mean when an insurance contract is "aleatory"?
 It is dependent on a future event
24. What does it mean when an insurance contract is "executed
and executory"?
 It is already executed as to the insured
 As to the insurer, it is premised on the happening of an
event
25. What are the elements of an insurance contract?
 Insurable interest
 Insured is subject to a risk of loss
 Insurer assumes risk of loss or a portion of it
 General scheme to distribute risk among a group of
persons bearing a similar risk
 Payment of premium
26. What must he have an "insurable interest" in?
 It must be an interest in the property insured; there must
be a relation (not limited to ownership)
27. To what is the thing exposed to?
 It is exposed to risk
28. What about the assumption of the risk?
 It is assumed by the insurer from the person who had
the interest
29. What should the insurer do if you are asking them to insure the
risk?
 Pay consideration - the premium
30. What is the element not traceable to the definition?
 General scheme to distribute risk among a group of
persons bearing a similar risk
31. What does it mean?
 Sharing among the insured and insurer/other insured
(by way of volume; e.g. 10 people pay 10K each to
insure 100K houses, hence the risk is distributed, at least
on the part of the insurer)
 Hence why there is a public policy aspect to it; other
people's money will be used to finance the assumption
of risk
32. What are the three main classifications of insurance?
 Property interest
 Death (loss of earning power)
 Contingent liability (to make payment to another)
33. What about 1st and 3rd party liability? What's the difference?
 1st party - claim is by the insured
 3rd party - 3rd party has a claim as to your insurance
contract
34. What about all-risk and specified risk? What's the difference?
 All-risk - all risks except exceptions
 Specified risk - only the specific insured risks
35. What is a contract of adhesion?
 Generally, it is a "take-it or leave-it" contract
 It is usually construed strictly against the person who
made it (insurer)
Notes:
 Art. 2207 applies only with property and only if there is a
wrongdoer; subrogation applies only if you have rights you can sue
for; it only applies if a payment to indemnify the insured from what
was insured against
 Provisions on contracts in the civil code are relevant to insurance
contracts
 Structure of Insurance code:
o Chapter 1 - general provisions on insurance
o Chapter 2 - classes of insurance (if providing a different rule
to Chapter 1, these will apply)
o Chapter 3 - business of insurance

Cases:
1. Pan Malayan v. CA - subrogation by law had occurred (Art.
2207); Pan Malayan had stepped into the shoes of the insured
upon payment; since the insured party had a case against
Fabie, Pan Malayan can already pursue a case against Fabie;
"own damage" should be construed as to include accident by
third party; also "accident" is anything that happened, not
willfully damaged by the insured, there is no question as to
agreement between Pan Malayan and the insured; Pan
Malayan has a cause of action against Fabie, even if there is a
privity of contract between Pan Malayan and the insured
2. FedEx v. American Home Assurance - American Home
Assurance insured a shipment which was damaged due to
fault of the receiver in Manila (non-refrigerated); AHA paid
Smithkline (shipper) and attempted to sue FedEx; they had
personality to sue upon subrogation into the rights of Smithkline
when they paid; FedEx not liable since a condition precedent
to liability is to inform the carrier and give them an opportunity
 to examine; Art. 2207 only entitles you to the remedies
available to the insured
3. Fireman's Fund Insurance Co. v. Jamila & Company, Inc. -
Firestone (insured) is only a nominal party, the real party in
interest is not Fireman's Fund Insurance Co. (insurer) after
paying the insured the value of the damage caused by
Jamila, who's guards caused damage to company property;
Jamila does not have to consent to subrogation, this is not
conventional subrogation, the subrogation of Art. 2207 does
not need consent; the right of subrogation is of the highest
equity in favor of the insurer
4. F.F. Cruz and Co. v. CA - Insured had already collected 35K
from their insurer for destruction of their house for negligence,
so the 70K damages awarded by the court should be reduced
to 35K since the insurer had already subrogated the rights up
to the 35K it paid and it is not a party to the suit
5. Rizal Surety & Insurance Co. v. Manila Railroad Co. - Insurer
paid P16,500, but the management contract limited the
insurance to P500, the insurer can then not go after the
consignee for the P16,500, they can only go after for the
amount insured
6. Pioneer Insurance & Surety Corp v. CA - No double recovery to
prevent unjust enrichment; reinsurer had already paid Pioneer,
hence, it cannot recover from Lim by foreclosing the airplanes
(no double recovery); there is no proof Pioneer represented
the reinsurer, it is not a real party in interest; payment cannot
be reimbursed if a solidary debtor paid a debt when it has
prescribed (JDA did not inform Pioneer within 10 days, as per
contract, yet Pioneer still paid)
7. CCC Insurance v. CA - Driver could not read or write, but it is
still not an unqualified driver; he had a license at a time that
exams and reading/writing were not requisites for a license;
construed liberally for the insured
8. Assoc. of Baptists for the World Evangelism v. Fieldmen's
Insurance - Joyriding is theft, hence the insurer is liable; criminal
conviction is not necessary to be held liable to pay for the
damage caused by the joyride, there is a preponderance of
evidence that theft had occurred