11/06/16 is the reason why insurance is a been in force during

INSURANCE LAW risk distributing device. the lifetime of the

Madaming nag cocontribute sa insured for a period of
★Insurance policy is a contract (requires isang fund and that fund will be two (2) years from the
consent, object, consideration absent of used to indemnify you. date of its issue or of
one renders the contract NULL & VOID) its last reinstatement,
 it is a written instrument in which the CHARCTERISTICS OF AN INSURANCE the insurer cannot
contract of insurance is set forth. It should CONTRACT prove that the policy is
be WRITTEN  an exception to the rule on void ab initio or is
contracts that there may be oral contracts 1. risk-distributing device  rescindable by reason
 however, even without insurance policy, “risk” of the fraudulent
the contract is still valid.  kruk kruk  Insurer receives PREMIUM concealment or
inamerrr [consideration] misrepresentation of
 In the event, one suffers, insurer the insured or his
Insurance policy/contract is, again, an has so much funds agent.
exception to the rule on contracts that  Many [other insured clients]
both parties must sign the contract contribute to a certain/common 5. CONSENSUAL CONTRACT –
 here, the insurer only signs the contract fund and such fund shall take consent is important; both parties must give
 EXN: when there are warranties care of any loss/damage consent
included/attached to the policy
 however, the application form forwarded 2. Contract of indemnity 6. ALEATORY- others consider
to the insurer is signed by the insured. This  Not total indemnity – either partial insurance as a wagering contract BUT NO
is part of the contract. or full  wagering contracts or
 Depends on premium or policy gambling depends on or is subject to the
Insurance contract/policy- is a special the insured has taken. happening of uncertain event
contract; governed by special law  never confuse insurance with
 use the word “indemnify” not “pay” when 3. FINE PRINTS – [atty G’s advice: these
dealing with insurance problems  this is read this!!!] common in a contract
more technical of adhesion
 SPECIAL LAW [insurance] primarily  allowed ELEMENTS:
applies > GENERAL LAW [civil code]  read (it is wrong not to read it), in case of
doubt, it is construed in favor of the insured 1. PREMIUM (consideration)– most
 in insurance, liability would arise from  You cannot use “I did not read it” important!
unknown or contingent event as a defense
(fortuitous/natural disaster/gross  Acceptance/Consent of the What is the object?
negligence/ torts) Insured binds him to the contract - Depends on the kind of policy
- OLD CASE so the Insurer is NOT liable for entered into.
o Fire ravaged the failure of the insured to read the
insured in this case same. 2. INSURABLE INTEREST – very
o Fire is not covered by important for a valid insurance
the person’s insurance 4. UBERRIMAE FIDAE contract- contract.
o However, what is contract entered in utmost good  there must be a RISK OF LOSS (like fire,
insured is the said faith marine, health)
person’s liability or  the [insured] is supposed to -insurer should assume that risk
obligation to pay every disclose all the material facts.  insurer then would have a
cut-off dun sa mga GR: Contract of insurance should be scheme to distribute that risk
kinon-sign na mga construed in favor of the insured. [loss] in case somebody dies/gets
goods. (GAISANO XPN: Concealment injured.
CASE)  E.g. in life insurances, insured “SCHEME” = plan to distribute
o Siyempre may utang must disclose all ailments, past loss
yan, not able to pay medications
within 60 days  Same rule in relation to medical 3. RISK OF LOSS
o Such person is insured insurance 4. ASSUMPTION OF RISK
against LOSS, o Although this is non-life 5. SCHEME TO DISTRIBUTE
DAMAGE, LIABILITY o Concealment under LOSS
Sec.48 applies to LIFE
***Insured against WHAT? – this is a very insurance only.
technical term. It should specify the exact HOWEVER, SC 3 General Classifications of Insurance:
kind of insurance. [marine ba or fire, or applied Sec. 48 to 1. LIFE [group, individual,
whatever]. many kinds of endowment]
insurance as long as it 2. NON-LIFE [motor vehicle,
***THING is insured. – payable within 60 is not one of the marine, fire, accident, medical]
days or 90 days – it depends. Sino? Yung exceptions in the policy 3. SURETYSHIP
insurer magbabayad within 60 or 90 days? o “SEC. 48. Whenever a
right to rescind a ★There are certain
Why do we have these types of contracts? contract of insurance is companies/organizations/corporations
- There are so many natural given to the insurer by engaged in the business of insurance but
disasters, so you want to be any provision of this NOT considered as an insurance company.
certain that at least, you will be chapter, such right [like contract of indemnity in case of
indemnified and suffer loss but must be exercised hospitalization and medical expenses.
