Insurance Law Contract of Insurance PDF

**INSURANCE LAW** Table of Contents {#table-of-contents.TOCHeading} ================= [CONTRACT OF INSURANCE 5](#_Toc185185940) [WHEN IS A PERSON DEEMED AS ENGAGED IN THE BUSINESS OF INSURANCE 5](#_Toc185185941) [CHARACTERISTICS OF A CONTRACT OF INSURANCE 6](#_Toc185185942) [Personal contract 6](#_Toc185185943) [Aleatory 7](#_Toc185185944) [Consensual 7](#_Toc185185945) [Contract of indemnity 8](#_Toc185185946) [Risk-distributing device 8](#_Toc185185947) [Doctrine of *uberrimae fidei* 8](#_Toc185185948) [Not commutative 9](#_Toc185185949) [PRINCIPAL OBJECT AND PURPOSE TEST 9](#_Toc185185950) [HEALTH CARE AGREEMENTS 9](#_Toc185185951) [ELEMENTS OF AN INSURANCE CONTRACT 11](#_Toc185185952) [RULES ON INTERPRETATION 11](#_Toc185185953) [FINE PRINT RULE 11](#_Toc185185954) [CIVIL CODE PROVISION GOVERNING INSURANCE CONTRACTS 11](#_Toc185185955) [PROHIBITION ON THE DESIGNATION OF BENEFICIARIES 12](#_Toc185185956) [SUBROGATION 12](#_Toc185185957) [WHEN CAN THE INSURER BE SUBROGATED TO THE RIGHTS OF THE INSURED 13](#_Toc185185958) [HOW MUCH CAN THE INSURER RECOVER FROM THE PERSON CAUSING THE LOSS OR INJURY 13](#_Toc185185959) [INSTANCES WHEN THE RIGHT OF SUBROGATION IS DEFEATED 14](#_Toc185185960) [REMEDY OF THE INSURED IF INSURANCE COVERAGE IS INSUFFICIENT 16](#_Toc185185961) [SITUATIONAL EXAMPLES 16](#_Toc185185962) [PROHIBITION ON DESIGNATION OF BENEFICIARIES v. SUBROGATION 17](#_Toc185185963) [WHAT MAY BE INSURED 17](#_Toc185185964) [INSURABLE RISKS 18](#_Toc185185965) [INSURANCE BY A MARRIED WOMAN 18](#_Toc185185966) [GAMBLING 18](#_Toc185185967) [PARTIES TO A CONTRACT OF INSURANCE 18](#_Toc185185968) [INSURER 18](#_Toc185185969) [INSURED 19](#_Toc185185970) [BENEFICIARY 19](#_Toc185185971) [ASSURED / OWNER 19](#_Toc185185972) [AGENT OF THE INSURER 20](#_Toc185185973) [INSURABLE INTEREST 21](#_Toc185185974) [WHY DO WE NEED TO ESTABLISH INSURABLE INTEREST 21](#_Toc185185975) [TEST TO DETERMINE THE EXISTENCE OF INSURABLE INTEREST 21](#_Toc185185976) [INSURABLE INTEREST IN LIFE INSURANCE 22](#_Toc185185977) [**WHO MUST HAVE INSURABLE INTEREST IN LIFE INSURANCE** 24](#_Toc185185978) [**FORFEITURE OF BENEFICIARY'S INTEREST IN LIFE INSURANCE POLICY** 24](#_Toc185185979) [**EXTENT OF INSURABLE INTEREST IN LIFE INSURANCE** 25](#_Toc185185980) [**WHEN MUST INSURABLE INTEREST EXIST** 25](#_Toc185185981) [INSURABLE INTEREST IN PROPERTY INSURANCE 26](#_Toc185185982) [**EXTENT OF INSURABLE INTEREST IN PROPERTY INSURANCE** 26](#_Toc185185983) [**WHO MUST POSSESS INSURABLE INTEREST IN PROPERTY INSURANCE** 27](#_Toc185185984) [**WHEN MUST INSURABLE INTEREST EXIST** 27](#_Toc185185985) [**REQUIREMENT ON EXISTING RIGHT OVER THE THING** 27](#_Toc185185986) [**VOID STIPULATIONS IN CONTRACT OF INSURANCE** 28](#_Toc185185987) [INSURABLE INTEREST IN PROPERTY v. LIFE INSURANCE 28](#_Toc185185988) [LOSS OF INSURABLE INTEREST 30](#_Toc185185989) [CONCEALMENT, MISREPRESENTATION, AND BREACH OF WARRANTIES 33](#_Toc185185990) [CONCEALMENT 33](#_Toc185185991) [**WHAT SHOULD BE COMMUNICATED** 33](#_Toc185185992) [**WHEN SHOULD THE FACT LEARNED** 33](#_Toc185185993) [**WHAT IF THE FACT THAT IS KNOWN BY THE PARTY TURNS OUT TO BE FALSE** 34](#_Toc185185994) [**"OUGHT TO COMMUNICATE"** 35](#_Toc185185995) [REPRESENTATION 37](#_Toc185185996) [**WHEN SHOULD THE STATEMENT BE MADE** 37](#_Toc185185997) [**NATURE AND FORM OF REPRESENTATION** 37](#_Toc185185998) [**KINDS OF REPRESENTATION** 37](#_Toc185185999) [**EFFECTS OF REPRESENTATION** 38](#_Toc185186000) [REMEDIES 39](#_Toc185186001) [**RESCISSION** 39](#_Toc185186002) [WARRANTIES (Sections 67 to 76 of the Insurance Code) 43](#_Toc185186003) [**KINDS OF WARRANTIES** 43](#_Toc185186004) [**EFFECTS OF BREACH OF WARRANTIES** 44](#_Toc185186005) [**BREACH OF IMMATERIAL WARRANTY** 46](#_Toc185186006) [EXCEPTIONS IN INSURANCE 46](#_Toc185186007) [WARRANTIES v. REPRESENTATION 47](#_Toc185186008) [POLICY (Section 49 to 66) 48](#_Toc185186009) [AS TO FORM 48](#_Toc185186010) [PROFORMA NATURE OF AN INSURANCE POLICY 48](#_Toc185186011) [CONTENTS (Section 51) 49](#_Toc185186012) [**PARTIES** 50](#_Toc185186013) [**AMOUNT OF INSURANCE** 50](#_Toc185186014) [RIDERS 53](#_Toc185186015) [**CONSIDERATIONS WHEN ASCERTAINING ITS BINDING EFFECT** 53](#_Toc185186016) [**Riders: Rule for No. 1** 53](#_Toc185186017) [**Riders: Rule for No. 2** 54](#_Toc185186018) [COVER NOTES 55](#_Toc185186019) [**WHEN BINDING** 55](#_Toc185186020) [**RULES ON COVER NOTES** 56](#_Toc185186021) [ACTIONS BASED ON AN INSURANCE CONTRACT 57](#_Toc185186022) [**WHEN DOES CAUSE OF ACTION ACCRUES** 57](#_Toc185186023) [PREMIUMS 60](#_Toc185186024) [THE CASH AND CARRY PRINCIPLE 60](#_Toc185186025) [**WHEN SHOULD YOU PAY** 61](#_Toc185186026) [**EXCEPTIONS TO THE CASH AND CARRY PRINCIPLE** 61](#_Toc185186027) [PAYMENT IN CHECKS 65](#_Toc185186028) [RETURN OF PREMIUM 68](#_Toc185186029) [**FULL RETURN OF PREMIUM** 68](#_Toc185186030) [**PARTIAL RETURN OF PREMIUM** 69](#_Toc185186031) [**NO RETURN OF PREMIUM** 70](#_Toc185186032) [DOUBLE INSURANCE AND REINSURANCE 71](#_Toc185186033) [DOUBLE INSURANCE 71](#_Toc185186034) [**TEST OF DOUBLE INSURANCE** 71](#_Toc185186035) [**OVERINSURANCE** 72](#_Toc185186036) [**IS DOUBLE INSURANCE PROHIBITED?** 73](#_Toc185186037) [**"OTHER INSURANCE CLAUSE"** 74](#_Toc185186038) [**RULES IN THE EVENT OF LOSS IN CASE OF OVERINSURANCE ARISING FROM DOUBLE INSURANCE** 75](#_Toc185186039) [REINSURANCE 82](#_Toc185186040) [LOSSES 83](#_Toc185186041) [ONLY 1 CAUSE OF LOSS 83](#_Toc185186042) [MULTIPLE CAUSE OF LOSS 84](#_Toc185186043) [WILLFUL ACTS v. NEGLIGENT ACTS 89](#_Toc185186044) [**LIABILITY OF INSURER WHEN THERE IS WILLFUL OR NEGLIGENT ACT** 89](#_Toc185186045) [NOTICE AND PROOF OF LOSS 90](#_Toc185186046) [**WHO SHOULD PROVIDE NOTICE OF LOSS** 90](#_Toc185186047) [**WHEN SHOULD NOTICE OF LOSS BE GIVEN** 90](#_Toc185186048) [**RULES ON NOTICE AND PROOF OF LOSS** 91](#_Toc185186049) []{#_Toc185185940.anchor}CONTRACT OF INSURANCE An agreement whereby one undertakes for a **consideration** to indemnify another against loss, damage, or liability **arising from an [unknown] or [contingent] event**. Premium - - How contract of insurance is different from other contracts - - Can **past events** be the subject of a contract of insurance? - - Contract of **suretyship** - - Is a **contract of suretyship a contract of insurance**? - - - - []{#_Toc185185941.anchor}WHEN IS A PERSON DEEMED AS ENGAGED IN THE BUSINESS OF INSURANCE **Doing an insurance business** or **transacting an insurance business**[^2^](#fn2){#fnref2.footnote-ref} 1. Making or proposing to make, **as insurer**, any **insurance contract**; 2. Making or proposing to make, **as surety**, any **contract of suretyship as a vocation** and not as merely incidental to any other legitimate business or activity of the surety; - 3. Doing any kind of business, including a **reinsurance business**, specifically recognized as constituting the doing of an insurance business within the meaning of this Code; - 4. Doing or proposing to do any business **in substance equivalent to any of the foregoing in a manner** designed to evade the provisions of this Code. The fact that no profit is derived from the making of insurance contracts, agreements, or transactions or that no separate or direct consideration is received therefor shall not be deemed conclusive to show that the making thereof does not constitute the doing or transacting of an insurance business. []{#_Toc185185942.anchor}CHARACTERISTICS OF A CONTRACT OF INSURANCE **PACIRDuN** 1. 2. 3. 4. 5. 6. 7. []{#_Toc185185943.anchor}Personal contract - - A ***stipulation pour autrui*** is a provision in a contract where a third party is designated as a beneficiary and can enforce the contract\'s terms. - - No. LOGAN cannot invoke the insurance policy because an insurance contract is purely personal. The transfer of the insured item does not automatically transfer the insurance coverage. []{#_Toc185185944.anchor}Aleatory - []{#_Toc185185945.anchor}Consensual - - - - No. The contract of insurance is not yet perfected. While the insurer has approved the application, the insured is still unaware that the insurer has accepted it. Therefore, under the commission theory, the contract is not perfected until the insured is notified of the insurer's acceptance. []{#_Toc185185946.anchor}Contract of indemnity - []{#_Toc185185947.anchor}Risk-distributing device - - []{#_Toc185185948.anchor}Doctrine of *uberrimae fidei* - - []{#_Toc185185949.anchor}Not commutative - - []{#_Toc185185950.anchor}PRINCIPAL OBJECT AND PURPOSE TEST - - Whether the **assumption of risk and indemnification of loss** are **the principal object and purpose** of the organization or whether they are merely incidental to its business. []{#_Toc185185951.anchor}HEALTH CARE AGREEMENTS **Primary purpose** Rendering of service and NOT to indemnify --------------------------------------------- --------------------------------------------------------- **As to when can the benefits be received** At any time NOT only when loss, peril, or damage occurs **Kind of risk assumed** Business risk and NOT insurance/actuarial risk +-----------------------------------+-----------------------------------+ | **Philippine Health Care | **Philamcare Health Systems v. CA | | Providers v. CIR (2009)** | (2002)** | +===================================+===================================+ | **Preventive** medical services | Under the agreement, | | such as periodic monitoring of | respondent\'s husband was | | health problems, family planning | entitled to avail of | | counseling, consultation and | hospitalization benefits, whether | | advices on diet, exercise and | ordinary or emergency, listed | | other healthy habits, and | therein. He was also entitled to | | immunization; | avail of \"out-patient benefits\" | | | such as annual physical | | **Diagnostic** medical services | examinations, preventive health | | such