Professional Documents
Culture Documents
INSURANCE LAW (Philippine Insurance Code, PD 612, As Amended)
INSURANCE LAW (Philippine Insurance Code, PD 612, As Amended)
(Hi guys! This is not a transcript. These are just my notes. You can refer to them just in case we
don’t get a transcript of his lecture on this date.)
SECTION 7 answers the question “who may be insured?” A public enemy is every citizen or
subject of a nation at war with the Philippines. It does not include robbers, thieves, private
depredators, or riotous mobs. A local criminal can be insured if the insurer is willing to take him as
a good risk. The citizen of a country with which we do not have diplomatic relations is not a public
enemy and can be insured.
SECTION 10 speaks of insurable interest in life and health. The general rule is that a person
may designate anyone to be his beneficiary. The exception is Art. 739 of the Civil Code in relation to
Art. 2012 (prohibited donations). See the case of Insular Life v. Ebrado, L-44059, Oct, 28, 1977
which says that the reason for the exception is that a life insurance policy is no different from a civil
donation insofar as the beneficiary is concerned coz both are founded upon the same consideration:
liberality. Therefore the rule on prohibited donations apply in cases life insurance.
When you insure the life of another, the consent of that person must be obtained and there
must also be insurable interest over the life of that person.
SECTION 11 says that the insured has the right to change beneficiary unless he has waived
this right in the said policy. Remember that if the designation of the beneficiary is irrevocable,
change of beneficiary can only be made with the consent of the said beneficiary.
CONCEALMENT
Concealment is the neglect to communicate that which a party knows and ought to
communicate. It need not be intentional or fraudulent to entitle the insured to rescind the policy.
Originally, the law requires that concealment must be intentional. But then Mambabatas Pambansa
Hernando Perez amended that to eliminate that requirement because the Supreme Court says it is
very difficult to prove fraudulent intent. Even if the concealment was not made with fraudulent
intent, the fact remains that the insurance company was misled into entering into a contract, which
it would have not entered into had it known the facts, or it would have charged a higher premium.
To constitute concealment, there are four requisites:
1. The party making the concealment must have the knowledge of the fact concealed;
2. The fact concealed must be material to the policy;
3. The party making the concealment makes no warranty as to the fact concealed;
4. The other party does not have the means of ascertaining the fact concealed.
Concealment often happens in life insurance. Where the applicant for a life insurance did not
disclose that he was sick because he was not aware of it. Thus, there’s no concealment.
Now, when is the fact concealed material? The law said materiality is determined by the
probable influence of a fact upon the party to whom the communication is due, informing his
estimate of the disadvantages of the proofs. The contract makes inquiries. In other words, if the
MISREPRESENTATION
The other matter that would vitiate consent is misrepresentation. Misrepresentation is a
statement by an applicant about the subject matter being insured. In other words, these are
statements made to induce the other party to enter into a contract. They are not part of the terms
and conditions of the contract but rather, are statements to induce the party to enter into a contract.
The law says, a representation is presumed to refer to the date on which the policy goes into
effect. That somebody insure his vessel for a trip say from Manila to Cebu on January 5 and he
represents, my vessel is in Manila, when actually the vessel is in Curimmao. There is no
misrepresentation, provided on the date the policy takes effect, the vessel is actually in Manila. This
is because the representation should be deemed to refer to the date when the policy takes effect.
The representation cannot qualify an express provision on the policy, but may qualify an
implied warranty. You have implied warranties in marine insurance, which will be taken up later on.
Now, representation is false when the facts do not correspond with the assertion. You have
this Ng Gan Zee case where a person applied for a life insurance policy with a question: Have you
ever applied for a life insurance policy or asked for the reinstatement of a lapse insurance policy and
your application was denied? He said no. It turned out however, that there was one time where his
policy lapsed and he applied for its reinstatement. Initially, his application was disapproved but
eventually it was approved but with a higher premium. The court said that there was no
misrepresentation because although initially the application for reinstatement was disapproved, it
was eventually approved.
The law says that if the insured has no personal knowledge of a fact, he may repeat the
information, which he has on the subject and which he believes to be true. The explanation is based
on the information of others.
In a typical application for a life insurance policy, there’s a question there asking whether
your parents/brothers have tuberculosis, heart ailments, etc. or if they died, or of what they died of.
