Insurance Memaid 2008

San Beda College of Law
4 2008 CENTRALIZED BAR OPERATIONS 9
INSURANCE CODE
Presidential Decree No. 612 3. ASSUMPTION OF RISK the insurer undertakes to assume the risk of such loss for a consideration; 4. PAYMENT OF PREMIUM the consideration for the insurers promise to assume the risk and pay the losses from such risk; 5. SCHEME TO DISTRIBUTE THE LOSSES the assumption of risk is part of a general scheme to distribute the loss among a large number of persons exposed to similar risks. NATURE OF INSURANCE (CAC-V- CUP2) CONTRACT
CONTRACT OF INSURANCE
CONTRACT OF INSURANCE An agreement whereby one undertakes for a consideration to indemnify another against loss, damage or liability arising from an unknown or contingent event (Sec.2, par.2, Insurance Code of the Philippines). GOVERNING LAWS 1. Insurance Code; or, in its absence 2. Civil Code; or, in the absence of both, 3. General principles prevailing on the subject in the United States, particularly in the State of California where our Insurance Code was based. ELEMENTS OF THE CONTRACT (RAPIS) 1. INSURABLE INTEREST The insured has an insurable interest in the life or thing insured, i.e. a pecuniary interest; 2. RISK OF LOSS The happening of designated events, either unknown or contingent, past or future, will subject such interest to some kind of loss, whether in the form of injury, damage or liability;
1. CONSENSUAL it is perfected by the meeting of the minds of the parties; 2. VOLUNTARY the parties may incorporate such terms or conditions as they may deem convenient; 3. ALEATORY the liability of the insurer is dependent on the happening of an event which is uncertain, or though certain, is to occur at some future undetermined time. (Article 2010, New Civil Code [NCC]). It is not, however, a gambling or wagering
EXECUTIVE COMMITTEE
VISMARCK UY over-all chair, APRIL CABEZA chair academics operations, ALDEAN LIM chair hotel operations, AYN SARSABA vice chair for operations, ANTHONY PURGANAN vice chair for academics, RONALD JOHN DECANO vice chair for secretariat, KARLA FUNTILA vice chair for finance, JEFFREY GALLARDO vice chair for edp, ULYSSES GONZALES vice chair for logistics
COMMERCIAL LAW
REINIER PAUL R. YEBRA subject chair ANSON T. LAPUZ assistant chair FATIMA ANNE C. ZAMORA edp ANSON T. LAPUZ code of commerce, JENNY VI H. MAGUGAT negotiable instruments law, CLARIBELLE S. BAUTISTA insurance, RALPH DAVID D. SO and MARA NADIA C. ELEFAO transportation law, REXIE MAY E. MAGSANO corporation law, FRANCESCA LOURDES M. SENGA banking laws, BETHEENA C. DIZON law on intellectual property, PRINCESSITA M. YULDE special laws
MEMBERS:
Colleen Infante, Andro Julio Quimpo, Jan Reyes, Anthony Menzon, Marife Andal, Rayhanah Abubacar, Francis James Brillantes, , Jay Masangcay, Belle Salas, Charity Jimenez, Richardson Bassig, Leopoldo Aquino, Carlo Bautista, Raul Canon, Karla Funtila, May Pandoy, Benedicto Claravall, Melanie Valenciano, Kring Carayugan, Eva Naparan, Paula Laureano, Kate Asilo, Ivy Galang, Masha Mariano, Diane Therese Dauz, Robert de Guzman, Jan Allyson Vitug, Agnes Pader, CJ Batalla, Leonardo Mendoza, Jay Celzo, Maria Teresa Flaminiano, Rodrigo Melchor Jr., Jan Ale Fajardo, Joyce Maika Tolentino, Precious Lledo, Emilio Maraon III
50 Insurance contract where the risk is created by the contract itself. 4. UNILATERAL imposes legal duties only on the insurer who promises to indemnify another in case of loss; executed as to the insured after payment of premium, and executory on the part of the insurer until payment for a loss. 5. CONDITIONAL it is subject to conditions, the principal one of which is the happening of the event insured against. 6. CONTRACT OF INDEMNITY Except life and accident insurance where the result is death, a contract of insurance is a contract of indemnity whereby the insurer promises to make good only the loss of the insured. 7. PERSONAL each party having in view the character, credit and conduct of the other. 8. PROPERTY since an insurance is a contract, as such, it is property in legal contemplation. SURETY CONTRACT AS INSURANCE A contract of suretyship shall be deemed to be an insurance contract, within the meaning of the Code, only if made by a surety who or which, as such, is doing an insurance business. Doing an Insurance Business: 1. making or proposing to make, as insurer, any insurance contract; 2. making or proposing to make, as surety, any contract of suretyship as a vocation and not as merely incidental to any legitimate business or activity of the surety; 3. doing any kind of business, including reinsurance business, specifically recognized as constituting the doing of an insurance business within the meaning of the Code; 4. 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 (Sec.2, par.4). Note: The fact that NO profit is derived from the making of insurance contracts, agreements or transactions or that no separate or direct consideration is received therefor, shall NOT be deemed conclusive to show that the making thereof does not constitute the doing or transacting of an insurance business.
MEMORY AID IN COMMERCIAL LAW
FIVE CARDINAL PRINCIPLES IN INSURANCE (I-SIGA) 1. INSURABLE INTEREST relation between the insured and the event insured against such that occurrence of the event will cause substantial loss or harm of some kind to the insured. 2. PRINCIPLE OF UTMOST GOOD FAITH (uberrimae fides) Each party takes into consideration the character, conduct and/or credit of the other and in making the contract, each is enjoined by law to deal with the other in utmost good faith. A violation of this duty gives the aggrieved party the right to rescind the contract. 3. CONTRACT OF INDEMNITY The insured who has insurable interest over a property is only entitled to recover the amount of actual loss sustained and the burden is upon him to establish the amount of such loss. Note: A life insurance is NOT a contract of indemnity. It is considered an investment. A life policy constitutes, through the insureds savings, his investment and the earnings thereon, a measure of economic security for the insured during his lifetime and for his beneficiary after his death (Insurance, Maria Clara L. Campos, 1983ed). Insurance contracts are not wagering contracts or gambling contracts. Reason: It is not a contract of chance and it is not used for profit. WAGERING CONTRACT
The parties contemplate gain through mere chance Gambler courts misfortune Tends to increase the inequality of fortune Essence of gambling is that whatever one wins from a wager is lost by the other wagering party As soon as the party makes a wager, he creates a risk of loss to himself where no such risk existed previously
CONTRACT OF INSURANCE
The parties seek to distribute the possible loss by reason of mischance Insured seeks to avoid misfortune Tends to equalize fortune The gains of the one insured are not at the expense of another insured The purchase of insurance does not create a new and nonexisting risk of loss to the purchaser
4.
CONTRACT OF ADHESION (Fine Print Rule) The policy is presented to the insured already in its printed form, so that

he either takes it or leaves it. Most of the terms of the contract do not result from mutual negotiations between the parties as they are prescribed by the insurer in final printed form to which the insured may adhere if he chooses but which he cannot change (Rizal Surety and Insurance Co. vs. CA, GR No. 112360, 336 SCRA 12, July 18, 2000). It is for this reason that any ambiguity therein is resolved in favor of the insured and against the insurer. 5. PRINCIPLE OF SUBROGATION If the plaintiffs property has been insured, and he has received indemnity from the insurance company for the injury or loss arising out of 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 (Article 2207 NCC). Note: The principle of subrogation is a normal incident of indemnity insurance as a legal effect of payment; it inures to the insurer without any formal assignment or any express stipulation to that effect in the policy. Said right is not dependent upon nor does it grow out of any private contract. Payment to the insured makes the insurer a subrogee in equity (Malayan Insurance Co., Inc. vs. CA, GR No. L36413, September 26, 1988). Incapacity of the insured will not affect the capacity of the subrogee because capacity is personal to the holder (Lorenzo Shipping vs. Chubb and Sons, Inc, 431 SCRA 266, June 8, 2004). Purposes of Subrogation: 1. To make the person who caused the loss legally responsible for it; 2. To prevent the insured from receiving double recovery from the wrongdoer and the insurer; and 3. To prevent the tortfeasors from being free from liability and is thus founded on considerations of public policy. Rules on Subrogation: 1. Applicable only to property insurance. Reason: The value of human life is regarded as unlimited and therefore, no recovery from a third
51 2008 CENTRALIZED BAR OPERATIONS party can be deemed adequate to compensate the insureds beneficiary. 2. The insurer can only recover from the third person what the insured could have recovered. NO SUBROGATION: 1. Where the insured by his own act releases the wrongdoer or third party liable for the loss or damage; 2. Where the insurer pays the insured the value of the loss without notifying the carrier who has in good faith settled the insureds claim for loss; 3. Where the insurer pays the insured for a loss or risk not covered by the policy (Pan Malayan Insurance Company vs. CA, GR No. 77397 184 SCRA 54, April 3, 1990); 4. In life insurance; 5. For recovery of loss in excess of insurance coverage; Note: Should the insured, after receiving payment from the insurer, release by his own act the wrongdoer or third party responsible for the loss or damage from liability, the insurer loses his rights against the wrongdoer since the insurer can only be subrogated to only such rights as the insured may have (Manila Mahogany Mfg. Corp. vs. CA, GR No. L-52756, 154 SCRA 668, October 12, 1987). WHAT MAY BE INSURED AGAINST/ RISK: 1. Any contingent or unknown event, whether past or future, which may damnify a person having an insurable interest or creates a liability against him may be insured against (Sec. 3). 2. A past event may be insured provided the loss is unknown to both parties and they expressly stipulated that prior loss is insured by the policy. 3. Contingent liability E.g. Reinsurance Note: Insurance for or against the drawing of any lottery, or for or against any chance or ticket in a lottery drawing a price is not allowed (Sec. 4). It may result in profit which is not true in insurance which only seek to indemnify the insured against losses. REQUISITES FOR RECOVERY UPON INSURANCE (CLIP) 1. The insured must have insurable interest in the subject matter; 2. That interest is covered by the policy; 3. There must be a loss; and
52 Insurance 4. The loss must be proximately caused by the peril insured against. CONSTRUCTION OF INSURANCE CONTRACT 1. The terms in an insurance policy which are ambiguous, equivocal, or uncertain are to be construed strictly and most strongly against the insurer, and liberally in favor of the insured so as to effect the dominant purpose of indemnity or payment to the insured. Reason: The insured usually has no voice in the selection or arrangement of the words employed and that the language of the contract is selected with great care and deliberation by experts and legal advisers employed by, and acting exclusively in the interest of, the insurance company (Calanoc v. Court of Appeals, et al., GR No. L-8218, 98 SCRA 98, December 15, 1955). If the terms are clear, there is no room for interpretation. 2. Intentional as used in an accident policy excepting intentional injuries inflicted by the insured or any other person, etc. implies the exercise of reasoning, consciousness, and volition. Where a provision of the policy excludes intentional injury, it is the intention of the person inflicting the injury that is controlling (Biagtan v. The Insular Life Assurance Company, Ltd., GR No. 25579, 44 SCRA 59, March 29, 1972). 3. The terms accident and accidental, as used in insurance contracts have not acquired any technical meaning, and are construed in their ordinary and common acceptation. Thus, the terms mean those that which happen by chance or fortuitously, without intention or design, and which is unexpected, unusual, and unforeseen. An accident is an event that takes place without ones foresight or expectation an event that proceeds from an unknown cause or is an unusual effect of a known cause and therefore, not expected (Finman General Assurance Corp. v. Court of Appeals, GR No. 94588, 213 SCRA 493, July 2, 1992). 4. An Authorized Driver clause limits the use of the insured vehicle to two persons only, namely: (1) the insured himself; or (2) any person on his (insureds) permission. The main purpose of the authorized driver clause is that a person other than
the insured owner, who drives the car on the insureds order, such as, his regular driver, or with his permission, such as a friend or member of the family or the employees of a car service or repair shop must be duly licensed drivers and have no disqualification to drive a motor vehicle (Villacorta v. Insurance Commission, GR No. L-54171, 28 SCRA 467, October 28, 1980). PERFECTION OF AN INSURANCE CONTRACT 1. An insurance contract is a consensual contract and is therefore perfected the moment there is a meeting of minds with respect to the object and the cause or consideration. 2. Insurance contracts through correspondence follow the cognition theory an acceptance made by letter shall not bind the person making the offer except from the time it came to his knowledge (Enriquez vs. Sun Life Assurance Co. of Canada, GR No. L15774, 41 Phil. 269, November 29, 1920).
PARTIES TO THE CONTRACT

1. INSURER the party who assumes or accepts the risk of loss and undertakes for a consideration to indemnify the insured or to pay him a certain sum on the happening of a specified contingency or event. Every person, partnership, association, or corporation duly authorized to transact insurance business may be an insurer (Sec. 6). Insurance Corporation corporation formed or organized to save any person or other corporations harmless from loss, damage, or liability arising from any unknown or future or contingent event or to indemnify or to compensate any person or persons or other corporation for any such loss, damage, or liability or to guarantee the performance of or compliance with contractual obligations or the payment of debt of others. (Sec. 185) a. It must have sufficient capital and assets required under the Insurance Code and the pertinent regulations issued by the Commission (Sec. 186); b. It must have a certificate of authority to operate issued by the Insurance Commission which should be renewed every year. (Sec. 187).

