2010

1. To secure a loan of P10 million, Mario mortgaged his building to Armando. In accordance with the loan arrangements, Mario had the building insured with First Insurance Company for P10 million, designating Armando as the beneficiary. Armando also took an insurance on the building upon his own interest with Second Insurance Company for P5 million. The building was totally destroyed by fire, a peril insured against under both insurance policies. It was subsequently determined that the fire had been intentionally started by Mario and that in violation of the loan agreement, he had been storing inflammable materials in the building. a. How much, if any, can Armando recover from either or both insurance companies? (2%) b. What happens to the P10 million debt of Mario to Armando? Explain. (3%)

2. Enrique obtained from Seguro Insurance Company a comprehensive motor vehicle insurance to cover his top of the line Aston Martin. The policy was issued on March 31, 2010 and, on even date, Enrique paid the premium with a personal check postdated April 6, 2010. On April 5, 2010, the car was involved in an accident that resulted in its total loss. On April 10, 2010, the drawee bank returned Enriques check with the notation "Insufficient Funds." Upon notification, Enrique immediately deposited additional funds with the bank and asked the insurer to redeposit the check. Enrique thereupon claimed indemnity from the insurer. Is the insurer liable under the insurance coverage? Why or why not? (3%) 3. Paolo, the owner of an ocean-going vessel, offered to transport the logs of Constantino from Manila to Nagoya. Constantino accepted the offer, not knowing that the vessel was manned by an irresponsible crew with deep-seated resentments against Paolo, their employer. Constantino insured the cargo of logs against both perils of the sea and barratry. The logs were improperly loaded on one side, thereby causing the vessel to tilt on one side. On the way to Nagoya, the crew unbolted the sea valves of the vessel causing water to flood the ship hold. The vessel sank. Constantino tried to collect from the insurance company which denied liability, given the unworthiness of both the vessel and its crew. Constantino countered that he was not the owner of the vessel and he could therefore not be responsible for conditions about which he was innocent. a. Is the insurance company liable? Why or why not? (3%) b. What is "barratry" in marine insurance? (2%) XIV

When OCCIDENTAL Bank folded up due to insolvency, Manuel had the following separate deposits in his name: P200,000 in savings deposit; P250,000 in time deposit; P50,000 in a current account; P1 million in a trust account; and P3 million in money market placement. Under the Philippine Deposit Insurance Corporation Act, how much could Manuel recover? Explain. (2%)

2009
IV Antarctica Life Assurance Corporation (ALAC) publicly offered a specially designed insurance policy covering persons between the ages of 50 to 75 who may be afflicted with serious and debilitating illnesses. Quirico applied for insurance coverage, stating that he was already 80 years old. Nonetheless, ALAC approved his application. Quirico then requested ALAC for the issuance of a cover note while he was trying to raise funds to pay the insurance premium. ALAC granted the request. Ten days after he received the cover note, Quirico had a heart seizure and had to be hospitalized. He then filed a claim on the policy. a. Can ALAC validly deny the claim on the ground that the insurance coverage, as publicly offered, was available only to persons 50 to 75 years of age? Why or why not? (2%) b. Did ALACs issuance of a cover note result in the perfection of an insurance contract between Quirico and ALAC? Explain. (3%)
On January 1, 2000, Antonio Rivera secured a life insurance from SOS Insurance Corp. for P1 Million with Gemma Rivera, his adopted daughter, as the beneficiary. Antonio Rivera died on March 4, 2005 and in the police investigation, it was ascertained that Gemma Rivera participated as an accessory in the killing of Antonio Rivera. Can SOS Insurance Corp. avoid liability by setting up as a defense the participation of Gemma Rivera in the killing of Antonio Rivera? Discuss with reasons. (4%) SUGGESTED ANSWER: No, SOS Insurance Corp. cannot avoid liability by setting up as defense the participation of Gemma Rivera in the killing of Antonio Rivera. Although the Insurance Code provides that the interest of the beneficiary in a life insurance policy shall be forfeited when the beneficiary is the principal, accomplice, or accessory in willfully bringing about the death of the insured, the same law also provides that in such an event, the nearest relative of the insured shall receive the proceeds of said insurance if not otherwise disqualified. The facts of the case reveal that Gemma Rivera's participation as accessory is only based on the findings of a police investigation. In other words, there is yet no final judgment of conviction. But assuming arguendo that a mere police investigation is enough to disqualify Gemma, the fact remains that the law itself provides that the insurance proceeds shall pertain to the nearest relatives of the insured. Hence, all premises considered, the insurer cannot therefore escape liability by simply raising the defense of Gemma's participation as an accessory to the crime. VII Terrazas de Patio Verde, a condominium building, has a value of P50 Million. The owner insured the building against fire with three (3) insurance companies for the following amounts: Northern Insurance Corp. - P20 Million Southern Insurance Corp. - P30 Million Eastern Insurance Corp. - P50 Million

1. Is the owner's taking of insurance for the building with three (3) insurers valid?
Discuss. (3%) 2. The building was totally razed by fire. If the owner decides to claim from Eastern Insurance Corp. only P50 Million, will the claim prosper? Explain. (2%) SUGGESTED ANSWER: 1. Yes, as a general rule, the owner's taking of insurance for the building with three (3) insurers is valid.This is a case of double insurance where the same person is insured by several insurers separately in respect to the same subject and interest. Under the Insurance Code, such an arrangement is not prohibited per se, although parties may agree upon an "other insurance" clause, in which case the insured may be prohibited from taking additional insurance without the insurer's consent. In the present case, it does not appear that the parties agreed on an other insurance clause. Hence, in the absence of any showing that such a restriction exists, there is nothing to prevent the insured from taking another insurance over the same property, subject only to the caveat that he cannot recover more than the value of his interest in the thing insured. 2. Yes, the claim will prosper. In case double insurance, the insured has the option to go after any one of the insurers unless the policy itself provides that insurers contribute ratably to the loss. In either case, he cannot recover more than the value of his insurable interest. In the case at bar, the insured, as owner, has an insurable interest up to P50 Million, the value of the building. That being the case, he can therefore claim the entire P50 Million from Eastern Insurance Corp. In turn, by the principle of contribution which applies in case of over-insurance due to double insurance, Eastern Insurance Corp. may require the other insurers to contribute ratably to the loss, considering that they separately insure the same interest against the same peril.