NOT SUSPENDED POLICY:

1. Avoided if: there is prohibition vs

alienation or change of interest w/o
consent of the insurer
2. Life, accident and health insurance (sec
20)
3. Change of Inter is after the loss
4. Change in inter in one or more of
several distinct things insured in 1 policy

consideration in the cover notes- kasi di pa certain

ang premiums dati. Exp: life insurance policy
binding deposit receipt kasi subject pa sa approval
ng insurer

CONCEALMENT + MARINE INSURANCE

under SEC 109
-Neglect to communicated(a. material fact)
that which a (d) party knows and ought to
communicate, insurer may rescind. Because the (b)
other party has no means of ascertaining the truth
and (c) the other makes no warranty as to such
facts.
Sec 30.
1. Those which the other knows
2. ought to know by exercise or ordinary
care (general usage of trade or all gen causes
which are open to his inquiry)
3. prove or tend to prove the existence of a
risk excluded by a warranty which is not material
4. waives communication (express-terms of
contract or implied-neglect to make inquiries)
5. risk excepted in the policy

GR: only parties in an insurance contract

may bring an action on the policy vs insurer.
XPN: when the contract is intended to
benefit 3rd persons
1. Stipulation in the contract in
favor of 3rd persons, before it is
revoked by the parties
2. Contract provides for indemnity
against liability to third persons
(SEC 387) compulsory 3rd party
liability coverage
As vs indemnity against actual loss or
payment

Materiality increases the risk or which if

disclosed might have led the company to decline
the risk or to accept the risk only for a higher
premium. (influence the judgement) Causal
connection is not necessary between the facts
concealed and the loss sustained. MISLED
But insurer shall be barred from raising
misrep as defense if he is aware at the time of the
acceptance of the premium . (Edillonva Manila
Bankers) _age of 65. The insurance may be
avoided substantially untrue
Cover notes and binders: written memo of
the most important terms of a prelim contract of
insurance, to give temporary protection pending the
investigation of the risk by the insurer or until the
issuance of a formal policy. prelim contract of
present insurance not to insurance of some future
time. Separate premiums are not required, bec they
are integrated to the policy subsequently issued so
that premiums on the regular policies include the

Sec 53: insurance proceeds shall be applied

EXCLUSIVELY to the proper interest of the person
in whose name or for whose benefit it is made
unless otherwise specified in the policy

Insurer is NOT SOLIDARILY LIABLE with insured

-the liability of the insurer is based on
contract while the insured carrier or vehicle owner
or operator is based on tort. (GSIS vs CA). The
liability of the insurer is direct but not solidary with
the insured. The liability of the insured is based on
art 2180 BCC .and although the 3rd parties may
proceed directly against the insurer, the liability of
the latter is only up to the extent of the amount
covered by the insurance policy.
Sec 57 exception to sec 20 continue policy and
will inure to the benefit of whomever may become
the owner of the interest insured.
Sec 58 mere transfer of a thing does not transfer
the policy, but suspends it until the same person
becomes the owner of both the policy and the thing
insured
Valued stipulated value at a specified sum
Open proved by the insured

Running successive insurance, object of policy is

defined fromtime to time spc subjects of the policy
by additional statements or indorsements (sec 62)
because of frequent change in location and quantity
Sec 63: condition, stipulation or agreement; limiting
the time for commencing an action for a period less
thatn 1 yr from the time the cause of action accrues
is VOID.
- This prevails over rules on prescription.
- Evidence as to the origin and cause of
destruction have not yet disappeared
- CAUSE OF ACTION ACCRUES FROM
THE TIME OF THE DENIAL OF THE
CLAIM OF THE INSURED BY THE
INSURER
- If there is no denial there is no necessity of
bringing suit
- NO AGREEMENT: 10yr if written, 6yr oral
- MR: date of denial pa din (Eagle star vs
Chia Yu)
COGSA 1 yr after the delivery of goods or date
when they should be delivered the carrier and the
ship shall be relieved from any liability for loss or
damage if no suit is brought by the shipper,
consignee or insurer vs the carrier
- Liability of the insurer is not extinguished
bec it is based on cont of insurance, carriers
liability is based on contract of carriage
- The shipper/consignee may still file claim vs
insurer but latter cannot if lapsed naang 1
yrvs carrier.
CANCELLATION there must be personal notice
to insured or his authorized broker to make it
effective and also to enable the insured to procure
another insurance. Actual receipt is essential,
presumption on regularity of performance of duty
must not be relied upon.
WARRANTIES : (Sec 67)
-