NOT that much because there is previous to the HMOs]  HEALTH MEDICAL
indemnity on the part of the commencement of an ORGANIZATIONS
Insurer. action on the contract.
- Because there are many SURETYSHIP – secondary contract to a
uncertain events and you want to “After a policy of life principal obligation. It is also an indemnity
be certain that you will not bear insurance made agreement to pay a 3rd person.
the total loss as the insurance payable on the death of Ex. Contract to put up a
company will indemnify you. That the insured shall have commercial building. X is a
 contractor-obligor. Henry Sy is
the owner-obligee. X was the one
highest bidder to build Henry Sy’s
3 commercial buldings. To make
sure that X will comply with his
obligation, Henry Sy required to
enter into a surety contract with a
bank to guarantee the
construction of the building. So X
should put up a bond. In the
event that X failed to comply his
obligation, Sy can directly sue the
bank-surety for failure to comply
with the principal contract. X and
the bank-surety’s liability is joint
and solidary.
Principal Contract: put
up the buildings.
Secondary Contract:
surety contract.
Who has the right to cancel the suretyship?
- The obligee [Henry Sy] has the
discretion to cancel the bond of
the surety, and NOT the
contractor [obligor].
If obligee did NOT cancel that, halimbawa,
hindi binayaran ni X ng premium yung
bank, contract of surety between them is
still binding. X and bank-surety are still joint
and solidarily liable. [NOTE: the COURTS
may also cancel suretyship]
PARTIES
Who are the parties in an insurance
contract?
- Insurer and insured.
- Beneficiary is not a party. He is a
third party to the contract of
insurance.
Why does the insured cannot cancel the
contract without the consent of the
beneficiary?
 IRREVOCABLE, insured cannot
just cancel without the consent of
the beneficiary (kulang notes ko)
Can you designate anybody as beneficiary?
 GR: Anyone
 EXN: public enemy, paramour
i INSURANCE, the fruits cannot be
Why can’t you insure your paramour?
- Look at Civil Code disqualification
on Donation. DONATION TO
PARAMOUR IS VOID! Memorize
Civil Code
- Civil Code: 1.) Those guilty of
adultery/concubinage; 2.) 2 or 3
convicted of the same crime and
then you donate to another e.g.
drug lord binigay sa anak; 3.)
public officers; 4.) beneficiary,
principal, accomplice, accessory
in an attempt in the life of the
insured these are VOID
DONATIONS
Article 739. The following donations shall
be void:
(1) Those made between persons
who were guilty of adultery or
concubinage at the time of the
donation;
(2) Those made between persons
found guilty of the same criminal
offense, in consideration thereof; GR; BF-GF cannot insure each other kahit
magkasabwat! engaged pa sila. There is no insurable
(3) Those made to a public officer interest
or his wife, descendants and XPN: Pecuniary benefit is derived from the
ascendants, by reason of his other, like support for legal education, so
office. one can designate the other as beneficiary.
 BAKIT BENEFICIARY!?!??!??!?????
In the case referred to in No. 1, the action
for declaration of nullity may be brought by ★In PROPERTY INSURANCE and likewise
the spouse of the donor or donee; and the in any kind of insurance, insurable interest
guilt of the donor and donee may be proved is required.
by action. Property coupled with an:
4TH XPN: Those who are principals, - Existing interest
accomplices, or accessories in the death of - Inchoate interest founded on an
the insured. existing interest
- Expectancy coupled with an
Can an illegitimate child be designated as a existing interest in that out of
beneficiary? which the expectancy arises.