Like somebody whose parents died of tuberculosis, they died when he was still a small child but then
his aunts/uncles told him that his father was a soldier, was a hero who died in the line of duty and
that was what he told. So there’s no concealment, no misrepresentation.
You have the Ng Gan Zee case again, where the insured was operated for tumor associated
with peptic ulcer. He was operated with peptic ulcer but then he said he was operated for tumor
REPRESENTATION
SECTION 36.A representation may be oral or written.
SECTION 37.A representation may be made at the time of, or before, issuance of the
policy.
Misrepresentation
Statement as a fact of something which is untrue and which the insured states with knowledge
that it is untrue and with an intent to deceive, or which he states positively as true without
knowing it to be true and which has a tendency to mislead, where such fact in either case is
material to the risk.
Representations are not required to be literally true unlike warranties. It is sufficient that they
are substantially true.
Egueras v GREPALIFE
A sickly person filed an application for life insurance. During the medical examination conducted by
the insurer to determine the fitness of the applicant, a robust and healthy person appeared
Jimenez Transcripts (Insurance Code)
Page 9 of 34
pretending to be the applicant. Held: The contract is avoided on the ground of fraudulent
misrepresentation.
Test of materiality
Probable and reasonable influence of the facts upon the party of whom the representation is
made in forming his estimate of the disadvantages of the proposed contract or in making his
inquiries
Tan v CA
Tan was issued a policy by PHILAMLife in November 1973. He died in April 1975. PHILAMLife
refused payment and in September 1975 notified the beneficiaries that it is rescinding the contract
on the ground of misrepresentation. The beneficiaries contend that rescission should be done “during
the lifetime of the insured”. Held: PHILAMLife can still rescind. The phrase “during the lifetime” only
means that the policy is no longer in force after the insured died. The key phrase is “for a period of
two years”. Where the insured died less than 2 years after the date of issue or last reinstatement,
the policy could never become incontestable.
THE POLICY
SECTION 49. The written instrument in which a contract of insurance is set forth, is
called a policy of insurance.
Ty v Filipina Compania
Where an insurance policy defines partial disability as “loss of either hand by amputation through the
bones of the wrist”, the insured cannot recover under the same policy for temporary disability
caused by fracturing of the hand. (“loss of legs” includes permanent paralysis of both legs, Panaton
v Malayan Co. Inc)
SECTION 50.The policy shall be in printed form which may contain blank spaces;
Rider – a printed or typed stipulation contained on a slip of paper attached to the policy and forming
an integral part thereof. They usually contain additional stipulations between the parties.
Warranties – are inserted or attached to the policy to eliminate specific potential increases of
hazard during the policy term owing to actions of the insured or conditions of property.
Clauses – agreements between the insurer and the insured on certain matter relating to the liability
of the insurer in case of loss
Examples of Clauses:
1. Three-fourths clause – where the insurer is liable only for ¾ of the loss or damage
2. Loss payable clause – where the loss, if any, is payable to the named party or parties, as their
interest may appear
3. Change of ownership clause – where insurance will inure to the benefit of whomsoever, during
the continuance of the risk, may become the owner of the interest insured
Tang v CA
In September 1965, Lee Su Guat, an illiterate who spoke only Chinese, applied for life insurance.
The application was in English. Lee Su Guat declared that she was of good health. The application
was approved. A second application was filed in November 1965 and subsequently accepted. Lee Su
Guat died in April 1966 of lung cancer. The insurer denied liability. The beneficiary claims that since
the insured was illiterate and the policy was in English, the insurer must show that it had fully
explained the terms of the policy to the insured, otherwise, the insurer will not be guilty of
misrepresentation. Held: Insurer not liable. It was under no obligation to prove that the terms of the
insurance contract was fully explained to the other party.
GREPALIFE v CA
Ngo filed an application with GREPALIFE for a policy on the life of his 1-year old daghter. He
submitted an application form and gave the premium to the insurer’s agent for which a binding
deposit receipt was issued to him. The application was denied but the agent, instead of notifying Ngo
wrote back the insurer, strongly recommending the acceptance of the application. The chils died in
the meantime. Ngo claimed on the binding deposit receipt saying that it constituted a temporary
contract of life insurance. Held: Insurer not liable. A binding deposit receipt was merely an
acknowledgement of receipt of the application for processing by the insurance company. A binding
receipt is manifestly merely conditional and does not insure outright.