as routine physical | care and other out-patient | | examinations, x-rays, urinalysis, | services. | | fecalysis, complete blood count, | | | and the like and | | | | | | **Curative** medical services | | | which pertain to the performing | | | of other remedial and therapeutic | | | processes in the event of an | | | injury or sickness on the part of | | | the enrolled member. | | | | | | - | | +-----------------------------------+-----------------------------------+ | Not an insurance contract | Non-life insurance contract | +-----------------------------------+-----------------------------------+ **SIR JAO'S POV** - - - - []{#_Toc185185952.anchor}ELEMENTS OF AN INSURANCE CONTRACT **CoCaRS** 1. Consent 2. Cause/Consideration (Premium) 3. Risk Distribution 4. Subject (Risk) []{#_Toc185185953.anchor}RULES ON INTERPRETATION []{#_Toc185185954.anchor}FINE PRINT RULE - []{#_Toc185185955.anchor}CIVIL CODE PROVISION GOVERNING INSURANCE CONTRACTS - - **\ ** []{#_Toc185185956.anchor}PROHIBITION ON THE DESIGNATION OF BENEFICIARIES - - - **ARTICLE 739**. The following donations shall be **[void]**: 1. Those made between persons who were guilty of **adultery or concubinage** at the time of the donation; 2. Those made between persons found **guilty of the same criminal offense, in consideration** thereof; 3. Those made to a **public officer** or his **wife**, **descendants and ascendants** **by reason of his office**. In the case referred to in No. 1, the action for declaration of nullity may be brought by the spouse of the donor or donee; and the guilt of the donor and donee may be proved by **preponderance of evidence** in the same action. - []{#_Toc185185957.anchor}SUBROGATION - []{#_Toc185185958.anchor} WHEN CAN THE INSURER BE SUBROGATED TO THE RIGHTS OF THE INSURED - - - -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- **Aspect** **Legal Subrogation** **Conventional Subrogation** --------------------------------------------------- ------------------------------------------------------------------------------------------------------------------ --------------------------------------------------------------------------------------------------------- **Definition** By operation of law, without the need for agreement between parties By agreement between the creditor, debtor, and third person **Consent Required** No consent of the debtor or creditor is required Requires the consent of both the original parties (creditor and debtor) and the third person **Presumption** Presumed in certain cases (e.g., when a creditor pays another creditor who is preferred) Not presumed, must be clearly established **Examples** \- Creditor pays another creditor who is preferred.\ \- When a third person, through agreement, substitutes themselves for the creditor - The third person, not interested in the obligation, pays with the debtor's approval\ - A person interested in the fulfillment of the obligation pays **Effect on the Rights of the Subrogated Person** The subrogated person acquires the creditor\'s rights, including the right to pursue the debtor or third parties The subrogated person acquires the creditor\'s rights subject to any stipulations made in the agreement -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- []{#_Toc185185959.anchor}HOW MUCH CAN THE INSURER RECOVER FROM THE PERSON CAUSING THE LOSS OR INJURY - - - - - []{#_Toc185185960.anchor}INSTANCES WHEN THE RIGHT OF SUBROGATION IS DEFEATED[^5^](#fn5){#fnref5.footnote-ref} 1. If the **assured**, by his own act, **releases the wrongdoer or third party liable** for the loss or damage from liability, the insurer\'s right of subrogation is defeated - 2. Where the **insurer** pays the assured the value of the lost goods **without notifying the carrier**, who has, in good faith, settled the assured\'s claim for loss, the settlement is binding on both the assured and the insurer, and the latter cannot bring an action against the carrier on his right of subrogation -- **double payment (by the insurer, and by carrier)** - 3. Where the **insurer** pays the assured for a loss which is **not a risk covered by the policy**, thereby effecting \"voluntary payment\", the former has no right of subrogation against the third party liable for the loss **Examples** - - **\ ** - - - - - - - **\ ** []{#_Toc185185961.anchor}REMEDY OF THE INSURED IF INSURANCE COVERAGE IS INSUFFICIENT The liability of the insurer depends on the specific terms of the policy. Some policies provide that the insurer will pay regardless of the amount of damages. However, most policies impose a ceiling, specifying a maximum amount for which the insurer can be held liable. If the insurance coverage is insufficient, the insured may claim the portion not covered by the insurance from the tortfeasor. In such cases, the insurer may file a subrogation case against the tortfeasor to recover the amount it paid to the insured. On the other hand, the insured may file a separate claim against the tortfeasor to recover the deficiency not covered by the insurance policy. - - []{#_Toc185185962.anchor}SITUATIONAL EXAMPLES X is the owner of a motor vehicle. It is covered by a property insurance policy with insurer Y. Z causes damage to the motor vehicle of X. X filed a claim for insurance proceeds amounting to 100,000 from Y, which was paid accordingly by Y. What is the remedy of Y? - In the earlier example, suppose that X signed a quitclaim and released Z from any liability without the consent of Y. X then claimed insurance proceeds from Y amounting to 100,000. Can Y be subrogated for X\'s rights? - - A secured a life insurance policy from Insurer B. On the other hand, C secures a property insurance policy over his car from Insurer D. Unfortunately, A died in a car mishap on account of C\'s negligence. And so, the beneficiaries of A were given 1M by Insurer B as per the life insurance policy. Insurer B now files an action for damages against C. As counsel for C, what will you do? - []{#_Toc185185963.anchor}PROHIBITION ON DESIGNATION OF BENEFICIARIES v. SUBROGATION +-----------------------------------+-----------------------------------+ | **Prohibition on the designation | **Subrogation** | | of beneficiaries\ | | | (Article 2012 in relation to | **(Article 2207)** | | Article 739)** | | +===================================+===================================+ | Life insurance | Property insurance | +-----------------------------------+-----------------------------------+ | **RATIONALE** | | | | | | - - | | +-----------------------------------+-----------------------------------+ []{#_Toc185185964.anchor}WHAT MAY BE INSURED[^6^](#fn6){#fnref6.footnote-ref} 1. Any contingent or unknown event 2. Past or future 3. Damnify a person having an insurable interest 4. Creating a liability against the insured Past event -- it must be unknown to parties, mostly applicable in marine insurance []{#_Toc185185965.anchor}INSURABLE RISKS 1. Personal risks -- life, health 2. Property 3. Liability -- surety, medicine malpractice insurance []{#_Toc185185966.anchor}INSURANCE BY A MARRIED WOMAN[^7^](#fn7){#fnref7.footnote-ref} The consent of the spouse is not necessary for the validity of an insurance policy taken out by a married person **on his or her life** or that of **his or her children**. - []{#_Toc185185967.anchor}GAMBLING Insurance for or against the drawing of any lottery, or for or against any chance or ticket in a lottery drawing, a prize cannot be insured. []{#_Toc185185968.anchor}PARTIES TO A CONTRACT OF INSURANCE **IIBAA** 1. 2. 3. 4. 5. []{#_Toc185185969.anchor}INSURER - **CPA** **Who can be an insurer?** 1. corporation 2. partnership 3. association []{#_Toc185185970.anchor}INSURED - - **Who can be insured?** - - - - []{#_Toc185185971.anchor}BENEFICIARY - - **Who can be a beneficiary?** - - **RULE REGARDING THE DESIGNATION OF BENEFICIARY** - - 1. 2. - - []{#_Toc185185972.anchor}ASSURED / OWNER - - - - - - []{#_Toc185185973.anchor}AGENT OF THE INSURER - Agents are key parties in a contract of insurance because an insurer, being a juridical entity, cannot act independently. To function effectively, an insurer must employ agents. - Agents play a crucial role as they negotiate on behalf of the insurer, persuading the insured to enter into an insurance contract. WHO CAN BE INSURED **GR: Anyone** can be insured so long as there is insurable interest over the life of the insured **Exception:** **Section 7 of the Insurance Code** -- **public enemy** - []{#_Toc185185974.anchor}INSURABLE INTEREST - - []{#_Toc185185975.anchor}WHY DO WE NEED TO ESTABLISH INSURABLE INTEREST **VLI** 1. For the contract to be **valid** - - 2. It confers **legal right** 3. For the contract to be considered a contract of **indemnity** - []{#_Toc185185976.anchor}TEST TO DETERMINE THE EXISTENCE OF INSURABLE INTEREST Will you **derive** **pecuniary or financial benefit or advantage** from its **preservation** and will **suffer pecuniary loss or damage** from its **destruction** by the happening of the contemplated peril? - - - - []{#_Toc185185977.anchor}INSURABLE INTEREST IN LIFE INSURANCE a. b. - c. - d. - - **Examples** - - - - - - - - - - - - - - **\ ** []{#_Toc185185978.anchor}**WHO MUST HAVE INSURABLE INTEREST IN LIFE INSURANCE** **GR:** The **assured** must have insurable interest **over the life of the insured** - - **Exception:** - []{#_Toc185185979.anchor}**FORFEITURE OF BENEFICIARY'S INTEREST IN LIFE INSURANCE POLICY** - **ORDER OF DISTRIBUTION IF BENEFICIARY IS FORFEITED** **OPE** 1. **Other beneficiaries** unless disqualified 2. **Absent other beneficiaries**, in accordance with the **policy contract** 3. If **policy contract is silent**, **estate of the insured** **\ ** []{#_Toc185185980.anchor}**EXTENT OF INSURABLE INTEREST IN LIFE INSURANCE** **GR:** Unlimited - **Exception:** insurable interest is **merely pecuniary** over the life of the person - []{#_Toc185185981.anchor}**WHEN MUST INSURABLE INTEREST EXIST** **GR:** Only at the time of the **perfection of the contract of insurance,** and it **need not exist thereafter** - **Exception:** interest is merely pecuniary - - []{#_Toc185185982.anchor}INSURABLE INTEREST IN PROPERTY INSURANCE Will you **derive** **pecuniary or financial benefit or advantage** from its **preservation** and will **suffer pecuniary loss or damage** from its **destruction** by the happening of the contemplated peril? - - - - - - []{#_Toc185185983.anchor}**EXTENT OF INSURABLE INTEREST IN PROPERTY INSURANCE** - - - **\ ** []{#_Toc185185984.anchor}**WHO MUST POSSESS INSURABLE INTEREST IN PROPERTY INSURANCE** - What happens if someone without an insurable interest in the property takes out insurance on it? - - **With insurable interest in the property?