- YES. The law says “child”
without any qualifications. Legal “SEC. 14. An insurable interest in property
basis. The law does not may consist in:
differentiate whether legitimate or (a) An existing interest;
illegitimate (b) An inchoate interest founded on an
existing interest; or
GAMBOA case: the legal wife and the (c) An expectancy, coupled with an existing
children were not awarded the proceeds of interest in that out of which the expectancy
the insurance, but instead the same were arises.
awarded to the illegitimate children with the
exception of the mistress because it ★So a lessee, even a mortgagee can
constitutes a VOID DONATION. As a rule, insure the thing because there is an
proceeds will be received by those EXISTING INTEREST.
designated in the policy, UNLESS the  the lease contract for the lessee, the title
designation is void. of ownership for the lessor
Can you insure the life of your mistress who
★In case of INCHOATE INTEREST –
pays for your law school expenses,
shares of stockholders as an SH, you
provides everything for you?
own the stocks in the corporation, what is
- YES you can insure your
your interest in the corporation? NONE =
mistress’ life because you derive
they CANNOT insure the corporation’s
pecuniary benefit from her. BUT
property because they only have an
YOU CANNOT DESIGNATE
inchoate interest NOT founded on an
HER AS BENEFICIARY.
existing interest.  pano mo nasabing not
founded in existing interest? CHUKMAWRL
Can you insure your wealthy father who
sent you to business school, and keeping in
mind that the Code does NOT expressly ★Mere squatter/informal settler (w/o the
state that children can insure the life of their consent of the owner) on a land = they
parent? CANNOT insure the fruits planted thereon
- YES, again, because you have UNLESS there is a contract with the
derived pecuniary benefit from landowner; not coupled with with existing
him. interest
 in CIVIL LAW, planter can
INSURING DESIGNATING gather the fruits, but in
SOMEBODY SOMEBODY AS insured.
BENEFICIARY
insurable interest ★Insurance takes effect when perfected
is required, anybody, except UNLESS cancelled or amended.
UNLESS you the 4 XPNS
derived a pecuniary PROPERTY LIFE
benefit/support
Insurable Interest Insurable Interest is
must be exist when enough to exist at
***insofar as insuring and designating insurance takes the time of
somebody as beneficiary, you can only
effect AND at the execution but need
insure those enumerated in the law or those time of loss. NOT exist at the
from whom you derive pecuniary benefit
time of loss or
(valid for 1 YEAR) death.
★INSURABLE INTEREST
- relation/connection/concern to a ???????
person
Existence AND at Ex. Maria was
- you want the life/property
- in short, it is your interest to the time of loss are insured by her
benefit from the existence of vested in the same husband for P100M
the person or preservation of a person who insured but later she
property.
annulled the
the same. marriage before her
husband’s death.
Can she claim the
proceeds? – YES.
II must exist at the II does not need to
time of the existence exist at the time of
and at the time of loss/death. It must
the loss despite full only exist at the
payment of 1 YEAR. time that the
The law provides insurance takes
that in property effect, and NOT at
insurance, II must the time of loss.
exist at the time of
existence and loss =
without ownership
even if paid for 1
YEAR.
House insured on Jan. 1, 2015. The owner
sold the property to Y in November 2015.
The owner repurchased the house and
thereafter, it was totally consumed by fire
on December 1, 2015. Is the owner of the
house entitled to the proceeds?
 YES, because his insurable
interest was not lost but merely
suspended during the duration it
was sold to Y. he regained it
upon repurchase.
What if the house was not repurchased? Is
the owner still entitled to the proceeds?
 NO, because in property
insurance, the insurable interest
should exist NOT ONLY at the
time of the commencement of the
contract of insurance BUT ALSO
at the time of the loss,
notwithstanding payment of
premiums even if paid for 1
year
CHANGE IN INTEREST
How about when you insured your house,
but you died in July? Will your heirs be
entitled? Did it avoid the insurable interest?
 NO. The law provides that if there
is a change in interest, upon
death by will or succession,
insurable interest passes to the
heirs/assignees  not lost owned
pa rin naman niya e
CONCEALMENT in Life Insurance
In order to make the insurer liable, what is
the rule?
 NO CONCEALMENT
 INCONTESTIBILITY RULE shall
not set in
What is concealment?
 SEC. 26. A neglect to
communicate that which a party
knows and ought to
communicate, is called a
concealment.
***when there is concealment in life
insurance, the Insurer is not liable UNLESS
barred by the INCONTESTIBILITY
CLAUSE
INCONTESTABILITY CLAUSE – to make
sure that the insurer is liable in case of
material concealment.
 Dapat within 2 years from the
execution of the contract of
insurance, nag investigate ka na
bilang Insurer kung may
concealment. After that 2-year
period, HINDI NA PWEDE.
