Course Outline Atty. Mary Ann L. Reyes I. Introduction A. History of insurance B. Laws o!ernin insurance ". '. $. 2. 3. +. #. *. %.

Article #$%& '(""& '("')'("#& '"*+& ''(#& New Ci!il Code Insurance Code& RA "(+(# ,a-endin ./ +"' as a-ended0 1a-ily Code Section "*3& Cor4oration Code 5SIS Act& SSS Act RA 3#3+ EO '3( ,6uly '3& "%*#0 RA $3%" ,./IC Law0 RA %*'% ,.re)Need Code0

INSURANCE LAW

Read7 Enri8ue9 !s. Sunlife Assurance& 2" .:il '+% ,"%'(0 Insular Life !s. E;rado& *( SCRA "*" ,"%##0 1ili4inas)Co-4ania de Se uros de Na!a& "# SCRA '"( ,"%++0 C. 5eneral conce4t of insurance ". Section '& Insurance Code of t:e .:ili44ines ,IC.0 '. <est of insurance Read7 W:ite 5old Marine Ser!ices !s. .ioneer Insurance& 5R No. "323"2& '* 6uly '((3= .:ila-care Healt: Ser!ices Inc. !s. CA& $#% SCRA $3+ $. 2. 3. +. Suretys:i4 ,Sec. '& IC.0 .re)need 4lans ,See Securities Re ulation Code0 >aria;le contracts ,Sec. '$'& IC.0 ? Now Sec. '$*& RA "(+(# /oin an insurance ;usiness ,Sec. '& IC.0

Read7 .:ili44ine Healt: Care .ro!iders !s. Co--issioner of Internal Re!enue& +(( SCRA 2"$ #. Mutual insurance co-4anies ,See W:ite 5old !s. .ioneer0 ? See -utual ;enefit associations under Sec. 2($& RA "(+(# /. C:aracteristics ". '. ris@ distri;utin de!ice contract of ad:esion ,fine 4rint rule0

Read7 Ri9al Surety and Insurance Co. !s CA& $$+ SCRA "' Blue Cross !s. Oli!ares ,1e;. "'& '((*0 1ortune Insurance and Surety Co. !s. CA& '22 SCRA $(* 5ulf Resorts !s .:ili44ine C:arter Insurance Cor4.& 5R No. "33"+#& May "+& '((3 Eternal 5ardens Me-orial !s. .:ila-life Insurance& 5R No. "++'23& A4ril %& '((*

$. 2.

aleatory ,Art. '("(& Ci!il Code0 contract of inde-nity ,Sec. 2& IC.0

Read7 >erendia !s. CA& '"# SCRA 2"# 2.". EAce4tions to t:e 4rinci4le of inde-nity 3. u;erri-ae fides contract

E. Ele-ents of insurance ". '. $. 2. 3. Insura;le interest ,Sec. "()"2& IC.= Sec. "()"2& RA "(+(# Ris@ of loss BSec. $ ,"0& Sec. 3" 4ar f IC.= stet& RA "(+(#C Assu-4tion of ris@ ,Sec. '& IC.= Sec. '& RA "(+(#0 /istri;ution of losses .re-iu- ,Sec. ##& IC.= Sec. ##& RA "(+(#0

Read7 5ulf Resorts !s. .CIC .:ila-life Healt: Syste-s !s. CA 1. Su;Dect -atter of a contract of insurance 5. E!ent or 4eril insured a ainst BSec. $,"0 IC.= Sec. *2& IC.& now Sec. *+& RA "(+(#C H. Ris@& defined= 4ure !s. s4eculati!e ris@= 4ast e!ent= distin uis:ed frofortuitous e!ent and condition& loss& 4eril& :a9ard I.ERi :t of su;ro ation ,Art. ''(#& Ci!il Code0 ". EAce4tions to t:e su;ro ation rule Read7 Manila Ma:o any Manufacturin Cor4. !s. CA 1ederal EA4ress Cor4. !s. A-erican Ho-e Assurance

II.