Exceptions:
1. Art 739, Civil Code
a. between persons guilty of adultery or concubinage
b. in favor of a public officer, his spouse or child, by reason of his office
c. between persons guilty of a crime in consideration thereof
2. Section 12, Insurance Code
When the beneficiary is the principal, accessory or accomplice in willfully bringing about the
death of the insured
Lampano v Jose
A is a building contractor of the house of B. A insured his interest in the house for P7,800. His
interest is actually only P7,000. The house is burned. Held: B is not entitled to the P800 in excess of
the interest of A.
SECTION 66. In case of insurance other than life, unless the insurer at least forty-
five days in advance of the end of the policy period mails or delivers to the named insured
at the address shown in the policy notice of its intention not to renew the policy or to
condition its renewal upon reduction of limits or elimination of coverages, the named
insured shall be entitled to renew the policy upon payment of the premium due on the
effective date of the renewal. Any policy written for a term of less than one year shall be
considered as if written for a term of one year. Any policy written for a term longer than
one year or any policy with no fixed expiration date shall be considered as if written for
successive policy periods or terms of one year.
WARRANTIES
Warranties may either be express or implied. Express if it is stated in the policy. Implied,
where there are implied warranties in a marine insurance for example, that the vessel that it
would not deviate.
Warranties are different from representations because warranties are part of the terms and
conditions of the policy while representations are not part of the policy but statements made to
induce someone to enter into a contract.
Warranty may relate to the past, present or the future or to any or all of them.
PAST: Somebody applying for life insurance warrants that he was never hospitalized for a
heart ailment
PRESENT: warrants he is in good health
FUTURE: common in a fire insurance policy there will be a warranty there that the insured will
not store inflammable materials.
So based on Section 77, Makati Tuscany, Section 78, the court said that there are 3
exceptions to the rule that the policy is not binding until the premiums are fully paid.
First, in life and industrial life where a grace period is given.
Secondly, Section 78 when there’s an admission in the policy that the premiums have been
paid.
Then, Makati Tuscany which says that the parties can stipulate that the premiums be paid in
installments.
Then you have this UCPB General Insurance Corp v. Masagana Dela(?)mart. Masagana Delamart
had been insuring its business with UCPB since 1988 and every year they would give Masagana
60 to 90 days credit to pay and that is common. Now, 1992 the problem was that a loss occurred
within the usual 60-day period. A fire raised the premises. The next day masagana paid the
premium and UCPB accepted the premium. The following day they filed a claim, you should now
return the premium. Now they were claiming that the premium was not paid when the loss
occurred therefore they were not liable. In a decisions of the second division penned by Justice
Pardo reiterated Arce and another case, the premium was not yet paid and therefore the
insurance was not binding, UCPB not liable. A motion for reconsideration was filed and the case
was elevated to court en banc. In a split decision, Chief Justice Davide reversed the decision. He
said that heretofore there were three exceptions when policy should be binding even if the
premiums are not paid: 1) life and industrial life insurance policy where a grace period is given;
2) when there is an acknowledgement in the policy that the premiums were paid; 3) Makati
Tuscany, where there is an agreement that the premiums will be paid in installments; and now,
he said, there are now two additional exceptions:
Sec. 91
The insured must give notice without unnecessary delay. If proof is required, he must bring with
him the necessary proof whenever a loss is incurred. Usually when you file a claim most people rely
on the insurance agent.
If the insurance company has rejected the claim, but he did not invoke delay in filing as a
ground of objection or any other grounds, then it would be waived as a defense in a case suit. This
is normal for a claim of motor vehicle insurance. The insurance company will ask police report, a
photograph of the damaged portion, and get estimates from an accredited shop. If the insurance
company did not tell the insured that he needs, for the example photographs, he cannot latter on
say that the insured failed to substantiate the loss with a photograph.
Delay will also be excused is caused by a misrepresentation by the insurance agent that he
will take care of everything.
Sec.92
He cannot obtain despite reasonable delays suffered to show that the reason why he cannot
produce such certificate because the certificate required by court not available. For example fire
insurance, the insurance company will ask report of investigator.