Liabile ka even if there is
concealment.
 INSURER CANNOT PROVE
THAT THE CONTRACT IS VOID
AB INITIO OR RESCISSIBLE
after 2 years from execution of
the contract of insurance.
***In LIFE Insurance, it is the insurer’s duty
to find out within 2 YEARS whether the
facts stated in the application are true or
not. Failure to do so, when the insured
dies within 2 years?????, the insurer
becomes liable. Even if the insured was
negligent when he died and the insurer
failed to investigate the cause of his death
in 2 years, the insurer CANNOT invoke the
concealment.
XPNs: There is nonpayment of premium.
NO insurable interest.
★Concealment will NOT apply if one of the
RISKS is excepted in the policy. Ano ang
excepted?
CANCELLATION ≠ RESCISSION
***Health Medical Insurance
 NOT LIFE INSURANCE
 GR: In non-life insurance,
material concealment (SEC 48)
will not apply, Insurer cannot
rescind the contract.
 SC: the rule can be used as an
affirmative defense of the insurer
to exempt itself from liability
***What’s the difference between Life and
Health Medical Insurance?
 In life insurance, you need not go
to court for rescission, just send a
formal notice to the heirs
★2 YEARS or
“REINSTATEMENT” –
automatic rescission
 In non-life insurance, go to court.
You can only use concealment as
an affirmative defense in
preparing the pleadings. Also,
exclusions in the policy apply
★★★SO when there is CONCEALMENT in
NON-LIFE, rescission is NOT automatic.
HMO – Health Medical Organizations
(corporation)– contract of indemnity ≠
insurance contract
 Engaged in providing for
hospitalization
 This involves CONTRACY
OF INDEMNITY These
corporations will reimburse
you for your expenses.
[proceeds]
***In 2 cases,
 Ang nag-insure ay HMO, not
insurance company, the
mistress was the one
designated as beneficiary
SC: since this is not an insurance
contract, the mistress is entitled to the
proceeds of the insurance [under HMO]
when the mistress paid for the hospital
expenses as reimbursement.
Material Concealment & Beneficiaries
concerned:
- Life
- Non-Life
- HMOs
★PREMIUM - what insured pays to insurer
as consideration
In PROPERTY insurance,
GR:NO PREMIUM = NO INSURANCE
(premiumindemnity)
XPNs:
1. Grace Period [is given] -
★GRACE PERIOD – either 30 or
60 DAYS from date due.
Does the grace period apply to LIFE
insurance?
- YES, and industrial life too.
2. Estoppel (installment basis
pagbayad ng premium)
3. Agent [given to insurer’s agent]
did not reimburse
4. Check [has sufficient funds]
***Notice of Non-Renewal not Received-
Insurer is liable pero pag insured mismo
ang nagpadala ng notice siyempre wala na
***“CREDIT EXTENSION” – when given,
payable on installment (life fire insurance)
When does insurer return the premium?
- When the thing insured is NOT
exposed to the risk (Ex. voyage
did NOT push through because
of strong typhoon)
- When contract is VOIDABLE –
why?
- Because of OVER-INSURANCE
or
- NO INSURABLE INTEREST.
- NO loss, damage, or liability
★If there is NO #LOSS #DAMAGE
#LIABILITY = return the premium!
FIRE INSURANCE- loss by fire or
extension of fire (allied risks??)
 must be specifically insured for FIRE –
iba pag ininsure mo for earthquake.
FIRE may be caused by gas explosion,
lightning, earthquake, tornado, windstorm.
 Insurer is liable only if FIRE is the
proximate and only cause, UNLESS fire is
excepted in the insurance contract
“ALLIED RISKS” proximate and ONLY
CAUSE is fire.
★FINE PRINTS “excluding the following...”
Kasi nakalagay sa exclusions eh.
★PROXIMATE CAUSE – by natural and
continuous sequence, uninterrupted by any
intervening cause. [WITHOUT
INTERVENTION]
 although IMMEDIATE
CAUSES are also allowed.
GR: proximate cause is fire
EXN: immediate causes are also allowed
 property damaged because of fire – NOT
necessarily your negligence.
 e.g. dahil sa sunog bumagsak yung
bahay sa iba pang bahay PROXIMATE
CAUSE
SC: Property lost by theft from saving them
from fire = immediate cause.
