Comm2 Reviewer With Cases

BOJY NOTES 1
Commercial Law Review 2 under Atty. Salao

I.
1.
2.
The Insurance Code (P.D. 612)

History of Insurance Law in the Philippines
Contract of Insurance (Sec. 3 5)
a. Travellers Insurance & Surety Corporation v. Hon. Court of

Appeals, G.R. No. 82036, May 22, 1997
8.
Parties to the contract of insurance (Sec. 6-9)
a. Philippine Health Care Providers, Inc. v. Commissioner of

Internal Revenue, G.R. No. 167330, September 18, 2009
II.
The Contract of Insurance

1. What may be insured (Sec. 3 - 5)
2.1 Rules on construing Insurance Code

2.2 Rules on construing Insurance Policy
3.
a. Philamcare Health Systems Inc. v. Court of Appeals, G.R.

No. 125678, March 18, 2002
Elements of an Insurance Contract

1.1 Insurance distinguished from gambling
a. Gulf Resorts, Inc. v. Philippine Charter Insurance Corp..

G.R. No. 156167, May 16, 2005
4.
Characteristics of Insurance Contracts
2. Parties to the Contract (Sec. 6 9)
a. New World International Dev. (Phils), Inc. v. NYK-FilJapan

Shipping Corp., G.R. No. 171468, August 24, 2011
2.1. Sec. 54 General Banking Law

2.2. Control Test on Corporations
2.3 Proper party to file action
2.4 Types of Mortgage Clauses
5.
Cases:
Doing an Insurance Business
a. White Gold Marine Services, Inc. v. Pioneer Insurance and

Surety Corp., G.R. No. 154514, July 28, 2005
a. Eternal Gardens Memorial Park Corp. v. The Philippine

American Life Insurance Company, G.R. NO. 166245, April 9,
2008
5.1 Principle of subrogation

6.
Public interest in the Insurance Business
a. Republic vs. Del Monte Motors, Inc., G.R. No. 156956,

October 9, 2006.
7.
Insurance versus Health Maintenance Organizations
(HMOs)
a. Philippine Health Care Providers, Inc. v. Commissioner of
Internal Revenue, G.R. No. 167330, September 18, 2009
b. Filipinas Compaa De Seguros vs. Christern, Huenefeld

And Co.,
Inc., G.R.No. L-2294, May 25, 1951
c. Constantino v. Asia Life Insurance Company, G.R. No. 1669,
August 31, 1950
d. Great Pacific Life Assurance v. Court of Appeals, G.R. No.
113899, October 13, 1999
3. Insurable Interest (Sec. 10 - 25)
BOJY NOTES 2
3.1 Types of beneficiaries
3.2 Rights of beneficiaries
3.3 Persons disqualified to be beneficiaries
SEC. 26. A neglect to communicate that which a party

knows and ought to communicate, is called a
concealment.
Cases:
SEC. 27. A concealment whether intentional or

unintentional entitles the injured party to rescind a
contract of insurance. Effect of concealment.
Remedy of insurer is rescission.
a. Heirs of Loreto C. Maramag represented by surviving

spouse Vicente Pangilinan Maramag v. Eva Verna De Guzman
Maramag, et al, G.R. No. 181132, June 5, 2009
b. Violeta Lalican v. The Insular Life Assurance Company,
Limited, G.R. No. 183526, August 25, 2009
Important Notes:
c. Gaisano Cagayan, Inc. v. Insurance Company of North

America, G.R. No. 147839, June 8, 2006
a. The party claiming the existence of concealment must

prove that there was knowledge of the fact concealed
on the part of the party charged with concealment.
d. The Insular Life Assurance Company, Ltd. vs. Ebrado, G.R.

No. L-44059, October 28, 1977
b. Good faith is not a defense in concealment (sec27)
e. Sing vs. Feb Leasing & Finance Corporation G.R. No.

168115, June 8, 2007
DEVICES FOR ASCERTANING AND CONTROLLING RIK
AND LOSS
4 primary concerns of the Insurer (EDCA)
1. Correct estimation of risk which enables insurer to
determine if he will approve the policy application and
if so at what premium rate (Concealment and
Representation)
2. Precise Delimitation of the risk which determines the
extent of the contingent duty to pay undertaken by the
insurer (Exception)
3. Control of risk to guard against increase of risk
(Warranties and Conditions)
4. Determine if loss occurs, and if so, the amount thereof.
(Condition)
Devices Used for Ascertaining and controlling
risks and loss: (CREW-C)
1. CONCEALMENT (Sec. 26 35)
c. The matter concealed need not be the cause of loss.

d. To be guilty of concealment, a party must have
knowledge of the fact concealed at the time of the
effectivity of the policy.
e. Failure to communicate information acquired AFTER
the effectivity of the policy will NOT be a ground to
rescind the contract.
Reason: Information is no longer material as it will no
longer influence the other party to enter into such
contract.
SEC. 28. Each party to a contract of insurance must
communicate to the other, in good faith, all facts within
his knowledge which are material to the contract and as
BOJY NOTES 3
to which he makes no warranty, and which the other has
not the means of ascertaining. - Duties
SEC. 29. An intentional and fraudulent omission, on the
part of one insured, to communicate information of
matters proving or tending to prove the falsity of a
warranty, entitles the insurer to rescind. When can an
insurer rescind.
Matters that need not be disclosed: (KOWEE)
SEC. 30. Neither party to a contract of insurance is
bound to communicate information of the matters
following, except in answer to the inquiries of the other:
The parties are bound to know all the general causes

which are open to his inquiry, equally with the other, and
all general usages of trade.
The right to information of material facts may be
waived:
a. By the terms of the contract;
b. By failure to make an inquiry as to such facts, where
they are distinctly implied in other facts from which
information is communicated.
Matters that must be disclosed even in the absence
of inquiry: (M-No means-No war)
(a) Those which the other knows;

a. Those material to the contract. (sec. 31, 24, 25)
(b) Those which, in the exercise of ordinary care, the
other ought to know, and of which the former has no
reason to suppose him ignorant;
(c) Those of which the other waives communication;
(d) Those which prove or tend to prove the existence of
a risk excluded by a warranty, and which are not
otherwise material; and
(e) Those which relate to a risk excepted from the policy
and which are not otherwise material.
Note: Neither party is bound to communicate, even upon
inquiry, information of his own judgment.
b. Those which the other has no means of ascertaining

(Sec.30, 32, 33)
c. Those as to which the party with the duty to
communicate makes no warranty. (secs. 67-76)
Test of Materiality
SEC. 31. Materiality is to be determined not by the
event, but solely by the probable and reasonable
influence of the facts upon the party to whom the
communication is due, in forming his estimate of the
disadvantages of the proposed contract, or in making his
inquiries.
Distinguished from Materiality in Marine Insurance:
BOJY NOTES 4
Rules on concealment are stricter, due to the difference in
the character of the property, and the greater facility the
insurer possesses in obtaining information as to its
conditions and surrounding circumstances which are often
insured when absent or afloat.
Thus, in addition to material facts, each party must
disclose ALL the information he possesses which are
material to the information of the belief or expectation of
a third person, in reference to a material fact.
As a general rule, the fact of concealment on the part of
the insured gives the insurer the right to rescind the
contract of insurance.
BUT a concealment in a marine insurance in any of the
following matters enumerated under SEC.110, does not
vitiate the entire contract, the insurer is exonerated only if
the facts concealed is the cause of the loss. If the cause is
something else, the insurer will still be liable.
SEC. 32. Each party to a contract of insurance is bound
to know all the general causes which are open to his
inquiry, equally with that of the other, and which may
affect the political or material perils contemplated; and all
general usages of trade.
SEC. 33. The right to information of material facts may
be waived, either by the terms of insurance or by neglect
to make inquiry as to such facts, where they are distinctly
implied in other facts of which information is
communicated.
SEC. 34. Information of the nature or amount of the

interest of one insured need not be communicated unless
in answer to an inquiry, except as prescribed by Section
51.
SEC. 35. Neither party to a contract of insurance is
bound to communicate, even upon inquiry, information of
his own judgment upon the matters in question.
Requisites:
1. A party knows a fact (a material fact which he neglects
to communicate or disclose to the other party;
2. Such party concealing is duty bound to disclose such
fact to the other party;
3. Such party concealing makes no warranty as to the
fact concealed; and
4. The other party has no means of ascertaining the fact
concealed.
Cases:
a. Vda. De Canilang vs. Court of Appeals, G.R. No.
92492, June 17, 1993
Canilang consulted Dr. Claudio and was diagnosed as
suffering from "sinus tachycardia." Mr. Canilang consulted the
same doctor again on 3 August 1982 and this time was found
to have "acute bronchitis."
On the next day, 4 August 1982, Canilang applied for a "nonmedical" insurance policy with Grepalife naming his wife, as
his beneficiary. Canilang was issued ordinary life insurance
with the face value of P19,700.
On 5 August 1983, Canilang died of "congestive heart
failure," "anemia," and "chronic anemia." The wife as
BOJY NOTES 5
beneficiary, filed a claim with Grepalife which the insurer
denied on the ground that the insured had concealed
material information from it.
Vda Canilang filed a complaint with the Insurance
Commissioner against Grepalife contending that as far as she
knows her husband was not suffering from any disorder and
that he died of kidney disorder.
Grepalife was ordered to pay the widow by the Insurance
Commissioner holding that there was no intentional
concealment on the Part of Canilang and that Grepalife had
waived its right to inquire into the health condition of the
applicant by the issuance of the policy despite the lack of
answers to "some of the pertinent questions" in the
insurance application. CA reversed.
Issue:
Whether or not Grepalife is liable.
Held:
SC took note of the fact that Canilang failed to disclose that
hat he had twice consulted Dr. Wilfredo B. Claudio who had
found him to be suffering from "sinus tachycardia" and
"acute bronchitis. Under the relevant provisions of the
Insurance Code, the information concealed must be
information which the concealing party knew and "ought to
[have] communicate[d]," that is to say, information which
was "material to the contract.
The information which Canilang failed to disclose was

material to the ability of Grepalife to estimate the probable
risk he presented as a subject of life insurance. Had Canilang
disclosed his visits to his doctor, the diagnosis made and the
medicines prescribed by such doctor, in the insurance
application, it may be reasonably assumed that Grepalife
would have made further inquiries and would have probably
refused to issue a non-medical insurance policy or, at the
very least, required a higher premium for the same coverage.
The materiality of the information withheld by Canilang from