Foreign Insurance Corporations may engage in insurance business in the Philippines provided the following requirements are met: a) The appointment of a resident of the Philippines as a general agent on whom any notice or proof of loss may be served and on whom summons and other processes may be served; b) It must possess paid-up unimpaired assets or capital and reserve not less than that required of domestic corporations; c) It must deposit for the benefit and security of policyholders, securities satisfactory to the Commission. d) Its investments should not exceed 20% of the net worth of foreign corporation or 20% of the capital of the registered enterprise. 2. INSURED the person in whose favor the contract is operative and who is indemnified against, or is to receive a certain sum upon the happening of a specified contingency or event. Anyone except a public enemy may be insured. (Sec. 7) Public enemy citizen or subject of a nation at war with the Philippines and does not include robbers thieves and other criminals. Reason: The purpose of war is to cripple the power and exhaust the resources of the enemy, and it is inconsistent that one country should destroy its enemys property and repay in insurance the value of what has been so destroyed, or that it should in such manner increase the resources of the enemy, or render it aid (Filipinas Cia de Seguros v. Christern Huenfeld & Co., Inc., GR No. L-2294, 89 Phil., May 25, 1951). Insurance by a minor (Sec. 3, par. 3) has been rendered moot and academic by Republic Act 6809 which reduced the majority age from 21 to 18 years of age. Hence, a person who is 18 years or more may enter into any kind of insurance contract because he is already of legal age. Insurance by a married woman A married woman may take out an insurance on her life or that of her children without the consent of her husband (Sec. 3 [2]), or that of her husband, having an insurable interest in the latter (Sec. 10).
53 2008 CENTRALIZED BAR OPERATIONS However, while either spouse may exercise any legitimate profession, occupation, business or activity without the consent of the other, the latter may object on valid, serious and moral grounds (Art. 73, Family Code). 3. CESTUI QUE VIE and BENEFICIARY Cestui que vie is the person on whose life the insurance is written. The beneficiary is the person designated to receive the proceeds of the policy when the risk attaches. Illustration: A husband may take out a policy on his wifes life, proceeds payable to their son. The husband is the insured, the wife is the cestui que vie, and the son is the beneficiary. Kinds of Beneficiary: a) Insured himself; b) Third person who paid a consideration; or c) Third person through mere bounty of insured. In the second and third cases, the beneficiary is not a party to the contract. Art. 1311 (2nd par.), NCC allows the contracting parties to include a stipulation in favor of a third person not a party to the contract. Persons who cannot be named Beneficiary Any person who is forbidden from receiving any donation under Art. 739 cannot be named beneficiary of a life insurance policy by the person who cannot make any donation to him (Art. 2012, NCC), to wit: a) Those who are guilty of adultery or concubinage with the insured at the time of designation; b) Those who were found guilty with the insured of the same criminal offense, committed in consideration of the designation; c) A public officer or his wife, descendants and ascendants designated by reason of his office (Article 739, NCC). Note: This prohibition will apply ONLY to life insurance policies (Art. 2012, NCC). Right to change Beneficiary: GENERAL RULE The insured shall have the right to change the beneficiary he designated in the policy.
54 Insurance The beneficiary acquires NO vested right but only an expectancy of receiving the proceeds under the insurance. The right may be exercised in the manner provided in the policy. The right ceases upon the insureds death. It may not be exercised by his representatives.
3. In case of an insurance policy taken out by an original owner on the life or health of a minor, all rights, title and interest in the policy shall automatically vest in the minor upon the death of the original owner, unless otherwise provided for in the policy (Sec. 3, par. 5).
EXCEPTION If the right to change the beneficiary is EXPRESSLY WAIVED in the policy, then the insured has no power to make such change without the consent of the beneficiary. The beneficiary acquires a vested right in the policy. Such beneficiary, to whom a policy of insurance upon life or health has passed by transfer, will or succession, may recover upon it whatever the insured might have recovered (Sec. 181, Insurance Code). If the insured refuses to pay the premiums, the designated irrevocable beneficiary may continue the policy by paying premiums that are due (Art. 1236, NCC). EXCEPTION TO THE EXCEPTION Under Articles 43(4), 50 and 64 of the Family Code, the innocent spouse may revoke the designation of the other spouse who acted in bad faith as beneficiary in any insurance policy, EVEN if such designation be stipulated as irrevocable. When the beneficiary dies before the insured: 1. Should the beneficiary predecease the insured and such beneficiary is irrevocable, and hence has a vested interest in the policy, the legal representatives of such beneficiary are entitled to the proceeds of the insurance as assets of his or her estate, unless the proceeds were made payable to the beneficiary only if living. 2. On the other hand, where the beneficiary is revocable and therefore does not have vested interest in the policy at the time of his death, his estate or legal representatives derive no interest from or through him, but the proceeds passes to the estate of the insured.
INSURABLE INTEREST
INSURABLE INTEREST The relation between the insured and the event insured against such that the occurrence of the event will cause substantial loss or harm of some kind to the insured. 1. LIFE INSURANCE Insurable interest in life exists when there is reasonable ground founded on the relation of the parties, either pecuniary or contractual or by blood or affinity, to expect some benefit or advantage from the continuance of the life of the insured. 2. PROPERTY INSURANCE Every interest in property, whether real or personal, or any relation thereto, or liability in respect thereof, of such nature that a contemplated peril might directly damnify the insured. PURPOSES 1. Based upon considerations which render wager policies invalid. Without such insurable interest, the contract would in effect be a mere wager or gambling contract which is void. 2. Measure of the upper limit of his provable loss under the contract. INSURABLE INTEREST IN LIFE INSURANCE 1. Where the insured is also the cestui que vie (Insurance upon ones life) A person has an insurable interest in his own life and health (Sec. 10[a]). The insured can make it payable to anyone he chooses, regardless of whether or not such beneficiary has an insurable interest in his (insureds) life. Upon the insureds death, the beneficiary shall be entitled to the full face value of the policy. It is assumed that the insured would not designate as his beneficiary a person whom he would not trust his life.

2. Where the insured is not the cestui que vie but is the beneficiary (insurable interest in the life of another) Where a person names himself beneficiary in a policy he takes on the life of another, he must have insurable interest in the life of the latter. Sec. 10 specifies the person in whose life the insured has an insurable interest, to wit: a) On himself, of his spouse, and of his children the insured beneficiary need not prove insurable interest because he is presumed to have an insurable interest on the life his spouse or his children. The husband and wife as well as parent and child do have some pecuniary interest in each others life since they are legally obliged to support each other. b) Of any person on whom he depends wholly or in part for education or support, or in whom he has pecuniary interest where the relationship is not as close as those mentioned above, the insuredbeneficiary will be like any other stranger i.e. he will have to prove that he has some pecuniary interest in the life of the cestui que vie, otherwise the policy will be void. c) Of any person under legal obligation to him for the payment of money, or respecting property or services of which death or illness might delay or prevent performance. d) Of any person upon whose life or estate vested in him depends. 3. Creditor of insured as beneficiary A creditor may name himself as beneficiary in a policy he takes on the life of his debtor. The death of the debtor may either prevent payment if his estate is not sufficient to pay his debts or delay such payment if an administrator has to be appointed to settle his estate. Except Sec. 10 (par. a) of the ICP, an insurance contract thereunder partakes the nature of a contact of indemnity. Hence, the creditors recovery upon the death of the debtor should be limited to the amount of his interest, i.e. the amount owing to him. BUT if the debtor is the insured and the creditor is named beneficiary, the
55 2008 CENTRALIZED BAR OPERATIONS creditor will be entitled to the WHOLE proceeds of the policy upon the debtors death, though his credit may be much less. 4. Business associate or employer of insured A person may take a policy on the life of his business partner because the latters death may result in an interruption of business operations which can in turn cause financial loss. A business firm can take out a policy on the life of its officers or employees whose services proved valuable to the business. The proceeds are not taxable income but constitute indemnity to the employer for the loss which the business suffers because of the death of a valued officer or employee.
Consent of the Cestui que vie: 1. First View Consent is essential to the validity of policy. It is believed that all such contracts (without the consent of the insured) are contrary to public policy and void. 2. Second View Under our law (Sec. 10), the consent of the person insured is not essential to the validity of the policy. So long as it could be proved that the assured has a legal insurable interest at the inception of the policy, the insurance is valid even without such consent. TIME OF EXISTENCE GENERAL RULE Insurable interest in life or health must exist when the insurance takes effect, but need not exist thereafter or when the loss occurs (Sec. 19). EXCEPTIONS 1. When the insurance is taken by the creditor on the life of the debtor, the creditor is required to have an insurable interest not only at the time of the contract but also at the time of the debtors death because in this case, it is considered as a contract of indemnity. 2. When the insurance is taken by the employer on the life of the employee (El Oriente Fabrica de Tabacos, Inc. v. Posadas, GR No. 34774, September 21, 1931). INSURABLE INTEREST IN PROPERTY An insurable interest in property may consist in:
56 Insurance 1. An existing interest the existing interest in the property may be legal title or equitable title. Examples of insurable interest arising from legal title: a. Trustee, as in the case of the seller of property not yet delivered; b. Mortgagor of the property mortgaged; c. Lessor of the property leased Examples of insurable interest arising from equitable title a. Purchaser of property before delivery or before he has performed the conditions of the sale; b. Mortgagee of property mortgaged; c. Mortgagor, after foreclosure but before the expiration of the period within which redemption is allowed. 2. An inchoate interest founded on an existing interest Example: A stockholder has an inchoate interest in the property of the corporation of which he is a stockholder, which is founded on an existing interest arising from his ownership of shares in the corporation. An expectancy, coupled with an existing interest in that out of which the expectancy arises Expectancy to be insurable must be coupled with an existing interest (Sec. 14) or founded on an actual right to the thing or upon any valid contract for it (Sec. 16).
destruction (Gaisano Cagayan, Inc. vs. Insurance Company of North America, GR No. 147839, June 8, 2006). TIME OF EXISTENCE An interest in property insured must exist when the insurance takes effect AND when the loss occurs, but need not exist in the meantime (Sec. 19). INSURABLE INTEREST IN PROPERTY INSURABLE INTEREST IN LIFE
3.
Extent Insurable interest in life is Insurable interest is unlimited (save in life limited to the actual insurance effected by a value of the interest creditor on the life of the thereon debtor) Existence of insurable interest Must exist when the It is enough that interest insurance takes effect exist at the time the policy AND when the loss takes effect and need not occurs, but need not exist at the time of the exist in the meantime. loss. Basis of expectation Expectation of the benefit There must be legal derived need not have basis legal basis Insurable Interest If the insured secured the policy, the beneficiary The beneficiary must need not have insurable have an insurable interest over the life of the interest in the thing insured; if secured by the insured. beneficiary, the latter must have insurable interest in the life of the insured.
MEASURE OF INSURABLE INTEREST IN PROPERTY: The measure of insurable interest in property is the extent to which the insured might be damnified by loss or injury thereof (Sec. 17). Insurable interest in property does not necessarily imply a property interest in, or a lien upon, or possession of, the subject matter of the insurance, and neither title nor a beneficial interest is requisite to the existence thereof. It is sufficient that the insured is so situated with reference to the property that he would be liable to loss should it be injured or destroyed by the peril against which it is insured. Anyone has an insurable interest in property who derives a benefit from its existence or would suffer loss from its
SPECIAL CASES: 1. In case of a carrier or depository A carrier or depository of any kind has an insurable interest in a thing held by him as such, to the extent of his liability but not to exceed the value thereof (Sec. 15). Reason: The loss of the thing by the carrier or depository may cause liability against him to the extent of its value. 2. In case of a mortgaged property The mortgagor and mortgagee each have an insurable interest in the property mortgaged and this interest is separate and distinct from the other. Therefore, insurance taken by one in his name only and in his favor alone does not inure to the benefit of the other. a) MORTGAGOR As owner, has an insurable interest therein to the extent of its value, even though the mortgage debt equals such value.