** **Effect on Contract of Insurance** ---------------------------------------------- ------------------------------------- --------------- **Assured** **Beneficiary** null and void unenforceable []{#_Toc185185985.anchor}**WHEN MUST INSURABLE INTEREST EXIST** At the **time of** **perfection** **[AND]** at the **time of loss**, although it **need not exist at the same time** - - - []{#_Toc185185986.anchor}**REQUIREMENT ON EXISTING RIGHT OVER THE THING** a. b. - c. - The individual cannot insure their parents\' property because their right is merely inchoate. Until the parents pass away, the individual has no vested interest in the property, which remains owned by the parents. - Can you insure the property of your debtor if the debt is unsecured? - No. There is insurable interest only if the obligation is secured. For example, in the case of a real estate mortgage, the insurable interest is based on the existing interest. - If a last will and testament designates an heir to inherit, does this create an insurable interest? - No. The reason is that it is only an inchoate right, so up until death, there is still no right because the last will and testament can still be revoked during the testator\'s lifetime. []{#_Toc185185987.anchor}**VOID STIPULATIONS IN CONTRACT OF INSURANCE** - 1. 2. 3. []{#_Toc185185988.anchor} INSURABLE INTEREST IN PROPERTY v. LIFE INSURANCE +-----------------------+-----------------------+-----------------------+ | **ASPECT** | **LIFE INSURANCE** | **PROPERTY | | | | INSURANCE** | +=======================+=======================+=======================+ | Why do we need | 1. 2. 3. | | | insurable interest | | | +-----------------------+-----------------------+-----------------------+ | What is insurable | Reason why a person | | | interest | takes an insurance | | | | contract | | +-----------------------+-----------------------+-----------------------+ | Who must have an | Assured over the life | Insured and the | | insurable interest | of the insured | beneficiary | +-----------------------+-----------------------+-----------------------+ | Extent of the | GR: unlimited | Limited to the value | | insurable interest | | of loss | | | XPN: creditor-debtor | | +-----------------------+-----------------------+-----------------------+ | When must insurable | At the time of | At the time of | | interest exists | perfection | perfection and at the | | | | time of loss | +-----------------------+-----------------------+-----------------------+ | What is the basis of | Need not be found on | Strictly found on a | | insurable interest | a strict legal basis | legal basis | | | because moral | | | | justification can be | | | | used | | +-----------------------+-----------------------+-----------------------+ []{#_Toc185185989.anchor}LOSS OF INSURABLE INTEREST **GENERAL RULE** - - - **EXCEPTIONS** - - - - - - 1. 2. 3. - 4. - 5. - - - - - []{#_Toc185185990.anchor}CONCEALMENT, MISREPRESENTATION, AND BREACH OF WARRANTIES **DOCTRINE OF *UBERRIMAE FIDEI*** - - - 1. 2. 3. []{#_Toc185185991.anchor}CONCEALMENT - - []{#_Toc185185992.anchor}**WHAT SHOULD BE COMMUNICATED** - []{#_Toc185185993.anchor}**WHEN SHOULD THE FACT LEARNED** - - - - - []{#_Toc185185994.anchor}**WHAT IF THE FACT THAT IS KNOWN BY THE PARTY TURNS OUT TO BE FALSE** - - - - **\ ** []{#_Toc185185995.anchor}**"OUGHT TO COMMUNICATE"** **CATEGORIES OF THE FACTS THAT SHOULD BE COMMUNICATED** 1. Need to be disclosed **even if** **not asked** 2. Need to be disclosed **only if asked** 3. Need **not** be disclosed **even if asked** **[Need to be disclosed even if not asked]** **TEST OF MATERIALITY** - - - - - - - - - - **[Need to be disclosed only when asked]** a. b. - c. d. e. - **[Need to be disclosed even if asked]** - - - - - []{#_Toc185185996.anchor}REPRESENTATION A **collateral statement of things** to encourage the insurer to accept the risk and vice versa - - []{#_Toc185185997.anchor}**WHEN SHOULD THE STATEMENT BE MADE** At the **time of or prior to the issuance** of the policy - []{#_Toc185185998.anchor}**NATURE AND FORM OF REPRESENTATION** May be **oral or written** - []{#_Toc185185999.anchor}**KINDS OF REPRESENTATION** *same concept with **warranties*** 1. 2. **Examples** +-----------------------------------+-----------------------------------+ | **Affirmative Representations** | **Promissory Representations** | +===================================+===================================+ | My house is fenced by a perimeter | I will construct a perimeter | | concrete wall | concrete wall around my house | | | within 3 months from the issuance | | | of the insurance | | | | | | I promise to maintain a concrete | | | wall around my house for 3 months | | | after the contract is issued | | | | | | - | +-----------------------------------+-----------------------------------+ - - - - - - - - - []{#_Toc185186000.anchor}**EFFECTS OF REPRESENTATION** 1. Of **representation** -- insurer may **rescind** **[or]** **deny** liability 2. Of **misrepresentation** - - - []{#_Toc185186001.anchor}REMEDIES Concealment Representation Warranty ---------------- ------------- ---------------- ---------- Rescission Deny liability []{#_Toc185186002.anchor}**RESCISSION** - - **GROUNDS** 1. Concealment; **[or]** 2. Representation **WHEN SHOULD THE RIGHT BE EXERCISED** - - - - - - - - - - **WHEN INSURER IS DEEMED TO HAVE WAIVED ITS RIGHT TO RESCIND** 1. 2. **DEEMED IN ESTOPPEL** Jurisprudence provides that an insurer is considered to have waived its right to rescind the contract of insurance when the insurer is **deemed in estoppel**. In one case, the Supreme Court ruled that the insurer was stopped from exercising its right to rescind when it **continued to accept premium payments despite knowing that the insured had concealed certain facts**. **INCONTESTABILITY CLAUSE** **Requisites** 1. 2. 3. **Rationale** The insurer, exercising due diligence, could have determined within two years whether the insured concealed or misrepresented any material facts. Two years is considered a sufficient period to discover if the insured concealed anything. If the insurer did not verify the accuracy of the information within this period, the policy has already become incontestable, and the right to rescind can no longer be exercised. - - - - - The incontestability clause cannot be invoked in all instances. It only applies in cases of fraudulent misrepresentation or concealment. The mere lapse of two years does not automatically entitle the insured to claim. This is because there are other defenses that are not barred by the incontestability clause. **Other defenses not covered by incontestability clause** 1. If the premium is not paid, the incontestability clause becomes void ab initio, even if the 2-year period has already passed 2. If there is no insurable interest in the insured person 3. When the cause of death is an **excepted risk**, meaning a **risk not covered by the insurance policy**. For example, if the policy covers natural causes only, but the insured person dies due to a stabbing, then it is considered excepted risk. 4. In some instances, when there is no proof of death, especially when expressly stated in the insurance policy **Fraud** 1. Simple fraud - 2. Vicious fraud - - - - []{#_Toc185186003.anchor}WARRANTIES\ (Sections 67 to 76 of the Insurance Code) A **warranty** is a **written statement or stipulation** inserted **on the face of the contract itself**, or **clearly incorporated therein** as a **part thereof** by **proper words of reference**, whereby the insured expressly **contracts as to the existence of certain facts, circumstances, or conditions**, the literal truth of which is essential to the validity of the contract of insurance. May relate to the **past**, **present**, or **future** **FORMALITY:** **written** statement or stipulation **WHERE THE WARRANTIES MAY BE INCORPORATED** 1. on the **face of the contract itself** or **clearly incorporated** as part of the contract; or 2. by proper **words of reference** - - - - - []{#_Toc185186004.anchor}**KINDS OF WARRANTIES** *same concept with **representation*** 1. 