Grepalife did not depend upon the state of mind of Jaime
Canilang. A man's state of mind or subjective belief is not
capable of proof in our judicial process, except through proof
of external acts or failure to act from which inferences as to
his subjective belief may be reasonably drawn. Neither does
materiality depend upon the actual or physical events which
ensue. Materiality relates rather to the "probable and
reasonable influence of the facts" upon the party to whom
the communication should have been made, in assessing the
risk involved in making or omitting to make further inquiries
and in accepting the application for insurance; that "probable
and reasonable influence of the facts" concealed must, of
course, be determined objectively, by the judge ultimately.
SC found it difficult to take seriously the argument that

Grepalife had waived inquiry into the concealment by issuing
the insurance policy notwithstanding Canilang's failure to set
BOJY NOTES 6
out answers to some of the questions in the insurance
application. Such failure precisely constituted concealment
on the part of Canilang. Petitioner's argument, if accepted,
would obviously erase Section 27 from the Insurance Code of
1978.
b. Sunlife Assurance Company of Canada vs. Court

of Appeals, G.R. No. 105135, June 22, 1995
Facts: Robert John Bacani procured a life insurance contract
for himself from petitioner-company, designating his mother
Bernarda Bacani, herein private respondent, as the
beneficiary. He was issued a policy valued at P100,000.00
with double indemnity in case of accidental death. Sometime
after, the insured died in a plane crash. Bernarda filed a claim
with petitioner, seeking the benefits of the insurance policy
taken by her son. However, said insurance company rejected
the claim on the ground that the insured did not disclose
material facts relevant to the issuance of the policy, thus
rendering the contract of insurance voidable. Petitioner
discovered that two weeks prior to his application for
insurance, the insured was examined and confined at the
Lung Center of the Philippines, where he was diagnosed for
renal failure. The RTC, as affirmed by the CA, this fact was
concealed, as alleged by the petitioner. But the fact that was
concealed was not the cause of death of the insured and that
matters relating to the medical history of the insured is
deemed to be irrelevant since petitioner waived the medical
examination prior to the approval and issuance of the
insurance policy.
Issue: Whether or not the concealment of such material fact,
despite it not being the cause of death of the insured, is
sufficient to render the insurance contract voidable
Held: YES. Section 26 of the Insurance Code is explicit in
requiring a party to a contract of insurance to communicate
to the other, in good faith, all facts within his knowledge
which are material to the contract and as to which he makes

no warranty, and which the other has no means of
ascertaining. Anent the finding that the facts concealed had
no bearing to the cause of death of the insured, it is well
settled that the insured need not die of the disease he had
failed to disclose to the insurer. It is sufficient that his nondisclosure misled the insurer in forming his estimates of the
risks of the proposed insurance policy or in making inquiries.
The SC, therefore, ruled that petitioner properly exercised its
right to rescind the contract of insurance by reason of the
concealment employed by the insured. It must be
emphasized that rescission was exercised within the two-year
contestability period as recognized in Section 48 of The
Insurance Code. WHEREFORE, the petition is GRANTED and
the Decision of the Court of Appeals is REVERSED and SET
ASIDE.
c. Ng Gan Zee v. Asian Crusader Life Assurance
Corp., G.R. No. 30685, May 30, 1983
Facts: In 1962, Kwon Nam applied for a 20yr endowment
insurance on his life with his wife, Ng Gan Zee as the
beneficiary. He stated in his application that he was operated
on for tumor of the stomach associated with ulcer. In 1963,
Kwong died of cancer of the liver with metastasis. Asian
refused to pay on the ground of alse information. It was
found that prior to his application, Kwong was diagnosed to
have peptic ulcers, and that during the operation what was
removed from Kwongs body was actually a portion of the
stomach and not tumor.
Issue: Whether or not the contract may be rescinded on the
ground of the imperfection in the application form.
Held: NO. Kwong did not have sufficient knowledge as to
distinguish between a tumor and a peptic ulcer. His
statement therefore was made in good faith. Asian should
have made an inquiry as to the illness and operation of
Kwong when it appeared on the face of the application that a
question appeared to be imperfectly answered. Asians
BOJY NOTES 7
failure to inquire constituted a waiver of the imperfection in
the answer.
d. Saturnino v. The Philippine American Life
Insurance Company, G.R. No. 16163, February
28, 1963
Representation Concealment Misrepresentation
Fraud
Facts: In September 1957, Estefania Saturnino was operated
for cancer in which her right breast was removed. She was
advised by her surgeon that shes not totally cured because
her cancer was malignant. In November 1957, she applied for
an insurance policy under Philamlife (Philippine American Life
Insurance Company). She did not disclose the fact that she
was operated nor did she disclose any medical histories.
Philamlife, upon seeing the clean bill of health from Estefania
waived its right to have Estefania undergo a medical
checkup.
In
September
1958,
Estefania
died
of
pneumonia secondary to influenza. Her heirs now seek to
enforce the insurance claim.
Issue: Whether or not Saturnino is entitled to the insurance
claim.
Held: No. The concealment of the fact of the operation is
fraudulent. Even if, as argued by the heirs, Estefania never
knew she was operated for cancer, there is still fraud in the
concealment no matter what the ailment she was operated
for. Note also that in order to avoid a policy, it is not
necessary that actual fraud be established otherwise
insurance companies will be at the mercy of any one seeking
insurance.
In this jurisdiction a concealment, whether intentional

unintentional, entitles the insurer to rescind the contract
insurance, concealment being defined as negligence
communicate that which a party knows and ought
communicate.
or
of
to
to
Also, the fact that Philamlife waived its right to have

Estefania undergo a medical examination is not negligence.
Because of Estefanias concealment, Philamlife considered
medical checkup to be no longer necessary. Had Philamlife
been informed of her operation, she would have been made
to undergo medical checkup to determine her insurability.
e. Edillon v. Manila Bankers Life Insurance Corp.,

G.R. No. 34200, September 30, 1982
Facts: In Apr. 1969, Carmen Lapuz applied for insurance with
Manila Bankers. In the application she stated the date of her
birth as July 11, 1904 (around 64 yrs old). The policy was
thereafter issued. Subsequently, in May 1969, Carmen died
of a car accident. Her sister, as beneficiary claimed the
proceeds of the insurance. Manila Bankers refused to pay
because the certificate of insurance contained a provision
excluding its liability to pay claims to persons under 16 or
over 60.
Issue: Whether or not the policy is void considering that the

insured was over 60 when she applied.
BOJY NOTES 8
Held: NO. The age of Carmen was not concealed to the
insurance company. Her application form indicated her true
age. Despite such information, Manila Bankers accepted the
premium and issued the policy. It had all the time to process
the application and notice the applicants age. If it failed to
act, it was because Manila Bankers was willing to waive such
disqualifications or it simply overlooked such fact. It is
therefore estopped from disclaiming any liability.
f. Philamcare Health Systems, Inc. v. Court of
Appeals, G.R. No. 125678, March 18, 2002
Facts: Ernani Trinos applied for a health care coverage with
Philamcare Health Systems, Inc. To the question Have you or
any of your family members ever consulted or been treated
for high blood pressure, heart trouble, diabetes, cancer, liver
disease, asthma or peptic ulcer?, Ernani answered No.
Under the agreement, Ernani is entitled to avail of
hospitalization benefits and out-patient benefits. The
coverage was approved for a period of one year from March
1, 1988 to March 1, 1989. The agreement was however
extended yearly until June 1, 1990 which increased the
amount of coverage to a maximum sum of P75,000 per
disability.
During the period of said coverage, Ernani suffered a
heart attack and was confined at the Manila Medical Center
(MMC) for one month. While in the hospital, his wife Julita
tried to claim the benefits under the health care agreement.
However, the Philamcare denied her claim alleging that the
agreement was void because Ernani concealed his medical
history. Doctors at the MMC allegedly discovered at the time
of Ernanis confinement that he was hypertensive, diabetic
and asthmatic, contrary to his answer in the application form.
Thus, Julita paid for all the hospitalization expenses.
After Ernani was discharged from the MMC, he was

attended by a physical therapist at home. Later, he was
admitted at the Chinese General Hospital. Due to financial
difficulties, however, respondent brought her husband home
again. In the morning of April 13, 1990, Ernani had fever and
was feeling very weak. Respondent was constrained to bring
him back to the Chinese General Hospital where he died on
the same day.
Julita filed an action for damages and reimbursement of
her expenses plus moral damages attorneys fees against
Philamcare and its president, Dr. Benito Reverente. The
Regional Trial court or Manila rendered judgment in favor of
Julita. On appeal, the decision of the trial court was affirmed
but deleted all awards for damages and absolved petitioner
Reverente. Hence, this petition for review raising the primary
argument that a health care agreement is not an insurance
contract; hence the incontestability clause under the
Insurance
Code
does
not
apply.
Issue: Whether or not there is concealment of material fact