You have this case where the person insured his premises he was leasing it to a restaurant,
by new years eve, he and his cook went out to look at the fire works, he neglected the gas range,
and a fire broke out. He went to file a claim, the arson investigator conducted an investigation but
never submitted his report. The investigator immigrated to the US and his whereabouts unknown. It
is enough to show that they cannot submit report of arson, not because the fire was caused by arson
but that the investigator immigrated.
In case of loss and the insurance company pays, it is subrogated to the rights of the insured
and he can collect from the wrongdoer. But if the insured has done any act which prevents the
insurance company from running after the wrongdoer, then the insurance company will be relieved
from liability because he will be prejudiced. For example the insured – in a motor vehicle insurance
settled with the wrongdoer by accepting P2,500 in settlement. Then he filed a claim with the
insurance company. The insurance company will be subrogated to his rights against the wrongdoer.
The wrongdoer can raise the defense against the insurance company that there was a settlement.
The insurance company therefore cannot be liable- in fact they can get the money from the insured
on the theory of payment by mistake. Also in one case, where an importer failed to file a claim in
the Arrastre operator on time. The court said that the is barred. The insurance company may be
exempt from liability.
Where in the case of a shipping company where the liability in the bill of lading stipulated a
certain amount unless the owner declared a higher value, he can recover a higher claim from the
insurance company.
Double Insurance
This double insurance – It exists where the same person is insured by several insurance
separately with respect to the same subject interest.
So there are 5 requisites of double insurance.
1. Insured must be the same – so if a lessor insured a building that he owns, and the lessee
insured it also there is no double insurance for the insurers are different.
Reinsurance:
Then you have reinsurance, the law defines it as, which is one by which an insurance
procures a third person to insure him against loss for liability for reasons of such original insurance.
The re-insurer is nothing more than liability insurers. Original insurer reinsures risk of another
insurance company. This can go in several layers. You have 5 layers. First layer, you call it
reinsurance, subsequent layers you call it retro-cession. Now it could be automatic like if you have a
treaty maybe 15% of whatever we insure it will automatically be ceded.
Now the court has said a re-insurer cannot intervene in action filed against the original
insurer because his rights may be adequately protected by a separate action, when the original
insurer sues him, then he can raise whatever defenses he can found in the original action.
Just like original insurance, the re-insurer’s contract is of utmost good faith. That is why the
original insurer must communicate with the re-insurer all the important representation of the original
insured which are material to the risk. Now this is very important like when somebody offers a
reinsurance. You find out…oh what kind of policies are you going to issue and where will you issue
these policies. Like this French company…who was ceding auto reinsurance here and in their
proposal they said we will not underwrite casualty policies. Then when the year ends they will
submit a report, here is the income, here is the output. This are the losses paid as a result of the
operation, here is your share in the profits, then when you receive the notice katakot-takot na
casualty…or they will say we will only insure buildings in New York…solid as rock, but you receive
January 9, 2002 By: Maria Micaela Anna Tujan Cayton Aka: Gorgeous
FIRE INSURANCE
Sec. 167 – 173.
Section 168 talks of alteration. For example is this case where the Supreme Court ruled that
there was alteration, when the building is insured as a bookstore, but it was converted into a
restaurant, also because there is an increase in risk. Another example is when one stores canvass in
the premises (inflammable), or when the place is insured as a residence but used to store leather
and other inflammables.
Section 169, for example is when a place is insured as a residential condominium but is
converted into an office condominium, there is no increased risk, and no alteration. Now this was
asked in the bar: a policy answers only for hostile fire, not friendly fire. Friendly fire is one which
burns where it is intended to burn, like a gas range fire, or a bonfire. However, fire which was
initially friendly can convert into hostile fire.
There was a case where the restaurant was insured under a fire policy. The restaurant sought
to recover indemnity for soot on the wall caused by a gas range burner. This discoloration on the
wall was caused over time because the gas range was positioned in such a way that the fire was
near the wall. Of course they cannot collect, it was friendly fire! Kasalanan nila kung bakit nila
nilagay ang lutuan sa tabi ng pader! Bobo! Eng-eng!
Normally the insurance policy provides that insurer is not liable for loss caused due to war or
rebellion and the like. The Supreme Court held in a case that insurance companies are not liable for
buildings burned during World War II because the Japanese ordered those to be burned. But if let’s
say that in the midst of those burning buildings done under the orders of the Japanese, another
building was independently burned (read: nakisali; saling kit-kit) that one building may recover
under the insurance policy.