***nakalimutan mo i-switch off ang lights
entitled pa rin sa proceeds because you are
insuring because of your negligence BUT
NOT GROSS NEGLIGENCE  e.g.
ARSON
***see friendly v hostile fire, pag ka hostile,
Insurer is liable
 Naalala ko pag friendly yung
mga galing sa stove – kung
saan talaga may apoy na
nalabas  PLS CHECK
11/13/16- another day! The days are
long. The years are short.
CONCEALMENT
Sec.48 [ XPN to the rule.] Applies also to
other insurance like MARINE INSURANCE.
★Some companies involved in
hospitalization (HMO=health medical
organizations)  Concealment NOT
applicable.
*HMOs = for reimbursement of
medical/hospital expenses who are NOT
insurers again, this is a contract of
indemnity.
RULE ON BENEFICIALS
*There are non-life insurers –
insure against medical,
hospitalization, and medical
services
***Health Provider Insurance Co.
 This is an insurer but the
insurance contract is NON-
LIFE
 Does incontestability apply?
[2-YEAR period]
o NO. It only applies to
LIFE INSURANCE!!!!
However, there are
non-life insurers who
provide for their own
rule on concealment.
 SC: Concealment in NON-
LICE INSURANCE= Mere
defense of insurer to be
exempt from liability
[affirmative defense]
o Rule on
Concealment – na
you cannot
rescind - does not
apply but only
concealment as
an affirmative
defense do
When *Beneficiary = anybody XPN: Void Donees
MISREPRESENTATION/CONCEALMENT (Art. 739)
is present = INSURER must only prove
only that it is non-life insurer.
MARINE INSURANCE
In Life Insurance, Insurer does not have to
prove itself if there is material concealment. - Insurance that covers risks
Insurer has right to rescind in case of regarding common carriers
material concealment. (automatic engaged in water
rescission when concealment is material transportation.
 NOTICE to heirs)  conflicting sa day 1  Common carriers must
ata please check prove extraordinary
diligence to exempt itself
★Consider the 2-YEAR period  insurer is from liability
given 2 YEARS to investigate whether there  EXN: 1. Acts of God; 2.
is material concealment. Fortuitous Events e.g.
E.G. Insured had no knowledge of such hijacking; piracy
material fact. (Ex. Di niya alam may
prostate cancer ka pala)- may concealment PERILS OF THE SHIP [insurer not liable] ≠
ba? PERIL OF THE SEA [insurer is liable]
 It is the insurer that should
find out kaya may mga *To minimize losses, the shipowner should
physical examination e insure the ship so that in case of perils of
 Insurer has the right to the sea, the insurer will be liable.
cancel because there’s
material concealment? PERILS OF THE PERILS OF THE
 If hindi niya na-discover, SHIP SEA
WALA NA.
 If the insured is still alive Insurer NOT liable Insurer is liable
within 2YEARS = insurer
has RIGHT TO RESCIND,
so no liability attaches = Broken engine – Piracy, fortuitous
VOID AB INITIO because of cause why the ship event, Hi-jacking,
material concealment = sank. natural disasters,
NOT liable anymore. typhoons, lightnings,
 PERO AGAIN PAG NON- earthquakes, storm
LIFE, HINDI PWEDENG surge [natural
AUTOMATIC RESCISSION.
disaster na to kahit
AFFIRMATIVE DEFENSE
LANG. wala sa book]
SC: Insurer is given 2 YEARS to investigate
whether a client has conceded a material *Coverage of marine insurance = perils of
fact. Otherwise, insurer can no longer the sea.
rescind.
*if you are the owner of the cargo or
★If NON-LIFE like medical insurer = NO engaged in the business of cargo
RESCISSION  can only interpose transportation. You can likewise insure
CONCEALMENT as an affirmative defense yourself against these liabilities.
during litigation. [affirmative defense 
only courts can determine] ★MARINE INSURANCE = vessel and
cargo are only insured.
★HMO = not insurer (to be an insurer,
must be licensed by Insurance
Commission) YET, HMOs can still engage
in the business of insurance but = NO ENGAGED IN FREIGHTAGE
INCONTESTABILITY CLAUSE which ***if cargo owner or someone engaged in
applies freightage, he can also insure the cargo
*NOT registered = mere contract because in this case, he cannot claim
of indemnity automatically claim from the Insurer. Sa
Common Carrier ka lang kukuha.