Reason: The loss or destruction of the property insured will not extinguish the mortgage debt. b) MORTGAGEE His interest is only up to the extent of the debt. Such interest continues until the mortgage debt is extinguished. Reason: The property relied on as mortgaged is only a security. In insuring the property, he is not insuring the property itself but his interest or lien thereon. Note: In case of an insurance taken by the mortgagee alone and for his benefit, the mortgagee, after recovery from the insurer, is not allowed to retain his claim against the mortgagor but it passes by subrogation to the insurer to the extent of the insurance money paid (Palileo vs. Cosio, GR No. L-7667, November 28, 1955). The lessor cannot be validly a beneficiary of a fire insurance policy taken by a lessee over his merchandise, and the provision in the lease contract providing for such automatic assignment is void for being contrary to law and public policy (Cha vs. Court of Appeals, GR No. 124520, August 18, 1997). STANDARD OR UNION MORTGAGE CLAUSE
Subsequent acts of the mortgagor CANNOT affect the rights of the assignee.
57 2008 CENTRALIZED BAR OPERATIONS The rule on subrogation by the insurer to the right of the mortgagee does not apply in this case. Reason: Premium payment has been paid by the mortgagor and not by the mortgagee. MORTGAGE REDEMPTION INSURANCE A life insurance taken pursuant to a group mortgage redemption scheme by the lender of money on the life of a mortgagor, who mortgages the house constructed to the extent of the mortgage indebtedness, such that if the mortgagor dies, the proceeds of his life insurance will be used to pay for his indebtedness and the deceaseds heirs will thereby be relieved from paying the unpaid balance of the loan (Great Pacific Life Assurance Corp. vs. Court of Appeals, GR No. 113899, 316 SCRA 677, October 13, 1999). TRANSFER OF INTEREST, POLICY, OR CLAIM In Insurance, the following may be transferred or assigned: a) The thing insured (See Sec. 20); b) The policy itself (See Sec. 58); c) The claim itself (See Sec. 83). 1. CHANGE OF INTEREST GENERAL RULE A change of interest in any part of the thing insured, unaccompanied by a corresponding change of interest in the insurance, SUSPENDS the insurance to an equivalent extent, until the interest in the thing and the interest in the insurance are vested in the same person (Sec. 20). EXCEPTIONS a. In cases of life, accident, and health insurance (Sec. 20). Reason: They are not regarded as contracts of indemnity and therefore, insurable interest need exist only at the time the insurance is effected. b. Change of interest in the thing insured after occurrence of an injury which results in a loss (Sec. 21). Reason: After the loss has happened, the liability of the insurer becomes fixed. Therefore, the insured has the right to assign his claim against the insurer as any other money claim. c. Change in interest in one or more of several distinct things separately insured by one policy (Sec. 22). Reason: The contract is divisible.
OPEN OR LOSS PAYABLE MORTGAGE CLAUSE

Acts of the mortgagor affect the mortgagee. Reason: Mortgagor does not cease to be a party to the contract (Secs. 8 and 9).
Effects of Loss Payable Clause: 1. The contract is deemed to be upon the interest of the mortgagor; hence, he does not cease to be a party to the contract; 2. Any act of the mortgagor prior to the loss, which would otherwise avoid the insurance affects the mortgagee even if the property is in the hands of the mortgagee; 3. Any act, which under the contract of insurance is to be performed by the mortgagor, may be performed by the mortgagee with the same effect; 4. In case of loss, the mortgagee is entitled to the proceeds to the extent of his credit; 5. Upon recovery by the mortgagee to the extent of his credit, the debt is extinguished.
58 Insurance d. Change of interest, by will or succession, on the death of the insured (Sec. 23). Reason: Art. 1311 of the Civil Code (Relativity of Contracts) Whoever takes the property of the decedent will automatically become the owner of the policy. e. Transfer of interest by one of several partners, joint owners, or owners in common, who are jointly insured, to others (Sec. 24). Reason: No new party was introduced into the co-ownership. It is the alienation to a stranger that will suspend the policy. f. When a policy is so framed that it will inure to the benefit of whomsoever, during the continuance of the risk, may become the owner of the interest insured (Sec. 57). Reason: Art. 1306 of the Civil Code (Autonomy of Contracts) g. When there is a prohibition against alienation or change of interest without the consent of the insurer, in which case, the policy is not merely suspended but avoided. Reason: Art. 1306 of the Civil Code (Autonomy of Contracts) 2. TRANSFER OF POLICY In LIFE Insurance the policy may be transferred without the consent of the insurer (Sec. 181). Reason: The policy does not represent a personal agreement between the insured and the insurer. EXCEPTION: When notice to an insurer of a transfer is expressly required in the policy (Sec. 182). In PROPERTY Insurance the policy may NOT be transferred without the consent of the insurer. Reason: The insurer approved the policy based on the personal qualification and the insurable interest of the insured. Effect of Transfer without Consent: The insurance policy will be suspended and will not be avoided until the interest in the thing and the interest in the insurance are vested in the same person. In CASUALTY Insurance the policy may NOT be transferred without the consent of the insurer.
Reason: The moral hazards are as great as those of property insurance. 3. TRANSFER OF CLAIM Claim of insured after loss is transferable, and any stipulation to the contrary is void. Reasons: 1. agreement hinders free transmission of property; 2. transfer does not involve a personal contract, but a money claim or right of action; 3. transfer involves no moral hazard. VOID STIPULATIONS IN AN INSURANCE CONTRACT: 1. Payment of loss, whether the person insured has or not any insurable interest in the subject-matter of insurance; 2. The policy shall be received as proof of such interest; 3. Every policy executed by way of gaming or wagering is void (Sec. 25). As to whether a person has or has no insurable interest in property, cannot be vested by mere agreement or stipulation of the parties. It is contrary to law and public policy because it becomes a wagering contract.
DEVICES USED FOR ASCERTAINING AND CONTROLLING RISK AND LOSS

FOUR PRIMARY CONCERNS OF THE INSURER 1. Correct estimation of risk which enables insurer to determine if he will approve the policy application and if so at what premium rate; 2. Determination of the risk; 3. Control of risk to guard against increase of risk; 4. Determine if loss occurs and if so the amount thereof. DEVICES USED FOR ASCERTAINING AND CONTROLLING RISKS AND LOSS (C2REW) 1. CONCEALMENT neglect to communicate that which a party knows and ought to communicate (Sec. 26).
2. REPRESENTATION an oral or written statement of a fact or condition affecting the risk made by the insured to the insurance company, tending to induce the insurer to assume the risk. 3. WARRANTIES statements or promises by the insured set forth in the policy itself

or incorporated in it by proper reference, the untruth or non-fulfilment of which in any respect, and without reference to whether the insurer was in fact prejudiced by such untruth or non-fulfilment render the policy voidable by the insurer. The same may be expressed, implied, affirmative or promissory. 4. EXCEPTION Exceptions make more definite the coverage indicated by the general description of the risk by excluding certain specified risks that otherwise would be included under the general language describing the risks assumed. 5. CONDITION The insurer must also protect himself against fraudulent claims of loss and this he attempts to do by inserting in the policy various conditions which make the form of either conditions precedent or subsequent. CONCEALMENT Requisites: 1. A party knows a fact (a material fact) which he neglects to communicate or disclose to the other party; 2. Such party concealing is duty bound to disclose such fact to the other; 3. Such party concealing makes no warranty as to the fact concealed; and 4. The other party has no means of ascertaining the fact concealed. Test of Materiality: Determined not by the event, but solely by the probable and reasonable influence of the facts upon the party to whom the communication is due, in forming his estimate of the advantages of the proposed contract, or in making his inquiries (Sec. 31). Distinguished from Materiality in Marine Insurance: Rules on concealment are stricter since the insurer would have to depend almost entirely on the matters communicated by the insured. Thus, in addition to material facts, each party must disclose ALL the information he possesses which are material to the information of the belief or expectation of a third person, in reference to a material fact. BUT a concealment in a marine insurance in any of the following matters enumerated under Sec. 110, ICP does NOT vitiate the entire contract, but merely exonerates the insurer from a loss resulting from the risk concealed.
59 2008 CENTRALIZED BAR OPERATIONS Effect of Concealment: a) If there is concealment under Sec. 27, the remedy of the insurer is rescission. b) The party claiming the existence of concealment must prove that there was knowledge of the fact concealed on the part of the party charged with concealment. c) Good faith is not a defense in concealment. Concealment, whether intentional or unintentional entitles the injured party to rescind the contract of insurance (Sec. 27). d) The matter concealed need not be the cause of loss. e) To be guilty of concealment, a party must have knowledge of the fact concealed at the time of the effectivity of the policy. f) Failure to communicate information acquired AFTER the effectivity of the policy will NOT be a ground to rescind the contract. Reason: Information is no longer material as it will no longer influence the other party to enter into such contract. Matters that need not be disclosed Neither party to a contract of insurance is bound to communicate information of matters following, EXCEPT in answer to inquiries of the other: (WOKEE) 1. Those which the other knows; 2. Those which, in the exercise of ordinary care, the other ought to know and of which, the former has no reason to suppose him ignorant; 3. Those of which the other waives communication; 4. Those which prove or tend to prove the existence of a risk excluded by a warranty, and which are not otherwise material; 5. Those which relate to a risk excepted from the policy and which are not otherwise material. Note: Neither party is bound to communicate, even upon inquiry, information of his own judgment. The parties are bound to know all the general causes which are open to his inquiry, equally with the other, and all general usages of trade. The right to information of material facts may be WAIVED: 1. by the terms of the contract; 2. by failure to make an inquiry as to such facts, where they are distinctly implied in other facts
60 Insurance from which communicated. information is
5. Refers to the date the contract goes into effect. CONCEALMEN T

The insured withholds information of material facts from the insurer
Matters that must be disclosed even in the absence of inquiry: (M-No means-No war) 1. Those material to the contract (Secs. 31, 34, 35); 2. Those which the other has no means of ascertaining (Sec. 30, 32, 33); 3. Those as to which the party with the duty to communicate makes no warranty (Secs. 67-76). REPRESENTATIONS Kinds of Representation: 1. Affirmative an affirmation of fact existing when the contract begins; 2. Promissory statement by the insured concerning what is to happen during the term of the insurance. Requisites of a false representation (misrepresentation): 1. The insured stated a fact which is untrue. 2. Such fact was stated with knowledge that it is untrue and with intent to deceive or which he states positively as true without knowing it to be true and which has a tendency to mislead. 3. Such fact in either case is material to the risk. Test of materiality concealment (Sec. 31). the same as
MISREPRESENTATION
The insured makes erroneous statements of facts with the intent of inducing the insurer to enter into the insurance contract Materiality
Act involved
Same rules apply to determine materiality Effect Same effect and gives the insurer the right to rescind the contract, whether the concealment or misrepresentation be intentional or not
WARRANTIES Purpose: To eliminate potentially increasing hazards which may either be due to the acts of the insured or to the change of the condition of the property. Basis: The insurer took into consideration the condition of the property at the time of effectivity of the policy. Kinds: 1. Express an agreement expressed in a policy whereby the insured stipulates that certain facts relating to the risk are or shall be true, or certain acts relating to the same subject have been or shall be done. 2. Implied - it is deemed included in the contract although not expressly mentioned. Example: In marine insurance, seaworthiness of the vessel. Effects of breach of warranty: 1. MATERIAL GENERAL RULE Violation of material warranty or of a material provision of a policy will entitle the other party to rescind the contract (Sec. 74). EXCEPTIONS a) Loss occurs before the time of performance of the warranty; b) The performance becomes unlawful at the place of the contract; and c) Performance becomes impossible (Sec. 73). 2. clause) IMMATERIAL (ex. Other insurance
Effect of Misrepresentation: 1. The injured party entitled to rescind from the TIME when the representation becomes false (Sec. 45). 2. When the insurer accepted the payment of premium with the knowledge of the ground for rescission, there is a waiver of such right. 3. There is no waiver of the right of rescission if the insurer had no knowledge of the ground therefor at the time of acceptance of premium payment (Stokes vs. Malayan Insurance Co., Inc. GR No. L-34768, February 24, 1984). Characteristics: 1. Not a part of the contract but merely a collateral inducement to it; 2. Oral or written; 3. Made at the time of, or before issuing the policy and not after; 4. Altered or withdrawn before the insurance is effected but not afterwards;