Normally the policy has a proviso that if there is underinsurance, insured must share in the
partial loss suffered. Unlike in marine insurance where the law specifically says this, under fire
insurance this is a standard provision placed by insurance companies.
Under Sec. 171. For instance, if there is a loss, and the building cost P250 million to build,
the insurance won’t pay the same amount if it is an old building. The value will be adjusted to reflect
depreciation suffered by the building before it was burned. There was this case, where the San
Miguel Corporation building claimed indemnity for fire that occurred in 1983 during construction of
the building. But at that time, that specific year, the value of construction materials skyrocketed.
The policy had a provision regarding underinsurance. San Miguel sought indemnity, computing its
CASUALTY INSURANCE
Section 174.
For example: personal accident insurance, third party liability insurance, contractors all risk
insurance (to indemnify for injury caused by falling debris from a construction area). In the 1950’s a
loss of thumb would rake in P6 thousand for the victim. Easy money! Ang daming nawawalan ng
daliri noon! When the indemnity was lowered, wala nang nawawalan ng daliri noon.
Now, Philippine insurance policies usually state that if the death is due to a voluntary act, the
insurer will indemnify only if it is due to an external physical violent force. But in other countries this
proviso does not appear in the contract. In the USA, there was a case where this guy heard that
restricting the oxygen supply to the brain resulted in the total orgasmic experience!!! So he put his
head in a plastic bag and masturbated (doctrine of self help obviously, solo flight, cause who’d
wanna hang out with a guy like that??!). Surprise surprise, he died. The US Courts ruled that his
heirs could collect, because this was an accident. But the Courts in Canada ruled the heirs cannot
collect in this case because the person knew (or should’ve known) that death was a foreseeable risk!
Moral of the story? Stick to the tried and tested modes of achieving an orgasm…
Well, a good example of a genuine accident is when there is a boxing contest and one of the
boxers slipped in such a way that he died. The Courts ruled that this is accidental because in a
boxing match there is no intent to kill (nor is there an intent to die ).
There is this case Jack doesn’t agree with – A person showed off his gun to another person
and to prove it was empty, he aimed at his temple and pulled the trigger. Oops, booboo, may bullet
pala. He died. Supreme Court held heirs can collect because it was a mistake. But Jack says it is
common sense not to aim a gun at anyone, even oneself, even though the gun is empty. Jack’s
viewpoint is more sensible, really!
An example of accident again: a seaman who jumped into the sea to save a child who fell
overboard. The seaman died. Seaman’s heirs can collect under accidental death, because he had no
intent to die.
A usual accident policy says it won’t answer for death or injury caused by murder or assault.
If desired for the policy to cover these instances, the insured must pay extra.
In this case of FinMan Insurance, the insurance policy did not contain the abovementioned
clause. The insured was innocently waiting for public transportation along a sidewalk, when someone
approaches him and stabs him just like that. The Court ruled in favor of collection, and said that one
must look at the viewpoint of the insured to determine if the injury caused was accidental. Since the
<Classmates, I’m sorry I didn’t bring a tape recorder so not all of this is a word-for-word
transcription of Jack’s lecture. I added some notes to make up. Sorry ulit.>
SURETYSHIP
SEC. 175. A contract of suretyship is an agreement whereby a party called the surety
guarantees the performance by another party called the principal or obligor of an
obligation or undertaking in favor of a third party called the obligee. It includes official
recognizances, stipulations, bonds or undertakings issued by any company by virtue of
and under the provisions of Act. No. 536, as amended by Act No. 2206.
A surety is solidarily liable with the principal. The Civil Code provisions on guaranty are
applicable to suretyship in a suppletory character. The liability of the surety is, however, limited to
the amount of the bond. (SEC. 176. The liability of the surety or sureties shall be joint and several
with the obligor and shall be limited to the amount of the bond. It is determined strictly by the
terms of the contract of suretyship in relation to the principal contract between the obligor and the
obligee) For instance, an accused applies for a bond with an insurance company. The obligee (the
court) is not concerned if the premium is not paid. If the accused absconds, the court will proceed
against the insurance company.