made by Ernani
Held: NO. The answer assailed by petitioner was in response

to the question relating to the medical history of the
applicant. This largely depends on opinion rather than fact,
especially coming from respondents husband who was not a
medical doctor. Where matters of opinion or judgment are
called for answers made I good faith and without intent to
deceive will not avoid a policy even though they are untrue.
BOJY NOTES 9
The fraudulent intent on the part of the insured must be
established to warrant rescission of the insurance contract.
Concealment as a defense for the health care provider or
insurer to avoid liability is an affirmative defense and the
duty to establish such defense by satisfactory and convincing
evidence rests upon the provider or insurer. In any case, with
or without the authority to investigate, petitioner is liable for
claims made under the contract. Having assumed a
responsibility under the agreement, petitioner is bound to
answer to the extent agreed upon. In the end, the liability of
the health care provider attaches once the member is
hospitalized for the disease or injury covered by the
agreement or wherever he avails of the covered benefits
which he has prepaid.
Plans issued Pension Plan Agreement to Manuel, with

petitioner Ma. Lourdes S. Florendo, his wife, as beneficiary. In
time, Manuel paid his quarterly premiums. Eleven months
later, Manuel died of blood poisoning. Subsequently, Lourdes
filed a claim with Philam Plans for the payment of the
benefits under her husbands plan but Philam Plans declined
her claim prompting her to file the present action against the
pension plan company before the Regional Trial Court (RTC)
of Quezon City and ruled in favor of Ma. Lourdes. However,
the Court of Appeals then reversed the RTC decision. Hence
this appeal.
Being a contract of adhesion, the terms of an insurance

contract are to be construed strictly against the party which
prepared the contract the insurer. By reason of the
exclusive control of the insurance company over the terms
and phraseology of the insurance contract, ambiguity must
be strictly interpreted against the insurer and liberally in
favor of the insured, especially to avoid forfeiture. This is
equally applicable to Health Care Agreements.
Held: The Supreme Court answers this to the negative and

the AFFIRMED in its entirety the decision of the Court of
Appeals.
The comprehensive pension plan that Philam Plans issued
contains a one-year incontestability period. It states:
g. Ma. Lourdes S. Florendo v. Philam Plans, Inc.,

Perla Abcede and Ma. Celeste Abcede, G.R. No.
186983, February 22, 2012
Facts:
Manuel
Florendo
filed
an
application
for
comprehensive pension plan with respondent Philam Plans,
Inc. (Philam Plans) Manuel signed the application and left to
Perla the task of supplying the information needed in the
application. Respondent Ma. Celeste Abcede, Perlas
daughter, signed the application as sales counselor. Philam
Issue: Whether or not Ma. Lourdes could claim benefits as

the beneficiary of her husband under the insurance plan
despite consideration that her husband Manuel concealed the
true condition of his health.
VIII. INCONTESTABILITY
After this Agreement has remained in force for one (1) year,
we can no longer contest for health reasons any claim for
insurance under this Agreement, except for the reason that
installment has not been paid (lapsed), or that you are not
insurable at the time you bought this pension program by
reason of age. If this Agreement lapses but is reinstated
afterwards, the one (1) year contestability period shall start
again on the date of approval of your request for
reinstatement.
The above incontestability clause precludes the insurer
from disowning liability under the policy it issued on the
ground of concealment or misrepresentation regarding the
health of the insured after a year of its issuance.
Since Manuel died on the eleventh month following the
issuance of his plan, the one year incontestability period has
BOJY NOTES 10
not yet set in. Consequently, Philam Plans was not barred
from questioning Lourdes entitlement to the benefits of her
husbands pension plan.
5. REPRESENTATION (Sec. 36 - 48)
SEC. 36. A representation may be oral or written.
unless it proceeds from an agent of the insured, whose duty

it is to give the information.
SEC. 44. A representation is to be deemed false when the
facts fail to correspond with its assertions or stipulations.
SEC. 37. A representation may be made at the time of, or

before, issuance of the policy.
SEC. 45. If a representation is false in a material point,

whether affirmative or promissory, the injured party is
entitled to rescind the contract from the time when the
representation becomes false.
SEC. 38. The language of a representation is to be

interpreted by the same rules as the language of contracts in
general.
SEC. 46. The materiality of a representation is determined

by the same rules as the materiality of a concealment.
SEC. 39. A representation as to the future is to be deemed a

promise, unless it appears that it was merely a statement of
belief or expectation.
SEC. 47. The provisions of this chapter apply as well to a

modification of a contract of insurance as to its original
formation.
SEC. 40. A representation cannot qualify an express

provision in a contract of insurance, but it may qualify an
implied warranty.
SEC. 48. Whenever a right to rescind a contract of insurance

is given to the insurer by any provision of this chapter, such
right must be exercised previous to the commencement of
an action on the contract.
SEC. 41. A representation may be altered or withdrawn

before the insurance is effected, but not afterwards.
SEC. 42. A representation must be presumed to refer to the
date on which the contract goes into effect.
SEC. 43. When a person insured has no personal knowledge
of a fact, he may nevertheless repeat information which he
has upon the subject, and which he believes to be true, with
the explanation that he does so on the information of others;
or he may submit the information, in its whole extent, to the
insurer; and in neither case is he responsible for its truth,
After a policy of life insurance made payable on the death of

the insured shall have been in force during the lifetime of the
insured for a period of two (2) years from the date of its issue
or of its last reinstatement, the insurer cannot prove that the
policy is void ab initio or is rescindable by reason of the
fraudulent concealment or misrepresentation of the insured
or his agent.
Kinds:
1. Affirmative an affirmation of fact existing when the
contract begins
BOJY NOTES 11
2. Promissory statement by the insured concerning
what is to happen during the term of the insurance.
Requisites of a False Representation:
1. The insured stated a fact which is untrue;
2. Such fact was stated with knowledge that it is untrue
and with intent to deceive or which he states positively
as true without knowing it to be true and which has a
tendency to mislead.
3. Such fact in either case is material to the risk
Although false, a representation of the expectation, intention,
belief, opinion, or judgment of the insured will not avoid the
policy if there is no actual fraud in inducing the acceptance of
the risk, or its acceptance at a lower rate of premium, and
this is likewise the rule although the statement is material to
the risk, if the statement is obviously of the foregoing
character, since in such case the insurer is not justified in
relying upon such statement, but is obligated to make further
inquiry.
Test of materiality same as concealment. (Sec. 31)
Effects of Misrepresentation:
1. The injured party entitled to rescind from the time
when the representation becomes false. (Sec. 45)
2. When the insurer accepted the payment of premium
with the knowledge of the ground for rescission, there
is a waiver of such right.
3. There is no waiver of the right of rescission if the
insurer had no knowledge of the ground therefor at the
time of acceptance of premium payment.
Characteristics of misrepresentation:
1. Not a part of the contract but merely a collateral
inducement of it;
2. Oral or written;
3. Made at the time of, or before issuing the policy and
not after;
Exception: The insured wants the insurer to make a
modification of the policy.
4. Altered or withdrawn before the insurance is effected

but not afterwards;
5. Refers to the date the contract goes into effect.
Concealment
Misrepresentation
Act Involved
The insured withholds
The insured makes erroneous
information of material facts
statements of facts with the
from the insurer.
intent of inducing the insurer
to enter into the insurance
contract
Materiality
Same rules apply to determine materiality
Effect
Same effect and gives the insurer the right to rescind the
contract, whether the concealment or misrepresentation be
intentional or not.
Note: where the insurer merely signed the application form
and made the agent of the insured file the same for her, it
was held by doing so, the insured made the agent of the
insurer her own agent.
Promissory representation - is a representation about
what will be done in the future. For example, a representation
made by an insured about what will happen during the time
of coverage, stated as a matter of expectation and
amounting to an enforceable promise.
Statement of belief or expectation if it is outside the
matters which the policyholder could be expected to know
about.
THE POLICY (Sec. 49 66)
BOJY NOTES 12
SEC. 49. The written instrument in which a contract of
insurance is set forth, is called a policy of insurance.
Note: An insurance contract may be verbal or in writing, or
partly in writing and partly verbal. However, the law provides
that no policy of insurance shall be issued or delivered unless
in the form previously approved by the insurance
commission. (226)
Contents of Policy:
1. Parties
2. Amount of insurance, except in open or running
policies;
3. Rate of premium
4. Property of the life insured;
5. Interest of the insured in the property if he is NOT the
absolute owner;
But he is the absolute owner, information of the
nature or amount of his interest need not be
communicated unless in answer to an inquiry.
(Sec. 34)
6. Risk Insured against
7. Duration of the insurance
SEC. 50. The policy shall be in printed form which may

contain blank spaces; and any word, phrase, clause, mark,
sign, symbol, signature, number, or word necessary to
complete the contract of insurance shall be written on the
blank spaces provided therein.
Any rider, clause, warranty or endorsement purporting to be
part of the contract of insurance and which is pasted or
attached to said policy is not binding on the insured, unless
the descriptive title or name of the rider, clause, warranty or
endorsement is also mentioned and written on the blank
spaces provided in the policy.
Unless applied for by the insured or owner, any rider, clause,
warranty or endorsement issued after the original policy shall
be countersigned by the insured or owner, which
countersignature shall be taken as his agreement to the
contents of such rider, clause, warranty or endorsement.
Notwithstanding the foregoing, the policy may be in
electronic form subject to the pertinent provisions of
Republic Act No. 8792, otherwise known as the Electronic
Commerce Act and to such rules and regulations as may be
prescribed by the Commissioner.
SEC. 51. A policy of insurance must specify:
(a) The parties between whom the contract is made;
(b) The amount to be insured except in the cases of open or
running policies;
(c) The premium, or if the insurance is of a character where
the exact premium is only determinable upon the
BOJY NOTES 13
termination of the contract, a statement of the basis and
rates upon which the final premium is to be determined;
(d) The property or life insured;
(e) The interest of the insured in property insured, if he is
not the absolute owner thereof;
(f) The risks insured against; and
(g) The period during which the insurance is to continue.
SEC. 52. Cover notes may be issued to bind insurance
temporarily pending the issuance of the policy. Within sixty
(60) days after issue of a cover note, a policy shall be issued
in lieu thereof, including within its terms the identical
insurance bound under the cover note and the premium
therefor.
Cover notes may be extended or renewed beyond such
sixty (60) days with the written approval of the
Commissioner if he determines that such extension is not
contrary to and is not for the purpose of violating any
provisions of this Code. The Commissioner may promulgate
rules and regulations governing such extensions for the
purpose of preventing such violations and may by such rules
and regulations dispense with the requirement of written
approval by him in the case of extension in compliance with
such rules and regulations.
SEC. 53. The 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.
SEC. 54. When an insurance contract is executed with an