GENERAL RULE It will not avoid the policy. EXCEPTION: When the policy expressly provides or declares that a violation thereof will avoid it (Sec. 75). WARRANTY
Part of the contract Form Written on the policy, actually or by reference May be written in the policy or may be oral. Must be proved to be material Requires only substantial truth and compliance Falsity renders the policy void on the ground of fraud
61 2008 CENTRALIZED BAR OPERATIONS the general description of the risk by excluding certain specified risks that otherwise would be included under the general language describing the risk assumed. An insurer seeking to defeat a claim because of an exception or limitation in the policy has the burden of proving that the loss comes within the purview of the exception or limitation. If a proof is made of a loss apparently within a contract of insurance, the burden is upon the insurer to prove that the loss arose from a cause of loss which is excepted or for which it is not liable, or from a cause which limits its liability (DBP Pool of Accredited Insurance Companies v. Mindanao Network, G.R. No. 147039, January 27, 2006). RESCISSION OF CONTRACT OF INSURANCE Grounds (FAB-BreC): 1. Concealment; 2. False representation; 3. Breach of material warranty; 4. Breach of a condition subsequent; 5. Alteration of the thing insured. IN NON-LIFE POLICY: The insurer must exercise the right to rescind the contract BEFORE the insured has filed an action to collect the amount of insurance. A defense to an action to recover insurance that the policy was obtained through false representation, fraud and deceit is NOT in the nature of an action to rescind and therefore not barred by the provision. There is no limit for interposing this defense. IN LIFE POLICY: The defenses mentioned are available only during the first two years of a life insurance policy, provided that after a policy of insurance made payable on the death of the insured shall have been in force during the lifetime of the insured for a period of 2 years from the date of its issue or its last reinstatement, the insurer cannot prove that the policy is void ab initio or is rescindable by the reason of fraudulent concealment or misrepresentation of the insured or his agent (Sec. 48) (INCONTESTABILITY CLAUSE). Purpose of Incontestability Clause To assure that after the specified period, the policy owner may rely upon the insurance company to carry out the terms of the contract, regardless of irregularities in connection with the application which may later be discovered.
REPRESENTATION
Nature Mere collateral inducement
Materiality Presumed material
Compliance Must be strictly complied with
Effect of falsity/ non-fulfilment Falsity or non-fulfilment operates as a breach of contract
CONDITIONS Effects of Breach: 1. CONDITION PRECEDENT prevents the accrual of cause of action. 2. CONDITION SUBSEQUENT avoids the policy or entitles the insurer to rescind The insurer may also protect himself against fraudulent claims of loss by inserting in the policy various conditions which take the form of conditions precedent. For instance, there are conditions requiring immediate notice of loss or injury and detailed proofs of loss within a limited period. CONDITION
Effects Limitation to the attachment of the risk Non-performance of which, although in form executed by the parties and delivered, does not spring into life Does not have that effect Does not suspend or defeat the operation of the contract
WARRANTY
The occurrence of breach temporarily renders the entire contract voidable.
EXCEPTIONS Provisions that may specify excepted perils. It makes more definite the coverage indicated by
62 Insurance
Requisites (2-LiP): 1. It must be a Life insurance policy; 2. It must be Payable on the death of the insured; and 3. It must be in force during the lifetime of the insured for at least 2 years from its date of issue or of its last reinstatement. The period of two years may be shortened but it cannot be extended by stipulation. Defenses not barred by incontestability clause (FELT-Vicious-PMs): 1. That the person taking the insurance lacked insurable interest as required by law; 2. That the cause of the death of the insured is an excepted risk; 3. That the premiums have not been paid; 4. That the conditions of the policy relating to military or naval service have been violated; 5. That the fraud is of a particular vicious type; 6. That the beneficiary failed to furnish proof of death or to comply with any conditions imposed by the policy after the loss has happened; 7. That the action was not brought within the time specified.
Contents of Policy (R2AP2ID): 1. Parties; 2. Amount of insurance, except in open or running policies; 3. Rate of premium; 4. Property or the life insured; 5. Interest of the insured in the property if he is NOT the absolute owner; BUT if he is the absolute owner, information of the nature or amount of his interest need not be communicated unless in answer to an inquiry (Sec. 34). 6. Risk insured against; 7. Duration of the insurance. RIDER An attachment to an insurance policy that modifies the conditions of the policy expanding or restricting its benefits or excluding certain conditions from the coverage. Counter-signature of the insured on a rider, endorsement, clause, or warranty If the rider, endorsement, clause or warranty was issued SIMULTANEOUSLY with the policy, the counter-signature of the insured is NOT necessary. However, the descriptive title or name of the rider must be written on the blank spaces provided in the policy. The rider, endorsement, clause, or warranty was issued AFTER the issuance of the policy: If the insured applied for the rider, endorsement, clause, or warranty, his counter-signature is NOT necessary. If the same is not applied for by the insured, riders and the like shall be countersigned by the insured or owner. Note: When the requirements for a rider are complied with, it is considered as part of the policy. BINDING RECEIPT A mere acknowledgment on behalf of the company that its branch office had received from the applicant the insurance premium and had accepted the application subject to processing by the head office. COVER NOTE (AD INTERIM) A concise and temporary written contract issued by the insurer through its duly authorized agent embodying the principal terms of an expected policy of insurance. Purpose: It is intended to give temporary insurance protection coverage to the applicant pending the acceptance or rejection of his application.
THE POLICY
POLICY OF INSURANCE The written instrument in which a contract of insurance is set forth (Sec. 49). It is not necessary for the perfection of the contract. Note: An insurance contract may be verbal or in writing, or partly in writing and partly verbal. However, the law provides that no policy of insurance shall be issued or delivered unless in the form previously approved by the Insurance Commission (Sec. 226). The approval of the Insurance Commissioner may be dispensed with upon the certification of the president, vice-president, or general manager of the insurance company concerned that the risk involved, the values of such risks and/ or the premiums therefor has not yet been determined or established, or such extension or renewal is not contrary to and is not for the purpose of violating any provisions of the Insurance Code, or of any rulings, instructions, or circulars of the Insurance Commissioner (Ins. Memo Cir. No. 3-75, dated September 29, 1975, effective Oct. 21, 1976).
63 2008 CENTRALIZED BAR OPERATIONS it is revoked by the contracting parties (Coquia v. Fieldmens Ins. Co., et al, GR No. L-23276, November 29, 1968). 2. A third person has no right in law or equity to the proceeds of an insurance unless there is a contract or trust, express or implied, between the insured and third person (Bonifacio Bros., Inc. v. Mora, GR No. L-20853, May 29, 1967). 3. Where the contract insurance provides for indemnity against liability to third persons, then third persons, to whom the insured is liable, can sue the insurer (Guingon v. del Monte, et al., GR No. L-21806, 20 SCRA 1043, August 17, 1967). INSURANCE PROCURED BY AN AGENT The insurance inures to the benefit of the principal. Requisites: 1. agent must be authorized; 2. must act within the scope of his authority; 3. must disclose his principal; 4. indicate by appropriate words that he is acting in a representative capacity. TEST TO DETERMINE WHETHER A THIRD PERSON MAY DIRECTLY SUE THE INSURER OF THE WRONGDOER Where the contract provides for indemnity against liability to third persons, then the latter to whom the insured is liable, can directly sue the insurer. On the other hand, where the insurance is for indemnity against actual loss or payment , then third persons cannot proceed against the insurer, the contract being solely to reimburse the insured for liability actually discharged by him through payment to third persons, said third persons recourse being, thus limited to the insured alone (Guingon v. Del Monte, Ibid). CANCELLATION OF NON-LIFE POLICY Requisites (WANG): 1. prior notice of cancellation to the insured; 2. notice must be based on the occurrence after the effective date of the policy of one or more of the grounds mentioned; 3. notice must be in writing, mailed or delivered to the insured at the address shown in the policy; 4. notice must state the grounds relied upon provided in Section 64 of the Insurance Code and upon request of the insured to furnish facts on which cancellation is made. Grounds (VP- FrANC):
Rules on Cover Notes: a. The cover note is valid for 60 days, after which the policy must be issued. b. The period may be extended or renewed beyond 60 days with the written approval of the Commissioner if he determines that such extension is not contrary to and is not for the purpose of violating any provisions of the Code. c. No separate premiums are intended or required to be paid on a cover note because cover notes do not contain particulars of the property insured that would serve as basis for the computation of premiums. Thus, no premium could be fixed and paid on the cover note. Cover notes should not be treated as separate policies but should be integrated to the regular policies subsequently issued so that the premiums on the regular policies include the consideration for the cover notes (Pacific Timber Export Corporation vs. Court of Appeals, GR No. L-38613, 112 SCRA 199, February 25, 1982). KINDS OF POLICY: 1. OPEN POLICY one in which the value of the thing insured is not agreed upon, but is left to be ascertained in case of loss (Sec. 60). 2. VALUED POLICY one which expresses on its face agreement that the thing insured shall be valued at a specified sum (Sec. 61). RUNNING POLICY one which contemplates successive insurances and which provides that the object of the policy may be from time to time defined, especially as to the subjects of insurance, by additional statements or endorsements (Sec. 62).
3.
GENERAL RULE The insurance proceeds shall be applied exclusively to the proper interest of the person in whose name or for whose benefit it is made. A third person may not sue the insurer directly. EXCEPTION If the insurance contract was intended to benefit third persons (Art. 1311, Civil Code), the latter may directly claim from the insurer. Thus, 1. If the insurance contract contain some stipulation in favor of a third person (stipulation pour autrui), the latter although not a party to the contract may enforce the stipulation in his favour before
64 Insurance 1. non-payment of premiums; 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. determination by the Insurance Commissioner that the policy would violate the Insurance Code.
binding effect of the policy. As far as the payment of the premium itself is concerned, the acknowledgment is only a prima facie evidence of the fact of such payment. The insurer may still dispute its acknowledgment but only for the purpose of receiving the premium due and unpaid (The Insurance Code of the Philippines Annotated, De Leon, H., 2006ed). Effect of acceptance of premium: Acceptance of premium within the stipulated period for payment thereof, including the agreed grace period, merely assures continued effectivity of the insurance policy in accordance with its terms. Where an insurer authorizes an insurance agent or broker to deliver a policy to the insured, it is deemed to have authorized said agent to receive the premium in its behalf. The insurer is bound by its agents acknowledgment of the receipt of payment of premium. Payment of the premium by post-dated check. Delivery of a promissory note or a check will not be sufficient to make the policy binding until the said note or check has been converted into cash. This is consistent with Article 1249 of the Civil Code. NOTE: Payment by means of a check or note, accepted by the insurer, bearing a date PRIOR to the loss, assuming availability of the funds thereof, would be sufficient even if it remains unencashed at the time of the loss. The subsequent effects of encashment would retroact to the date of the instrument and its acceptance by the creditor (Pandect of Commercial Law and Jurisprudence, Vitug, 2006ed). Entitlement of insured to return of premiums paid: 1. WHOLE a. If the thing insured was never exposed to the risks insured against (Sec. 79); b. If contract is voidable due to fraud or misrepresentation of the insurer or his agents (Sec. 81); c. If contract is voidable because of the existence of facts of which the insured was ignorant without his fault (Sec. 81); d. When by any default of the insured other than actual fraud, the insurer never incurred liability (Sec. 81); and
PREMIUM
GENERAL RULE CASH AND CARRY RULE - No insurance policy issued or renewal is valid and binding until actual payment of the premium. Any agreement to the contrary is void (Sec. 77). EXCEPTIONS (LACIE) 1. In case of life and industrial life whenever the grace period provision applies (Sec. 77). 2. Where there is an acknowledgment in the contract or policy of insurance that the premium had already been paid (Sec. 78). 3. If the parties have agreed to the payment of the premium in installments and partial payment has been made at the time of the loss (Makati Tuscany Condominium v. Court of Appeals, GR No. 95546, November 6, 1992). 4. Where a credit term was agreed upon (UCPB General Insurance, Inc. v. Masagana Telemart, GR No. 13717, April 4, 2001). 5. Where the parties are barred by estoppel. Note: Sec. 77 merely precludes the parties from stipulating that the policy is valid even if the premiums are not paid (Makati Tuscany Condominium Corp. vs. CA, GR No. 95546, November 6, 1992). Effect of Acknowledgment of Receipt of Premium in Policy: Conclusive evidence of its payment, in so far as to make the policy binding, notwithstanding any stipulation therein that it shall not be binding until the premium is actually paid (Sec. 78). Reason: When the policy contains such written acknowledgement, it is presumed that the insurer has waived the condition of prepayment. It hereby creates a legal fiction of payment. Note: The conclusive presumption extends only to the question on the