If the bond is not accepted, the principal is entitled to the return of the premiums paid.
However, taxes (e.g., documentary stamp tax) cannot be refunded. In some instances, the
insurance company will charge a service fee because the insurance company took time to review the
application for the bond. For instance, the manager took time to go over the papers, the clerk took
time to type the application, etc.
But if the bond was denied because there was fault on the part of the insurance company, the
applicant is entitled to the return of the premiums paid AND the taxes paid. Example: Courts
require insurance companies to get a clearance. The bond which the accused applied for was not
approved because the surety company failed to get a clearance (because it had an outstanding
obligation with the court because it failed to make good on a prior bond). In this case, the applicant
is entitled to the return of the premiums paid and the whatever taxes he has paid as well.
Continuing bonds (e.g., judicial bonds) remain in force until the case is finally terminated.
The insurance company is entitled to charge premiums every year.
3 Principal types:
1. Term – for a fixed period (e.g., for 5 years, for 10 years, etc), after that it expires. This is the
least expensive type of insurance. It does not have any cash surrender value.
2. Whole life – the insured pays premiums up to a certain time and then he will be insured up to a
certain age or until he dies, whichever comes first. For example, the policy states that the
insured will pay premiums until he’s 65. After that he’ll be insured until he’s 96.
3. Endowments – For example, the policy states that if the insured reaches 60, the insurer will pay
him annuities for life. This is the most expensive type of life insurance.
SEC. 180. An insurance upon life may be made payable on the death of the person, or on
his surviving a specified period, or otherwise contingently on the continuance or cessation
of life.
Every contract or pledge for the payment of endowments or annuities shall be
considered a life insurance contract for purposes of this Code.
In the absence of a judicial guardian, the father, or in the latter’s absence or
incapacity, the mother, of any minor, who is an insured or a beneficiary under a contract
of life, health, or accident insurance, may exercise, in behalf of said minor, any right under
the policy, without necessity of court authority or the giving of a bond, where the interest
of the minor in the particular act involved does not exceed P20, 000. Such right may
include, but shall not be limited to, obtaining a policy loan, surrendering the policy,
receiving the proceeds of the policy, and giving the minor’s consent to any transaction on
the policy.
Note: the P20, 000 has been amended by the Family Code. Now it’s P50, 000. Parents don’t have
to give a bond or apply for guardianship proceedings.
Nario vs. Philamlife (L-22796, June 26, 1967) held that a father or mother or a guardian cannot
surrender a life insurance policy or obtain loan therefrom where a minor child is an irrevocable
beneficiary, without judicial authority. Because of Section 180, the father (or in his absence or
incapacity, the mother) is now authorized to do acts of ownership (e.g., obtaining a policy loan,
surrendering the policy) without judicial authority, so long as the interest of the minor does not
exceed P50, 000. The interest of the minor is based on the face value of the policy and not on its
cash surrender value.
SECTION 180-A. The insurer in a life insurance contract shall be liable in case of suicide
only when it is committed after the policy has been in force for a period of 2 years from
the date of its issue or of its last reinstatement, unless the policy provides a shorter
period; provided, however that suicide committed in the state of insanity shall be
compensable regardless of the date of commission.
The insurance company is not liable because the presumption is that the insurance was taken
in contemplation of suicide. But if the suicide is committed by the insured while he was in a state of
insanity, the insurance company is still liable. Thus, if Miriam commits suicide, the beneficiary can
collect.
SEC. 181. A policy of insurance upon life or health may pass by transfer, will or
succession to any person, whether he has an insurable interest or not, and such person
may recover upon it whatever the insured might have recovered.
The insured may assign a life insurance policy if the policy is payable to his estate or his legal
representative or where the insured has reserved the right to change the beneficiary. If the policy is
payable to an irrevocably appointed beneficiary, the insured cannot assign it because that will
prejudice the vested interest of the irrevocable beneficiary.
Q. When are the proceeds of a life insurance payable to the estate of the insured
considered to be conjugal?