agent or trustee as the insured, the fact that his principal or
beneficiary is the real party in interest may be indicated by
describing the insured as agent or trustee, or by other
general words in the policy.
SEC. 55. To render an insurance effected by one partner or
part-owner, applicable to the interest of his co-partners or
other part-owners, it is necessary that the terms of the policy
should be such as are applicable to the joint or common
interest.
SEC. 56. When the description of the insured in a policy is
so general that it may comprehend any person or any class
of persons, only he who can show that it was intended to
include him, can claim the benefit of the policy.
SEC. 57. A policy may be so framed that it will inure to the
benefit of whomsoever, during the continuance of the risk,
may become the owner of the interest insured.
SEC. 58. The mere transfer of a thing insured does not
transfer the policy, but suspends it until the same person
becomes the owner of both the policy and the thing insured.
SEC. 59. A policy is either open, valued or running.
SEC. 60. An open policy is one in which the value of the
thing insured is not agreed upon, and the amount of the
insurance merely represents the insurers maximum liability.
The value of such thing insured shall be ascertained at the
time of the loss. (as amended an open policy is one in
which the value of the thing insured is not agreed upon, but
is left to be ascertained in case of loss.)
BOJY NOTES 14
SEC. 61. A valued policy is one which expresses on its face
an agreement that the thing insured shall be valued at a
specific sum.
(f) Discovery of other insurance coverage that makes

the total insurance in excess of the value of the
property insured; or (Added in the amendment)
SEC. 62. A running policy is one which contemplates

successive insurances, and which provides that the object of
the policy may be from time to time defined, especially as to
the subjects of insurance, by additional statements or
indorsements.
(g) A determination by the Commissioner that the

continuation of the policy would violate or would place the
insurer in violation of this Code.
SEC. 63. A condition, stipulation, or agreement in any policy

of insurance, limiting the time for commencing an action
thereunder to a period of less than one (1) year from the
time when the cause of action accrues, is void.
SEC. 64. No policy of insurance other than life shall be
cancelled by the insurer except upon prior notice thereof to
the insured, and no notice of cancellation shall be effective
unless it is based on the occurrence, after the effective date
of the policy, of one or more of the following:
(a) Nonpayment of premium;
(b) Conviction of a crime arising out of acts increasing the
hazard insured against;
(c) Discovery of fraud or material misrepresentation;
(d) Discovery of willful or reckless acts or omissions
increasing the hazard insured against;
(e) Physical changes in the property insured which result in
the property becoming uninsurable;
SEC. 65. All notices of cancellation mentioned in the

preceding section shall be in writing, mailed or delivered to
the named insured at the address shown in the policy, or to
his broker provided the broker is authorized in writing
by the policy owner to receive the notice of
cancellation on his behalf, (added in the amendment) and
shall state:
(a) Which of the grounds set forth in Section 64 is relied
upon; and
(b) That, upon written request of the named insured, the
insurer will furnish the facts on which the cancellation is
based.
SEC. 66. In case of insurance other than life, unless the
insurer at least forty-five (45) 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 (1) year shall be
considered as if written for a term of one (1) year. Any policy
written for a term longer than one (1) year or any policy with
BOJY NOTES 15
no fixed expiration date shall be considered as if written for
successive policy periods or terms of one (1) year.
contracting
parties.
This
principle
applies
to
the
interpretation of clauses, warranties, or indorsements which
are attached to policies to vary their terms.
Rider, clause, warranty or endorsement An attachment

to an insurance policy that modifies the conditions of the
policy expanding or restricting its benefits or excluding
certain conditions from the coverage.
Requisites:
1. The rider clause, warranty or endorsement is attached
in the policy.
2. The descriptive title or name of the RCWE is
mentioned and written on the blank spaces provided in
the original printed policy form; and
3. If not applied for by the insured or owner, the RCWE
shall be countersigned by the insured.
Counter-signature of the insured on a RCWE
If the RCWE was issued SIMULTANEOUSLY with the
policy, the counter-signature of the insured is NOT necessary.
However, the descriptive title or name of the rider must be
written on the blank spaces provided in the policy.
The RCWE was issued AFTER the issuance of the
policy;
If the insured applied for the RCWE, his countersignature is NOT necessary;
If the same is not applied for by the insured, RCWE
shall be countersigned by the insured or owner.
Note: When the requirements for a rider are complied with,
it is considered as part of the policy.
Binding Receipt
A mere acknowledgment on behalf of the company that is
branch office had received from the applicant the insurance
premium and had accepted the application subject to
processing by the head office.
Xxx any RCWE pasted or attached to the policy is considered

part of such policy or contract of insurance.
Rule in case of conflict between rider and printed
stipulation in the policy
When there is an inconsistency between a rider and the
printed stipulations in the policy, the rider prevails as being a
more deliberate expression of the agreement of the
Cover Note (Ad Interim)

A concise and temporary written contract issued by the
insurer through its duly authorized agent embodying the
principal terms of an expected policy of insurance.
Purpose: it is intended to give temporary insurance
protection coverage to the applicant pending the acceptance
or rejection of his application.
Rules on Cover Notes:
1. The cover note is valid for 60 days after which the
policy must be issued.
2. The period may be extended or renewed beyond 60
days with the written approval of the Commissioner if
he determines that such extension is not contrary t
and is not for the purpose of violating any provisions of
the Code.
The approval of the Insurance Commissioner may be
dispensed with upon the certification of the president, vicepresident, or general manager of the insurance company
concerned that the risk involved, the values of such risks
and/or the premiums therefor has not yet been determined
or established, or such extension or renewal is not contrary
to and is not for the purpose of violating any provisions of the
insurance code, or of any rulings, instructions, or circulars of
the insurance commissioner.
3. No separate premiums are intended or required to be
paid on a cover note because cover notes do not
contain particulars of the property insured that would
BOJY NOTES 16
serve as basis for the computation of premiums. Thus,
no premium could be fixed and paid on the cover note.
4. Cover notes could not be treated as separate policies
but should be integrated to the regular policies
subsequently issued so that the premiums on the
regular policies include the consideration for the cover
note.
Kinds of Insurance Policies:
1. Open Policy one in which the value of the thing
insured is not agreed upon, but is left to be
ascertained in case of loss. (sec60)
2. Valued Policy one which expresses on its face
agreement that the thing insured shall be valued at a
specified sum. (sec61)
3. Running Policy One which contemplates successive
Insurances and which provides that the object of the
policy may be from time to time defined, especially as
to the subjects of insurance, by additional statements
or endorsements. (Sec62)
GR: The insurance proceeds shall be applied exclusively to
the proper interest of the person in whose name or for whose
benefit it is made. A third person may not sue the insurer
directly.
Exc: If the insurance contract was intended to benefit third
persons, the latter may directly claim from the insurer. Thus:
1. If the insurance contract contain some stipulation in
favor of a third person (Stipulation Pour Autrui), the
latter although not a party to the contract may enforce
the stipulation in his favor before it is revoked by the
contracting parties.
2. A Third person has no right in law or equity to the
proceeds of an insurance unless there is a contract or
trust, express or implied, between the insured and
third person.
3. Were the contract insurance provides for indemnity
against liability to third persons, then third persons, to
whom the insured is liable, cans sue the insurer.
Insurance Procured by an Agent
The insurance inured o the benefit of the principal.
Requisites:
1. Agent must be authorized;
2. Must act within the scope of his authority
3. Must disclose his principal
4. Indicate by appropriate words that he is acting in a
representative capacity.
Test to determine whether a third person may directly
sue the insurer of the Wrongdoer
Where the contract provides for INDEMNITY AGAINST
LIABILITY to third persons, then the latter to whom the
insured is liable, can directly sue the insurer.
On the other hand, where the insurance is for
INDEMNITY AGAINST ACTUAL LOSS OR PAYMENT, then third
persons cannot proceed against the insurer the contract
being solely to reimburse the insured for liability actually
discharged by him through payment to third persons, said
third persons recourse being, thus limited to the insured
alone. (Guingon vs del monte)
Cancellation of Non-life Policy
The right of the insurer to cancellation of a policy of
insurance other than life is covered by sec.64 and 65 of the
insurance code.
Requisites (WANG):
1. Prior notice of cancellation to the insured;
2. Notice must be based on the occurrence after the
effective date of the policy of one or more of the
grounds mentioned;
3. Notice must be in writing, mailed or delivered to the
insured at the address shown in the policy.
4. Notice must sate the grounds relied upon provided in
sec. 64 of the insurance code and upon request tof the
insured to furnish facts on which cancellation is made.
Grounds:
1. Non-payment of premiums
2. Conviction of a crime out of acts increasing the hazard
insured against
3. Fraud or material misrepresentation
4. Willful or reckless acts or omissions increasing the risk
insured against;
BOJY NOTES 17
5. Physical changes in the property insured making it
uninsurable
6. Determination by the Insurance Commissioner that the
policy would violate the Insurance Code.
Group insurance - an insurance that covers a defined group of