2. - **\ ** []{#_Toc185186005.anchor}**EFFECTS OF BREACH OF WARRANTIES** **GENERAL RULE** **EXCEPTIONS**[^9^](#fn9){#fnref9.footnote-ref} 1. Before the time arrives for the performance of a warranty relating to the future, a **loss insured against happens** 2. Before the time arrives for the performance of a warranty relating to the future, **performance becomes unlawful at the place of the contract** 3. Before the time arrives for the performance of a warranty relating to the future, the **omission to fulfill the warranty does not avoid the policy** **[Illustration]** **First exception** - - **Second exception** - - **Third exception** - - - **\ ** []{#_Toc185186006.anchor}**BREACH OF IMMATERIAL WARRANTY** Ordinarily, a **violation of an immaterial provision does not avoid the policy**. However, if the **parties so stipulate that such violation of such immaterial provision would avoid the policy**, then the **immaterial provision shall be converted into a material one**, in which case, the **policy shall be avoided**. - - []{#_Toc185186007.anchor}EXCEPTIONS IN INSURANCE Exceptions are specific risks which are removed from the general risks undertaken by the insurer. - - []{#_Toc185186008.anchor}WARRANTIES v. REPRESENTATION +-----------------------+-----------------------+-----------------------+ | **ASPECT** | **WARRANTIES** | **REPRESENTATION** | +=======================+=======================+=======================+ | Part of the contract | **Part** of the | **Collateral** | | | contract | statements | | | | | | | | - | +-----------------------+-----------------------+-----------------------+ | Compliance | **Strict compliance** | **Substantial | | requirement | is necessary | compliance** will | | | | suffice | | | - | | | | | - - | +-----------------------+-----------------------+-----------------------+ | Effect of falsity | **Mere falsity** of a | Misrepresentation | | | warranty will **avoid | must be made **with | | | a contract** | intent to defraud** | +-----------------------+-----------------------+-----------------------+ | Materiality | Materiality is | **Representation must | | | **presumed** | be material** | +-----------------------+-----------------------+-----------------------+ | Good faith as a | Good faith **cannot** | Good faith is a | | defense | be raised as a | **plausible** defense | | | defense | | | | | - | | | - | | +-----------------------+-----------------------+-----------------------+ | Result of breach / | Breach of warranty = | Misrepresentation = | | misrepresentation | breach of contract | fraud | +-----------------------+-----------------------+-----------------------+ | Who makes it | **Only the insured** | May be made by **both | | | makes a warranty | the insured and the | | | | insurer** | +-----------------------+-----------------------+-----------------------+ []{#_Toc185186009.anchor}POLICY (Section 49 to 66) - No particular formality is required in a contract of insurance. The contract can be either oral or written. When the insurance contract is in written form, the document issued by the insurer upon approval of the insured\'s application is referred to as the policy. []{#_Toc185186010.anchor}AS TO FORM Because of the amendment of the law, insurance policies can also be in electronic form. []{#_Toc185186011.anchor}PROFORMA NATURE OF AN INSURANCE POLICY - Insurance contracts are imbued with public interest to ensure that the policy being issued has been approved by the insurance commissioner. The policy issued must be approved by the commissioner. One cannot arbitrarily agree to such modifications, as the policy must still be submitted for approval by the Insurance Commissioner. This is because modifying the terms of the policy would amount to altering an insurance policy that has already been pre-approved by the commissioner. Section 232 clearly states that no policy, certificate, or contract of insurance shall be issued or delivered within the Philippines unless it has been approved by the insurance commissioner. This provides an added layer of protection for individuals entering into an insurance contract, ensuring that the policy issued has undergone proper approval. However, it is also important for individuals to conduct their due diligence to verify that the policy being issued has indeed been approved by the insurance commissioner. - Recently, there have been increasing issues related to variance insurance contracts, which are policies that combine insurance with an investment component. In these contracts, part of the premium payment goes toward an investment. Naturally, when investing, individuals expect their investment to grow over time. However, some individuals who entered into variance contracts with insurers have reported dissatisfaction. For instance, they were under the impression that after five years, their policy would mature, and they would receive a return on their investment. Instead, they found that their investment had been depleted, and they were puzzled, believing they were scammed by the insurer. However, a closer look at the fine print of the insurance policy reveals that there was no wrongdoing by the insurer. The policy clearly stated that if the policyholder failed to pay premiums within a certain period, the insurer could use the investment funds to cover the premiums, leaving no money left in the investment. - Some policyholders invested in these contracts expecting dividends, which are sometimes used to cover premium payments. In such cases, the dividends from the investment are applied directly to the premium, relieving the policyholder from paying out-of-pocket for the premium. In essence, the policyholder remains insured without worrying about the premium payment, as the dividends cover it. - It is important to note that while the likelihood of being scammed by insurers is low due to heavy regulation by the Insurance Commissioner, policyholders must be diligent. They should carefully review the terms of the insurance contract before entering into it. Even though an insurance contract may be a contract of adhesion, meaning one party may have more power in drafting the terms, if the terms are clearly stated, they should be followed as written. The rule that ambiguities should be construed against the drafter applies only when the terms are unclear. Therefore, it is essential for prospective policyholders to read the fine print and fully understand the details of their policy. []{#_Toc185186012.anchor}CONTENTS (Section 51) 1. 2. 3. 4. 5. 6. 7. **\ ** []{#_Toc185186013.anchor}**PARTIES** **In some cases, it is possible for an insurance policy to simply specify the general group of individuals who would benefit from it, rather than identifying a specific beneficiary**. When the description of the insured is broad enough to cover a range of people or classes, **only those who can demonstrate that the policy was intended to include them may claim the benefits**. In other words, **insurance policies are not always required to explicitly state the identity of the beneficiary**. For instance, in property insurance, a policy might state that the beneficiary is whoever owns the insured property. In this scenario, the specific beneficiary is not named, but as long as one can prove ownership of the insured property, they would be considered a valid beneficiary. The key is to demonstrate that the individual belongs to the group or class of persons described in the policy. []{#_Toc185186014.anchor}**AMOUNT OF INSURANCE** 1. Open 2. Valued 3. Running **OPEN INSURANCE** In an open insurance policy for a Tesla vehicle, if it states that the vehicle is insured for an amount not exceeding PHP 5 million, this is the maximum liability the insurer is obligated to cover, regardless of the actual value of the vehicle. For example, if the Tesla is valued at PHP 20 million and is completely destroyed in an accident, the insured can only recover up to PHP 5 million, as that was the agreed-upon maximum liability. However, if the vehicle is only partially damaged, such as being scratched, the insured cannot demand the full PHP 5 million. The insurer will assess the extent of the damage and pay based on that assessment, not the maximum value agreed upon in the policy. If the vehicle was originally valued at PHP 5 million and the policy was set for 10 years, but a loss occurs 9 years after the policy was executed, the insurer will again assess the value of the vehicle at the time of the loss, factoring in depreciation. Suppose the vehicle was only revalued at PHP 2 million after 9 years, so the insurer would only pay that amount. This is an example of **open insurance, where the value of the insured property is determined at the time of loss**. **\ ** **VALUED INSURANCE POLICY** A **valued insurance policy is one where the agreed-upon value of the property is explicitly stated in the policy, and that value is binding**. For example, if the Tesla owner upgrades the vehicle by adding accessories such as a power bank, which increases the vehicle\'s value, the insurer is still only liable for the agreed-upon value at the time of the policy's execution. If the vehicle is lost after the upgrades, the insurer will only pay the agreed-upon value, in this case, PHP 5 million, because that value was stipulated in the policy. Thus, the **agreed value in a valued insurance policy is the amount that controls in the event of a loss**. **LIFE INSURANCE IS NEITHER AN OPEN INSURANCE NOR VALUED POLICY** - **Life insurance cannot be classified as open insurance**. Although life is inherently unquantifiable, **open insurance typically involves an agreement on a maximum liability, which serves as a limit rather than a guaranteed amount**. In contrast, **life insurance** **specifies a fixed sum insured that is agreed upon in advance**. This **sum is determined based on the value that the insurer is willing to provide, not an open-ended or indefinite value**. While section 60 of the insurance contract stipulates that the value of the insured item is to be determined at the time of the loss, this does not imply that life insurance is an open insurance policy. - **If life insurance were treated as open insurance, it would conflict with public policy**. In open insurance, the value stated in the contract is the maximum amount, meaning the insurer is not obligated to pay that sum. For example, if the agreed maximum amount in life insurance were PHP 500,000, the insurer is not automatically obligated to pay that amount upon the insured\'s death. The insurer may attempt to reduce the payout by questioning the value of the insured person's life, which would be derogatory and contrary to public policy. Therefore, life insurance is not considered open insurance; it is better classified as valued insurance. - Valued insurance specifies an agreed amount to be paid at the time of loss, based on the premium paid by the policyholder. The **value in life insurance is not about placing a value on human life but about