e. When rescission is granted due to the insurers breach of contract (Sec. 74). 2. PRO RATA a. When the insurance is for a definite period and the insured surrenders his policy before the termination thereof; Exceptions: 1. policy not made for a definite period of time; 2. short period rate is agreed upon; 3. life insurance policy b. When there is over-insurance 1. In case of over-insurance by double insurance, the insurer is not liable for the total amount of the insurance taken, his liability being limited to the property insured. Hence, the insurer is not entitled to that portion of the premium corresponding to the excess of the insurance over the insurable interest of the insured. 2. In case of over-insurance by several insurers, the insured is entitled to a ratable return of the premium, proportioned to the amount by which the aggregate sum insured in all the policies exceeds the insurable value of the thing at risk (Sec. 82). DEVICES USED TO PREVENT THE FORFEITURE OF A LIFE INSURANCE AFTER THE PAYMENT OF THE FIRST PREMIUM: 1. GRACE PERIOD after the payment of the first premium, the insured is entitled to a grace period of thirty days within which to pay the succeeding premiums. 2. CASH SURRENDER VALUE the amount the insurer agrees to pay to the holder of the policy if he surrenders it and releases his claim upon it. 3. EXTENDED INSURANCE where the insurance originally contracted for is continued for such period as the amount available therefor will pay when it will terminate. In such a case, the insurance will be for the same amount as the original policy but for a period shorter than the period in the original contract. 4. PAID UP INSURANCE no more payments are required, and consists of insurance for life in such an amount as the sum available therefor, considered as a single and final premium, will purchase. It results to a reduction of the original
65 2008 CENTRALIZED BAR OPERATIONS amount of insurance, but for the same period originally stipulated. 5. AUTOMATIC LOAN CLAUSE a stipulation in the policy providing that upon default in payment of premium, the same shall be paid from the loan value of the policy until that value is consumed. In such a case, the policy is continued in force as fully and effectively as though the premiums had been paid by the insured from funds derived from other sources. 6. REINSTATEMENT provision that the holder of the policy shall be entitled to reinstatement of the contract at any time within three years from the date of default in the payment of premium, unless the cash surrender value has been paid, or the extension period expired, upon production of evidence of insurability satisfactory to the company and the payment of all overdue premiums and any indebtedness to the company upon said policy (Reviewer on Insurance, Insolvency and Code of Commerce, Perez H., 2000ed).
DOUBLE INSURANCE
Double insurance exists where the same person is insured by several insurers separately, in respect to the same subject and interest (Sec. 93). Requisites (2- same IRIS): 1. same insured person; 2. same subject matter; 3. same interest insured; 4. same risk or peril insured against; and 5. 2 or more insurers insuring separately. OVER-INSURANCE Exists when the insured insures the same property for an amount GREATER than the value of that property. Effect in case of loss: 1. The insurer is bound only to pay the extent of the real value of the property lost; 2. The insured is entitled to recover the amount of premium corresponding to the excess in value of the property. EFFECTS OF OVER INSURANCE BY DOUBLE INSURANCE (Sec. 94) 1. The insured, unless the policy otherwise provides, may claim payment from the insurers in such order as he may select, up to the amount for which the insurers
66 Insurance are severally liable under their respective contracts; Where the policy under which the insured claims is a valued policy, the insured must give credit as against the valuation for any sum received by him under any other policy without regard to the actual value of the subject matter insured; Where the policy under which the insured claims is an unvalued policy, he must give credit, as against the full insurable value, for any sum received by him under any policy; Where the insured receives any sum in excess of the valuation in the case of valued policies, or of the insurable value in the case of unvalued policies, he must hold such sum in trust for the insurers, according to their right of contribution among themselves; Each insurer is bound, as between himself and the other insurers, to contribute ratably to the loss in proportion to the amount for which he is liable under his contract. Under the Principle of Contribution or Contribution Clause it is required that each insurer contribute ratably to the loss or damage considering that the several insurances cover the same subject matter and interest against the same peril.
one insurer involved
insurers
2.
3.
REINSURANCE A contract by which the insurer procures a third person to insure him against loss or liability by reason of an original insurance (Sec. 95) also known as Reinsurance Cession. In every reinsurance, the original contract of insurance and the contract of reinsurance are covered by separate policies. LIMIT OF SINGLE RISK No insurance company other than life, shall retain any risk on any one subject of insurance in an amount exceeding 20% of its net worth (Sec. 215). DOUBLE INSURANCE
Involves the same interest Subject Subject of insurance is property Subject of insurance is the original insurers risk Insurer becomes the insured in relation to reinsurer Insured Insured is the party in interest in the 2 contracts Original insured has no interest in the reinsurance contract (Sec. 98) Insureds consent not necessary
4.
5.
REINSURANCE
Interest Involves different interest
Insurer Insurer remains in such capacity
ADDITIONAL OR OTHER INSURANCE CLAUSE A condition in the policy requiring the insured to inform the insurer of any other insurance coverage of the property insured. It is lawful and specifically allowed under Sec. 75 which provides that (a) policy may declare that a violation of a specified provision thereof shall avoid it, otherwise the breach of an immaterial provision does not avoid it. Purposes: 1. To prevent an increase in the moral hazard; and 2. To prevent over-insurance and fraud. OVER-INSURANCE
When the amount of the insurance is beyond the value of the insureds insurable interest
Insureds consent Insured has to give his consent
DOUBLE INSURANCE
There may be no overinsurance as when the sum total of the amounts of the policies issued does not exceed the insurable interest of the insured There are always several
Amount of insurance
Number of insurers There may only be
Other Terms: 1. Reinsurance treaty Merely an agreement between two insurance companies whereby one agrees to cede and the other to accept reinsurance business pursuant to provisions specified in the treaty. 2. Automatic reinsurance The reinsured is bound to cede and the reinsurer is obligated to accept a fixed share of the risk which has to be reinsured under the contract. 3. Facultative reinsurance There is no obligation to cede or accept participation in the risk each party having a free choice. But once the share is accepted, the obligation is absolute and the liability thereunder can be discharged only by

payment (Equitable Ins. & Casualty Co. vs. Rural Ins. & Surety Co., Inc., GR No. L-17436, 4 SCRA 343, January 31, 1962). 4. Retrocession A transaction whereby the reinsurer, in turn, passes to another insurer a portion of the risk reinsured. It is really the reinsurance of reinsurance (The Insurance Code of the Philippines Annotated, Hector de Leon, 2002ed).
67 2008 CENTRALIZED BAR OPERATIONS and without which the event would not have occurred. NOTICE OF LOSS Purposes: 1. To give the insurer information by which he may determine the extent of his liability; 2. To afford the insurer a means of detecting any fraud that may have been practiced upon him; 3. To operate as a check upon extravagant claims. In fire insurance
Required
LOSS
LOSS IN INSURANCE The injury, damage or liability sustained by the insured in consequence of the happening of one or more of the perils against which the insurer, in consideration of the premium, has undertaken to indemnify the insured. It may be total, partial, or constructive. LOSS IS SATISFIED BY (RPR) a) Payment of loss; b) Reinstatement (repair or restoration) of the property lost or damaged; c) Replacement (substitution) with another or similar property. WHEN INSURER IS LIABLE FOR LOSS 1. Loss the proximate cause of which is the peril insured against (Sec. 84); 2. Loss the immediate cause of which is the peril insured against except where the proximate cause is an excepted peril (Sec. 86); 3. Loss through the negligence of the insured except where there was gross negligence amounting to willful act (Sec. 87); 4. Loss caused by efforts to rescue the thing insured from a peril insured against (Sec. 85); 5. Loss caused by a peril NOT insured against to which the thing insured was exposed in the course of rescuing the same from the peril insured against (Sec. 85). WHEN THE INSURER IS NOT LIABLE 1. Loss by the insureds willful act or gross negligence; 2. Loss due to the connivance of the insured (Sec. 87); and 3. Loss where the excepted peril is the proximate cause. PROXIMATE CAUSE That which in a natural and continuous sequence, unbroken by any new independent cause, produces an event
In other types of insurance

Not required Failure to give notice will not exonerate the insurer, unless there is a stipulation in the policy requiring the insured to do so.
Effect of failure to furnish Failure to give notice will defeat the right of the insured to recover.
Defects in the notice or proof of loss are waived when the insurer: 1. Writes to the insured that he considers the policy null and void as the furnishing of notice or proof of loss would be useless; 2. Recognizes his liability to pay the claim; 3. Denies all liability under the policy; 4. Joins in the proceedings for determining the amount of the loss by arbitration, making no objections on account of notice and preliminary proof; or 5. Makes objection on any ground other than formal defect in the preliminary proof. CLAIMS SETTLEMENT The indemnification of the loss of the insured. In case of an unreasonable delay/denial in the payment of the insureds claim by the insurer, the insured can recover: i. attorneys fees; ii. expenses incurred by reason of the unreasonable withholding; iii. interest at double the legal interest rate fixed by the Monetary Board; and iv. amount of the claim (Zenith Insurance Corp. vs. CA, GR No. 85296, 185 SCRA 398, May 14, 1990; Sec. 244). TIME FOR PAYMENT OF CLAIMS
68 Insurance LIFE POLICIES

a. Maturing upon the expiration of the term The proceeds are immediately payable to the insured, except if proceeds are payable in installments or annuities, which shall be paid as they become due. b. Maturing at the death of the insured, occurring prior to the expiration of the term stipulated The proceeds are payable to the beneficiaries within 60 days after: presentation of claim and filing of proof of death (Sec. 242).
NON-LIFE POLICIES
The proceeds shall be paid within 30 days after the receipt by the insurer of proof of loss, and ascertainment of the loss or damage by agreement of the parties or by arbitration but not later than 90 days from such receipt of proof of loss, whether or not ascertainment is had or made (Sec. 243).
EFFECT OF REFUSAL OR FAILURE TO PAY THE CLAIM WITHIN THE TIME PRESCRIBED Sections 242, 243 and 244 of the Insurance Code provide that the insurer shall be liable to pay interest twice the ceiling prescribed by the Monetary Board which means twice 12% per annum (legal rate of interest prescribed in CB No. 416) or 24% per annum interest on the proceeds of the insurance from the date following the time prescribed in Secs. 242 or 243, until the claim is fully satisfied (Prudential Guarantee and Assurance, Inc v. Trans-Asia Shipping Lines, Inc. GR No. 151890, June 20, 2006). EXCEPTION Refusal or failure to pay the loss or damage will entitle the assured to collect interest UNLESS such refusal or failure to pay is based on the ground that the claim is fraudulent (Ibid; Secs. 242, 243).
a. The stipulated prescriptive period shall begin to run from the date of the insurers rejection of the claim filed by the insured or beneficiary and not from the time of the loss. b. In case the claim was denied by the insurer but the insured filed a petition for reconsideration, the prescriptive period should be counted from the date the claim was denied at the first instance and not from the denial of the reconsideration (Sun Life Office, Ltd. v. Court of Appeals, GR No. 89741, 195 SCRA 193, March 13, 1991). 2. If there is no stipulation or the stipulation is void, the insured may bring the action within the prescriptive period provided for in the Civil Code, which is 10 years in case the contract is written. 3. In CMVLI, the written notice of claim must be filed within 6 months from the date of the accident; otherwise, the claim is deemed waived even if the same is brought within one year from its rejection (Vda. De Gabriel vs. CA, GR No. 103883, 264 SCRA 137, November 14, 1996). 4. The suit for damages, either with the proper court or with the Insurance Commissioner, should be filed within 1 year from the date of the denial of the claim by the insurer; otherwise, claimants right of action shall prescribe (Sec. 384).
SPECIAL KINDS OF INSURANCE

MARINE INSURANCE
Insurance against risks connected with navigation, to which a ship, cargo, freightage, profits or other insurable interest in movable property, may be exposed during a certain voyage or a fixed period of time (Sec. 99). Coverage: 1. Insurance against loss or damage to: a. Vessels, goods, freight, cargo, merchandise, profits, money, valuable papers, bottomry and respondentia, and interest in respect to all risks or perils of navigation; b. Persons or property in connection with marine insurance;
PRESCRIPTIVE PERIOD (Secs. 63 & 384)

