Escolar Documentos
Profissional Documentos
Cultura Documentos
Brief History
1
Presidential Decree No. 612 and related laws codied by Presidential Decree
No. 1460.
2
Inserted by virtue of Presidential Decree No. 1460.
Life is a risk. A time proven clich. The world is surrounded by risks. There are risks everywhere. Some risks are minimal
and can be lived with, but most are not. Thus, the need for insurance. But insurance does not work to protect one against the risks
happening, instead, it covers the consequences of the happening.
Thus, insurance is something one buys hoping he never has
to use. It is purchased to protect oneself from unexpected losses he
cannot afford the accident he hopes he never gets into, the re he
prays never destroys his home, the storm he knows sooner or later
is bound to batter his roof, the lawsuit that threatens to wipe out all
his savings.
While it may seem complex, insurance is really quite simple:
The payments (or premiums) of the many pay for the losses of a few.
The premiums go into a large pool. The claims of the few are paid
from that pool. Because there are more people contributing to the
pool than there are making claims, there is always enough to pay
the claims even large single claims like when someone is permanently disabled as a result of a car collision, or many smaller claims
like those resulting from a natural disaster.
Even when the pool comes close to emptying, there is another
pool from which insurance companies can draw to pay claims. Some
of the premiums are used by the insurance company to buy reinsurance insurance for insurance companies. Sometimes losses are
Republic vs. Del Monte Motors, Inc., G.R. No. 156956, October 9, 2006.
PREFACE
Upon reaching the age of thirty (30) and after five (5) academic
years of teaching the subject, the author felt that it was time to
collate his materials and sit down in writing his views and thoughts
on the subject of insurance.
This book, although it consists of almost a thousand pages, represents a simple discussion of the insurance law in the Philippines.
A substantial proportion of the material is adapted from the legal
provisions and jurisprudence, both here and abroad; opinions and
annotations of authors, both local and foreign; and other published
articles, both in the papers and in the internet. Some Supreme Court
decided cases are reproduced herein in full for the readers to appreciate the correlation of insurance law principles with one another as
well as with other laws, both substantive and remedial.
The author wrote this book in the hope that his humble work
would be of great help to the law students, bar candidates and law
practitioners.
E.V.M.D.
March 31, 2009
iii
iv
CONTENTS
GENERAL PROVISIONS
Section 1 ..................................................................................................
A.
B.
C.
1
2
3
Section 2 ..................................................................................................
A.
B.
C.
D.
E.
F.
G.
H.
I.
J.
K.
L.
4
5
16
19
20
23
27
27
28
28
32
33
38
43
50
52
56
59
60
Chapter 1
THE CONTRACT OF INSURANCE
Title 1
WHAT MAY BE INSURED
Section 3 ..................................................................................................
v
62
A.
B.
C.
Section 4 ..................................................................................................
A.
B.
C.
62
64
66
69
69
70
71
Section 5 ..................................................................................................
73
Title 2
PARTIES TO THE CONTRACT
Section 6 ..................................................................................................
A.
B.
C.
D.
Section 7 ..................................................................................................
74
74
75
76
77
77
A.
B.
C.
D.
E.
F.
97
102
Section 8 ..................................................................................................
103
Section 9 ..................................................................................................
A.
B.
C.
D.
E.
F.
vi
78
78
81
81
86
86
89
103
103
105
106
107
111
113
113
Title 3
INSURABLE INTEREST
Section 10 .................................................................................................
A.
B.
C.
120
120
122
Section 11 .................................................................................................
135
A.
B.
C.
D.
E.
F.
G.
Section 12 .................................................................................................
1)
2)
3)
125
135
135
136
137
139
141
144
145
145
Rationale ..................................................................................
Act Must be Felonious.............................................................
Nearest Relative as Beneficiary .............................................
145
146
147
Section 13 .................................................................................................
149
Section 14 .................................................................................................
A.
B.
C.
D.
E.
F.
150
150
151
154
155
157
158
Section 15 .................................................................................................
158
Section 16 .................................................................................................
159
Section 17 .................................................................................................
160
Section 18 .................................................................................................
1)
2)
161
161
163
163
Section 19 .................................................................................................
167
168
169
Section 20 .................................................................................................
170
Section 21 .................................................................................................
170
vii
Section 22 .................................................................................................
170
Section 23 .................................................................................................
170
Section 24 .................................................................................................
170
A.
B.
C.
171
172
173
173
173
174
174
Title 4
CONCEALMENT
Section 26 .................................................................................................
1)
2)
176
176
177
Section 27 .................................................................................................
177
A.