people, for example the members of a society or professional
association, or the employees of a particular employer. Group
coverage can help reduce the problem of adverse
selection by creating a pool of people eligible to purchase
insurance who belong to the group for reasons other than the
wish to buy insurance, which might be because they are a
worse than average risk.
Group insurance may offer life insurance, health
insurance, and/or some other types of personal insurance.
Group annuity - A group annuity contract is issued by a life

insurance company to a tax-qualified retirement plan.
In group annuities, employees do not own shares of specific
funds, but own "units" in the underlying pooled investment.
Because of their structure, group annuity investments are not
considered to be "securities" and are therefore not subject to
the uniform disclosure rules of FINRA (formerly the NASD).
There are two primary fees that group annuities charge: the
"contract charge" (or "administrative fee") and "separate
account fee." The contract charge is the cost of operating the
group annuity, and includes the insurance agent's
commissions. The separate account fee goes to the
management of the underlying investment. This fee is on top
of the expenses of the underlying investment.
All group annuity contracts also offer the right for plan
participants to purchase annuities.
BREACH OF..
1. WARRANTIES:
SEC. 67. A warranty is either expressed or implied.
SEC. 68. A warranty may relate to the past, the present, the
future, or to any or all of these.
SEC. 69. No particular form of words is necessary to create
a warranty.
SEC. 70. Without prejudice to Section 51, every express
warranty, made at or before the execution of a policy, must
be contained in the policy itself, or in another instrument
signed by the insured and referred to in the policy as making
a part of it.
SEC. 71. A statement in a policy, of a matter relating to the
person or thing insured, or to the risk, as fact, is an express
warranty thereof.
SEC. 72. A statement in a policy, which imparts that it is
intended to do or not to do a thing which materially affects
the risk, is a warranty that such act or omission shall take
place.
SEC. 73. When, before the time arrives for the performance
of a warranty relating to the future, a loss insured against
BOJY NOTES 18
happens, or performance becomes unlawful at the place of
the contract, or impossible, the omission to fulfill the
warranty does not avoid the policy.
SEC. 74. The violation of a material warranty, or other
material provision of a policy, on the part of either party
thereto, entitles the other to rescind.
2. Implied it is deemed included in the contract

although not expressly mentioned.
Example: in marine insurance, seaworthiness of the vessel,
non-deviation from the agreed voyage or non-indulgence in
illegal ventures.
Effects of breach of warranty:
SEC. 75. A policy may declare that a violation of specified

provisions thereof shall avoid it, otherwise the breach of an
immaterial provision does not avoid the policy.
SEC. 76. A breach of warranty without fraud merely
exonerates an insurer from the time that it occurs, or where
it is broken in its inception, prevents the policy from
attaching to the risk.
1. Material
GR: Violation of material warranty or of a material
provision of a policy will entitle the other party to
rescind the contract. (sec. 74)
Exc:
a. Loss occurs before the time arrives for the
performance of the warranty;
Purpose: to eliminate potentially increasing hazards which

may either be due to the acts of the insured or to the change
of the condition of the property,
Basis: the insurer took into consideration the condition of
the property at the time of effectivity of the policy.
Kinds:
1. Express an agreement expressed in a policy
whereby the insured stipulates that certain facts
relating to the risk are or shall be true, or certain acts
relating to the same subject have been or shall be
done.
b. the performance becomes unlawful at the place of

the contract; and
c. performance becomes impossible (Sec.73)
2. Immaterial (e.g.) Other insurance clause
GR: it will not avoid the policy
Exc: When the policy expressly provides or declares that a
violation thereof will avoid it. (Sec. 75)
Warranty
Representation
BOJY NOTES 19
2. Condition Subsequent Avoids the policy or entitles
the insurer to rescind.
Nature
Part of the contract
Mere collateral inducement

Form
Written on the policy,

actually or by reference
May be written in the policy

or may be oral
Materiality
Presumed material
The insurer may also protect himself against fraudulent

claims of loss by inserting the policy various conditions
which take the form of conditions precedent. For instance,
there are conditions requiring immediate notice of loss or
injury and detailed proofs of loss within a limited period.
Condition
Must be proved to be
material
Compliance
Must be strictly complied

with
Requires only substantial

truth and compliance
Effect of falsity/non-fulfillment
Falsity or non-fulfillment
operates as a breach of
contract
Falsity renders he policy void

on the ground of fraud
2. CONDITIONS
Effect of Breach:
1. Condition precedent Prevents the accrual of cause
of action
Warranty
Effects
Limitation to the
attachment of the risk
Does not have that effect
Non-performance of which,
although in form executed
by the parties and
delivered, doe not spring
into life.
Does not suspend or defeat

the operation of the
contract.
The occurrence of breach temporarily renders the entire

contract voidable
Exceptions: Provisions that may specify excepted perils.
It makes more definite coverage indicated by the general
description of the risk by excluding certain specified risks
that otherwise would be included under the general
language describing the risk assumed.
An Insurer seeking to defeat a claim because of an
exception or limitation in the policy has the burden of
proving that the loss comes within the purview of the
BOJY NOTES 20
exception or limitation. If a proof is made of a loss
apparently within a contract of insurance, the burden is
upon the insurer to prove that the loss arose from a cause
of loss which is excepted or for which it is not liable, or
from a cause which limits its liability.
Note: Breach of warranty or condition renders the
contract defeasible at the option of the insurer; but if he
so elects, he may waive his privilege and power to rescind
by the mere expression of an intention so to do. In that
event his liability under the policy continues as before.
Grounds:
There is no limit for interposing this defense.

Rescission in life policy
The defenses mentioned are available only during the
first two years of a life insurance policy, provided that after a
policy of insurance made payable on the death of the insured
shall gave been in force during the lifetime of the insured for
a period of 2 years from the date of its issue or its last
reinstatement, the insurer cannot prove that the policy is
void ab initio or is rescindable by the reason of fraudulent
concealment or misrepresentation of the insured or his
agent. (Incontestability clause) (sec.48)
1. Concealment
2. False Representation
Purpose of Incontestability clause:
3. Breach of material warranty
To assure that after the specified period, the policy owner

may rely upon the insurance company to carry out the terms
of the contract, regardless of irregularities in connection with
the application which may later be discovered.
4. Breach of a condition subsequent

5. Alteration of the thing insured
Requisites:
Rescission in non-life policy
1. It must be a life insurance policy;
The insurer must exercise the right to rescind the
contract BEFORE the insured has filed an action to collect the
amount of insurance.
A defense to an action to recover insurance that the
policy was obtained through false representation, fraud and
deceit is NOT in the nature of an action to rescind and
therefore not barred by the provision. (Sec. 45)
2. It must be payable on the death of the insured and

3. It must be in force during the lifetime of the insured for
atleast 2 years from its date of issue or its last
reinstatement.
BOJY NOTES 21
The period of two years may be shortened but it cannot be
extended by stipulation.
The Incontestability clause precludes the insurer from
raising the defense of false representations or concealment
of material facts insofar as health and previous diseases are
concerned. If the insurance has been in force for at least two
years during the insureds lifetime.
Defenses not barred by Incontestability clause:

1. That the person taking the insurance lacked insurable
interest as required by law;
Cases:
a. The Insular Life Assurance Company, Ltd.
v. Feliciano, G.R. No.
47593, December 29, 1943
Facts: Evaristo Feliciano was issued an insurance policy by Insular
Life. In September 1935, he died. His heirs (Serafin Feliciano et al)
filed an insurance claim but Insular Life denied the application as it
averred that Felicianos application was attended by fraud. It was
later found in court that the insurance agent and the medical
examiner of Insular Life who assisted Feliciano in signing the
application knew that Feliciano was already suffering from
tuberculosis; that they were aware of the true medical condition of
Feliciano yet they still made it appear that he was healthy in
theinsurance application form; that Feliciano signed the application
in blank and the agent filled the information for him.
2. That the cause of the death of the insured is an

excepted risk;
3. That the premiums have not been paid;
4. That the conditions of the policy relating to military or
naval service have been violated.
Issue: Whether or not Insular Life can avoid the insurance policy
by reason of the fact that its agent knowingly and intentionally
wrote down the answers in the application differing from those
made by Feliciano hence instead of serving the interests of his
principal, acts in his own or anothers interest and adversely to that
of his principal.
5. That the fraud is of a particular vicious type;

6. That the beneficiary failed to furnish proof of death or
to comply with any conditions imposed by the policy
after the loss has happened.
7. That the action was not brought within the time
specified.
Held: No. Insular Life must pay the insurance policy. The weight of
authority is that if an agent of the insurer, after obtaining from an
applicant for insurance a correct and truthful answer to
interrogatories contained in the application for insurance, without
knowledge of the applicant fills in false answers, either fraudulently
or otherwise, the insurer cannot assert the falsity of such answers
as a defense to liability on the policy, and this is true generally
without regard to the subject matter of the answers or the nature of
BOJY NOTES 22
the agents duties or limitations on his authority, at least if not
brought to the attention of the applicant.
The fact that the insured did not read the application which he
signed, is not indicative of bad faith. It has been held that it is not
negligence for the insured to sign an application without first
reading it if the insurer by its conduct in appointing the agent
influenced the insured to place trust and confidence in the agent.
b. Saturnino v. The Philippine American Life Insurance