RULES 1. The parties to a contract of insurance may validly agree that an action on the policy should be brought within a limited period of time, provided such period is NOT less than 1 year from the time the cause of action accrues. If the period agreed upon is less than 1 year from the time the cause of action accrues, such agreement is void. (Sec. 63)

c. Precious stones, jewels, jewelry and precious metals whether in the course of transportation or otherwise; and Bridges, tunnels, piers, docks and other aids to navigation and transportation (Sec. 99). Cargo can be the subject of marine insurance, and once it is entered into, the implied warranty of seaworthiness immediately attaches to whoever is insuring the cargo, whether he be the shipowner or not (Roque vs. IAC, GR No. L66935, November 11, 1985). 2. Marine Protection Insurance and Indemnity
69 2008 CENTRALIZED BAR OPERATIONS d. Floater provides insurance to follow the insured property wherever it may be located, subject always to the territorial limits of the contract.
d.
INSURABLE INTEREST 1. SHIPOWNER a) Over the vessel to the extent of its value, provided that if chartered, the recovery is only up to the amount not recoverable from the charterer. b) He also has an insurable interest on expected freightage (Sec. 103). c) No insurable interest if he will be compensated by charterer for the value of the vessel, in case of loss. 2. CARGO OWNER Over the cargo and expected profits (Sec. 105). 3. CHARTERER Over the amount he is liable to the shipowner, if the ship is lost or damaged during the voyage (Sec. 106). 4. OWNER/ DEBTOR (where the vessel or cargo is hypothecated by bottomry or respondentia) Difference between the value of vessel or goods and the amount of loan (Sec. 101). In loans on bottomry and respondentia, repayment of the loan is subject to the condition that the vessel or goods, respectively, given as a security, shall arrive safely at the port of destination. If a vessel is hypothecated by bottomry, only the excess is insurable, since a loan on bottomry partakes of the nature of an insurance coverage to the extent of the loan accommodation. The same rule would apply to the hypothecation of the cargo by respondentia (Pandect of Commercial Law and Jurisprudence, Vitug, 2006ed). 5. CREDITOR/ LENDER Amount of the loan RISK INSURED AGAINST It is only perils of the sea which may be insured against unless perils of the ship are covered by an all-risk policy.
PERILS OF THE SEA PERILS OF THE SHIP
Measure of Indemnity: 1. Valued policy The parties are bound by the valuation, if the insured had some interest at risk and there is no fraud (Sec. 156). 2. Open policy The following rules shall apply in estimating a loss: a. value of the ship value at the beginning of the risk; b. value of the cargo actual cost when laden on board or market value at the time and place of lading; c. value of freightage gross freightage exclusive of primage; d. cost of insurance in each case, to be added to the estimated value (Sec. 161). Major divisions of transportation insurance: 1. Ocean Marine Insurance Scope: a. ships or hulls b. goods or cargoes c. earnings such as freight d. liability incurred by reason of maritime perils 2. Inland Marine Insurance Classes: a. Property in transit provides protection to property frequently exposed to loss while it is being transported from one location to another. b. Bailee liability insurance for those who have temporary custody of the goods. c. Fixed transportation property they are so insured because they are held to be an essential part of the transportation system such as bridges, tunnels, etc.
70 Insurance
Includes only those casualties due to the: 1. unusual violence; or 2. extraordinary action of wind and wave; or 3. other extraordinary causes connected with navigation. A loss which in the ordinary course of events, results from the: 1. natural and inevitable action of the sea; 2. ordinary wear and tear of the ship; or 3. negligent failure of the ships owner to provide the vessel with proper equipment to convey the cargo under ordinary conditions.
expenses as he may have incurred in his efforts to protect the property against a peril for which the insurer would have been liable (Sec. 163). Note: Such clause constitutes an exception to the principle that an insurance contract is one of indemnity (where the insurer promises to make good only the loss of the insured) since the insurer is liable to pay additional expenses for the protection of the property against an insured peril. Matters, although concealed, will NOT vitiate the contract except when they caused the loss (Sec. 110) 1. National character of the insured; 2. Liability of the thing insured to capture or detention; 3. Liability to seizure from breach of foreign laws of trade; 4. Want of necessary documents; and 5. Use of false or simulated papers. DISTINCTIONS ON CONCEALMENT OTHER PROPERT Y INSURAN CE
The information or belief of a 3rd party is not material and need not be communicated, unless it proceeds from an agent of the insured whose duty is to give information.
SPECIAL MARINE INSURANCE CONTRACTS AND CLAUSES 1. ALL-RISKS POLICY insurance against all causes of conceivable loss or damage. Except: a. as otherwise excluded in the policy; or b. due to fraud or intentional misconduct on the part of the insured (Choa Tiek Seng vs. CA, GR No. 84507, 183 SCRA 223, March 15, 1990). The insured has the initial burden of proving that the cargo was in good condition when the policy attached and that the cargo was damaged when unloaded from the vessel; thereafter, the burden shifts to the insurer to show the exception to the coverage (Filipino Merchants Insurance vs. Court of Appeals, GR No. 85141, 179 SCRA 638, November 28, 1989). 2. BARRATRY CLAUSE A clause which provides that there can be no recovery on the policy in case of any willful misconduct on the part of the master or crew in pursuance of some unlawful or fraudulent purpose without consent of owners, and to the prejudice of the owners interest (Roque vs. IAC, Ibid). 3. INCHAMAREE CLAUSE A clause which makes the insurer liable for loss or damage to the hull or machinery arising from the: a. Negligence of the captain, engineers, etc. b. Explosions, breakage of shafts; and c. Latent defect of machinery or hull (Bar Review Materials in Commercial Law, Jorge Miravite, 2007ed). 4. SUE AND LABOR CLAUSE A clause under which the insurer may become liable to pay the insured, in addition to the loss actually suffered, such
MARINE INSURANCE
Information of 3rd persons The information or the belief or expectation of 3rd persons in reference to a material fact is material and must be communicated.
Effect of concealment
The concealment of any fact in relation to any of the matters stated in Sec. 110 does not vitiate the entire contract but merely exonerates the insurer from a risk resulting from the fact concealed Concealment of any material fact will vitiate the entire contract, whether or not the loss results from the risk concealed.
IMPLIED WARRANTIES 1. Seaworthiness of the ship at the inception of the insurance (Sec. 113); 2. Against improper deviation (Sec. 123, 124, 125); 3. Against illegal venture; 4. Warranty of neutrality: The ship will carry the requisite documents of nationality or

neutrality of the ship or cargo where such nationality or neutrality is expressly warranted (Sec. 120); and 5. Presence of insurable interest. While the payment by the insurer for the insured value of the lost cargo operates as a waiver of the insurers right to enforce the term of the implied warranty against the insured under the marine insurance policy, the same cannot be validly interpreted as an automatic admission of the vessels seaworthiness by the insurer as to foreclose recourse against the common carrier for any liability under the contractual obligation as such common carrier (Delsan Transportation Lines vs. CA, GR No. 127897, 364 SCRA 24, November 15, 2001). SEAWORTHINESS A relative term depending upon the nature of the ship, voyage, service and goods, denoting in general a ships fitness to perform the service and to encounter the ordinary perils of the voyage, contemplated by the parties to the policy (Sec. 114). GENERAL RULE The warranty of seaworthiness is complied with if the ship be seaworthy at the time of the commencement of the risk. Prior or subsequent unseaworthiness is not a breach of the warranty nor is it material that the vessel arrives in safety at the end of her voyage. EXCEPTIONS 1. In the case of a TIME POLICY, the ship must be seaworthy at the commencement of every voyage she may undertake during the period of the coverage. 2. In the case of CARGO POLICY, each vessel upon which the cargo is shipped or transshipped, must be seaworthy at the commencement of each particular voyage. 3. In the case of a VOYAGE POLICY contemplating a voyage in different stages, the ship must be seaworthy at the commencement of each stage of the voyage. Applicability of implied warranty of seaworthiness to cargo owner It becomes the obligation of a cargo owner to look for a reliable common carrier, which keeps its vessels in seaworthy conditions. The shipper may have no control over the vessel but he has control in the choice of the common carrier that will transport his
71 2008 CENTRALIZED BAR OPERATIONS goods (Roque vs. IAC, GR No. L-66935, Ibid). DEVIATION Departure from the course of the voyage insured, or an unreasonable delay in pursuing the voyage, or the commencement of an entirely different voyage (Sec.123). Instances: a. Deviation from the agreed voyage; b. Departure of vessel from the course of the sailing fixed by mercantile usage; c. Departure of vessel from the most natural, direct and advantageous route if not fixed by mercantile usage; d. Unreasonable delay in pursuing voyage; and e. Commencement of an entirely different voyage (Secs. 121-123). Kinds of Deviation: 1. PROPER a. When caused by circumstances outside the control of the ship captain or ship owner; b. When necessary to comply with a warranty or to avoid a peril (real peril); c. When made in good faith to avoid a peril (non-existing/ assumed peril); d. When made in good faith to save human life or to relieve another vessel in distress (Sec. 124). Effect: In case of loss, the insurer is still liable. 2. IMPROPER - Every deviation not specified in Sec. 124 (Sec. 125). Effect: In case of loss or damage subsequent to an improper deviation, the insurer is not liable (Sec. 126).
LOSS I. TOTAL A. ACTUAL i. Total destruction; ii. Irretrievable loss by sinking or by being broken up; iii. Damage rendering the thing valueless to the owner for the purpose for which he held it; or iv. Other event which effectively deprives the owner of the possession, at the port of destination, of the thing insured (Sec. 130). B. CONSTRUCTIVE i. Actual loss of more than of the value of the object;
72 Insurance ii. Damage reducing, by more than , the value of the vessel and of cargo; and iii. Expense of transshipment exceeds of value of cargo (Sec. 131, in relation to Sec. 139). In case of constructive total loss, insured may: 1. Abandon goods or vessel to the insurer and claim for whole insured value (Sec. 139), or 2. Without abandoning vessel, claim for partial actual loss (Sec. 155). II. PARTIAL- that which is not total (Sec. 128). ABANDONMENT Act of the insured by which, after a constructive total loss, he declared the relinquishment to the insurer of his interest in the thing insured (Sec. 138). Requisites for validity (PEN FACT): 1. There must be an actual relinquishment by the person insured of his interest in the thing insured (Sec. 138); 2. There must be a constructive total loss (Sec. 139); 3. The abandonment must be neither partial nor conditional (Sec. 140); 4. It must be made within a reasonable time after receipt of reliable information of the loss (Sec. 141); 5. It must be factual (Sec. 142); 6. It must be made by giving notice thereof to the insurer which may be done orally or in writing (Sec. 143); and 7. The notice of abandonment must be explicit and must specify the particular cause of the abandonment (Sec. 144). Effects: 1. Transfer of Interest It is equivalent to a transfer by the insured of his interest to the insurer with all the chances of recovery and indemnity (Sec.146). 2. Transfer of Agency Acts done in good faith by those who were agents of the insured in respect to the thing insured, subsequent to the loss, are at the risk of the insurer and for his benefit (Sec.148). If an insurer refuses to accept a valid abandonment, he is liable upon an actual total loss, deducting from the amount any proceeds of the thing insured which may have come to the hands of the insured (Sec. 154).
AVERAGE Any extraordinary or accidental expense incurred during the voyage for the preservation of the vessel, cargo, or both, and all damages to the vessel and cargo from the time it is loaded and the voyage commenced until it ends and the cargo unloaded.
GENERAL
Has inured to the common benefit and profit of all persons interested in the vessel and cargo
PARTICULAR
Has not inured to the common benefit and profit of all persons interested in the vessel and her cargo. To be borne alone by the owner of the cargo or the vessel, as the case may be.
To whom inures
By whom borne To be borne equally by all of the interests concerned in the venture.
Requisites Requisites for the right to claim contribution: 1. Common danger to the vessel or cargo; 2. Part of the vessel or cargo was sacrificed deliberately; 3. Sacrifice must be for the common safety or for the benefit of all; 4. Sacrifice must be made by the master or upon his authority; 5. It must be not be caused by any fault of the party asking the contribution; 6. It must be successful, i.e. resulted in the saving of the vessel or cargo; and 7. It must be necessary.
Right of the insured in case of general average GENERAL RULE The insured may either hold the insurer directly liable for the whole of the insured value of the property sacrificed for the general benefit, subrogating him to his own right of contribution, or demand contribution from the other interested parties as soon as the vessel arrives at her destination. The insurer is liable for any general average loss (Sec. 136) where it is payable or has been paid by the insured in consequence of a peril insured against, as fixed in the policy. The insurer shall be liable upon a partial loss, only for such proportion of