177
179
179
180
185
B.
C.
Section 28 .................................................................................................
A.
B.
187
187
188
Section 29 .................................................................................................
188
A.
B.
188
188
Section 30 .................................................................................................
189
A.
B.
C.
D.
E.
189
189
191
191
192
Section 31 .................................................................................................
192
A.
B.
192
193
C.
Section 32 .................................................................................................
A.
B.
C.
194
195
195
196
197
Section 33 .................................................................................................
198
198
199
199
203
Section 34 .................................................................................................
C.
203
Section 35 .................................................................................................
203
Title 5
REPRESENTATION
Section 36 .................................................................................................
A.
B.
C.
D.
E.
207
207
208
208
208
209
Section 37 .................................................................................................
210
A.
B.
C.
210
211
211
Section 38 .................................................................................................
211
A. Construction ............................................................................
B. Applicability of Rules on Interpretation of Contracts ...........
C. Applicability of the Rules of Court .........................................
211
212
213
Section 39 .................................................................................................
214
A.
B.
Section 40 .................................................................................................
A.
B.
C.
214
215
215
216
216
216
Section 41 .................................................................................................
216
Section 42 .................................................................................................
217
Section 43 .................................................................................................
217
ix
A.
217
B.
218
226
Section 44 .................................................................................................
A.
B.
C.
D.
E.
F.
228
231
235
235
235
236
236
236
237
237
Section 45 .................................................................................................
237
A.
B.
C.
D.
E.
Contract of Speculation...........................................................
237
238
241
242
242
243
243
Section 46 .................................................................................................
A.
B.
247
247
248
Section 47 .................................................................................................
248
Section 48 .................................................................................................
249
A.
B.
249
250
250
258
265
266
272
278
E.
F.
G.
H.
279
279
279
280
Title 6
THE POLICY
Section 49 .................................................................................................
281
Section 50 .................................................................................................
281
A.
B.
C.
D.
E.
282
292
293
294
295
295
Section 51 .................................................................................................
A.
B.
C.
D.
E.
F.
G.
Parties ......................................................................................
Amount of Insurance...............................................................
Premium ..................................................................................
Property, Life or Liability Insured .........................................
Interest of the Insured in Property ........................................
Risk Insured Against ..............................................................
Period During Which the Insured is to Continue ..................
Section 52 .................................................................................................
A.
B.
C.
D.
309
309
311
311
313
313
Section 53 .................................................................................................
A.
300
300
305
306
307
308
309
309
318
318
318
328
328
329
333
xi
338
343
Section 54 .................................................................................................
347
347
Section 55 .................................................................................................
352
Section 56 .................................................................................................
353
Section 57 .................................................................................................
353
Section 58 .................................................................................................
353
Section 59 .................................................................................................
354
Section 60 .................................................................................................
354
Section 61 .................................................................................................
354
Section 62 .................................................................................................
354
354
356
Section 63 .................................................................................................
356
1)
2)
356
357
357
361
370
370
371
Section 64 .................................................................................................
372
Section 65 .................................................................................................
373
373
Section 66 .................................................................................................
382
3)
4)
5)
367
Title 7
WARRANTIES
Section 67 .................................................................................................
383
383
383
385
385
Section 68 .................................................................................................
A.
B.
392
392
393
Section 69 .................................................................................................
393
xii
Section 70 .................................................................................................
394
394
Section 71 .................................................................................................
402
1)
2)
3)
4)
403
403
403
404
Section 72 .................................................................................................
405
Section 73 .................................................................................................
A.
B.
405
405
406
Section 74 .................................................................................................
406
406
407
407
Section 75 .................................................................................................
411
412
Section 76 .................................................................................................
420
Title 8
PREMIUM
Section 77 .................................................................................................
Cases: ARCE vs. THE CAPITAL INSURANCE &
SURETY CO., INC. .....................................................
ACME SHOE RUBBER & PLASTIC
CORPORATION vs. THE COURT OF APPEALS ....
THE MANUFACTURERS LIFE INSURANCE
CO. vs. MEER..............................................................
Section 78 .................................................................................................
A.
B.
C.
422
423
425
429
434
434
437
438
439
456
456
Section 79 .................................................................................................
456
Section 80 .................................................................................................
457
Section 81 .................................................................................................
457
xiii
Section 82 .................................................................................................
A.
B.
C.
457
457
460
461
461
Title 9
LOSS
Section 83 .................................................................................................
A.
466
466
Section 84 .................................................................................................
469
470
471
471
Section 85 .................................................................................................
479
Section 86 .................................................................................................
479
Section 87 .................................................................................................
