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Insurance.

Our discussion yesterday and the matter of functions of the IC, IC functions can be divided into two:

1. Administrative
2. Adjudicatory

Licensing and Administrative functions because an Insurance Corporations are required to have two
franchises: the first franchise (SEC) and the secondary franchise (Insurance Commission). Licensing of
Agents/ Company Every three year period, according amendments in 2013.

No policy or covered note shall be issued, unless the format is approved by the Insurance
Zcommissioner

Part of his power is the management of the security fund, which is established by the Insurance Code,
to answer for the claims of the polich holders of the insurance companies that are closed.

Adjudication any amount that is below 5M is under the jurisdiction of the Commissioner. The trick
question is when the amount is below 5M, one must separate the attys fees, costs, etc, to arrive at the
mother claim. If the amount is greater than 5M, regular courts.

The powers of adjudication does not include the reso of any legality of the agreement between an
insurance agent a nd an insurance company – regular courts

Insular life vs. Paz Khu: the doctrine here is, the deed of reinstatement where you count the
incontestability clause is the date when the insurer approved the application for reinstatement, that is
when the calendar backs to zero.

Matagal nang ipa insure ikaw ang agent, matagal nang mag fill up kasi tamad na tamad. Magprint ng
resume. Lahat ng negative ni “no” policy was issued. Before incontestability sets in, availed partial
disability, nalaman, na admit na for mild stroke. Can I make a defense that my agent is the one who
filled up the application form? No, because applying the rules on Agency, her concealment is my
concelment, and because it happend less than the two year period, it is contestable and it affected my
rights to the insurace.

PDIC

An insurance legislation.

Why do we need to have a law on depost insurance? There are two laws to encourage people to
deposit money in banks: why? So you can jump start the lending cycle.

Maximum deposit insurance coverage amount 500k

The prez if he needs to increase the maximum deposit insurance coverage, he can increase it.
When will you are entitled to PDIC protection?

Are all bank closures covered? No, only when the bank is closed by the order of the Monetary Board.
Closed now hear later. Rural Bank of Buhi vs. CA – Public interest is at stake. Preliminary closure to
protect its assets.

First closure is akin to a preventive suspension of a government employee.

Second closure – if it is inimical to the public interest. That period is when PDIC comes in. Suspension as
a penalty.

Mechanisms – PDIC will notify everybody. And you will receive a notice from PDIC. You have 2 years to
file a valid claim; otherwise, PDIC will presume that you are waiving the right to claim the money. PDIC
has six months to settle the claim, except when there are multiple claimants. PDIC’s remedy is to
interplead because we will release the money by a court’s lawful order.

How to pay:

Payment in cash 1. Signing of voucher along with Subrogatory receipt,

Payment: transfer deposit - a transfer deposit is any deposit in cash made by PDIC to your account, in
any open banks. Why? Because you will still continue to putting money in the bank. Take note that
whether it be payment in cash or transfer deposit, the depositor has still the option to avail of one of
this.

GR Maximum amount : 500k

Exception: the first 500k is covered by the insurance. And the second is from the PDIC, but it wears a
different hat, that is one of a liquidator. If the liquidation is successful, the excess shall be recovered by
PDIC, subject to the rules on preference of credits under the Civil Code.

What about banks with foreign branches? Can PDIC be liable? It’s up to the bank to apply, but generally
they are not.

FCD? Up to allowable exchange rate up to 500k

What is the effect when the PDIC pays you? Two components: full discharge, where you cannot hold
PDIC anymore, and being a property insurance, a subrogation arises.

How does our SC resolves matters in conflict as to matters of agreement between Philam and Eternal?

Eternal vs. Philam Life

Two parties formed a joint venture where you can buy a funeral lot automtically covered by insurance of
Philam so that, when one dies and there is still an unpaid balance, it will pay Eternal. However, a person
died, but insurer refused to pay because in the second paragraph, no insurance shall be effective unless
the insurer has approved the application of the lot purchaser. Hence, there is a conflict between the two
paragraphs.

The SC ruled that Contracts; Insurance Law; It must be remembered that an insurance contract is a
contract of adhesion which must be construed liberally in favor of the insured and strictly against the
insurer in order to safeguard the latter’s interest.—It must be remembered that an insurance contract is
a contract of adhesion which must be construed liberally in favor of the insured and strictly against the
insurer in order to safeguard the latter’s interest. Thus, in Malayan Insurance Corporation v. Court of
Appeals, 270 SCRA 242 (1997), this Court held that: Indemnity and liability insurance policies are
construed in accordance with the general rule of resolving any ambiguity therein in favor of the insured,
where the contract or policy is prepared by the insurer. A contract of insurance, being a contract of
adhesion, par excellence, any ambiguity therein should be resolved against the insurer; in other words,
it should be construed liberally in favor of the insured and strictly against the insurer. Limitations of
liability should be regarded with extreme jealousy and must be construed in such a way as to preclude
the insurer from noncompliance with its obligations. (Emphasis supplied.)

Same; Same; The mere inaction of the insurer on the insurance application must not work to prejudice
the insured; it cannot be interpreted as a termination of the insurance contract.—The seemingly
conflicting provisions must be harmonized to mean that upon a party’s purchase of a memorial lot on
installment from Eternal, an insurance contract covering the lot purchaser is created and the same is
effective, valid, and binding until terminated by Philamlife by disapproving the insurance application.
The second sentence of Creditor Group Life Policy No. P-1920 on the Effective Date of Benefit is in the
nature of a resolutory condition which would lead to the cessation of the insurance contract. Moreover,
the mere inaction of the insurer on the insurance application must not work to prejudice the insured; it
cannot be interpreted as a termination of the insurance contract. The termination of the insurance
contract by the insurer must be explicit and unambiguous. Eternal Gardens Memorial Park Corporation
vs. Philippine American Life Insurance Company, 551 SCRA 1, G.R. No. 166245 April 9, 2008

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