the amount insured by him as the loss bears to the value of the whole interest of the insured on the property insured (Sec. 157). The valuation in the policy is conclusive between the parties thereto in the adjustment of either a partial or total loss, if the insured has some interest at risk and there is no fraud on his part (Sec. 156). Except that when a thing has been hypothecated by bottomry or respondentia, before its insurance, and without the knowledge of the person actually procuring the insurance, he may show the real value. But a valuation fraudulent in fact entitles the insurer to rescind the contract (Ibid).
73 2008 CENTRALIZED BAR OPERATIONS 2. Logically, there cannot be co-insurance in life insurance. 3. Co-insurance applies in fire insurance ONLY when expressly stipulated by the parties. CO-INSURANCE
The insured procures insurance at less than the value of the insured property and is deemed to be coninsurer as to the deficiency. In case of loss, the insured & insurer shares the same pro rata.
REINSURANCE
The insurer procures a 3rd person to insure him against loss or liability by reason of such original insurance. In case of loss, the reinsurer will pay the insurer for the risk reinsured (Bar Review Materials in Commercial Law, Jorge Miravite, 2007ed).
FIRE INSURANCE
A contract by which the insurer for a consideration agrees to indemnify the insured against loss of, or damage to, property by hostile fire, including loss by lightning, windstorm, tornado or earthquake and other allied risks, when such risks are covered by extension to fire insurance policies or under separate policies (Sec. 167). Note: The liability of an insurer is to pay for direct loss only. The insurer may be liable to pay for consequential losses if covered by extension to such fire policies or insured under separate policy. Prerequisites to recovery: 1. Notice of loss must be immediately given, unless delay is waived expressly or impliedly by the insurer; and 2. Proof of loss according to best evidence obtainable. Delay may also be waived expressly or impliedly by the insurer. Measure of Indemnity 1. Open policy only the expense necessary to replace the thing lost or injured in the condition it was at the time of the injury 2. Valued policy the parties are bound by the valuation, in the absence of fraud or mistake Note: It is very crucial to determine whether a marine vessel is covered by a marine insurance or fire insurance. The determination is important for 3 reasons:
EXCEPTIONS 1. After the separation of interests liable to contribution; and 2. When the insured has neglected or waived his right to contribution (Sec. 165). FPA Clause (Free From Particular Average) A clause agreed upon in a policy of marine insurance in which it is stated that the insurer shall not be liable for a particular average, and such insurer shall be free therefrom, but he shall continue to be liable for his proportion of all general average losses assessed upon the thing insured (Sec. 136). CO-INSURANCE A marine insurer is liable upon a partial loss, only for such proportion of the amount insured by him as the loss bears to the value of the whole interest of the insured in the property insured (Sec. 157). When the property is insured for less than its value, the insured is considered a co-insurer of the difference between the amount of insurance and the value of the property. Requisites: 1. The loss is partial; 2. The amount of insurance is less than the value of the property insured. Rules: 1. Co-insurance insurance; applies only to marine
74 Insurance 1. Rules on constructive total loss and abandonment applies only to marine insurance; 2. Rule on co-insurance applies primarily to marine insurance; 3. Rule on co-insurance applies to fire insurance ONLY if expressly agreed upon (Commentaries and Jurisprudence on the Commercial Laws of the Philippines Agbayani, 1988ed). Alteration as a special ground for rescission by insurer Requisites: 1. The use or condition of the thing is specifically limited or stipulated in the policy; 2. Such use or condition as limited by the policy is altered; 3. The alteration is made without the consent of the insurer; 4. The alteration is made by means within the control of the insured; 5. The alteration increases the risk (Sec. 168); and 6. There must be a violation of a policy provision (Sec. 170). FALL-OF-BUILDING CLAUSE Clause in a fire insurance policy that if the building or any part thereof falls, except as a result of fire, the policy shall immediately cease. OPTION TO REBUILD CLAUSE Clause giving the insurer the option to reinstate or replace the property damaged or destroyed or any part thereof, instead of paying the amount of the loss or the damage. The insurer, after electing to rebuild, cannot be compelled to perform this undertaking by specific performance because this is an obligation to do, not to give. Remedy: Art. 1167, NCC.
2. Third party liability insurance insurance against specified perils which may give rise to liability on the part of the insured for claims for injuries to or damage to property of others. a. Insurable interest is based on the interest of the insured in the safety of persons, and their property, who may maintain an action against him in case of their injury or destruction, respectively. b. In a third party liability (TPL) insurance contract, the insurer assumes the obligation by paying the injured third party to whom the insured is liable. Prior payment by the insured to the third person is not necessary in order that the obligation may arise. The moment the insured becomes liable to third persons, the insured acquires an interest in the insurance contract which may be garnished like any other credit (Perla Compania de Seguros, Inc vs. Ramolete, GR No. L-60887, 205 SCRA 487, November 13, 1991). c. Aside from compulsory motor vehicle liability insurance, casualty insurance are governed by the general provisions applicable to all types of insurance, and outside of such statutory provisions, the rights and obligations of the parties must be determined by their contract, taking into consideration its purpose and always in accordance with the general principles of insurance law.
CASUALTY OR ACCIDENT INSURANCE

Insurance covering loss or liability arising from accident or mishap, excluding those falling under other types of insurance such as fire or marine (Sec. 174). Classifications: 1. Accident or health insurance insurance against specified perils which may affect the person and/or property of the insured. Examples: personal accident, robbery/theft insurance
d. In burglary, robbery and theft insurance, the opportunity to defraud the insurer the moral hazard is so great that insurer have found it necessary to fill up the policies with many restrictions designed to reduce the hazard. Persons frequently excluded are those in the insureds service and employment. The purpose of the exception is to guard against liability should theft be committed by one having unrestricted access to the property (Fortune Insurance vs. CA, 244 SCRA 208). e. Right of a third party injured to sue the insurer of party at fault depends on whether the contract of insurance is intended to benefit third persons also or only the insured. Tests applied:

1. Indemnity against third party liability injured third party can directly sue the insurer. Purpose: To protect injured person against the insolvency of the insured who causes such injury. 2. Indemnity against actual loss or payment third party has no cause of action against the insurer. The third persons recourse is limited to the insured alone (Sec. 53, Bonifacio Bros. vs. Mora, GR L-20853, May 29, 1967).
75 2008 CENTRALIZED BAR OPERATIONS
LIABILITY INSURANCE (CMVLI)

A species of compulsory insurance that provides for protection coverage that will answer for legal liability for losses and damages for bodily injuries or property damage that may be sustained by another arising from the use and operation of motor vehicle by its owner. Purpose: To give immediate financial assistance to victims of motor vehicle accidents and/ or their dependents, especially if they are poor regardless of the financial capability of motor vehicle owners or operators responsible for the accident sustained (Shafer vs. Judge, RTC, Ibid). Claimants/victims may be a passenger or a 3rd party It applies to all vehicles whether public and private vehicles. Note: It is the only compulsory insurance coverage under the Insurance Code. Methods of coverage: 1. Insurance policy; 2. Surety bond; or 3. Cash deposit PASSENGER Any fare-paying person being transported and conveyed in and by a motor vehicle for transportation of passengers for compensation, including persons expressly authorized by law or by the vehicles operator or his agents to ride without fare (Sec. 373[b]). THIRD PARTY Any person other than the passenger, excluding a member of the household or a member of the family within the second degree of consanguinity or affinity, of a motor vehicle owner or land transportation operator, or his employee in respect of death or bodily injury arising out of and in the course of employment (Sec. 373[c]). NO FAULT CLAUSE Clause that gives the victim (injured person or heirs of the deceased) an option to file a claim for death or injury without the necessity of proving fault or negligence of any kind. Purpose: To guarantee compensation or indemnity to injured persons in motor vehicle accidents. Rules:
Note: The insurer is NOT solidarily liable with the insured. The insurers liability is based on contract; that of the insured is based on torts. Furthermore, the insurers liability is limited by the amount of the insurance coverage (Pan Malayan Insurance Corporation vs. CA, GR No. 77397,184 SCRA 54 April 3, 1990). INTENTIONAL vs. ACCIDENTAL AS USED IN INSURANCE POLICIES Not given any technical meaning and construed in their ordinary and common acceptation. 1. Intentional Implies the exercise of the reasoning faculties, consciousness and volition. Where a provision of the policy excludes intentional injury, it is the intention of the person inflicting the injury that is controlling. If the injuries suffered by the insured clearly resulted from the intentional act of the third person, the insurer is relieved from liability as stipulated (Biagtan vs. the Insular Life Assurance Co. Ltd., GR No. 25579, March 29, 1972). 2. Accidental That which happens by chance or fortuitously, without intention or design, which is unexpected, unusual and unforeseen. NO ACTION CLAUSE Requirement in a policy of liability insurance which provides that suit and final judgment be first obtained against the insured; that only thereafter can the person injured recover on the policy (Guingon vs. Del Monte, GR No. L-21806, 20 SCRA 1043, August 17, 1967). A no action clause must yield to the provisions of the Rules of Court regarding multiplicity of suits (Shafer vs. RTC, GR No. 78848, 167 SCRA 386, November 14, 1988).
COMPULSORY MOTOR VEHICLE
76 Insurance 1. No Fault Indemnity: P15,000.00 for all motor vehicles (Insurance Memorandum Circular No. 4-2006, July 26, 2006). 2. Proofs of loss: a. Police report of accident; b. Death certificate and evidence sufficient to establish proper payee; c. Medical report and evidence of medical or hospital disbursement. 3. Claim may be made against one motor vehicle only; 4. Proper insurer from which to claim a. In case of an occupant: Insurer of the vehicle in which the occupant is riding, mounting or dismounting from; b. In any other case: Insurer of the directly offending vehicle (Sec. 378). 5. In all cases, the right of the party paying the claim to recover against the owner of the vehicle responsible for the accident shall be maintained. Note: The claimant is not free to choose from which insurer he will claim the no fault indemnity as the law makes it mandatory that the claim shall lie against the insurer of the vehicle in which the occupant is riding, mounting or dismounting from. That said vehicle might not be the one that caused the accident is of no moment since the law itself provides that the party paying may recover against the owner of the vehicle responsible for the accident (Perla Compania de Seguros, Inc. vs. Ancheta, GR No. L49699, 169 SCRA 144, August 8, 1988). This no-fault claim does NOT apply to property damage. If the total indemnity claim exceeds P15,000.00 and there is controversy in respect thereto, the finding of fault may be availed of by the insurer only as to the excess. The first P15,000.00 shall be paid without regard to fault. The essence of the no-fault indemnity insurance is to provide victims of vehicular accidents or their heirs immediate compensation although in limited amount, pending final determination of who is responsible for the accident and liable for the victims injuries or death. SPECIAL CLAUSES 1. AUTHORIZED DRIVER CLAUSE a clause which aims to indemnify 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 (Villacorta
vs. Insurance Commissioner, GR No. 54171, 100 SCRA 467, October 28, 1980). Note: The requirement that the person driving the insured vehicle is permitted in accordance with the licensing laws or other laws or regulations to drive the motor vehicle (licensed driver) is applicable only if the person driving is other than the insured. 2. THEFT CLAUSE- a clause which includes theft as among the risks insured against. Where the car is unlawfully and wrongfully taken without the owners consent or knowledge, such taking constitutes theft, and thus, it is the theft clause and NOT the authorized driver clause that should apply (Palermo vs. Pyramids Ins., GR No. L-36480, 161 SCRA 677, May 31, 1988). 3. COOPERATION CLAUSE- a clause which provides in essence that the insured shall give all such information and assistance as the insurer may require, usually requiring attendance at trials or hearings.
SURETYSHIP
An agreement whereby a surety guarantees the performance by the principal or obligor of an obligation or undertaking in favor of an obligee (Sec. 175). It is considered an insurance contract if it is executed by the surety as a vocation, and not incidentally (Sec. 20). When the contract is primarily drawn up by one party, the benefit of doubt goes to the other party (insured/obligee) in case of an ambiguity following the rule in contracts of adhesion. Suretyship, especially in fidelity bonding, is thus treated like non-life insurance in some respects. Nature of liability of surety 1. Solidary; 2. Limited to the amount of the bond; 3. It is determined strictly by the terms of the contract of suretyship in relation to the principal contract between the obligor and the obligee (Sec. 176).
77 2008 CENTRALIZED BAR OPERATIONS benefit. If he outlives the period, no person benefits from the insurance. 5. Industrial Life life insurance entitling the insured to pay premiums weekly, or where premiums are payable monthly or more often (but not less than weekly), if the face value is P2,000 or less, and the words industrial policy printed upon the policy. 6. Variable Contract policy or contract on either group/ individual basis issued by an insurance company providing for benefits or other contractual payments or values thereunder to vary so as to reflect investment results of any segregated portfolio of investment (Bar Review Materials in Commercial Law, Miravite, 2007ed). LIABILITY OF INSURER IN CERTAIN CAUSES OF DEATH OF INSURED 1. SUICIDE Insurer is liable in the following cases: a. If committed after two years from the date of the policys issue or its last reinstatement; b. If committed in a state of insanity regardless of the date of the commission unless suicide is an excepted peril (Sec. 180-A); c. If committed after a shorter period provided in the policy. Any stipulation extending the 2-year period is null and void. 2. AT THE HANDS OF THE LAW (e.g. by legal execution) It is one of the risks assumed by the insurer under a life insurance policy in the absence of a valid policy exception (Vance, p.572 cited in The Insurance Code of the Philippines, De Leon H. 2002ed). However, Justice Vitug believes that death by suicide (if the insured is sane) or at the hands of the law obviates against recovery as being more in consonance with public policy and as being implicit under Sec. 87, ICP (Pandect of Commercial Law and Jurisprudence, Vitug, 2006ed). Miravite also opines that the beneficiary of an insured who is executed for a crime he committed cannot recover from the insurer for 2 reasons: (1) his death is caused through his connivance, and (2) any stipulation to render the insurer liable under these circumstances would be
SURETYSHIP
PROPERTY INSURAN CE
Principal contract 2 parties: insurer and insured Contract of indemnity Insurer has no such right; only right of subrogation May be cancelled unilaterally either by insured or insurer on grounds provided by law No need of acceptance by any third party Risk-distributing device; premium paid as a ratable contribution to a common fund
Classification Accessory contract 3 parties: surety, obligor and obligee Credit accommodation Number of parties
Nature Recovery Surety can recover from principal
Cancellation Bond can be cancelled only with consent of obligee, Commissioner or court
Acceptance Requires acceptance of obligee to be valid
Scheme Risk-shifting device; premium paid being in the nature of a service fee
LIFE INSURANCE
Insurance on human lives and insurance appertaining thereto or connected therewith which includes every contract or pledge for the payment of endowments or annuities (Sec. 179). Kinds: 1. Ordinary Life, General Life or Old Line Policy insured pays a fixed premium every year until he dies. Surrender value after 3 years. 2. Limited Payment Policy insured pays premium for a limited period. If he dies within the period, his beneficiary is paid; if he outlives the period, he does not get anything. 3. Endowment Policy insured pays premium for specified period. If he outlives the period, the face value of the policy is paid to him; if not, his beneficiaries receive the benefit. 4. Term Insurance insurer pays once only, and he is insured for a specified period. If he dies within the period, his beneficiaries
78 Insurance contrary to public policy (Bar Review Materials in Commercial Law, Miravite, 2007ed). 3. KILLING BY THE BENEFICIARY GENERAL RULE 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 which event, the nearest relative of the insured shall receive the proceeds of said insurance, if not otherwise disqualified (Sec. 12). EXCEPTIONS a. Accidental killing; b. Self-defense; c. Insanity of the beneficiary at the time he killed the insured If the premiums paid came from conjugal funds, the proceeds are considered conjugal. If the beneficiary is other than the insureds estate, the source of premiums would not be relevant (Del Val vs. Del Val, 29 Phil 534). Reason: A natural person cannot be placed in the same footing as a juridical person. The measure of indemnity in life or health insurance policy is the sum fixed in the policy except when a creditor insures the life of his debtor (Sec. 183).
The Insurance Commissioner has the discretion to refuse the issuance of a certificate of authority on the very broad ground that such refusal will best promote the interest of the people of this country. NO CERTIFICATE CAN BE GRANTED until the Commissioner is satisfied that: a) The applicant is qualified under Philippine laws to transact business in the country; b) The grant of such authority of the organizers and administrators, the financial organization and the amount of capital reasonably assure the safety and interests of the policy holders and the public. 2. Capital Requirements Except in case of reinsurers whose capital requirements are higher, the paid up capital stock of a domestic insurance company must be at least 5 million pesos (P5,000,000.00). The amount may be increased by the Secretary of Finance upon the recommendation of the Commissioner which would reasonably assure the safety of the interests of the policyholders and the public. The Commissioner may require as a condition to licensing that its stockholders pay in cash in proportion to their subscription, a contributed surplus fund of not less than 1 million pesos in life insurance company or not less than P500,000.00 in case of a non-life insurance company. 3. Filing of Necessary Documents A certified copy of the last annual statement showing the condition and affairs of such company. If incorporated under Philippine laws, a copy of the articles of incorporation and by-laws, and amendments thereto, certified by the SEC to be a copy of that which is filed in its office. 4. Additional requirements for foreign corporations In addition to the requirements imposed on domestic insurance companies, the following requirements must be fulfilled by foreign corporations: a) Secure a license from the SEC to do business in the Philippines by following the requirements of the Corporation Code;
CASH SURRENDER VALUE As applied to a life insurance policy, it is the amount the insured, in case of default, after the payment of at least 3 full annual premiums, is entitled to receive if he surrenders the policy and releases his claims upon it.
GOVERNMENT REGULATION OF INSURANCE BUSINESS THE BUSINESS OF INSURANCE