Company, G.R. No. 16163, February 28, 1963
Representation Concealment Misrepresentation Fraud
Facts: In September 1957, Estefania Saturnino was operated for
cancer in which her right breast was removed. She was advised by
her surgeon that shes not totally cured because her cancer was
malignant. In November 1957, she applied for an insurance policy
under Philamlife (Philippine American Life Insurance Company). She
did not disclose the fact that she was operated nor did she disclose
any medical histories. Philamlife, upon seeing the clean bill of
health from Estefania waived its right to have Estefania undergo a
medical checkup. In September 1958, Estefania died of
pneumonia secondary to influenza. Her heirs now seek to enforce
the insurance claim.
order to avoid a policy, it is not necessary that actual fraud be

established otherwise insurance companies will be at the mercy of
any one seeking insurance.
In this jurisdiction a concealment, whether intentional
unintentional, entitles the insurer to rescind the contract
insurance, concealment being defined as negligence
communicate that which a party knows and ought
communicate.
or
of
to
to
Also, the fact that Philamlife waived its right to have Estefania
undergo a medical examination is not negligence. Because of
Estefanias concealment, Philamlife considered medical checkup to
be no longer necessary. Had Philamlife been informed of her
operation, she would have been made to undergo medical checkup
to determine her insurability.
c.
Edillon
v.
Manila
Bankers
Life
Insurance
Corporation, G.R. No. 34200, September 30, 1982
Facts: In Apr. 1969, Carmen Lapuz applied for insurance with
Manila Bankers. In the application she stated the date of her birth
as July 11, 1904 (around 64 yrs old). The policy was thereafter
issued. Subsequently, in May 1969, Carmen died of a car accident.
Her sister, as beneficiary claimed the proceeds of the insurance.
Manila Bankers refused to pay because the certificate of insurance
contained a provision excluding its liability to pay claims to
persons under 16 or over 60.
Issue: Whether or not Saturnino is entitled to the insurance claim.
Held: No. The concealment of the fact of the operation is

fraudulent. Even if, as argued by the heirs, Estefania never knew
she was operated for cancer, there is still fraud in the concealment
no matter what the ailment she was operated for. Note also that in
Issue: Whether or not the policy is void considering that the

insured was over 60 when she applied.
BOJY NOTES 23
Held: NO. The age of Carmen was not concealed to the insurance
company. Her application form indicated her true age. Despite
such information, Manila Bankers accepted the premium and issued
the policy. It had all the time to process the application and notice
the applicants age. If it failed to act, it was because Manila
Bankers was willing to waive such disqualifications or it simply
overlooked such fact. It is therefore estopped from disclaiming any
liability.
pursuant to the agreement between the insurer and the

government employee and to remit such deductions to the
insurer concerned, and collect such reasonable fee for its
services.- (Added provision)
PREMIUM (Sec. 77 84)
SEC. 79. An acknowledgment in a policy or contract of

insurance or the receipt of premium is conclusive evidence of
its payment, so far as to make the policy binding,
notwithstanding any stipulation therein that it shall not be
binding until the premium is actually paid.
SEC. 77. An insurer is entitled to payment of the premium

as soon as the thing insured is exposed to the peril insured
against. Notwithstanding any agreement to the contrary, no
policy or contract of insurance issued by an insurance
company is valid and binding unless and until the premium
thereof has been paid, except in the case of a life or an
industrial life policy whenever the grace period provision
applies, or whenever under the broker and agency
agreements with duly licensed intermediaries, a
ninety (90)-day credit extension is given. No credit
extension to a duly licensed intermediary should
exceed ninety (90) days from date of issuance of the
policy.(added)
SEC. 78. Employees of the Republic of the Philippines,

including its political subdivisions and instrumentalities, and
government-owned or -controlled corporations, may pay
their insurance premiums and loan obligations through salary
deduction: Provided, That the treasurer, cashier, paymaster
or official of the entity employing the government employee
is authorized, notwithstanding the provisions of any existing
law, rules and regulations to the contrary, to make
deductions from the salary, wage or income of the latter
SEC. 80. A person insured is entitled to a return of premium,

as follows:
(a) To the whole premium if no part of his interest in the
thing insured be exposed to any of the perils insured against;
(b) Where the insurance is made for a definite period of
time and the insured surrenders his policy, to such portion of
the premium as corresponds with the unexpired time, at a
pro rata rate, unless a short period rate has been agreed
upon and appears on the face of the policy, after deducting
from the whole premium any claim for loss or damage under
the policy which has previously accrued: Provided, That no
holder of a life insurance policy may avail himself of the
privileges of this paragraph without sufficient cause as
otherwise provided by law.
BOJY NOTES 24
SEC. 81. If a peril insured against has existed, and the
insurer has been liable for any period, however short, the
insured is not entitled to return of premiums, so far as that
particular risk is concerned.
premiums on the policy or to increase the benefits thereof.

(Added provision)
GR:
SEC. 82. A person insured is entitled to a return of the
premium when the contract is voidable, and subsequently
annulled under the provisions of the Civil
Code(added); or on account of the fraud or
misrepresentation of the insurer, or of his agent, or on
account of facts, or the existence of which the insured was
ignorant of without his fault; or when by any default of the
insured other than actual fraud, the insurer never incurred
any liability under the policy.
A person insured is not entitled to a return of premium if the
policy is annulled, rescinded or if a claim is denied by reason
of fraud.
SEC. 83. In case of an over insurance by several insurers

other than life, the insured is entitled to a ratable return of
the premium, proportioned to the amount by which the
aggregate sum insured in all the policies exceeds the
insurable value of the thing at risk.
Cash and Carry Rule no insurance policy issued or

renewal is valid and binding until actual payment of the
premium. Any agreement ot the contrary is void. (Sec77)
Reason: the insurer upon issuance of the policy, is
immediately exposed to liability for the risks insured against,
hence it is entitled to be paid premium for extending
protection to the insured immediately upon such exposure.
Exceptions:
1. In case of life and industrial life whenever the grace
period provision applies (sec77)
2. Where there is an acknowledgment in the contract or
policy of insurance that the premium had already been
paid. (sec78)
3. If the parties have agreed to the payment of the
premium in installments and partial payment has been
made at the time of te loss
4. Where a credit term was agreed upon.
SEC. 84. An insurer may contract and accept payments, in

addition to regular premium, for the purpose of paying future
a. UCPB General Insurance Co., Inc. v. Masagana

Telamart, Inc.
BOJY NOTES 25
Facts: Plaintiff obtained from defendant fire insurance policies on
its property effective from May 1991 - 1992. On June 1992,
plaintiff's properties were raged by fire. On the same date plaintiff
tendered, and defendant accepted five checks as renewal premium
payments for which a receipt was issued. Masagana made a claim
which was denied. the checks were then returned to plaintiff.
According to defendant, the claim cannot be entertained for
properties were burned before the tender of premium.
Issue: Whether or not section 77 of the insurance code must be
strictly applied to petitioners advantage despite its practice of
granting 60 to 70 day credit term for the payment of its premium
Held: The first exception is provided by Section 77 itself, and that
is, in case of a life or industrial life policy whenever the grace
period provision applies.
The second is that covered by Section 78 of the Insurance Code,
which provides:
SECTION 78 (now 79). Any acknowledgment in a policy or contract
of insurance of the receipt of premium is conclusive evidence of its
payment, so far as to make the policy binding, notwithstanding any
stipulation therein that it shall not be binding until premium is
actually paid.
A third exception was laid down in Makati Tuscany Condominium
Corporation vs. Court of Appeals, wherein we ruled that Section 77
may not apply if the parties have agreed to the payment in
installments of the premium and partial payment has been made at
the time of loss.
Tuscany case has provided a fourth exception to Section 77,
namely, that the insurer may grant credit extension for the
payment of the premium. This simply means that if the insurer has
granted the insured a credit term for the payment of the premium
and loss occurs before the expiration of the term, recovery on the
policy should be allowed even though the premium is paid after the
loss but within the credit term.
Moreover, there is nothing in Section 77 which prohibits the parties
in an insurance contract to provide a credit term within which to
pay the premiums. That agreement is not against the law, morals,
good customs, public order or public policy. The agreement binds

the parties. Article 1306 of the Civil Code provides:
ARTICLE 1306. The contracting parties may establish such
stipulations clauses, terms and conditions as they may deem
convenient, provided they are not contrary to law, morals, good
customs, public order, or public policy.
Finally in the instant case, it would be unjust and inequitable if
recovery on the policy would not be permitted against Petitioner,
which had consistently granted a 60- to 90-day credit term for the
payment of premiums despite its full awareness of Section 77.
Estoppel bars it from taking refuge under said Section, since
respondent relied in good faith on such practice. Estoppel then is
the fifth exception to Section 77.
Note: Sec77 merely precludes the parties from stipulating

that the policy is valid even if the premiums are not paid.
Effect of acknowledgment of receipt of premium In
policy:
Conclusive evidence of its payment, in so far as to make the
policy binding, notwithstanding any stipulation therein that it
shall not be binding until the premium is actually paid.
(Sec78) (now 79)
Reason:
When
the
policy contains such written
acknowledgment, it is presumed that the insurer has waived
the condition of prepayment. It hereby creates a legal fiction
of payment.
Note: the conclusive presumption extends only to the
question on the binding effect of the policy. As far as the
payment of the premium itself is concerned, the
acknowledgment is only a prima facie evidence of the fact of
such payment. The insurer may still dispute its
acknowledgment but only for the purpose of receiving the
premium due and unpaid.
Effect of acceptance of premium
Acceptance of premium within the stipulated period for
payment thereof, including the agreed grace period, merely
BOJY NOTES 26
assures continued effectivity of the insurance policy in
accordance with its terms.
Where the insurer authorizes an insurance agent or
broker to deliver a policy to the insured, it is deemed to have
authorized said agent to receive the premium in its behalf.
The insurer is bound by its agents acknowledgment of the
receipt of payment of premium.
The acceptance by the insurer of premium payments
after he has knowledge of a ground for rescission will bar him
from rescinding the policy.
Payment of the Premium by post-dated check
Delivery of a promissory note or a check will not be sufficient
to make the policy binding until the said note or check has
been converted into cash. This is consistent with art. 1249 of
the NCC.
Note: payment means of a check or note, accepted by the
insurer, bearing a a date PRIOR to the loss, assuming
availability of the funds thereof, would be sufficient even if it
remains unencashed at the time of the loss. The subsequent
effects of encashment would retroact to the date of the
instrument and its acceptance by the creditor.
Entitlement of insured to return of premiums paid:
1. Whole
a. If the thing insured was never exposed to the risks
insured against (sec79) (now 80)
b. If contract is voidable because of the existence of
facts of which the insured was ignorant without is
fault. (Sec81) (now 82)
c. When by any default of the insured other than
actual fraud, the insurer never incurred liability.
(sec81) (now 82)
d. When rescission is granted due to the insurer
breach of contract (Sec74)
2. Pro rata
a. When the insurance is for a definite period and the
insured surrenders his policy before the termination
thereof;
Exceptions:
1. Policy not made for a definite period of time;
2. Short period rate is agreed upon;