Contract of Insurance A. B. Re8uisites of a contract of insurance ,Art. "$"*& New Ci!il Code0 .erfection ,Art. "$"%& NCC0 ". Co nition t:eory Read7 /e!elo4-ent Ban@ of t:e .:ili44ines !s. CA& 5R. "((%$#& Marc: '"& "%%2 Enri8ue9 !s. Sun Life Insurance of Canada& 5R. "3*%3& No!. '%& "%'( 5reat .acific Life Assurance !s. CA& 5R Nos. $"*23 F $"*#$& A4ril $(& "%#% C. .arties to a contract of insurance ,Sec. + F #& IC.= Sec. + F #& RA "(+(# ". t:e insurer& t:e insured& t:e ;eneficiary '. See Art. $*& NCC= $. rule on -arried wo-en ,Sec. $& IC. as su4erseded ;y 1a-ily Code= Sec. $& RA "(+(#0 2. rule on -inors ,Sec. $& IC.= Sec. $& RA "(+(#0 3. 4u;lic ene-y +. ca4acity of 4arty insured ,natural& Duridical 4ersons0 #. t:e insurer ,Sec. "*$)"*#& IC.& now Sec. "%")"%$& RA "(+(# = Sec. '*(& IC. on 4rofessional reinsurers& now Sec. '**& RA "(+(#= Sec. $%() $%"& IC. on -utual ;enefit associations& now Sec. 2($)2(3& RA "(+(# = Sec. '+'& IC.0 *. t:e ;eneficiary BArt. #$%& '("'& NCC= Read7 Insular Life !s. E;rado= Sec. ""& IC. ,Sec. ""& RA "(+(#0= Sec. "*(& IC. ,Sec. "*'& RA "(+(#0= Art. ''3& 1a-ily Code= Sec. 3$& IC. ,Sec. 3$& RA "(+(#0C Su;Dect -atter of insurance ,Sec. $ & IC.= Sec. $& RA "(+(#0 Insurance not a wa erin contract ,Sec. 2& IC.= Sec. 2& RA "(+(#0

/. E.

III.

Insura;le Interest A. B. C. /. Conce4t of insura;le interest in eneral Reason for t:e re8uire-ent of insura;le interest Insura;le interest in life insurance ,Sec. "(& ""& "'& IC.= Sec. "(& ""& "'& RA "(+(#0 Insura;le interest in 4ro4erty insurance ,Sec. "$ ?"*& IC.= Sec. "$)"*& RA "(+(#0 ". Ginds of insura;le interest in 4ro4erty

Read7 5aisano Ca ayan Inc. !s. Insurance Co-4any of Nort: A-erica& 5R No. "2#*$%& 6une *& '((+0 '. Insura;le interest in case of -ort a ed 4ro4erty ,Sec. *)%& IC.= Sec. *)%& RA "(+(#0 a. standard or union -ort a e clause ;. o4en -ort a e or loss 4aya;le clause

Read7 5ea onia !s. CA& 1e;ruary +& "%%3 RCBC !s. CA& '*% SCRA '%' $. 2. 3. +. #. Se4arate insura;le interest of -ort a or and -ort a ee ,Sec. 3$ and %$ IC.= Sec. 3$ and %3& RA "(+(#0 W:en -ust insura;le interest in 4ro4erty eAist ,Sec. "%& IC.= Sec. "%& RA "(+(#0 Insura;le interest of ;eneficiary in 4ro4erty& life insurance Effect of c:an e of interest in t:e t:in insured ,Sec. '(&)'2& 3# F 3*& IC.= Sec. '()'2& 3#F3*& RA "(+(#= Art. "$(+& NCC0 Assi nee in life& 4ro4erty insurance BSec "*"& IC. ,Sec. "*2& RA "(+(#= Sec. "*& IC. ,Sec. "*& RA "(+(#0C

Read7 S4ouses C:a !s. CA& Au ust "*& "%%# Cases under t:is to4ic7 S4ouses C:a !s. CA& ,Au ust "*& "%%#0= 5ea onia !s. CA& 1e;ruary +& "%%30= RCBC !s. CA ,'*% SCRA '%'0= 5aisano Ca ayan& Inc. !s. Insurance Co-4any of Nort: A-erica& 5.R. No. "2#*$% ,6une *& '((+0.