A.
B.
C.
480
480
480
481
481
494
Title 10
NOTICE OF LOSS
Section 88 .................................................................................................
499
A. Condition .................................................................................
B. Requisite for Recovery ............................................................
C. Notice in Fire Insurance .........................................................
499
499
500
Section 89 .................................................................................................
500
Section 90 .................................................................................................
500
Section 91 .................................................................................................
500
501
Section 92 .................................................................................................
506
xiv
Title 11
DOUBLE INSURANCE
Section 93 .................................................................................................
A.
B.
C.
507
507
508
508
516
517
522
524
Section 94 .................................................................................................
524
A.
B.
C.
D.
525
525
525
526
Title 12
REINSURANCE
Section 95 .................................................................................................
A.
B.
C.
D.
E.
529
533
533
534
535
538
538
Section 96 .................................................................................................
538
Section 97 .................................................................................................
539
Section 98 .................................................................................................
539
A.
B.
xv
529
530
531
533
539
540
Chapter II
CLASSES OF INSURANCE
Title I
MARINE INSURANCE
Sub-Title 1- A
DEFINITION
Section 99 .................................................................................................
A.
B.
C.
D.
E.
F.
J.
541
542
543
545
546
547
548
551
556
564
564
565
566
572
Sub-Title 1-B
INSURABLE INTEREST
Section 100 ...............................................................................................
A.
B.
C.
D.
E.
F.
573
573
574
575
576
577
577
578
A.
B.
C.
D.
E.
F.
578
578
578
579
580
580
580
xvi
580
580
580
581
582
582
582
583
Sub-Title 1-C
CONCEALMENT
Section 107 ...............................................................................................
583
584
584
A.
584
584
585
585
Sub-Title 1-D
REPRESENTATION
Section 111 ...............................................................................................
586
586
A.
B.
586
587
Sub-Title 1-E
IMPLIED WARRANTIES
Section 113 ...............................................................................................
A.
B.
Implied Seaworthiness............................................................
Express and Implied Warranties ...........................................
587
587
588
588
588
589
591
592
592
592
592
xvii
593
593
594
595
597
597
598
599
Sub-Title 1-F
THE VOYAGE AND DEVIATION
Section 121 ...............................................................................................
599
599
599
599
600
A.
B.
C.
600
601
601
602
602
602
602
602
604
Sub-Title 1-G
LOSS
Section 127 ...............................................................................................
605
605
606
606
606
606
A.
B.
C.
606
607
608
609
609
A. Reshipment ..............................................................................
609
xviii
B.
C.
609
610
610
611
A.
B.
C.
611
614
615
619
626
Sub-Title 1-H
ABANDONMENT
Section 138 ...............................................................................................
627
627
627
628
A.
B.
628
628
629
629
629
629
630
630
630
630
630
631
631
631
631
631
1.
2.
3.
631
632
632
Sub-Title 1-I
MEASURE OF INDEMNITY
Section 156 ...............................................................................................
xix
632
632
634
634
634
634
634
A.
B.
635
635
636
637
637
637
Title 2
FIRE INSURANCE
Section 167 ...............................................................................................
A.
B.
C.
D.
E.
F.
G.
639
Coverage ..................................................................................
Extension or Under Separate Policies ...................................
Fire Following Earthquake.....................................................
Friendly Fire/Hostile Fire .......................................................
Direct and Indirect Losses ......................................................
Lightning .................................................................................
Double Insurance ....................................................................
639
640
640
641
641
642
642
643
643
643
643
644
644
645
645
647
Title 3
CASUALTY INSURANCE
Section 174 ...............................................................................................
A.
B.
C.
648
648
649
649
650
Title 4
SURETYSHIP
Section 175 ...............................................................................................
654
654
654
655
655
655
656
656
Title 5
LIFE INSURANCE
Section 179 ...............................................................................................
664
664
A.
B.
C.
664
665
666
Section 180-A............................................................................................
669
670
670
671
Chapter III
THE BUSINESS OF INSURANCE
Title 1
INSURANCE COMPANIES, ORGANIZATION,
CAPITALIZATION AND AUTHORIZATION
Section 184 ...............................................................................................
672
672
672
673
674
675
676
677
678
xxi
678
Title 2
MARGIN OF INSOLVENCY
Section 194 ...............................................................................................
680
681
Title 3
ASSETS
Section 196 ...............................................................................................
682
683
Title 4
INVESTMENTS
Section 198 ...............................................................................................
685
686
686
689
689
690
690
691
691
692
692
694
Title 5
RESERVES
Section 210 ...............................................................................................