REQUISITES PRIOR TO OPERATION 1. Certificate of authority and payment of fees No insurance company, whether domestic or foreign, can transact any business in the Philippines until after it shall have obtained a certificate of authority for that purpose from the Insurance Commissioner upon application therefor and payment by the company concerned of the fees prescribed by the Code (Sec. 187).

b) File a copy of the SEC certificate showing that it is duly registered in accordance with paragraph 1; c) If incorporated, it must file a certified copy of its articles of incorporation and its by-laws, certified by the SEC as a copy of that filed in its office; d) If not incorporated, file a certificate setting forth the nature and character of the business, the location of its principal office, the names of the persons composing the partnership or association, the amount of the capital employed and the names of the persons who are managing the business. The certificate must be verified by the affidavit of the chief officer, or the manager or agent of the company accompanied by a copy of the written articles of said company, if any; e) Must fulfil the same capital requirements as domestic companies and in addition, must deposit with the Commissioner securities for the benefit and security of its policyholders and creditors. Security deposits shall be (1) answerable for all the obligations of the depositing insurer under its insurance contracts; (2) at all times free from any liens or encumbrance; and (3) exempt from levy by any claimant (Republic v. Del Monte Motors, GR 156956, October 9, 2006). The right to lay claim on the fund is dependent on the solvency of the insurer and is subject to all other obligations of the company arising from its insurance contracts. Thus, claimants interest is merely inchoate. Being a mere expectancy, it has no attribute of property (Ibid). f) Must set aside an amount corresponding to the legal reserves of the policies written in the Philippines and invest the same only in such classes of Philippine securities as described by the Code which securities cannot be taken out of the country without the written consent of the Commissioner. g) File with the Commissioner a written power of attorney designating some person who must be a resident of the Philippines as its general agent, on whom any notice or summons or legal processes may be served It must also
79 2008 CENTRALIZED BAR OPERATIONS sign an agreement that in case it shall be without any agent, the service upon the Insurance Commissioner shall have the same effect as if made on the company. REQUISITES FOR CONTINUANCE IN BUSINESS 1. Reserve Requirements a. Every life insurance company must make an annual valuation of its policies, unpaid dividends and other obligations outstanding on December 31 of the preceding year. The aggregate net value so ascertained of the policies of the company is deemed its reserve liability to provide for which it must hold funds in secure investments equal to such net value. b. Every non-life insurance company must ascertain reserve for unearned premiums on its outstanding policies equal to 40% of the gross premiums received on policies having not more than 1 year to run and pro rate on all gross premiums received on policies having more than 1 year to run. 2. Margin of Solvency Margin of solvency is the excess value of an insurance companys admitted assets exclusive of its paid up capital, in case of a domestic company, or an excess of the value of its admitted assets in the Philippines, exclusive of its security deposits, in case of a foreign company, over the amount of its liabilities, unearned premiums and reinsurance reserves in the Philippines (Sec. 194). MARGIN OF SOLVENCY REQUIRED OF INSURANCE COMPANIES a) In case of life insurance companies, at least 2% of the total amount of its insurance in force as of the preceding calendar year on all policies except term insurance. b) In case of non-life insurance companies, at least 10% of the total amount of its net premium during the preceding calendar year c) The margin of insolvency, however, shall NOT be less than P500,000.00. CONSEQUENCES OF FAILURE TO MAINTAIN THE REQUIRED MARGIN OF SOLVENCY a. The company which fails to maintain the required margin of solvency shall not be permitted to take any new risks of any kind or character unless
80 Insurance and until it make good deficiency (Sec. 194); b. such
No dividend may be declared by the deficient company (Sec. 195).
(Sec. 416), except in case of maritime insurance which is within the jurisdiction of the MTC or the RTC depending on the value involved (BP 129; admiralty & maritime jurisdiction). Where the amount exceeds P100,000.00, the RTC has jurisdiction. The filing of a complaint with the Commissioner shall preclude civil courts form taking cognizance of the case. A decision which has become final may be the subject of a writ of execution which may be served and enforced by a Sheriff (Sec. 416). The Insurance Commissioner has no jurisdiction to decide the legality of a contract of agency entered into between an insurance company and its agent. The same is NOT covered by the term doing or transacting insurance business under Sec. 2, ICP, neither is it covered by Sec. 416 of the same Code which grants the Commissioner adjudicatory powers (Philippine American Life Insurance Co. vs. Ansaldo, GR No. 76452 234 SCRA 509, July 26, 1994). 2. ADMINISTRATIVE/ REGULATORY a. Enforcement of insurance laws; b. Issuance, suspension or revocation of certificate of authority; c. Power to examine books and records, etc.; d. Rule-making authority; and e. Punitive
3. Permitted Investments The permitted areas of investment are broad but definitely exclude those that are speculative. The insurance company must submit a monthly report of its investment to the Commissioner. The latter may order the sale or disposal of the same if he deems any of them to be injudicious. 4. Annual Statement and examination of companies On or before April 30 of each year, insurance companies must render a statement to the Commissioner showing the exact condition of its affairs on the preceding 30th day of December. SUSPENSION AND REVOCATION OF AUTHORITY The Commissioner may suspend or revoke the certificate of authority based on the following grounds: 1. If upon examination, it is found to be in an unsound condition; 2. When its condition or method of business is found to be such as to render its proceedings hazardous to the public or its policyholders; 3. Where its paid-up capital stock in case of domestic corporation, or its security deposits, in case of foreign company is impaired or deficient; 4. Where its margin of solvency is deficient; and 5. Failure to comply with the provision of law or regulation.
INSURANCE COMMISSIONER
Main agency charged with the enforcement of the Insurance Code and other related laws. Functions: 1. ADJUDICATORY/ QUASI-JUDICIAL a. Exclusive original jurisdiction Any dispute in the enforcement of any policy issued pursuant to Chapter VI (CMVLI) (Sec. 385, par. 2). b. Concurrent original jurisdiction (with the RTC) Where the maximum amount involved in any single claim is P100,000.00

Insurance Memaid 2008

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San Beda College of Law

4 2008 CENTRALIZED BAR OPERATIONS 9

MEMORY AID IN COMMERCIAL LAW

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MEMORY AID IN COMMERCIAL LAW

PARTIES TO THE CONTRACT

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MEMORY AID IN COMMERCIAL LAW

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MEMORY AID IN COMMERCIAL LAW

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OPEN OR LOSS PAYABLE MORTGAGE CLAUSE

MEMORY AID IN COMMERCIAL LAW

DEVICES USED FOR ASCERTAINING AND CONTROLLING RISK AND LOSS

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60 Insurance from which communicated. information is

MEMORY AID IN COMMERCIAL LAW

5. Refers to the date the contract goes into effect. CONCEALMEN T

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Materiality Presumed material

Compliance Must be strictly complied with

Effect of falsity/ non-fulfilment Falsity or non-fulfilment operates as a breach of contract

The occurrence of breach temporarily renders the entire contract voidable.

MEMORY AID IN COMMERCIAL LAW

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MEMORY AID IN COMMERCIAL LAW

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MEMORY AID IN COMMERCIAL LAW

one insurer involved

Insurer Insurer remains in such capacity

Insureds consent Insured has to give his consent

Number of insurers There may only be

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In other types of insurance

68 Insurance LIFE POLICIES

MEMORY AID IN COMMERCIAL LAW

SPECIAL KINDS OF INSURANCE

PRESCRIPTIVE PERIOD (Secs. 63 & 384)

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MEMORY AID IN COMMERCIAL LAW

San Beda College of Law

MEMORY AID IN COMMERCIAL LAW

San Beda College of Law

MEMORY AID IN COMMERCIAL LAW

CASUALTY OR ACCIDENT INSURANCE

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75 2008 CENTRALIZED BAR OPERATIONS

LIABILITY INSURANCE (CMVLI)

COMPULSORY MOTOR VEHICLE

MEMORY AID IN COMMERCIAL LAW

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Nature Recovery Surety can recover from principal

Acceptance Requires acceptance of obligee to be valid

MEMORY AID IN COMMERCIAL LAW

GOVERNMENT REGULATION OF INSURANCE BUSINESS THE BUSINESS OF INSURANCE

San Beda College of Law

80 Insurance and until it make good deficiency (Sec. 194); b. such

MEMORY AID IN COMMERCIAL LAW

No dividend may be declared by the deficient company (Sec. 195).

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