I>. /e!ices for ascertainin and controllin ris@ and loss A. Conceal-ent ,No c:an es under RA "(+(#0 ". Conce4t ,Sec. '+& IC.0 '. /uty to co--unicate ,Sec. '*& IC.0 $. <est of -ateriality ,Sec. $"& IC.0 2. Effect of conceal-ent ,Sec. '# F '%& IC.0 3. Matters w:ic: need not ;e co--unicated ,Sec. $(& $'& $2& F $3 IC.0 +. Wai!er of infor-ation ,Sec. $$& IC.0 Re4resentation ". '. $. 2. 3. +. Conce4t ,Sec. $+& IC.0 Ginds of re4resentation ,Sec. $+& $#& $%& 2'& IC.0 <est of -ateriality ,Sec. 2+& IC.0 Effect of alteration or wit:drawal ,Sec. 2"& IC.0 <i-e to w:ic: re4resentation refers ,Sec. 2'& IC.0 Effect w:en re4resentation is o;tained fro- t:ird 4ersons ,Sec. 2$& IC.0 #. W:en 4resu-ed false= effect of falsity ,Sec. 22 F 23& IC.0 See c:an es in Sec. 23& RA "(+(# C. Re-edies a!aila;le in case of conceal-ent or false re4resentation ". '. W:en rescission ;y t:e insurer -ay ;e eAercised ,Sec. 2*& IC.0 W:en life insurance 4olicy ;eco-es incontesta;le ,Sec. 2*& IC.0 a. re8uisites for incontesta;ility ;. t:eory and o;Dect of incontesta;ility c. defenses not ;arred ;y incontesta;ility

B.

/.

Warranties ". '. $. 2. Conce4t= distin uis:ed fro- re4resentation Ginds of warranties ,eA4ress& i-4lied& affir-ati!e& 4ro-issory0 <i-e to w:ic: warranty refers ,Sec. +*& IC.0 Effect of ;reac: ,Sec. #2& #3& F #+& IC.0

Cases7 5reat .acific Life Assurance !s. CA ,$"+ SCRA +#*0= Sun Life Assurance Co. of Canada !s. CA ,5.R. No. "(3"$3& 6une ''& "%%30= .:ila-care Healt: Syste-s Inc. !s. CA ,$#% SCRA $3+0= >da de Canilan !s. CA ,5.R. No. %'2%'& 6une "#& "%%$0= <an !s. CA ,6une '%& "%*%0= .rudential 5uarantee !s. <rans)Asia S:i44in Lines& Inc. 5.R. No. "3"*%(& '( 6une '((+

>.

<:e .olicy of Insurance

A. /efinition and for- ,Sec. 2%)3(& RA "(+(#0 ? see new 4ro!ision re electronic forB. 1ine 4rint rule C. Contents of t:e 4olicy ,Sec. 3"& RA "(+(#0 /. .a4ers attac:ed to t:e 4olicy and t:eir ;indin effect ,rider& warranties& clause& endorse-ent0 E. Ginds of 4olicy ". o4en ,Sec. +(& RA "(+(#0 '. !alued ,Sec. +"& RA "(+(#0 $. runnin ,Sec. +'& RA "(+(#0 1. Co!er notes ,Sec. 3'& RA "(+(#0 5. Cancellation of 4olicy ,Sec. +3)++& EA "(+(#0 H. <i-e to co--ence action on t:e 4olicy= effect of sti4ulation ,Sec. +$& RA "(+(#0 Cases7 .acific <i-;er EA4ort Cor4oration !s. CA ,""' SCRA "%%0= 5reat .acific Life Assurance Cor4oration !s. CA& *% SCRA 32$0= .:ilA- Life and 5eneral Insurance Co. !s. 6ud e >alencia)Ba alacsa ,5R No. "$%##+= Au ust "& '(('0 >I. .re-iuA. B. E. 1. 5. Conce4t Effect of non)4ay-ent of 4re-iu-= EAce4tions ,Sec. ##& #*& IC.& Art. "$(+& NCC0 ? now Sec. ## and #%& RA "(+(# W:en insured entitled to return of 4re-iu-s ,Sec. #%)*'& IC.= now Sec. *()*2& EA "(+(#0 .ay-ent t:rou : salary deduction ,Sec. #*& RA "(+(#0 1uture 4re-iu-s ,Sec. *2& RA "(+(#0

Cases7 Ma@ati <uscany Condo-iniu- Cor4. !s. CA ,'"3 SCRA 2+'0= UC.B 5eneral Insurance !s. Masa ana <ela-art ,6une "3& "%%%0= UC.B 5eneral Insurance !s. Masa ana <ela-art ,$3+ SCRA $(#0= A-erican Ho-e Insurance !s. C:ua ,5.R. No. "$(2'"& 6une '*& "%%%0= <i;ay !s. CA ,'3# SCRA "'+0= .:il. .:oeniA Surety F Ins.& Co. !s. Woodwor@s& Inc.& ,%' SCRA 2"%0 >II. .ersons entitled to reco!er on t:e 4olicy and conditions to reco!ery A.

