Interpretation of Insurance Contracts
 If contract is NOT ambiguous, obscure, or susceptible of 2
interpretations, it must be interpreted against insured.
  A nation against whom, which the Philippines is at war on any
Other Insurance Clause – disclosing any other insurance that covers the
same subject property
RATIONALE:
 To avoid over insurance, the more insurances you will take out on
the same subject property it will result to over insurance which is
prohibited under the law for being contrary to public policy.
 An insurance contract is devised to indemnify the insured on the
actual value of the property loss, nothing more nothing less.
Example: Wagering, Gaming Policy – when there is absence of insurable
interest
Consensual Contract – the act of acceptance by the insurance company
will be manifested by the issuance and delivery of the insurance policy
Theory of Cognition v. Theory of Manifestation
 Theory of Manifestation
 Theory of Cognition (Art 1319) – whenever acceptance is made
through mail or telegram, the acceptance (insurance policy) must
reach the knowledge of the person to be insured. Sun Life v.
Enriquez case.
Who may be insured?
 Anyone may be insured except any public enemy.
What is a public enemy?
citizen of that country. Filipinas Com. De Seguros v. Christern
Huenfeld&Co. case.
 Determine nationality of corporation through control test which
looks into the controlling interest.
Trading with enemy act – prohibited trading with an enemy in times of
war
Contract of Indemnity – only applies to property, not applies to life since
the latter is not susceptible of pecuniary estimation. In life insurance, the
payment is not considered indemnification but more of dependent upon the
stipulated amount in the policy. Section 186
XPN (to life insurance) – whenever a creditor insures the life of his debtor.
May insure the life of his debtor only up to the amount due to him.
Insurable Interest – there must be an insurable interest, Sec. 10
 The beneficiary assigned by the insured need not have any
insurable interest on the life of the insured, provided that the
insured is insured himself. (Ininsure niya sarili niyang buhay)
 XPN: Statutory Limitations (Insular Life v. Carponia)
 Art 739, Art 2012- Any person prohibited from receiving
donations from one another are not allowed to be designated as
beneficiaries in the insurance procured by the other.
 Art. 739 – “guilty” is based on preponderance of evidence that is
the quantum of evidence required in a civil proceeding

Art 739 – Heirs of Loreto Maramag v. Eva Guzman
Art. 1311 – Relativity of Contracts (Stipulation por artui)
Art. 1306 – Principle of Freedom/Autonomy of Contracts
Art. 1308 (Section 86/87) – Mutuality of Contracts
- Can take insurance separately on the same property, it will not
result to double insurance. They have different insurable interest.
- Mortgagee Clause/Loss Payable Clause
Section 18 in relation to Section 25 (mandatory character, difference of life
and property insurance)
Spouses Cha and United Ins. v. CA and Choa Tiek Seng – insurable
interest (Art 1409 – void contracts)

Right to change beneficiary – Fil Am Life v. Judge Pineda

 When a beneficiary has been designated as irrevocable, he/she is

deemed a co-owner, vested right over the policy and cannot be
removed without express written consent.
 Insured cannot add any beneficiary without consent of the
irrevocable beneficiary for the reason that his share has the
tendency to be dissipated.
 Creditors of the insured cannot simple attach the assets without
consent of irrevocable beneficiary
 Other prohibitions provided by Am Jur

When the policy is silent as to when the beneficiary is revocable or

irrevocable, he/she is deemed revocable

To be exempted from payment of estate tax, beneficiary must be

designated as irrevocable provided he did not change his beneficiary
during his lifetime.

Section 13-19 Property

Lessee – Lessor
Mortgagee – Mortgagor