determining the sum that the insured is willing to pay premiums for, based on their financial situation**. This is why life insurance is considered valued insurance rather than open insurance. **\ ** **RUNNING INSURANCE** - Running insurance is applicable when insuring certain items or groups of items whose value cannot be fully determined. It is called \"running\" because the extent of the insurance policy and the payment amount can change month to month. This type of insurance is particularly applicable in inventory as its value is not consistent and constantly fluctuates. To address this, the insured typically secure a running policy, allowing the insurance coverage to adjust in accordance with changes in inventory. []{#_Toc185186015.anchor}RIDERS **Riders are documents that qualify or modify the terms stated in an insurance policy**. For instance, in a property insurance policy, it may state that the insurer is liable for any loss due to car theft. However, after reviewing the policy, it may be realized that there is no coverage for losses due to Acts of God, such as flooding, which has become a common issue in Manila. If a vehicle is damaged by floodwater and it is not a covered peril in the policy, the policyholder can contact the insurer. In such cases, the insurer may issue a rider to include Acts of God as a covered peril, **modifying the original terms of the policy**. []{#_Toc185186016.anchor}**CONSIDERATIONS WHEN ASCERTAINING ITS BINDING EFFECT** 1. Was it issued together with the policy? 2. Was it issued after the issuance of the policy? []{#_Toc185186017.anchor}**Riders: Rule for No. 1** To ensure the correct Rider is attached and binds the insurer at the time of issuance, it\'s important to refer to the exception. If the Rider is listed, for example, as \"Annex A entitled Rider Number One,\" it will have a binding effect because the descriptive title of the Rider is mentioned in the policy. In practice, when securing an insurance contract, the client may request a review of their policy. If, for instance, a client asks to check their comprehensive insurance policy and it doesn't cover Acts of God, such as damage from natural disasters, the insurer may not be liable for such incidents. However, if the client presents another document that includes a Rider, the lawyer should examine the main contract again to see if it references the Rider. **If the main contract clearly mentions the Rider, the client is covered. If not, the Rider does not have binding effect, and the lawyer should inform the client that they are not covered under the current policy, advising them to consider Rule No. 2**. **\ ** []{#_Toc185186018.anchor}**Riders: Rule for No. 2** If the rider has already been issued, inform the client to simply countersign the rider to give it binding effect. However, before doing so, notify the insurer to issue a new rider, which should then be countersigned. []{#_Toc185186019.anchor}COVER NOTES - Also referred to as "**binders**" or "**binding slips**" or **preliminary or temporary contracts of insurance** - - []{#_Toc185186020.anchor}**WHEN BINDING** It would depend on the **authority of the agent** - - - **\ ** []{#_Toc185186021.anchor}**RULES ON COVER NOTES** Cover notes can be extended or renewed by the Insurance Commissioner if it is not for purposes of violating the law. - - []{#_Toc185186022.anchor}ACTIONS BASED ON AN INSURANCE CONTRACT GENERAL RULE 1. 2. 3. 1. 2. EXCEPTION - - []{#_Toc185186023.anchor}**WHEN DOES CAUSE OF ACTION ACCRUES** Only when the insurer made the **FIRST denial of the claim** (not from the motion for reconsideration if there is) Where the **claim is denied and the insured files a motion for reconsideration, which is subsequently denied**, the **reckoning period for filing an action will be based on the date of the initial denial, not the denial of the motion for reconsideration** -- unless otherwise specified in the insurance contract. - - - - - - - - - - - - []{#_Toc185186024.anchor}PREMIUMS - A **premium** is defined as the **agreed price for assuming and carrying the risk of insurance**. - This is the **consideration** which must be paid at the time and in the way and manner specified in the policy. - **Failure to pay premium will result in the lapse of the policy and will be forfeited by its own terms**. - - \"The premium is the ***elixir vitae*** or **source of life** of the insurance business.\" - []{#_Toc185186025.anchor}THE CASH AND CARRY PRINCIPLE Cash and carry means that **payment must be made first before the insurance policy is issued**. The term \"cash and carry\" refers to this practice, where the insurer expects payment upfront. If the insurance payment is not made, the insurance contract is considered **void**. As a general rule, the payment of the premium is required for the insurance policy to be valid, even if the insurer agrees to assume the risk before the premium is paid. If the premium is not paid, the insured cannot avail of the proceeds of the policy, regardless of any agreement to the contrary. This is in line with Section 77, which clearly states that no agreement can override the requirement for premium payment. **\ ** []{#_Toc185186026.anchor}**WHEN SHOULD YOU PAY** In the case of life insurance, an individual is exposed to risk from the moment the insurance policy is entered into. Therefore, the premium should already be paid at that time. Similarly, with property insurance, it is unknown when damage will occur, but from the moment the insurance contract is in effect, the individual is already exposed to the peril that is insured against. []{#_Toc185186027.anchor}**EXCEPTIONS TO THE CASH AND CARRY PRINCIPLE** 1. Section 77. xxx in the case of a **life or an industrial life policy** whenever the grace period provision applies. xxx 2. Section 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. 3. Parties agreed that premium shall be **paid in installments, and partial payment has been made at the time of the loss**. 4. Section 77. xxx whenever under the **broker and agency agreements** with duly licensed intermediaries, a **ninety (90)-day credit extension is given**. xxx 5. Where the **insurer is in estoppel** 6. Section 179. xxx. except where the **obligee has accepted the bond**, in which case the bond becomes valid and enforceable irrespective of whether or not the premium has been paid by the obligor to the surety FIRST EXCEPTION: in the case of a **life or an industrial life policy** whenever the grace period provision applies The Grace Period Provision can be found under Sections 233 and 234 of the Insurance Code. Before one can avail of the Grace Period Provision under Section 77, an important requisite imposed by law is that the first premium must be paid. Without the first premium payment, the Grace Period is not applicable. Assuming the first premium has been paid but the second premium was not, and a loss of life occurs within 30 days from the due date of the second premium, can the insurer deny liability on the grounds of non-payment? According to Section 77, this is **not necessarily the case because the loss occurred within the grace period**. Sections 233 and 234 grant a grace period of 30 days from the due date of the premium payment. This means that the policy is treated as if it had never lapsed. Consider the case of a life insurance policy for an individual named Ross. Ross paid the first premium on November 20, 2023, and the second premium was due on November 20, 2024. However, Ross failed to make the second premium payment by November 25, 2024. In this instance, the **grace period provision would apply**, meaning the **policy would not be voided**. Therefore, the insurer would still be obligated to pay the beneficiaries the proceeds of the life insurance policy. If insurer question how to handle the unpaid second premium, given that the insured passed away within the grace period. In such cases, the insurer will deduct the amount due for the second premium from the policy proceeds. For instance, if the life insurance policy value is PHP 500,000 and the second premium payment is PHP 5,000, the insurer would pay the beneficiary only PHP 495,000, reflecting the deduction for the unpaid premium. **If the insured died beyond the grace period, the policy would be considered void**. SECOND EXCEPTION: 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. **Once the insurer issued the Acknowledgement receipt, confirming the receipt of the premium payment, this statement, according to the rules, would already make the policy binding and conclusive between the insurer and the insured**. In other words, **a perfected insurance policy exists between the insurer and the insured, even if the premium has not yet been paid**. This is because the insurer has admitted and acknowledged receiving a payment from the insured. However, it is important to note that under Section 79, **this conclusiveness only applies to the binding effect of the insurance policy but does not extend to the actual payment of the premium**, meaning that the **payment of the premium is not yet conclusive**. Therefore, the insurer can still collect the actual premium payment from the insured. However, the insurer cannot use the non-payment of the premium as a defense to avoid liability if the contemplated risk occurs. THIRD EXCEPTION: Parties agreed that the premium shall be paid in installments, and partial payment has been made at the time of the loss There must be a mutual agreement between the insurer and the insured that the payment will be made in installments. This agreement **cannot be assumed by the insured, even if a loss occurs, by simply stating that partial payments have already been made**. According to insurance law and jurisprudence, partial payments alone do not validate or bind the policy; it is insufficient to claim that the policy is valid without proof of mutual consent. **To establish that an installment