The insured expressly contracts as to the

existence of certain facts, circumstances or
conditions. LITERAL TRUTH IS
ESSENTIAL TO THE VALIDITY OF THE
INSURANCE
Affirmative: @ or before
Promissory: something shall not be done or
omitted

Implied presumed by the mere fact that

the contract is entered into

Representation
Precede contract
Should be shown to be
material
Sets aside pol
Both INSR INSD

Warranty
Part of the contract
Materiality presumed
Breach of contract
INSD only

SEC 73
GR: NON PERFORMANCE OF PROMISSORY
WARRANTY : RESCIND
XPN: before the time arrives for performance of PW
1. Loss insured against happens
2. Performance becomes unlawful at the place
of the contract
3. Perf becomes impossible
CAUSAL CONNECTION IS NOT NECESSARY
basta me violation ng material warranty INSR
may rescind.
XPN: hazardous inflammable mats: small quantities
for daily use or incidental to the business
Sec 75: immaterial prov to material by stipulations
prevents the policy from attaching to the risk - @
effectivity warranty w/ fraud.
PREMIUM
Sec 77. An insurer is entitles to payment of the
premium as soon as the thing insured is exposed to
the peril insured against.
GR: payment of PR is a condition precedent to and
essential for the efficacy of the contract of ins.
Unless the PR is paid the policy shll not be valid
and binding notwithstanding any agreement to the
contrary
XPN:
1. Coverage relates to Life or industrial life
(health) insurance when grace period
applies
2. 90 days credit extension is given (valid and
binding if PR is not paid) (UCPB
vsMasaganaTelemart liable si insurer

kasipractice ng insurer to grant 60-90 credit

extention, estopped from taking refuge
under sec 77.)
3. Written acknowledgment of the receipt of
premium (conclusive evidence of payment)
4. Obligee accepted the bond (valid and
enforceable bond) (surety insurance)
5. Industrial life insurance that the policy
shall not lapse for non-payment of premium
due to the failure of teh insurer to send its
representatives or agent to the residence of
the insured to collect premiums.
i. Not for #1 sa grace period (3
mos)
Effect of non-payment: not merely suspends but put
an end to an insurance contract (remedy of the
insurer, render the policy as not binding, policy had
lapsed ). TIME OF PAYMENT IS PECULIARLY OF
THE ESSENCE OF THE CONTRACT
INSTALLMENTS:
1. If no agreement and not an established
practice forfeit even if there is partial
payment
2. Agreed or established practice
acceptance of the payment of premiums on
instalments would suffice to make the policy
binding
a. (Makati tuscanivsca) bindingstaggered payment, INSR intention
to honor the policies it issued to the
INSD. SEC 77 does not prohibit that
the parties may agree to allow
payment on instalments. Valid upon
1st premium.
b. Where the risk is entire and the
contract is indivisible the insured is
not entitled to a refund od the PR
paid if the INSR is exposed to the
risk insured for any period
CHECKS/ PN: if not paid on time or dishonoured
not forfeited policy but payment of PR becomes an
independent obligation. Balik pa din sa 90 day
credit extension.
OVERDUE+ KNOWLEDGE of loss +
ACCEPTANCE of PR = waiver
If not, defense of non payment of PR

DEVICES TO AVOID FORFEITURE OF LIFE

INSURANCE:
1. PERIOD OF GRACE: 30 days after
payment of 1st PR to pay succ PR.
a. Liable is INSR pero deducted PR
due
2. PAY CASH SURRENDER VALUE: if INSR
agreed to pay to the holder of the policy if
he surrenders it and releases claim upon it.
(from excess of the annual risk during the
earlier years to balance the deficiency the
PR will meet for annual risk in the later days
of the policy
3. OPTIONS for INSD: 1. CSV 2. EXTENDED
INSRANCE 3. CONVERT TO PAID-UP
INSURANCE
4. AUTOMATIC LOAN CLAUSE: default =
paid by loan value of the policy until value is
consumed
5. REINSTATEMENT: within 3 Yrs from date of
default of payment xpn:
ubosCSV,expiredang EXT period
Sec 79: acknowledgment: conclusive evi binding
but not for purposes of collecting PR: INSR should
pay not deny payment
RETURN PR:
1. Not exposed
2. INSD surrenders b4 expiration
3. Contract is voidable and annulled under
NCC fraud/misrep by INSR
4. facts INSD is ignorant
5. Default of INSD: no liability si INSR
6. Over insurance: insurance in excess of
the amt of the insurable interest of the
insured by SEVERAL INSR, insured is
entitled to ratable return of the PR,
proportioned to the amt by wc the
aggregate sum insured in all pol
exceeds the insurable value of the thins
at risk
NO RETURN PR:
1. Peril insured vs existed, INSR liable for
any perios, the risk is entire and
indivisible
2. Life insurance (SEC 80)
3. INSD guilty of fraud, misrep
4. Pol annulled/rescinded/claim denied
not attributable to INSR