A. The proceeds of a life insurance policy payable to the insured’s estate, on which the premiums
were paid by the conjugal partnership, constitute conjugal property. Thus, half belongs to the
husband exclusively and the other half belongs to the wife. If the premiums were paid partly
with paraphernal and partly with conjugal funds, the proceeds are in the like proportion
paraphernal and conjugal (Bank of the P.I. vs Posadas 56 Phil 315). However, where the
proceeds are payable to an irrevocable beneficiary such proceeds belong exclusively to the
beneficiary although the premiums were paid out of conjugal funds (Del Val vs Del Val 29 Phil
334)
SEC. 183. Unless the interest of a person insured is susceptible of exact pecuniary
measurement, the measure of indemnity under a policy of insurance upon life or health is
the sum fixed in the policy.
LIABILITY INSURANCE
(My note: This is actually covered by Section 174. This is also related to compulsory motor vehicle
insurance, which is Sections 373-389 and the provisions are too long for me to reproduce here.
Bahala na lang kayong magbasa. This is his lecture and parts of the Perez reviewer.)
Whether or not a third party can sue the insurer depends upon the wording of the contract.
For instance, in third party liability insurance contracts (TPL contracts are usually motor vehicle
insurance contracts---you can’t have your car registered if you don’t have TPL at the least), third
parties can sue the insurer directly. If the indemnity is against actual loss or payment, third parties
cannot sue.
The injured party for whom the contract of insurance is intended can directly sue the insurer.
Thus, in a vehicular accident, a person injured by the motor vehicle covered by third-party liability
insurance may directly sue the insurer. The general purpose of statutes enabling an injured person
to proceed directly against the insurer is to protect injured person against the insolvency of the
insured who causes such injury and to give such injured person a certain beneficial interest in the
proceeds of the policy.
Q: What is the margin of solvency required of insurance company? (Just try to look for it in the
Insurance Code, coz there was something wrong with Lyn’s file. File contained weird characters!)
Note also that Jack Discussed Sec. 241 and 242. (As to Claims Settlement)
AGENTS AND BROKERS: Must be licensed.. Soliciting for compensation without a license:
criminally liable. Rebate of premiums is also prohibited. Agreements regarding kickbacks can’t be
enforced because they are illegal.
SECTION 309.
It’s unlawful for any person to insure abroad if the risk is located in the Philippines because the
Commissioner has no jurisdiction over foreign insurers, but if the arrangement is CIF, it’s valid
because the risk occurs abroad.
Rating organizations – they give a range of premiums and say that anyone who does not
prescribe the premiums prescribed by us, we’re not doing business with you. It’s a valid exercise of
police power recognized in the US because if the premiums are no longer viable, the business
collapses, and the public is prejudiced. Also, there is no suppression of business.
Here, it covers only 2 instances: fire insurance and motor vehicle insurance.
A: An insurer may be held liable under the “no fault indemnity” provision without the necessity or
proving fault or negligence of any kind, provided the following requisites are present:
1. The claim is for death or injury to any passenger or third party;
2. The total indemnity in respect of any one person does not exceed P 5, 000; and
3. The necessary proof of loss under oath to substantiate the claim must be submitted
(Note: Jack said that in case of death, you submit the death certificate. In case of injury, you
submit a medical report. In ALL cases, however, you have to submit a police report)
Q: What right does the insurer paying “no fault indemnity” have?
A: 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 (Section 378). It is of no moment that that the
vehicle insured is not the one that caused the accident since the law provides that the insurer paying
the claim may recover from the owner of the vehicle responsible for the accident (Perla Compania de
Seguros case)
Jack: The no fault indemnity clause is without prejudice to the claimant’s getting more. For
instance, the claim is for 15, 000. Under the no fault indemnity clause, he gets 5, 000. But this
doesn’t mean that the 10, 000 is barred. Only that the claimant has to prove that there was
negligence. It’s void for the insurance company to require the claimant to waive his other claims as
a condition precedent to the release of the P5, 000 (which the claimant is entitled to as a matter of
right anyway. And kapal naman ng insurance company kung ganun, di ba?)
Two periods: you have to file the claim with the insurance company within 6 months from the time
of the accident, otherwise it’s deemed waived. Then you have to go to court within one year from
the denial of the claim, otherwise your claim will be barred. (See Section 384)
Importance of a license:
If the insured himself is the driver, he has the right to recover damages even if his license has
expired. If the driver is merely authorized by the owner (e.g, your “chauffer” or your friend or your
boyfriend), then the authorized driver must have a valid license (i.e, hindi expired), otherwise the
claim is barred.