695
695
696
696
696
Title 6
LIMIT OF SINGLE RISK
Section 215 ...............................................................................................
xxii
697
Title 7
REINSURANCE TRANSACTIONS
Section 216 ...............................................................................................
698
698
698
698
699
699
700
Title 8
ANNUAL STATEMENT
Section 223 ...............................................................................................
701
701
701
Title 9
POLICY FORMS
Section 226 ...............................................................................................
702
702
704
708
708
711
Title 10
VARIABLE CONTRACTS
Section 232 ...............................................................................................
714
715
715
715
715
716
717
717
717
xxiii
Title 11
CLAIMS SETTLEMENT
Section 241 ...............................................................................................
719
720
720
721
Title 12
EXAMINATION OF COMPANIES
Section 245 ...............................................................................................
725
725
Title 13
SUSPENSION OR REVOCATION OF AUTHORITY
Section 247 ...............................................................................................
726
Title 14
APPOINTMENT OF CONSERVATOR
Section 248 ...............................................................................................
727
Title 15
PROCEEDINGS UPON INSOLVENCY
Section 249 ...............................................................................................
729
731
731
Title 16
CONSOLIDATION AND MERGER OF INSURANCE COMPANIES
Section 252 ...............................................................................................
732
732
732
733
733
733
734
734
734
734
xxiv
Title 17
MUTUALIZATION OF STOCK LIFE INSURANCE COMPANIES
Section 262 ...............................................................................................
735
735
736
737
738
739
740
740
Section 269-A............................................................................................
740
743
743
745
Title 18
WITHDRAWAL OF FOREIGN INSURANCE COMPANIES
Section 273 ...............................................................................................
747
747
747
747
748
748
748
Title 19
PROFESSIONAL REINSURERS
Section 280 ...............................................................................................
749
750
Title 20
HOLDING COMPANIES
Section 282 ...............................................................................................
751
752
752
752
752
753
xxv
753
753
754
754
754
755
755
757
757
757
757
Chapter IV
SALES AGENCIES AND TECHNICAL SERVICES
Title 1
INSURANCE AGENTS AND INSURANCE BROKERS
Section 299 ...............................................................................................
759
760
760
760
761
761
761
762
763
763
763
Title 2
REINSURANCE BROKERS
Section 310 ...............................................................................................
765
765
766
Title 3
RESIDENT AGENTS
Section 313 ...............................................................................................
767
767
xxvi
767
767
767
Title 4
NON-LIFE COMPANY UNDERWRITER
Section 318 ...............................................................................................
769
769
769
770
770
Title 5
ADJUSTERS
Section 323 ...............................................................................................
771
771
771
772
772
772
772
772
773
773
773
773
Title 6
ACTUARIES
Section 335 ...............................................................................................
774
774
774
775
Title 7
RATING ORGANIZATION AND RATE MAKING
Section 339 ...............................................................................................
776
776
xxvii
776
777
777
778
778
778
778
778
779
779
780
780
780
780
781
781
781
781
782
782
782
782
783
Title 8
PROVISION COMMON TO AGENTS, BROKERS,
AND ADJUSTERS
Section 364 ..............................................................................................
784
Chapter V
SECURITY FUND
Section 365 ...............................................................................................
785
785
785
786
787
787
787
xxviii
788
Chapter VI
COMPULSORY MOTOR VEHICLE
LIABILITYINSURANCE
Section 373 ...............................................................................................
789
790
790
790
790
792
792
793
793
794
794
794
794
795
795
795
E.
F.
795
795
796
796
797
798
801
806
813
824
827
xxix
814
818
821
827
828
830
831
Chapter VII
MUTUAL BENEFIT ASSOCIATIONS AND
TRUSTS FOR CHARITABLE USES
Title 1
MUTUAL BENEFIT ASSOCIATIONS
Section 390 ...............................................................................................
832
833
833
834
834
835
835
835
835
836
836
837
837
837
837
837
838
838
839
839
Title 2
TRUSTS FOR CHARITABLE USES
Section 410 ...............................................................................................
840
840
840
840
xxx
Chapter VIII
THE INSURANCE COMMISSIONER
Title 1
ADMINISTRATIVE AND ADJUDICATORY POWERS
Section 414 ...............................................................................................
841
841
842
A.
B.
C.
D.
E.
F.
844
844
845
846
847
848
Title 2
FEES AND OTHER SOURCES OF FUNDS
Section 417 ...............................................................................................
849
851
MISCELLANEOUS PROVISIONS
Section 419 ...............................................................................................
852
852
852
852
852
852
853
873
xxxi