3. Life insurance policy
b. When there is over-insurance
b.1. in case of over-insurance by double insurance,
the insurer I not liable for the total amount of the
insurance taken, his liability being limited to the
property insured.
b.2. In case of over-insurance by several insurers,
the insured is entitled to a ratable return of the
premium proportioned to the amount by which the
aggregate sum insured in all the policies exceeds
the insurable value of the thing at risk. (sec82)
(now 83)
Devices Used to Prevent the Forfeiture of a Life
Insurance after the Payment of the First Premium:
1. Grace period after the payment of the first
premium, the insured is entitled to a grace period of
30 days within which to pay the succeeding premiums.
2. Cash Surrender Value the amount the insurer
agrees to pay to the holder of the policy if he
surrenders it and releases his claim upon it.
3. Extended Insurance Where the insurance originally
contracted for is continued for such period as the
amount available therefor will pay when it will
terminate. In such case, the insurance will be for the
same amount as the original policy but for a period
shorter than the period in the original contract.
4. Paid-Up Insurance No more payments are required,
and consist of insurance for life in such an amount as
the sum available therefore, considered as a single
and final premium, will purchase. It results to a
reduction of the original amount of insurance, but for
the same period originally stipulated.
5. Automatic Loan Clause A stipulation in the policy
providing that upon default in payment of premium,
the same shall be paid from the loan value of the
policy until that value is consumed. In such a case, the
BOJY NOTES 27
policy is continued in force as fully and effectively as
though the premiums had been paid by the insured
from funds derived from other sources.
6. Reinsurance provision that the holder of the policy
shall be entitled to reinstatement of the contact at any
time within three years from the date of default I the
payment of premium, unless the cash surrender value
has been paid, or the extension period expired, upon
production of evidence of insurability satisfactory to
the company and the payment of all overdue
premiums and any indebtedness to the company upon
said policy.
7. Estoppel bars insurer from taking refuge under
sec77, since respondent relied in good faith on such
practice.
LOSS (Sec. 85 89)
SEC. 85. An agreement not to transfer the claim of the
insured against the insurer after the loss has happened, is
void if made before the loss except as otherwise provided in
the case of life insurance.
SEC. 86. Unless otherwise provided by the policy, an insurer
is liable for a loss of which a peril insured against was the
proximate cause, although a peril not contemplated by the
contract may have been a remote cause of the loss; but he is
not liable for a loss of which the peril insured against was
only a remote cause.
SEC. 87. An insurer is liable where the thing insured is
rescued from a peril insured against that would otherwise
have caused a loss, if, in the course of such rescue, the thing
is exposed to a peril not insured against, which permanently
deprives the insured of its possession, in whole or in part; or
where a loss is caused by efforts to rescue the thing insured
from a peril insured against.
SEC. 88. Where a peril is especially excepted in a contract

of insurance, a loss, which would not have occurred but for
such peril, is thereby excepted although the immediate
cause of the loss was a peril which was not excepted.
SEC. 89. An insurer is not liable for a loss caused by the
willful act or through the connivance of the insured; but he is
not exonerated by the negligence of the insured, or of the
insurance agents or others.
Loss in Insurance
The injury, damage or liability sustained by the insured
in consequence of the happening of one or more of the perils
against the happening of one or more of the perils against
which the insurer, in consideration of the premium, has
undertaken to indemnify the insured. It may be total, partial,
or constructive in Marine Insurance. [secs. 127 (now 129)
and 131 (now 133)]
Loss is Satisfied:
1. Payment of loss;
2. Reinstatement (repair or restoration) of the property
lost or damaged;
3. Replacement (substitution) with another or similar
property.
When Insurer is Liable for Loss:
1. Loss the proximate cause of which is the peril insured
against. (Sec84) (now 86)
2. Loss the immediate cause of which is the peril insured
against except where the proximate cause in an
excepted peril (sec86) (now 88)
3. Loss through the negligence of the insured except
where there was gross negligence amounting to willful
act (sec87) (now 88)
4. Loss caused by efforts to rescue the thing insured from
a peril insured against (sec85) (now 87)
5. Loss caused by a peril NOT insured against to which
the thing insured was exposed in the course of
BOJY NOTES 28
rescuing the same from the peril insured against
(sec85) (now 87)
When the insurer is not liable:
1. loss by the insureds willful act or gross negligence;
2. loss due to the connivance of the insured (sec87)
(now 89)
3. loss where the excepted peril is the proximate cause.
Proximate cause that which in a natural and continuous
sequence, unbroken by any new independent cause,
produces an event and which the event would not have
occurred.
a. United Merchants Corp. v. Country Bankers
Insurance Corp., G.R. No. 198588, July 11, 2012
While it is a cardinal principle of insurance law that a contract of
insurance is to be construed liberally in favor of the insured and
strictly against the insurer company, contracts of insurance, like
other contracts, are to be construed according to the sense and
meaning of the terms which the parties themselves have used. If
such terms are clear and unambiguous, they must be taken and
understood in their plain, ordinary and popular sense. Courts are
not permitted to make contracts for the parties; the function and
duty of the courts is simply to enforce and carry out the contracts
actually made.
Insurance; limitation in liability.
An insurer who seeks to
defeat a claim because of an exception or limitation in the policy
has the burden of establishing that the loss comes within the
purview of the exception or limitation. If loss is proved apparently
within a contract of insurance, the burden is upon the insurer to
establish that the loss arose from a cause of loss which is excepted
or for which it is not liable, or from a cause which limits its
liability. In the present case, CBIC failed to discharge its primordial
burden of establishing that the damage or loss was caused by
arson, a limitation in the policy.
NOTICE OF LOSS (Sec. 90 94)

SEC. 90. In case of loss upon an insurance against fire, an
insurer is exonerated, if written notice thereof be not given
to him by an insured, or some person entitled to the benefit
of the insurance, without unnecessary delay. For other nonlife insurance, the Commissioner may specify the period for
the submission of the notice of loss.
SEC. 91. When a preliminary proof of loss is required by a
policy, the insured is not bound to give such proof as would
be necessary in a court of justice; but it is sufficient for him
to give the best evidence which he has in his power at the
time.
SEC. 92. All defects in a notice of loss, or in preliminary
proof thereof, which the insured might remedy, and which
the insurer omits to specify to him, without unnecessary
delay, as grounds of objection, are waived.
SEC. 93. Delay in the presentation to an insurer of notice or
proof of loss is waived if caused by any act of him, or if he
omits to take objection promptly and specifically upon that
ground.
SEC. 94. If the policy requires, by way of preliminary proof
of loss, the certificate or testimony of a person other than
the insured, it is sufficient for the insured to use reasonable
diligence to procure it, and in case of the refusal of such
person to give it, then to furnish reasonable evidence to the
insurer that such refusal was not induced by any just
grounds of disbelief in the facts necessary to be certified or
testified.
Purposes:
BOJY NOTES 29
1. To give the insurer information by which he may
determine the extent of his liability.
2. To afford the insurer a means of detecting any fraud
that may have been practiced upon him;
3. To operate as a check upon extravagant claims.
In fire Insurance/CMVLI
In other types of
Insurance
Required
Not required
Effect of failure to furnish
Failure to give notice will
Failure to give notice will not
defeat the right of the
exonerate the insurer, unless
insured to recover
there is a stipulation in the
policy requiring the insured
to do so.
Defects in the notice or proof of loss are waived when
the insurer:
1. Writes to the insured that he considers the policy null
and void as the furnishing of notice or proof of loss
would be useless;
2. Recognizes his liability to pay the claims;
3. Denies all liability under the policy;
4. Joins in the proceedings for determining the amount of
the loss by arbitration, making no objections on
account of notice and preliminary proof; or
5. Makes objection on any ground other than formal
defect in the preliminary proof.
Claim Settlement
The indemnification of the loss od the insured
In case of an unreasonable delay/denial in the payment of
the insureds claim by the insurer, the insured can recover:
1. attorneys fees
2. expenses incurred by reason of the unreasonable
withholding;
3. Interest at double the legal interest rate fixed by the
monetary board; and
4. Amount of the claim
Time of Payment of Claims

Life Policies
Maturing
upon
the
expiration of the term
the proceeds are immediately
payable to the insured,
except
if
proceeds
are
payable in installments or
annuities, which shall be paid
as they become due.
Maturing at the death of
the
insured,
occurring
prior to the expiration of
the term stipulatedthe
proceeds are payable to the
beneficiaries within 60 days
after: presentation of claim
and filing of proof of death.
(sec242) (now 249)
Non-Life Policies
The proceeds shall be paid
within 30 days after receipt
by the insurer of proof of
loss, and ascertainment of
the loss or damage by
agreement of the parties or
by arbitration but not later
than 90 days from such
receipt of proof of loss,
whether or not ascertainment
is had or made. (Sec. 243)
(now 249)
Effect off Refusal or Failure to Pay the Claim within the