payment agreement is valid and binding, it must be clearly outlined in the written insurance policy**. If the policy specifies that the premium payments are to be made in installments, this agreement is considered valid. Additionally, an important qualifier to consider before declaring an exception to the cash-and-carry principle is that **there must be a partial payment made at the time of the loss** for the policy to be considered valid. FOURTH EXCEPTION: whenever under the broker and agency agreements with duly licensed intermediaries, a ninety (90)-day credit extension is given In non-life insurance policies, the 90-day credit extension is typically applicable. This extension must be provided by the insurer and should be part of the agreement between the parties. The concept is similar to the previous discussion about the grace period, where if payment is not made on the due date and there is an extended credit term, in this case, a 90-day extension and a loss occurs within that 90-day period, the insured is still required to pay for the loss. FIFTH EXCEPTION: Where the insurer is in estoppel **UCPB General Insurance Co., Inc. v. Masagana Telemart, Inc., G.R. No. 137172, 04 April 2001** Masagana obtained five fire insurance policies from UCPB to cover its properties from May 22, 1991, to May 22, 1992. The terms of payment involved a 60- to 90-day credit period routinely granted by the insurer, during which premiums could be paid without invalidating the insurance coverage. On June 13, 1992, a fire destroyed the Masagana\'s insured properties. UCPB tendered premium payments on July 13, 1992, but UCPB rejected them, claiming that the fire insurance policies had expired without renewal due to non-payment of premiums before the occurrence of the fire and that Section 77 of the Insurance Code strictly required prepayment for the policies to be valid and binding. UCPB had allegedly sent a notice of non-renewal as required under the renewal clause of the insurance policies but failed to provide sufficient proof that Masagana received it. Masagana filed a case to compel UCPB to honor the insurance policies, asserting that they were effectively renewed due to UCPB\'s habitual practice of granting credit terms and the absence of valid notice of non-renewal, thereby making the policies binding when the fire occurred. **SUPREME COURT RULING** The policies were effectively renewed by operation of law due to UCPB\'s failure to provide timely and valid notice of non-renewal as required under the renewal clause. UCPB was estopped from invoking Section 77 of the Insurance Code, as its consistent practice of granting a 60- to 90-day credit term for premium payments **induced Masagana to believe that the insurance policies would remain valid despite delayed payment**. By habitually accepting premium payments beyond the policy periods without objection, UCPB **created an expectation that the coverage was binding under the extended payment terms**. This established conduct barred UCPB from denying liability on the grounds of non-payment, as it would be inequitable to allow the insurer to benefit from such practices while repudiating its obligations when a claim arose. **\ ** **SIR JAO's POV** Section 77 is clear in stating that, notwithstanding any agreement to the contrary, the parties cannot stipulate that they will be liable even if the premium is not paid. However, the Supreme Court\'s decision could be interpreted as allowing the insured to potentially use the words of the insurer against them. The Supreme Court stated that an exception to this rule occurs when the insurer is in estoppel. For instance, if the insurer tells the insured that they do not need to pay the premium, this could be considered estoppel. This raises concerns about the potential for insured parties to manipulate such conduct to justify delayed payments where the exception of estoppel was recognized. Nonetheless, jurisprudence is clear that when the insurer is in estoppel, it can serve as an exception to the cash-and-carry principle. SIXTH EXCEPTION: where the obligee has accepted the bond, in which case the bond becomes valid and enforceable irrespective of whether or not the premium has been paid by the obligor to the surety If an employer loses an illegal dismissal case before a labor arbiter, they may be required to pay back wages and other remedies to the employee. If the employer wants to appeal the decision, they must file their case with the National Labor Relations Commission. In this case, the employer must post a supersedeas bond, which is necessary for the appeal to be considered valid. To obtain the bond, the employer must find an accredited bondsman or surety to issue a bond certificate. After submitting the bond to the NLRC, the appeal is considered perfected. If, upon appeal, the employer still loses and the ruling becomes final, the employee can then pursue the judgment award by claiming the bond posted by the employer. However, if the surety refuses to pay, claiming that the employer has not paid the required premium for the bond, the employee is still entitled to the judgment award. Section 179 of the Labor Code is clear that the employee is entitled to the bond, even if the premium payment has not been made. The **acceptance of the bond by the NLRC is considered an acceptance on behalf of the employee**, and the employee should be compensated for the judgment award regardless of any issues between the employer and the surety regarding premium payment. []{#_Toc185186028.anchor}PAYMENT IN CHECKS Payment of premiums by check will not produce any effect **until it has been encashed**. If the check has been cleared, it will retroact on the date when it should have been encashed. **Mere notice that the check is already available does not amount to payment**. - - - Jaime Gaisano v. Development Insurance and Surety Corporation, G.R. No. 190702, 27 February 2017 ***Context on the parties:*** Trans-Pacific Underwriters Agency is an insurance agent representing Development Insurance and Surety Corporation, tasked with collecting premiums for policies issued by the insurer. Development Insurance and Surety Corporation is a domestic insurance company that issued a comprehensive vehicle insurance policy to Gaisano. Gaisano, as the insured, relied on Trans-Pacific to facilitate the payment of the premium for his vehicle insurance, which was acknowledged by Trans-Pacific but only fully processed by the insurer after the vehicle was stolen. - **September 27, 1996** - - - - - - - - Gaisano filed a case to compel the insurer to honor the insurance claim, arguing that the insurance policy was valid and binding at the time of loss, despite the delayed premium payment, due to the insurer's acknowledgment of the premium and conduct constituting waiver or estoppel. **\ ** **SUPREME COURT RULING** **No binding insurance contract existed between Gaisano and Development Insurance and Surety Corporation, as the premium was not paid at the time of the loss of the insured vehicle** on September 27, 1996. Under Section 77 of the Insurance Code, an insurance policy is not valid and binding unless and until the premium has been paid. Although Gaisano argued that there was a waiver of the pre-payment requirement or an extension of the payment term, the **Court found no evidence of a consistent practice by the insurer to grant credit terms or extensions for premium payment**. Therefore, the failure to pay the premium before the vehicle was stolen rendered the policy ineffective. The Court further clarified that the **exceptions to the rule in Section 77 did not apply in this case**. The policy was not a life or industrial life policy, and there was no acknowledgment of premium receipt by the insurer that could make the policy binding despite non-payment. Additionally, the agreement between Trans-Pacific and Gaisano did not establish a credit term or waiver of payment, and no estoppel could be applied. As a result, **while Gaisano was not entitled to recover the insurance proceeds, he was entitled to the return of the premium paid with interest from July 7, 1997, under the principle of unjust enrichment**. Capital Insurance and Surety Co., Inc. v. Plastic Era Co. Inc., G.R. No. L-22375, 18 July 1975 American Home Assurance Company v. Chua, G.R. No. 130421, 28 June 1999 Loyola Life Plans v. ATR, G.R. No. 228402, 26 August 20 20 []{#_Toc185186029.anchor}RETURN OF PREMIUM []{#_Toc185186030.anchor}**FULL RETURN OF PREMIUM** 1. No exposure to the peril 2. Voidable contracts 3. Ignorance of facts NO EXPOSURE TO THE PERIL In marine insurance, the voyage can be insured in the event that the voyage does not succeed or if the vessel sinks. In such cases, the insured would be entitled to insurance. For example, if the voyage is insured and the premium is paid to the insurance, but for some reason, the voyage never commences. In this instance, since the voyage never commenced, the insured was never exposed to the peril that was insured against. Therefore, the insured is entitled to a full return of the premium. VOIDABLE CONTRACTS In the context of voidable contracts under obligations and contracts, when we refer to a voidable contract, it means there is some defect in the consent. For instance, the contract may have been vitiated. If the contract is voidable on its face, the insured is entitled to a full return of the premium. However, it must be noted that since voidable contracts are considered valid until annulled, the insurance contract must first be annulled before the insured can claim a refund of the premium paid. IGNORANCE OF FACTS OR MISTAKE Chandler purchased a second-hand motor vehicle, which was his first vehicle. Wanting to protect it from any potential damage, Chandler secured an insurance contract for the vehicle. However, Chandler was not aware that the vehicle had already been sold to Phoebe first. Therefore, there was a