Beneficiary ,Sec. "")"'& 3$& 3+& F 3# & IC.= now Sec. "")"'& 3$& 3+& 3#& RA "(+(#0 B. Li-itations on t:e a44oint-ent of ;eneficiary ,Art '("' F #$%& NCC0 C. Rule w:ere insurance is -ade ;y an a ent or trustee ,Sec. 32& IC.= now Sec. 32& RA "(+(#0 /. Rule w:ere insurance if -ade ;y 4artner or 4art owner ,Sec. 33& IC.= Sec. 33& RA "(+(#0 E. Loss ,Sec. *$)*#& IC.= Sec. *3)*% RA "(+(#0 See also Sec."#$& "*")"*'& IC.= now Sec. "#3& "*2)"*3& RA "(+(#0 1. Notice and 4roof of loss ,Sec. **)%'& IC.= now Sec. %()%2& RA "(+(#0. See also Sec. "*'& IC.= now Sec. "*3& RA "(+(# Cases7 Bonifacio Bros. Inc. !s. Mora ,May '%& "%+#0= <:e Insular Life Assurance !s. E;rado& *( SCRA "*"0= >da. de Consue ra !s. 5SIS ,$# SCRA $"30= 5o !s. Redfern ,#' .:il #"0= Country Ban@ers Insurance Cor4oration !s. Lian a Bay ,6anuary '3& '(('0

>III.

/ou;le Insurance A. B. C. /. /efinition and re8uisites ,Sec. %$& IC.= now Sec. %3& RA "(+(#0 /istin uis:ed fro- o!er)insurance Sti4ulation a ainst dou;le insurance Rules for 4ay-ent w:ere t:ere is o!er)insurance ;y dou;le insurance ,Sec. %2& IC.= now Sec %+& RA "(+(#0

IH.

Reinsurance A. B. C. /. /efinition ,Sec. %3& IC.= now Sec. %#& RA "(+(#0 Nature ,Sec. %# F %*& IC.= now Sec. %% F "((& RA "(+(#0 /istin uis:ed fro- dou;le insurance /uty of reinsured to disclose facts ,Sec. %+& IC.= now Sec. %*& RA "(+(#0

H.

Marine Insurance A. B. C. /efinition Sco4e of -arine insurance ,Sec. %%& IC.0= now Sec. "("& RA "(+(# Ris@s or losses co!ered in -arine insurance ". 4erils of t:e sea !s. 4erils of t:e s:i4 '. Iall ris@sJ -arine insurance 4olicy Insura;le interest in -arine insurance ". "('0 ;. rule w:ere !essel :y4ot:ecated ;y ;otto-ry ,Sec. "("& IC.= now Sec "($& RA "(+(#0 c. insura;le interest in frei :ta e ,Sec. "(')"(2& IC.= now Sec. "(2)"(+& RA "(+(#0 '. $. c:artererKs insura;le interest ,Sec. "(+& IC.= now Sec. "(*& RA "(+(#0 interest in t:e t:in and in 4rofits ,Sec. "(3& IC.= now Sec. "(#& RA "(+(#0 s:i4 ownerKs insura;le interest ,Sec. "((& IC.= now Sec. "('& RA "(+(#0 a. rule w:ere !essel is c:artered ,Sec. "((& IC.= now Sec.

/.

E.

Conceal-ent ". Meanin of conceal-ent in -arine insurance '. /uty to co--unicate ,Sec. "(#& IC.= now Sec. "(%& RA "(+(#0 $. O4inions or eA4ectations of t:ird 4ersons ,Sec. "(*& IC.= now Sec. ""(& RA "(+(#0 2. W:en conceal-ent does not !itiate t:e entire contract ,Sec. ""(& IC.= now Sec. ""'& RA "(+(#0 3. .resu-4tion as to @nowled e ,Sec. "(%& NIL= now Sec. """& RA "(+(#0 1. Re4resentations ". Effect of false re4resentation ;y t:e insured ,Sec. """& IC.= now Sec. ""$& RA "(+(#0 '. Effect of false re4resentation as to eA4ectation ,Sec. ""'& IC.= now Sec. ""2& RA "(+(#0 I-4lied Warranties in Marine Insurance

5.

