INSURANCE 2018 | Karl Benedict Sayson
Part I
History
Applicable Laws – Presidential Decree No. 612, as Amended by R.A. No. 10607
Important new provisions under R.A. 10607
Implementing Office – Sec. 430, ICP
Nature of Insurance
A. Concepts Defined
1. Contract of Insurance (Sec.2) – Case: Mayer Steel Pipe vs Court of Appeals G.R. No. 124050 | 1997-06-19 ;
2. Doing or Transacting an Insurance Business (Sec.2, no.2) – Phil Health Care Providers vs Commissioner of
Internal Revenue, GR. No. 167330 (9/18/09)
3. Contract of Adhesion or Fine Print Rule – Eternal Garden Memorial vs. Phil American Life Insurance GR No.
166245 (4/9/08); Western Guaranty Corporation vs CA 187SCRA652
4. Parties in Insurance Contract - Insurer and Insured (Sec.6), beneficiary (Arts. 739 & 2012 of the NCC).
Case: Great Pacific Life vs CA, 316 SCRA 677;
5. Interpretation of Insurance Contracts – Case: Rizal Surety vs CA, 336 SCRA 12 (2000); American Home
Assurance vs Tantuco GR. NO. 138941, 8 October 2001; Pan Malayan Insurance vs CA, GR No. 81026
(4/3/90)
B. Characteristics of Insurance Contract
1. Aleatory Insurance- Malayan Insurance vs Arnaldo & Pinca, GR. No. L-67835 (10/12/87). Article 2010 NCC
2. Contract is considered a risk-distributing device – Tibay vs CA GR No. 119655 (5/24/95)
3. Uberrima Fides (perfect good faith) - Fieldman’s Insurance vs CA GR No. L-24833 (9/23/68)
4. Contract of Indemnity- White Gold Marine vs Pioneer Insurance GR. 154514 (7/28/05)
5. Personal Contract – Insular Life vs Ebrado G.R. No. L-44059 (10/28/77)
C. Classes of insurance
a. Marine
b. Fire
c. Casualty
d. Suretyship
e. Life
f. Compulsory Motor Vehicle Liability Insurance
D. What may be insured against
1. A future contingent event resulting in loss or damage
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2. A past unknown event resulting in loss or damage
3. Contingent liability
E. Parties to an insurance contract – Sec 6-9
1. The insurer – Sec. 6, ICP
2. The Insured
a. Public Enemy -Sec 7, ICP
b. Minors – R.A. 6809 (Age of majority is 18 years)
c. Married women – R.A. 6809
3. The Beneficiary
a. Beneficiary of one who insures his own life –Insured may designate any person as his beneficiary .
Exception: Persons specified in Article 739, NCC. Insular Life vs Ebrado, 80 SCRA 181 (1977).
b. Beneficiary of life insurance on the life of another person – insured must have interest on the life of
the person whose life he is insuring.
c. Beneficiary of property insurance
d. The designation is revocable unless the right to revoke is expressly waived in the policy (Sec.11, ICP)
e. Sec 64, Family Code – allows the innocent spouse to revoke the designation of the other spouse as
irrevocable beneficiary after legal separation.
f. Designation of illegitimate children – Heirs of Loreto Maramag v. Maramag, GR No. 181132, June
5,2009.
F. Insurable Interest – Sec. 13-14
1. Insurable interest defined- Gaisano Cagayan vs Insurance Company of North America GR. No. 147839
(6/08/06)
2. Insurable interest in life/Health – Hilario Gercio vs Sunlife GR No. 23703 (48 Phil 53)
3. Insurable Interest in Property (Sec. 13 & 14) – Filipino Merchants Co. vs CA 179 SCRA 638.
4. Gen Rule: Sec 20. Effect of change of interest in thing. Exceptions: Sec 21, 22,24 & 57.
5. Insurable Interest of mortgagor & mortgagee over mortgaged property. Rizal Commercial Banking Corp v.
CA 289 SCRA 292 (1998).
G. Perfection of the Contract of Insurance
a. Offer and Acceptance/Consensuality
(1) Delay in acceptance - Virginia Perez vs BF Lifeman Insurance GR No. 112329 (1/28/2000)
(2) Delivery of Policy
b. Premium Payment
c. Non-Default Options in Life Insurance –
i. Grace Period
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ii. automatic loan policy
iii. application of dividend
iv. Reinstatement of a Lapsed Policy of Life Insurance – Sec 227, ICP. Rufino Andres vs The Crown Life
Insurance G.R. No. L-l0874 January 28, 1958
Part II
DEVICES TO DELIMIT SUBJECT MATTER OF INSURANCE
a. Concealment – Sec. 26, ICP.
i. Test of Materiality: Sunlife Assurance vs CA, 245 SCRA 268; Philamcare Health Systems vs CA and
Julita Trinos, GR No. 125678, March 18, 2002;
ii. Effects of Concealment – Sec. 27, ICP
iii. Cause of Loss
iv. Is good faith a defense in concealment?
v. Waiver & Estoppel – Edillon v. Manila Bankers Life,117 SCRA 187 (1982).
b. Representation (sec.36-48) –
i. Kinds (Sec.39); affirmative , promissory
ii. Test of Materiality - Sec.31
iii. Effects of Misrepresentation
c. Warranties – Effect of Breach of warranty (sec.67-76). Case: Perla Cia De Seguros Inc vs CA, 208 SCRA 487.
i. Kinds (Sec 67) – Express, Implied, Affirmative, Promissory
ii. Effect of Breach of Warranty
iii. Immaterial Provisions – Sec.75,ICP
d. Condition
e. Exceptions Country Banker’s Insurance vs Lianga Bay G.R. No. 136914, Jan. 25, 2002.