LOSS:
Transfer of interest insured before the loss is
binding
Agreement not to transfer the claim of the insured
vs insurer after the loss: VOID
- When the loss occurred the rights of the
parties are fixed under the policy and the
subsequent conveyance by the insured
cannot affect the liability of the insurer
LIABLE ANG INSURER:
1. Proximate cause: peril insured vs
2. Caused by efforts to rescue the thing
insured from the perils insured vs
3. Caused by a peril not insured against to wc
the thing insured is exposed in the course of
rescuing the same from peril insured
against
4. Immediate cause (cause or condition
nearest to the time and place of injury): peril
insured vs, unless proximate cause is
excepted
5. Negligence of the insured (unless gross)
o FGU vs CA carelessness or
negligence of insured is not defense,
unless neg or recklessness is so
gross as to constitute a wilful act
Burden of proof: accident insurance: includes
damage loss due to fault of 3rd person
Insureds bene: covered
Insurer: excepted peril
Sun insurance vs CA:
Suicide vs accident:
- Positive act
Accident: happens by chance or fortuitously without
intention and design
Insured is negligent
FRAUDALENT CLAIM: AVOIDED POLICY
- Materislmisrepins statement of loss,
forfeited benefits, insurer proves did
knowingly and with fraudulent intent.
LIFE INSURANCE PAYMENT OF PROCEEDS:
It depends on the maturity of the life insurance
1. On expiration of the terms: immediately
upon maturity

2. On death: 60 days from presentation

If the INSR does not pay shall be liable for interest
on the sum due at the rate of twice the ceiling
prescribed by the MB from time payment is
supposed to be made XP if fraudulent claim.
PROPERTY INS 30 days after proof of loss is
received and ascertained of the loss or damage by
agreement or arbitration (60D) 90 days from
receipt.
SUBROGATION: PROPERTY INSURANCE ONLY:
INSD received payment from the INSR of the loss
covered by the policy, the insurance comp shall be
subrogated to the rights of the insured vs the
wrongdoer or the person who violated the contract.
IT IS DISCRETIONARY ON THE PART OF THE
INSR
ACCRUES: right to subrogation: upon payment of
insurance claim,
BY OPERATION OF LAW: subrogation is a normal
incident of indemnity insurance.
Upon payment of loss the insurer is entitled to be
subrogated pro tanto to any right which the insured
have vs 3rd persons whose negligence or wrongful
act caused the loss who may be liable to the
insured by reason of the thing insured
Payment operates as an equitable assignment to
the insurer of the property and all remedies which
the insured may have for the recovery thereof.
Subrogation takes effect by operation of law and
does not need the consent of the insured.
EXTENT: to the rights of the insured
the rights of the subrogee or inurer suceeds the
same as but not greater than those of the subrogor
or insured have.
INCAPACITY OF INSURED does not affect the
SUBROGEE - merely steps into the shoes of the
INSD and succeed the INSD to the rights of the
INSD only in relation to the debt. Capacity to sue is
right, personal to the holder, and is conferred by
law and not by the parties. the incapacity does not
pass on to the SUBROGEE-INSURER

NO SUBROGATION:
1. life insurance
2. the prox cause of the damage was negligence
of the insured
3. INSR pays LOSS not covered (example sa
copra- short shipment)
4. when insured- failed to comply with the
legal/stipulated condition precedent prior to the
filing of an action against the wrong doer
Manila mahogany vs CA
THe insurer is entitled to reover from the insured
the amount of insurance money paid, Since the
insured by its own acts release the wrongdoer, and
defeated the right of subrogation of the INSR
since the insurer can be subrogated to only such
rights as the insured may have, should the insured,
after recieving payment from the insurer, RELEASE
THE WRONGDOER, who causes the loss, THE
INSURED LOSSES its rights against the latter
1. the insurer can recover from the insured
whatever it has paid
2. XP when the insurer consented
SEC 95 DOUBLE INSURANCE:
where the same person is insured by several
insurers separately in respect to the same subject
and interest. (same risk)
that incase of happening of the risk insured against
the insured shall be directly benefited by recovering
from the policies
not prohibited, the insurers are made liable UP TO
THE EXTENT OF THE VALUE OF THE THING
INSURED BUT NOT TO EXCEED THE AMOUNT
OF THE POLICIES ISSUED.
XP: if provision in the policy: policy void if procured
another insurance on the prop or any part thereof BREACH - the insurer can rescind the contract
(WARRANTY NOT TO BE INSURED IN ANOTHER
POLICY)
XP: STOCK IN TRADE: things insured is not
specific but described IN GENERAL TERMS
1. when the policies taken cover less than the
entire quantity of the stocks-in-trade.