Can you insure the life of your mistress? - To claim directly against the
- NO. You have no insurable insurer, separately insure your
interest. However, if the person freightage. XPN: Insure yourself
provides that the mistress in an ALL-RISK policy [covers
provides for education, then YES, BOTH perils of the ship and sea]
but she CANNOT be designated
as beneficiary VOID ALL RISK MARINE INSURANCE
DONATION UNDER THE LAW. 1. BARRATRY– nagwarla mga
You can only have an insurable crew members.  peril of the
interest on your mistress’s life ship
because of pecuniary interest. 2. MASTER AYAW NA NIYA,
- If contract of indemnity, NOT PINABAYAAN SHIP  peril of
INSURANCE, YES the mistress the ship because there is an
is entitled to the proceeds IMPLIED WARRANTY of
seaworthiness – E ANO?!?!?
***kasama na tong mga to pag ALL RISK
KEMELAR BOOMST
RIGHT OF SUBROGATION – pag
binayaran na ng Insurer ang indemnity, he
then exercises his right of subrogation
against the owner of the ship
 [right of indemnity] insurer’s
right against the vessel-
owner, provided, that the
vessel owner is at fault.
 If owner is insured from
ALL RISK, NO
SUBROGATION, walang
habol sa insured [vessel
owner]
Remedy of 3rd Person/insured (w/o fault):
CLAIM for damages under transportation
law.
What is a fortuitous event? An event
unforeseen, even if foreseen, UNEVITABLE
SC: Piracy/Hijacking = fortutous event, but
must be proven.
Perils of the Sea = easier to prove than
perils of the ship [ordinary wear & tear]
GENERAL AVERAGE LOSS – What’s the effect? Nawalan ka ng
losses/expenses to save the vessel, cargo,
or any interest on the vessel, like jettison,
proper deviation (deviate from original
course) or arrival under stress.
 E.g. you don’t know there’s
a typhoon coming. In the
middle of the ocean, your
vessel is not stable
(lapsided? Haha basta
nakatabingi), then there’s
storm surge. Ang ginawa
mo, you throw overboard the
cargo to save the vessel.
This is Jettison. Sino
magbabayad ng loss?
YUNG MGA NASALBA.
Kunwari, 5M ang loss,
paghahatia-hatian
proportionately if there is no
insurance.
JETTISON – purpose: throw away to the
sea all heavy load [cargo] of the ship in
order to save the vessel/lives of
passengers.
Who will pay?
- Those who were saved. Thus,
they will contribute the value
[loss] of the cargo thrown to the
sea, proportionately, if NO
insurance. [if insured kung may
insurance, insurer must pay
those who suffered]
PROPER DEVIATION – e.g. you do not
know that there are pirates in your route.
Lumihis ka ng landas. Purpose: to save the
cargo/vessel from pirates or hi-jackers. May
expense ba rito? OO, gas at yung cargo
nan a-spoiled. For example, 1 week lang
originally ang layag, but it took you 3
weeks. Said expense must be reimbursed.
BUT if there’s an insurance, it is the Insurer
who should reimburse. Proper Deviation is
considered as PERIL OF THE SHIP.
ARRIVAL UNDER STRESS – purpose:
arrive to a certain port which is NOT your
destination in order to save lives, cargo,
vessel or when you ran out of oil, SO
ADDITIONAL EXPENSES were incurred.
As a result, common carrier is liable to the
said expenses. This is likewise considered
as PERIL OF THE SHIP.
*** KAYA NGA KELANGAN ALL RISK
MARINE INSURANCE ANG KUNIN MO
 Either vessel owner or cargo
owner, or BOTH
RULE ON CONCEALMENT IN MARINE
INSURANCE
1. You concealed the fact that your
vessel is heading West China
Sea, alam naman natin ang
kainitan ng China kemelar.
Supposing you conceal the fact
that the nationality of your vessel,
kunwari Philippine-registered na
vessel. Pero nilagyan mo ng
Chinese flag with Chinese
characters pa. Nagpanggap kang
Chinese, but later it was seized
by the Chinese authority.
cargo. Babayaran mo lahat yun.
Was there material concealment?
Is the insurer liable? You as the
owner of the cargo was the one
who concealed the nationality of
the vessel.