Part III
THE POLICY OF INSURANCE
A. Policy defined -Sec. 49 - 66
1. Form
2. Cover notes – Sec 52. case: Pacific Timber Export vs CA, 112 SCRA 199
B. Contents of the policy - Sec. 51
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C. Specific Code Provisions relating to policies –
i. Incontestability clause-Sec.48,ICP;Florendo v. Philam Plans G.R. No186983, 22 Feb.2012)
-Requisites
Defenses that are not Barred by Incontestability Clause
ii. Rider - Sec.50
D. Unilateral Cancellation of Policy (sec. 64 65 and 79)
1. By the INSURER – case: Malayan Insurance CO. Inc. vs Cruz Arnaldo, 154 SCRA 672
2. Only grounds for cancellation
3. Cancellation by the INSURED (sec.79)
4. Kinds of Policies – Open Policy (sec.60), Valued Policy (sec.61) Running Policy (sec.62)
E. The Premium (Sec.77 Amended and 78 – Salary deduction for govt employees ) – Cash and Carry Provision
1. Effect of non-payment of premium – Case: Areola vs CA, 236 SCRA 643
2. Effect of partial payment of premium – Case: Tibay vs CA, 257 SCRA 126
3. Payment of premium by check – case: American Home Assurance vs Chua, 309 SCRA 250
4. Payment of premium by installments – Case: Mercantile Insurance vs Felipe Ysmael Jr; 169 SCRA 66; UCPB
General Insurance vs Masagana Telamart 308 SCRA 259; UCPB Genera Insurance vs Masagana Telamart,
GR no. 137172, 4 April 2001. Sec 77 - includes credit extension.
5. Effect of payments of premium through agent – case: South Sea Surety vs CA 244 SCRA 744 (1995)
6. When the Insured is Entitled to Return of Premiums Paid – Sec. 79, 81 & 82)
F. Period of Prescription (Sec.63, 384) - cases: Travellers Insurance vs CA, 272 SCRA 536; Jacqueline Jimenez Vda.
De Gabriel vs CA, GR no. 103883, Nov. 4, 1996
Part IV
DOUBLE INSURANCE (Sec.95-96)
REINSURANCE (Sec. 97-100) – effects of double insurance (Sec.94) case: Geagonia vs CA, 241 SCRA 152 (1995)
OVER INSURANCE
PART V
A. LOSS – Sec.85-89
a. Proximate Cause & Immediate Cause
b. Loss for which insurer liable – Sec. 87
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c. Loss for which insurer not liable- Sec.89
B. Claims Settlement and Subrogation
a. Notice (Sec 88, ICP) and Proof of Loss (Sec 89, ICP)
b. Guidelines on Claims Settlement
1) Life Insurance- Sec 242, ICP
2) Property Insurance – Sec 243, ICP
3) Effects of Delay of Insurer, Sec 244,ICP
4) When is Insurer liable to pay damages and Interest under Sec243-244 – Tio Kho Chio v. CA 202
SCRA119.
C. PERIOD OF prescription - Secs.63, 384, ICP
D. Right of SUBROGATION – Article 2207, NCC
i. Cases when there is no right of Subrogation – Pan Malayan Insurance Co. vs CA, 184 SCRA 54
PART VI
Particular Insurance
A. MARINE insurance (Sec.101)
1. Coverage of marine insurance
2. Special marine insurance contracts
a. Insurance against all risks
b. Inchamaree clause
3. Insurable interest in marine insurance
4. Concealment – Sec.109-112
5. Implied Warranties – Sec.115-122, ICP.
Philamgen vs CA, 273 SCRA 262 (1997)
6. Voyage and Deviation – Sec 123-128
7. Loss – Actual Total Loss (Sec.130,ICP); Constructive Total Loss (Sec.131, in relation to Sec.139);
Abandonment (Sec 138)
8. Perils of Sea vs Perils of the Ship
B. Fire Insurance (Sec. 169-175,ICP)
1. Definition
2. Alteration in use or in condition – Sec. 168
3. Measure of indemnity – Development Insurance Corp v. IAC,143 SCRA 62
4. Other insurances
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C. Casualty Insurance (Sec.176)
1. Definition – Sec.176
2. “Intentional” vs. “Accidental” as used in Insurance – Pan Malayan Insurance Corp v. CA, 184 SCRA 54
3. Compulsory Motor Vehicle Liability- Sec. 386-399
a. Method of coverage
b. Vehicles covered
4. Non-fault clause – Sec. 378
i. Total Indemnity shall not exceed P15,000 (Insurance Memo Circular 4-2006)
ii. Proofs of Loss
5. Time to File & Process Claim Under CTPL – Sec.384 & 385. Vda de Gabriel vs. CA, 264 SCRA 137 (1996)
6. Applicability
7. Authorized Driver Clause – Villacorta v. I.C. 100 SCRA 467 (1980),
8. Theft Clause- Perla Compania de Seguros vs. CA, 208 SCRA 487 (1992).
D. Life insurance
1. Definition – Sec.181, ICP
2. Kinds – Ordinary Life, Limited Payment, Endowment, Term, Industrial Life
3. Effect of Death of Insured Through:
a. Suicide – Sec. 183, ICP
b. Killing of insured by beneficiary
E. Group Insurance
F. Microinsurance (Sections 187-188)
G. Insurance Companies, Organization, Capitalization and Authorization (Sections 190-199)
Reference:
1. Codal, Commercial Laws of the Philippines vol. I
2. De Leon, The Insurance code of the Philippines, Annotated, 11th edition
3. Martin, Insurance law and other special laws, vol. 11
4. Sundiang & Aquino, Review on Commercial Law, 2014
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