2. total amt of the policies is less than the total

value of the stocks in trade.
- subject matters of the policies are not the same

SEC 96 OVERINSURANCE: obtains policy in an

amount exceeding the value of his INS INT
1.INSURED: may claim payment from insurers in
such order as he may select , up to the amount for
which the insurers are severally liable under their
respective contracts, unless otherwise provided
2. VALUED POLICY: any sum recieved by him
under any other policy shall be deducted from the
value od tge policy without regard to the actual
value of SM insured
3. UNVALUED POLICY: sum received will be
deducted against the full insurable value
4. any sum received in excess, held in trust for
insurers acc to their right of contri among
themselves
** among themselves the insurers are bound to
contribute RATABLY to the loss IN PROPORTION
TO THE AMOUNT FOR WHICH THEY ARE
LIABLE UNDER THEIR POLICIES.
INSURER'S POLICY
----------------------------- X AMT OF LOSS = SHARE
TOTAL AMT OF
POLICIES ISSUED
EFFECT: contract of indemnity (not in life insurance
- contract to pay a certain sum of money in the
event of death XPN: insurance on the life of
another is capable of pecuniary estimation) :
amount of recovery in case of loss is limited to the
value of the insured's insurable interest
OVER INSURANCE BY DOUBLE
INSURANCE:
1. INSURED: may claim payment from
insurers in such order as he may select , up
to the amount for which the insurers are
individually liable under their respective
contracts, unless otherwise provided
P - house @ 1M

A co: 500k
Bco: 1M
Cco: 1M
Held: in such orders as he may select, up to
the amount wc the insurers are individually
liable
2. VALUED POLICY: any sum
recieved by him under any other policy shall
be deducted from the value od tge policy
without regard to the actual value of SM
insured
P collected from A: 500K, recover 500k from
others

SEC 97 REINSURANCE
iNSURER procured a 3rd person to insure him
against loss or liability by reason of such original
insurance
why? the single risk is so great that the happening
of the peril insured against would render him
INSOLVENT or seriously cripple his efficiency.
REimburse loss sustained

If share is accepted, the obli becomes absolute

liability is discharged only by payment of the share
in the losses
COMPACT: agree in advance that each will
reinsure a part of any line of insurance taken by the
other, and is self executing contract
COMMUNICATED BY THE REINSURED:
1. All rep made by the orig insured
2. Knowledge info he posseses-prev or
subseq acquired-material to the risk
XPN: automatic reinsurance
If not communicated ground for avoiding the
reinsurance policy
INSURANCE AGAINST LIABILITY NOT DAMAGE:
The reinsurer is no tliable to the reinsured for a loss
under an original policy if the reinsured is not liable
to the original policy holder, he may obtain payment
even before paying the loss of the orig insured TO
THE EXTENT OF THE LIABILITY OF THE
REINSURED IN THE ORIG POLICY or amount so
paid if reinsured was discharged from liab,
MARINE INSURANCE

RETROCESSION: reinsurance on a 2nd or

subsequent level same orig risk written by the 1st
ceding company
REINS TREATY: an agreement bet 2 insurance co
ehereby agrees to cede and the other to accept
reinsurance business pursuant to provisions
specified in the treaty
NECESSARY:
1. non life insurer insures in any 1 risk or hazard an
amount exceeding 20% of its networth , the excess
over the said limit must be reinsured: retention of
the insurer will be reduced to the max of 20% of its
NW (could nt retain any risk in xcess of 20% of
NW)
2. foreign com withdraws from PHILS, reinsured
and assumed by another INS CO
REINSURANCE COMPACT and FACULTATIVE
REINSURANCE right to accept or not
participation in the risk insured.

1. Loss or damage to aircraft

2. Goods and merchandise while being
assembled, packed, crated, baled,
compressed or similarly prepared for
shipment.(in the course of transportation
and any risk to wc the goods or
merchandise may be exposed to while
being assembled)
3. Loss or injury to persons in connection with
marine transit or transportation insurance,
XP: life insurance and insurance against
loss by reason of bodily injury to any
person arising out of the ownership
maintenance or use of automobiles.
4. Precious stones, jewels, jewelry,
precious metals, whether in course of
transportation or otherwise
5. Bridges tunnels and other
instrumentalities or transportation and
communication, piers, wharves, docks
and slips, aid of navigation and transpo
** jewels/stones:

2 peculiarities:
Implied warranties
Sea worthiness
-safe
- no deviation
- subject to implied warranty

PROTECTION AND INDEMNITY CLUB

- ASSOC OF SHIP OWNERS band together
insurance for a mutual basis a cooperative
enterprise members are both insurer and
insured all contribute to a system of
premiums or assessments
- Third party liability (anyone other than P&I
Club an its members)
PERILS OF NAVIGATION
-

River navigation
Damage from rain in consequence of
improper stowage exp when caused by the
insured

PERILS OF THE SEA

Embrace all kinds of
marine casualties and
damages done to the
ship or goods at sea by
violent action of the
winds or waves

PERILS OF THE SHIP

Resulting from the
a. Natural and inevitable
action of the sea
b. Ordinary wear and
tear
c. Negligent failure of
the owner to provide
proper equipment to
convey the cargo under
ordinary condition
Collision
Usually not covered
unless otherwise stated
Ex. Lacking necessary
repair or misuse of the
ship

INSURED MUST CHECK SEAWORTHINESS:

- law provides for an implied warranty,
obligation of the cargo owner or insured to
look for a reliable common carier wc keeps

its vessels in sea worthy condition, because

he has the full controlin the choice of CC
ALL RISK POLICY: (includes perils of the ship)
-

covers accidents cause of any kind marine

peril or not including pilferage losses during
war
broad comprehensive meaning
any loss xp wilful and fraudulent act of the
insured
protection to cases where difficulties of
logical explanation or some mystery
surround the loss or damage to property
it is a special insurance and extending to
other risk than are usually contemplated
and covers all XP: arise from fraud,
intentional misconduct of insured
peril+loss or damage to goods insured
loss or damage is excepted- insurer
EX: arrest of political acts of government but
he risk occasioned by ordinary judicial
process were not expressly indicated as an
exception in the policies. Limitation of
liability should be regarded with extreme
jealousy and must be construed in such a
way as to preclude the insurer from non
compliance with its obligation.

INSURABLE INSTEREST:
SEC 102
1. Owner not affected by a charter party
2. Charter party
Even when it is chartered by one
who covenants to pay him its value in case
chartered by one who covenants to pay him
its value in case of loss
-insurer shall be liable for only that
part of the loss wc the insured cannot
recover from the charterer
Vessel 5M
Charterer pay 2.5M-loss
Insured recovered from charterer- 1M
Insured may recover INSR 4M deficit
SEC 103
LOAN ON BOTTOMRY OR
RESPONDENTIA

A loan in which under any condition

whatever the repayment of the sum loaned
and of the premium stipulated, depends
1. upon the safe arrival in port of the
goods on which it is made or
2. Of the price they may receive in
case of accident,
Shall be considered a loan on bottomry or
respondentia
It is a loan with things exposed to maritime
risk as collaterals to be paid if the collaterals
are safely transported and the lender shall
lose his money if the latter are lost.
Bottomry - The security is a vessel
Respondentia cargo

Lend
er

Loan on
bottomr
y 20M

Ow
ner

insurable interest 80M if the vessel is

lost

FREIGHTAGE:

If the collateral is lost, the loan is

extinguished
II = value loan secured on bottomry
Ex:

100 M

vessel
50M (insurer II)
Loan on bot 30M (lender II)
Hypothecates the vessel
(pledge as security w/o delivery)
Actual loss
20M

Insurable interest 20M = 50M 30M

RIGHT OF INSURER AND LENDER ON SALVAGE
(SALVAGE VALUE)
Subject of LOB vessel, after a loss the value of
what may be saved and salvaged shall be divided
between the lender and the insurer
In proportion to the legit interest of each one,
Loan- sa principal

a. Chartering of the ship

b. Its employment for the carriage of
his own goods or of those of others
The owner of a ship has a II on EXPECTED
FREIGHTAGE (supposed to be earned)
o XPN: freightage is payable in any
event whether the vessel is lost or
not (will not suffer any loss or
damage
o Ex. Shipowner receives in advance
the payment of freightage and w/o
obligation to return it even if the
vessel fails to arrive safely at the
port of destination,
o WHEN EXIST?
A. Charter party
Time the vessel has
broken ground on the
chartered voyage
B. No charter party
And the price is to be
paid for the carriage
of goods from the
time said goods are
actually on board the
vessel
Time both ship and
goods are ready for
the specific voyage
PROFIT:II: legal and equitable

CONCEALMENT: SEC 109 v SEC 30

SEC 28 each party to a contract of insurance
must communicate to the other in GF all facts
within his knowledge wc are material to the

contract and as to wc he makes no warranty and

wc the other has not the means of ascertaining