Cargo owner is insured, may the
insurer rescind? Sabi ni maam, in
life insurance, no matter what is
the cause of the death, as long
as there is material concealment
discovered withinm 2 years,
insurer is not liable. In marine
insurance, it is stricter in the
sense that it can cancel or
rescind if the fact concealed is
the cause of the loss. Concealed
nationality is the proximate
cause. Insurer will not rescind
contract, but will be exempted
from the cargo seized. 
magiging parang exclusion na to
Was there material concealment?
- YES. Insurer is NOT liable for the
loss of the cargo seized by the
Chinese authorities
- Jaise: will not rescind contract but
will be exempted from the cargo
seized (please check)
2. Ex. Dangerous drugs shipped
under the guise of vegetables, so
the Chinese authorities seized
the cargo and NOT the vessel
Ans: insurer is only exempted in
the loss of the cargo that was
captured; only insofar as your
liabilities or loss or damage is
concerned. In this case, loss of
the cargo only. KAHIT ILLEGAL
AMPERCH?!?!!??!!??!?!?!?!?!?!?
!?!?!?!?!??
★KUROKURO: In Life Insurance, when the
insurer rescinds, it is the CONTRACT he is
rescinding, UNLIKE in MARINE
INSURANCE, not the whole contract but
the insurer is exempted only as to the
value to which the insured is liable.
Ex. goods were insured, then
they were lost. Insurer is liable. If
the vessel was damaged, not
insured, but still the goods are
the ones insured, insurer now is
NOT liable sa VESSEL.
3. What if the vessel violated of
Foreign Trade Laws, like in Anti-
Dumping Policies if there is
overproduction of rice in order to
maintain prices of rice, authorities
dumped the excess of production
para ma-maintain price ng rice
doon. This violated Foreign Trade
Law of the countries where the
vessel dumped the rice. The
Gov’t of Laos, for example, it
seized your vessel and the vargo,
sinunog nila lahat yon.
Since you concealed the fact of
dumping, this will exempt the
insurer not from everything like
rescission in LIFE INSURANCE,
but doon lang sa related sa loss.
***Rescission does NOT apply in MARINE
[concealment] but only EXEMPTION from
liability with respect to the material fact
concealed alone.
RIGHT OF SUBROGATION – right by
insurer to proceed against the party at
fault.
- It is the substitution of your right
in the place of another
- In Life Insurance, there is NO
SUBROGATION
- In Fire Insurance, there is right of
subrogation
In water transportation, maraming risks so
that if the vessel sank and you are the
vessel owner and you are insured, what are
your rights? Can you proceed against the
Insurer?
There are 2 KINDS OF LOSS [BY
SINKING] / CLASSES OF SINKING
1. Total loss [when vessel is NOT
located] – di ka na Makita 
claim from the insurer
2. Constructive Total loss [when
vessel is located]- alam mo kung
nasaan, you can still recover
some of the losses from there 
REMEDY: Either recover or re-
float.
 IF >3/4 OF THE
EXPENSES TO
RECOVER/RE-FLOAT =
CONSTRUCTIVE TOTAL
LOSS
How much did you lose? Pa-
estimate mo muna.
 Ex. Value of vessel and
cargo is P50M. You can
claim kahit na ¾ lang ang
 damage. BUT you cannot
compel the Insurer to pay
the total. Pag ayaw niya
bayaran yang total, you can
only claim for ACTUAL
LOSS.
 pero kung lumubog totally
yung barko, under the
hypothecary nature, CLAIM
FROM THE INSURER ALL
MOTOR VEHICLE INSURANCE
★Land Transportation
★ALL motor vehicles are required now to
be insured.
2 KINDS [also applies to MARINE
INSURANCE]:
1. THIRD-PARTY LIABILITY
(TPL) – other than the
passengers*
 Most common, but be
careful. There are insurers
na pag babasahin mo sa
fine print, napakaraming
exceptions. Kaya mas mura
ang premiums.
 E.g. EXN: Theft, Typhoon
 Take note of the exclusions
in your policy
 does NOT cover/include the
members of the family,
household (like yaya), and
passengers on board
(pasahero sa jeep at fault)
Ex. may pulis (free ride sya
kasi authorized) = NOT 3rd
party because he must be
treated just like any fare-
paying passengers.
 e.g. nagbanggaan 2 answer.
passenger jeepneys. Driver
may-ari  hindi siya
covered only the
passengers of the jeepney
at fault. ---
WHAT?!??!!??!?!?
 if it cannot be determine
who’s at fault. You cannot
recover from the the insurer
of vehicle which you are a
passenger.