Time Prescribed
GR: Sec. 242-244 (now 248-250) provide that the insurer
shall be liable to pay interest twice the ceiling prescribed by
the Monetary Board which means twice 12% per annum
(legal rate of interest) or 24% per annum interest on the
proceeds of the insurance from the date following the time
prescribed in secs. 242-243, until the claim is fully satisfied.
Exc: Refusal or failure to pay the loss or damage will entitle
the assured to collect interest UNLESS such refusal or failure
to pay is based on the ground that the claim is fraudulent.
DOUBLE INSURANCE (Sec. 95 96)
Definition:
BOJY NOTES 30
SEC. 95. A double insurance exists where the same person
is insured by several insurers separately in respect to the
same subject and interest.
Requisites:
1. Same insured person;
2. Same subject matter;
3. Same interest insured;
4. Same risk or peril insured against; and
5. Two or more insurers insuring separately
Over-insurance exists when the insured insures the same
property for an amount greater than the value of that
property.
Effect in case of loss:
1. The insurer is bound only to pay the extent of the real
value of the property lost;
2. The insured is entitled to recover the amount of
premium corresponding to the excess in value of the
property.
Effects of over insurance by double insurance:
SEC. 96. Where the insured in a policy other than life is over
insured by double insurance:
(a) The insured, unless the policy otherwise provides, may
claim payment from the insurers in such order as he may
select, up to the amount for which the insurers are severally
liable under their respective contracts;
(b) Where the policy under which the insured claims is a

valued policy, any sum received by him under any other
policy shall be deducted from the value of the policy without
regard to the actual value of the subject matter insured;
(c) Where the policy under which the insured claims is an

unvalued policy, any sum received by him under any policy
shall be deducted against the full insurable value, for any
sum received by him under any policy;
(d) Where the insured receives any sum in excess of the

valuation in the case of valued policies, or of the insurable
value in the case of unvalued policies, he must hold such
sum in trust for the insurers, according to their right of
contribution among themselves;
(e) Each insurer is bound, as between himself and the other

insurers, to contribute ratably to the loss in proportion to the
amount for which he is liable under his contract.
Principle of Contribution or Contribution Clause

It is required that each insurer contribute ratably to the
loss or damage considering that the several insurance cover
the same subject matter and interest against the same peril.
Additional or other insurance clause
A condition in the policy requiring the insured to inform the
insurer of any other insurance coverage of the property
insured. It is lawful and specifically allowed under Sec. 75
which provides that a. policy may declare that a violation of
a specified provision thereof shall avid it, otherwise the
breach of an immaterial provision does not avoid it.
Purpose:
Double insurance is not prohibited by law. The reasons why it
may be required that its existence be disclosed are:
BOJY NOTES 31
1. To prevent an increase in the moral hazard; and
2. To prevent over-insurance and fraud.
Xxx the prohibition applies only in case of double insurance,
the court ruled that in order to constitute a violation of the
clause, the other insurance must be upon the same subject
matter, the same interest therein, and the same risk. Thus,
even though the multiple insurance policies involved were all
issued in the name of the same assured, over the same
subject matter and covering the same risk it was ruled that
there was no violation of the other insurance clause since
there was not double insurance. (Malayan Insurance Co. inc
vs Phil first insurance co)
Over-Insurance
Double Insurance
Amount of insurance
When the amount of the
There may be no overinsurance is beyond the
insurance as when the sum
value of the insureds
total of the amounts of the
insurable interest
policies issued does not
exceed the insurable interest
of the insured.
Number of Insurers
There may only be one
There are always several
insurer involved
insurers.
The ratable contribution of each insurer will be determined
based on the following formula:
Amount of Policy
----------------------------- X loss = liability of insurer
Total insurance taken
SEC. 97. A contract of reinsurance is one by which an

insurer procures a third person to insure him against loss or
liability by reason of such original insurance. a.k.a.
Reinsurance Cession
In every reinsurance, the original contract of insurance and

the contract of reinsurance are covered by separate policies.
Limit of single Risk
No insurance company other than life, shall retain any risk on
any one subject of insurance in an amount exceeding 20% of
its net worth. (sec. 221)
Double Insurance
Reinsurance
Interest
Involves the same interest
Subject
Property
Original insurers risk

Insurer
REINSURANCE (Sec.97-100)
Definition:
Involves different interest
Insurer remains in such

capacity
Insurer becomes the insured

in relation to insurer
Insured
BOJY NOTES 32
Insured is the party in
interest in the 2 contracts
Original insured has no

interest in the reinsurance
contract (Sec. 100)
Insureds consent
Insured has to give his
consent
Insureds consent not

necessary
Other Terms:
1. Reinsurancce Treaty Merely an agreement
between two insurance companies whereby one
agrees to cede and the other to accept reinsurance
business pursuant to provisions specified in the treaty.
all the representations of the original insured, and also all

the knowledge and information he possesses, whether
previously or subsequently acquired, which are material to
the risk.
SEC. 99. A reinsurance is presumed to be a contract of
indemnity against liability, and not merely against damage.
SEC. 100. The original insured has no interest in a contract
of reinsurance.
III.
Classes of Insurance
1. Marine (Sec. 99 166)
2. Fire (Sec. 167 173)
2. Automatic reinsurance he reinsured is bound to

cede and the reinsurer is obligated to accept a fixed
share of the risk which has to be reinsured under the
contact.
3. Casualty (Sec. 174)

4. Suretyship (Sec. 175 178)
5. Life Insurance (Sec. 179 183)
3. Facultative Reinsurance there is no obligation to

cede or accept participation in the risk each party
having a free choice. But once the share is accepted,
the obligation is absolute and the liability thereunder
can be discharged only by payment.
4. Retrocession - a transaction whereby the reinsurer,
in turn, passes to another insurer a portion of the risk
reinsured. It is really the reinsurance of reinsurance.
SEC. 98. Where an insurer obtains reinsurance, except
under automatic reinsurance treaties, he must communicate
6. Compulsory Motor Vehicle Liability Insurance (Sec. 373

389)
IV.
The Business of Insurance

Case:
1. Republic of the Philippines, Represented by Eduardo

Malinis in His Capacity as Insurance Commissioner v. Del
Monte Motors, Inc., G.R. No. 156956, October 9, 2006
V.
The Insurance Commissioner
BOJY NOTES 33
1. Administrative and adjudicatory powers

Comm2 Reviewer With Cases

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BOJY NOTES 1

Commercial Law Review 2 under Atty. Salao

The Insurance Code (P.D. 612)

a. Travellers Insurance & Surety Corporation v. Hon. Court of

Parties to the contract of insurance (Sec. 6-9)

a. Philippine Health Care Providers, Inc. v. Commissioner of

The Contract of Insurance

2.1 Rules on construing Insurance Code

a. Philamcare Health Systems Inc. v. Court of Appeals, G.R.

Elements of an Insurance Contract

a. Gulf Resorts, Inc. v. Philippine Charter Insurance Corp..

Characteristics of Insurance Contracts

2. Parties to the Contract (Sec. 6 9)

a. New World International Dev. (Phils), Inc. v. NYK-FilJapan

2.1. Sec. 54 General Banking Law

Doing an Insurance Business

a. White Gold Marine Services, Inc. v. Pioneer Insurance and

a. Eternal Gardens Memorial Park Corp. v. The Philippine

5.1 Principle of subrogation

Public interest in the Insurance Business

a. Republic vs. Del Monte Motors, Inc., G.R. No. 156956,

b. Filipinas Compaa De Seguros vs. Christern, Huenefeld

SEC. 26. A neglect to communicate that which a party

SEC. 27. A concealment whether intentional or

a. Heirs of Loreto C. Maramag represented by surviving

c. Gaisano Cagayan, Inc. v. Insurance Company of North

a. The party claiming the existence of concealment must

d. The Insular Life Assurance Company, Ltd. vs. Ebrado, G.R.

b. Good faith is not a defense in concealment (sec27)

e. Sing vs. Feb Leasing & Finance Corporation G.R. No.

c. The matter concealed need not be the cause of loss.

The parties are bound to know all the general causes

(a) Those which the other knows;

b. Those which the other has no means of ascertaining

SEC. 34. Information of the nature or amount of the

The information which Canilang failed to disclose was

The materiality of the information withheld by Canilang from

SC found it difficult to take seriously the argument that

b. Sunlife Assurance Company of Canada vs. Court

which are material to the contract and as to which he makes

In this jurisdiction a concealment, whether intentional

Also, the fact that Philamlife waived its right to have

e. Edillon v. Manila Bankers Life Insurance Corp.,

Issue: Whether or not the policy is void considering that the

After Ernani was discharged from the MMC, he was

Issue: Whether or not there is concealment of material fact

Held: NO. The answer assailed by petitioner was in response

Plans issued Pension Plan Agreement to Manuel, with

Being a contract of adhesion, the terms of an insurance

Held: The Supreme Court answers this to the negative and

g. Ma. Lourdes S. Florendo v. Philam Plans, Inc.,

Issue: Whether or not Ma. Lourdes could claim benefits as

unless it proceeds from an agent of the insured, whose duty

SEC. 37. A representation may be made at the time of, or

SEC. 45. If a representation is false in a material point,

SEC. 38. The language of a representation is to be

SEC. 46. The materiality of a representation is determined

SEC. 39. A representation as to the future is to be deemed a

SEC. 47. The provisions of this chapter apply as well to a

SEC. 40. A representation cannot qualify an express

SEC. 48. Whenever a right to rescind a contract of insurance

SEC. 41. A representation may be altered or withdrawn

After a policy of life insurance made payable on the death of