".

Seawort:iness ,Sec. ""$& IC.= now Sec. ""3& RA "(+(#0 a. w:at constitutes seawort:iness ,Sec. ""2& ""+& ""%& IC.= now Sec. ""+& ""*& 0"'"& RA "(+(# ;. w:en co-4lied wit:= EAce4tions ,Sec. ""3& IC.= now Sec. ""#& RA "(+(#0 c. w:en !oya e consists of different 4ortions ,Sec. ""#& IC.= now Sec. ""%& RA "(+(#0 d. rule w:ere s:i4 ;eco-es unseawort:y in t:e course of t:e !oya e ,Sec. ""*& IC.= now Sec. "'(& RA "(+(#0 e. car o seawort:iness ,Sec. ""%& IC.= now Sec. "'"& RA "(+(#0 Warranty t:at necessary docu-ents are carried ,Sec. "'(& IC.= now Sec. "''& RA "(+(#00 Warranty a ainst i-4ro4er de!iation a. -eanin of de!iation ,Sec. "'$& IC.= now Sec. "'3& RA "(+(#0 ;. w:at is !oya e insured ,Sec. "'"& IC.= now Sec. "'$& RA "(+(#0 c. if course of sailin not fiAed ,Sec "''& IC.= now Sec. "'2& RA "(+(#0 d. w:en 4ro4er ,Sec. "'2& IC.= now Sec. "'+& RA "(+(#0 e. effect of i-4ro4er de!iation ,Sec. "'3& IC.= now Sec. "'#0 f. loss su;se8uent to i-4ro4er de!iation ,Sec. "'+& IC.= now Sec. "'*& RA "(+(#0

'. $.

H.

Loss ".

Ginds of losses ,total or 4artial& Sec. "'#)"'*& IC.= now Sec. "'%) "$(& RA "(+(#0 '. Ginds of total loss ,actual and constructi!e0 ,Sec. "'%)"$'& IC.= now Sec. "$")"$2& RA "(+(#0 $. W:en s:i4 4re!ented fro- co-4letin !oya e ,Sec. "$$& IC.= now Sec. "$3& RA"(+(#0 2. Lia;ility for da-a es in case of res:i4-ent of car o ,Sec. "$2& IC.= now Sec. "$+& RA "(+(#0 3. Ri :t to 4ay-ent u4on an actual total loss ,Sec. "$3& IC.= now Sec. "$#& RA "(+(#0 +. Sco4e of insurance a ainst actual total loss ,Sec. "$#& IC.= now Sec. "$%& RA"(+(#0 #. W:en constructi!e total loss eAists ,Sec. "$%& IC.= now Sec. "2"& RA"(+(#0 *. Conce4t of a;andon-ent and its re8uisites ,Sec. "$* ?"33& IC.= now Sec. "2(&)"3#& RA "(+(#0 %. A!era e ". Ginds of a!era e ,4articular and eneral0 '. Re8uisites of eneral a!era e $. InsurerKs lia;ility for eneral a!era e ,Sec. "+2)"+3& IC.= now Sec. "++)"+#& RA"(+(#0 "(. Measure of Inde-nity ,Sec. "3+)"++& IC.= now Sec. "3*&)"+*& RA "(+(#0 Cases7 Ro8ue !s. IAC ,"$% SCRA 3%+0= 5o <iaco !s. Union Ins. Society of Canton ,2( .:il 2("0= Cat:ay Insurance !s. CA ,"3" SCRA #"(0= 1ili4ino Merc:ants Insurance Co. !s. CA ,"#% SCRA +$*0= Oriental Assurance Cor4oration !s. CA ,'(( SCRA 23%0

HI.

1ire Insurance /efinition and sco4e of fire insurance ,Sec. "+#& IC.= now Sec. "+%& Ris@s or losses co!ered Effect of alteration in t:e t:in insured ,Sec. "+*)"+%& IC.= now Sec. "#() "#". RA"(+(#0 Read Sec. "#(& IC. ,Now Sec. "#'& RA "(+(#0 Measure of inde-nity ,Sec. "#")"#'& IC.= now Sec. "#$)"#2& RA "(+(#0 Co)insurance clause .ro:i;itions ,Sec. "#$& IC.= now Sec. "#3& RA "(+(#0

A. RA"(+(#0 B. C. /. E. 1. 5.