 If it was already determined
that it was the other jeepney
who is overspeeding, at
namatay yung passenger ng
jeepney.
o SC: you can only
claim against one
motor vehicle
 1.
Where
you are
passen
ger
 2.
Insurer
of the
vehicle
at fault
2. COMPREHENSIVE – it
does not mean na
comprehensive, lahat lahat
na, may exceptions
 e.g. Acts of God- Typhoon
Ondoy
 lumulutang na yung kotse sa
baha. You notified the
insurer, sasabihin sayo,
“Ma’am hindi po covered
yan” Wala po tayong acts of
God kahit comprehensive.
Therefore, walang nakuha
sa insurance. You have to
pay additional premium for
acts of God.
3. ORDINARY
COMPREHENSIVE?
More Exceptions = Lesser Premium
Price
NO FAULT INDEMNITY- no need to prove
fault para maka recover
COMPREHENSIVE
4. ALL expenses to restore to
former condition. [so claim
against the insurer]
5. **includes THIRD PARTY
LIABLITY (TPL)
6. Comprehensive is broader
than TPL
7. Insurer is liable provided,
not excluded tignan sa
exclusionary clauses
When do you file your claim?
★File your claim against:
 Insurance Commissioner
(within 10 YEARS if no specific
period stipulated in the
insurance)
 Courts
★Cause of Action accrues from Insurer’s
inaction.
When do you count the 10-YEAR period?
8. Within 1 YEAR of inaction
from the insurer. (NOT
suspended from the time of
inaction of the insurer).
*Remember the rule on subrogation:
★INSURER = automatic right
subrogation to recover against the party at
fault. Need NOT be expressed in the
contract. It accrues automatically.
claim against the insurer of the
vehicle at fault.
*pag nagbayad yung insurer ng vehicle at
fault, and it was later discovered [by the
court] that the insured [vehicle at fault] was
actually at fault = NO SUBROGATION
SURETYSHIP
-kind of insurance where surety guarantees
another (principal) who undertakes the
obligation in favor of another (obligee).
e.g. A commercial building is to be
constructed. You are the owner. You
entered into a construction contract which is
1 year for 50M. to assure yourself of
fulfillment of the obligation, you require the
contractor to get a bond as surety.
Pumayag bonding company. Hence, it will
guarantee to the owner of the building na
gagawin ng principal yung obligation in
accordance with the contract.
Liability: JOINT and SEVERAL with the
surety.
*separate and distinct contract
from the construction contract, hence, the
owner of the building is not party to their
contract
BUT STILL pwede niya habulin si
surety
*a.k.a. “Bonding Company” =
surety
*usually NO fixed expiration ang
surety contract = continuing
 can only be
cancelled by the OBLIGEE if the
obligation in the principal contract
is already complied. If NOT YET,
it is the COURT or the
INSURANCE COMMISSIONER
who can cancel the same. THE
PRINCIPAL CANNOT CANCEL
THE CONTRACT.
Concealment
Gaisano case “Liability insurance” 
insure goods because you have a liability to
pay those goods so you insure yourself for
the liability.
“Excepted Risks” – [insurance] has
exceptions, like fire, motor INSURER
shall invoke and prove the existence of the
same.
Does the insurer have license from the
Insurance Commission?
9. Make qualification to your
RULE ON ALLEGATION
FINE PRINT RULE:
(contract of adhesion)  if it is included in
the exceptions, insurer is NOT liable.
GR: Construed in favor of the
insured.
XPN: If there is nothing to
construe.
DOUBLE INTEREST
of
Legal interest prevailing now: 6% per
annum
HOWEVER, the Insurance Code provides
for DOUBLE INTEREST
(12% P.A. x 2 = 24% P.A. = insurer’s
liability)
 Special law > general law
 Insurance Code > New Civil
Code: 6% p.a. applies only
to banks, loans, so NOT
applicable in insurance.
 Cannot invoke 6% interest
rate, should insurer fail to
pay within a certain number
of days
Brokers and Agents = separately licensed
by Insurance Commission