double sale. Phoebe was the first to cause the registration of the vehicle. As this was the case, Phoebe is recognized as the true owner because she was the first buyer to register the vehicle in good faith. Because of this, Chandler had no insurable interest in the car, as Phoebe was the rightful owner. Due to this ignorance of facts, Chandler is entitled to a full return of the premium paid for the insurance. This is based on the fact that Chandler did not know that he had no insurable interest in the car. Chandler\'s right to recover the premium is without prejudice to their ability to pursue any necessary civil or criminal cases against the person responsible for the double sale. **\ ** []{#_Toc185186031.anchor}**PARTIAL RETURN OF PREMIUM** 1. Surrender of policy 2. Overinsurance 3. Rescission due to insurer's breach SURRENDER OF POLICY **Surrender of policy** refers to a situation where the **insured decides to discontinue the insurance policy they had previously entered into**. This concept is only applicable to property insurance. In the case of a property insurance contract with a coverage period of 12 months, the premium paid is assumed to cover the entire year. However, **if the insured chooses to terminate the policy after four months, they will need to surrender the policy**. Upon surrendering, the insured may be entitled to a partial return of the premium. This return will be **pro-rated based on the duration of the coverage**. The amount refunded will depend on the short-period rate specified in the insurance contract, which outlines how much will be refunded in the event of early termination. It is important to note that this provision applies only to property insurance. In life insurance, a similar concept exists but is referred to as the surrender of the policy. It is typically specified in the contract that the insured is entitled to a cash surrender value. This differs from the property insurance concept of surrendering a policy. The **cash surrender value** represents the amount returned to the insured **if they outlive the policy**. This return of premium is not considered taxable income because it is not classified as income. The term \"cash surrender value\" is often mentioned in relation to taxation in life insurance policies. OVERINSURANCE Overinsurance occurs when there is double insurance. Double insurance, as a general rule, is not prohibited, meaning it is possible to insure property with multiple insurers. However, the liability of these insurers will be prorated based on the coverage they agreed upon in their insurance contracts with the insured. If an overpayment of the premium occurs due to overinsurance, it is required that the excess premium be refunded to the insured. If a property is insured by multiple insurers, there is a possibility of overinsuring it. For example, if the property is valued at PHP 300,000 but is insured for a total of PHP 1,000,000 with multiple insurers, the liability of the insurers will be prorated. In this case, the premium paid will be higher because the coverage exceeds the property's value. However, the insured's liability will remain proportionate to the actual value of the property. RESCISSION DUE TO INSURER'S BREACH The breach **must be the fault of the insurer** because if the breach is due to the actions of the insured, then Section 82 applies, and the insured is not entitled to any return of premium. []{#_Toc185186032.anchor}**NO RETURN OF PREMIUM** Breach of contract is due to the **acts of the insured**. In all other instances, the insured is not entitled to a return of premium because the **premium is considered the consideration in exchange for the insurer\'s commitment to assume liability** in the event of loss of life or property. []{#_Toc185186033.anchor}DOUBLE INSURANCE AND REINSURANCE []{#_Toc185186034.anchor}DOUBLE INSURANCE []{#_Toc185186035.anchor}**TEST OF DOUBLE INSURANCE** SIP 1. Same **s**ubject; 2. Same **i**nterest; **AND** 3. Same **p**eril If ALL three considerations exist, then there is double insurance. - - - - - - - **\ ** - - - - - - - - - - []{#_Toc185186036.anchor}**OVERINSURANCE** **Overinsurance** is **insuring for more than one's insurable interest**. - - - - **Double insurance does not automatically result in overinsurance**, especially if the total insurance is combined and does not exceed the insurable interest, which is the value of the property insured by the insured. **Overinsurance may exist even without double insurance.** - []{#_Toc185186037.anchor}**IS DOUBLE INSURANCE PROHIBITED?** As a general rule, double insurance is not prohibited. - - - - - - **\ ** []{#_Toc185186038.anchor}**"OTHER INSURANCE CLAUSE"** When a policy is secured, the insured is not required to disclose to the insurer that they have obtained an insurance policy covering the same subject matter against the same peril from another insurer. This is not a material fact that must be disclosed. As a consequence, there may be instances where an insurer is unaware that the insured has obtained an insurance policy from a different insurer for the same subject matter pertaining to the same peril and the same interest. To protect itself from these situations, the insurer may include an \"Other Insurance Clause\" in the insurance policy. It must be noted that the clause must be expressly indicated in the insurance policy for it to become enforceable. The \"**other insurance clause**\" **requires the disclosure of existing co-insurers as a condition for the policy\'s validity**. Non-disclosure of such co-insurers violates this condition, allowing the insurer to avoid the policy. The rationale behind this clause is to prevent over-insurance and the potential for fraud, where a property owner may obtain excessive insurance coverage, creating an inducement to destroy the property to collect more than its value. This aims to protect both the insurer and the public from fraudulent claims.[^10^](#fn10){#fnref10.footnote-ref} The "other insurance" clause is intended to **discourage over-insurance**. The rationale behind the incorporation of the \"other insurance\" clause is to prevent over-insurance and thus avert the perpetration of fraud. When a property owner obtains insurance policies from two or more insurers in a total amount that exceeds the property\'s value, the insured may have an inducement to destroy the property for the purpose of collecting the insurance. The public, as well as the insurer, is interested in preventing a situation in which a fire would be profitable to the insured.[^11^](#fn11){#fnref11.footnote-ref} If the insurer includes an \"other insurance clause\" in the policy, it is imperative for the insurer to specify **what needs to be done** and provide a **consequence if the insured fails to comply** with the conditions set forth by the insurer in the insurance policy. **EXAMPLES** 1. A condition stating that purchasing additional insurance without the consent of the insurer will void the policy. 2. A provision that requires the insured to inform the insurer of any other insurance on the property, otherwise, the contract may be revoked because of concealment. - 3. A warranty that there is no other existing insurance over the same property and that its violation will amount to a breach of the policy. 4. The insured warrants that no insurance has been taken and no insurance will be taken unless the insurer has given consent, and that any violation of this will constitute a breach of the policy. []{#_Toc185186039.anchor}**RULES IN THE EVENT OF LOSS IN CASE OF OVERINSURANCE ARISING FROM DOUBLE INSURANCE** a. b. c. d. e. **\ ** - - - - - -------------------------------------------------------------------------- **Insurer** **Coverage\ **Fraction** **Prorated Share\ (in million pesos)** (in million pesos)** ------------- ---------------------- -------------- ---------------------- Central 100 100/200 50 Park 50 50/200 25 Friends 50 50/200 25 **Total** **200** **100** -------------------------------------------------------------------------- - **\ ** - +-----------------+-----------------+-----------------+-----------------+ | **Insurer** | **Coverage\ | **Claimed** | **Remaining | | | (in million | | Coverage** | | | pesos)** | | | | | | | **(in million | | | | | pesos)** | +=================+=================+=================+=================+ | Central | 100 | 100 | 0 | +-----------------+-----------------+-----------------+-----------------+ | Park | 50 | | 50 | +-----------------+-----------------+-----------------+-----------------+ | Friends | 50 | | 50 | +-----------------+-----------------+-----------------+-----------------+ | **Total** | **200** | | **100** | +-----------------+-----------------+-----------------+-----------------+ **\ ** +-----------------+-----------------+-----------------+-----------------+ | **Insurer** | **Coverage\ | **Claimed** | **Remaining | | | (in million | | Coverage** | | | pesos)** | | | | | | | **(in million | | | | | pesos)** | +=================+=================+=================+=================+ | Central | 100 | 100 | 0 | +-----------------+-----------------+-----------------+-----------------+ | Park | 50 | | 50 | +-----------------+-----------------+-----------------+-----------------+ | Friends | 50 | | 50 | +-----------------+-----------------+-----------------+-----------------+ | **Total** | **200** | | **100** | +-----------------+-----------------+-----------------+-----------------+ +-----------------+-----------------+-----------------+-----------------+ | **Insurer** | **Coverage\ | **Claimed** | **Remaining | | | (in million | | Coverage** | | | pesos)** | | | | | | | **(in million | | | | | pesos)** | +=================+=================+=================+=================+ | Central | 100 | \* | 100 | +-----------------+-----------------+-----------------+-----------------+ | Park | 50 | 50 | 0 | +-----------------+-----------------+-----------------+-----------------+ | Friends | 50 | \*\* | 50 | +-----------------+-----------------+-----------------+-----------------+ | **Total** | **200** | | **150** | +-----------------+-----------------+-----------------+-----------------+ **\ ** +-----------------+-----------------+-----------------+-----------------+ | **Insurer** | **Coverage\ | **Claimed** | **Remaining | | | (in million | | Coverage** | | | pesos)** | | | | | | | **(in million | | | | | pesos)** | +=================+=================+=================+=================+ | Central | 100 | 100 | 0 | +-----------------+-----------------+-----------------+-----------------+ | Park | 50 | 50 | 0 | +-----------------+-----------------+-----------------+-----------------+ | Friends | 50 | | 50 | +-----------------+-----------------+-----------------+-----------------+ | **Total** | **200** | | **50** | +-----------------+-----------------+-----------------+-----------------+ +-----------------+-----------------+-----------------+-----------------+ | **Insurer** | **Coverage\ | **Claimed** | **Remaining | | | (in million | | Coverage** | | | pesos)** | | | | | | | **(in million | | | | | pesos)** | +=================+=================+=================+=================+ | Central | 100 | 100 | 0 | +-----------------+-----------------+-----------------+-----------------+ | Park | 50 | 50 | 0 | +-----------------+-----------------+-----------------+-----------------+ | **Total | | | **150** | | claimed** | | | | +-----------------+-----------------+-----------------+-----------------+ | Total loss | | | (100) | +-----------------+-----------------+-----------------+-----------------+ | **Excess | | | **50** | | claim** | | | | +-----------------+-----------------+-----------------+-----------------+ **\ ** -------------------------------------------------------------------------- **Insurer** **Coverage\ **Fraction** **Prorated Share\ (in million pesos)** (in million pesos)** ------------- ---------------------- -------------- ---------------------- Central 100 100/200 50 Park 50 50/200 25 Friends 50 50/200 25 **Total** **200** **100** -------------------------------------------------------------------------- +-----------------+-----------------+-----------------+-----------------+ | **Insurer** | **Coverage\ | **Claimed** | **Remaining | | | (in million | | Coverage** | | | pesos)** | | | | | | | **(in million | | | | | pesos)** | +=================+=================+=================+=================+ | Central | 100 | 100 | 0 | +-----------------+-----------------+-----------------+-----------------+ | Park | 50 | | 50 | +-----------------+-----------------+-----------------+-----------------+ | Friends | 50 | | 50 | +-----------------+-----------------+-----------------+-----------------+ | **Total** | **200** | | **100** | +-----------------+-----------------+-----------------+-----------------+ **\ ** +-----------------+-----------------+-----------------+-----------------+ | **Insurer** | **Coverage\ | **Claimed** | **Remaining | | | (in million | | Coverage** | | | pesos)** | | | | | | | **(in million | | | | | pesos)** | +=================+=================+=================+=================+ | Central | 100 | 100 | 0 | +-----------------+-----------------+-----------------+-----------------+ | Park | 50 | 50 | 0 | +-----------------+-----------------+-----------------+-----------------+ | **Total | | | **150** | | claimed** | | | | +-----------------+-----------------+-----------------+-----------------+ | Total loss | | | (100) | +-----------------+-----------------+-----------------+-----------------+ | **Excess | | | **50** | | claim** | | | | +-----------------+-----------------+-----------------+-----------------+ +-----------------+-----------------+-----------------+-----------------+ | **Insurer** | **Prorated | **Actual Paid\ | **Amount for | | | Share\ | (in million | Reimbursement** | | | (in million | pesos)** | | | | pesos)** | | **(in million | | | | | pesos)** | +=================+=================+=================+=================+ | Central | 50 | 100 | 50 | +-----------------+-----------------+-----------------+-----------------+ | Park | 25 | 50 | 25 | +-----------------+-----------------+-----------------+-----------------+ | Friends | 25 | 0 | 0 | +-----------------+-----------------+-----------------+-----------------+ | **Total** | **100** | **150** | **75** | +-----------------+-----------------+-----------------+-----------------+ - - - []{#_Toc185186040.anchor}REINSURANCE []{#_Toc185186041.anchor}LOSSES Losses trigger the obligation of the insurer to indemnify the insured because the purpose of an insurance contract is to provide indemnification. Indemnification occurs only when a loss has been sustained. However, the insurer is not liable for all types of losses since it is liable only if the cause of the loss falls under a covered peril as specified in the insurance policy. Determining the cause of the loss is crucial, as it helps establish whether the loss resulted from a covered peril or an excepted peril. This determination is essential in assessing the insurer's liability under the terms of the policy. []{#_Toc185186042.anchor}ONLY 1 CAUSE OF LOSS **RULES IF THERE IS ONLY 1 CAUSE OF LOSS** 1. If the cause of the loss is a covered peril, then the insurer will be held liable 2. If the cause of the loss is an excepted peril, then indemnification will not take place. A motor vehicle was insured against acts of God. When it was parked in the mountains and damaged due to a landslide, the insurer is liable as the cause of the loss was a covered peril. []{#_Toc185186043.anchor}MULTIPLE CAUSE OF LOSS **PROXIMATE CAUSE v. IMMEDIATE CAUSE v. REMOTE CAUSE** **Proximate cause** is that which, in a **natural and continuous sequence**, **unbroken by any efficient intervening cause**, produces injury and without which the result would not have occurred. - **Immediate cause** is the cause that is **nearest to the loss**. **Remote cause** refers to an event that **indirectly contributes to the ultimate loss** but is **not the direct or immediate cause**. It lies between the proximate cause, which is the primary event leading to the loss, and the immediate cause, which is the direct action or event that triggered the loss. **RULES** 1. If the proximate cause is a peril that is insured against, then the insurer is liable even if the immediate cause is excepted. 2. If the immediate cause is a peril insured against, the insurer is liable unless the proximate cause is excepted. 3. The insurer is not liable for losses caused by remote causes. 4. If the thing insured is exposed to a peril not insured against while being rescued from a peril insured against, and such exposure permanently deprives the insured of its possession, in whole or in part, or if a loss is caused by efforts to rescue the thing insured from a peril insured against, the insurer is liable. SCENARIO 01 **RULE 01: If the proximate cause is a peril that is insured against, then the insurer is liable even if the immediate cause is excepted.** Assuming that fire is an insured peril, the insurer is liable because the proximate cause of the events that followed was the fire. As a result, the insurer is responsible for the loss of the house, even if the house was not directly destroyed by the fire. Assuming the insurance policy specifies that a collapsed wall is an excluded peril, it would not be relevant in this case. The rule states that if the proximate cause is a peril covered by the policy, the insurer is liable, even if the immediate cause is an excepted peril. **\ ** SCENARIO 02 ![](media/image2.png) **RULE 02: If the immediate cause is a peril insured against, the insurer is liable unless the proximate cause is excepted.** As a general rule, unless otherwise stipulated, the insurer is liable if the immediate cause of the loss is a peril covered by the policy. For instance, if the house is insured against fire, the insurer is liable because fire is the immediate cause of the loss. However, the insurer will not be liable if the proximate cause of the loss is an excepted peril. For example, if the fire insurance policy states that the insurer will be liable if the house is destroyed by fire but also includes a stipulation that the insurer is not liable for explosions. Thus, in this case, the insurer will not be held responsible because, although the immediate cause of the loss is fire (which is covered peril), the proximate cause of the damage was the explosion of a tank, which is an excepted peril. Therefore, the insurer is absolved from liability. SCENARIO 03 **RULE 03: The insurer is not liable for losses caused by remote causes.** Proximate cause = explosion of the tank Immediate cause = collapse of the wall Remote causes = the causes between the proximate and immediate cause Assume that the house was insured under a fire insurance policy. In this case, while fire is involved in the chain of events, it is a remote cause, as it is neither the proximate cause nor the immediate cause of the damage or loss of the house. Therefore, the insurer should not be held liable. SCENARIO 04 ![](media/image4.png) Assume the washing machines were insured under a fire insurance policy. In this case, the fire will not be considered the proximate cause due to the existence of an efficient intervening cause, that is, the act of removing the washing machines from the burning building to prevent them from being destroyed by fire. This immediate intervening cause broke the chain of events that would have otherwise led to the washing machines being burned while it was still inside the building. It should also be noted that in this scenario, the immediate cause is not the fire but the rain. The insurer will still be liable in this case, but the basis for liability will be under Section 87 of the Insurance Code. This section states that if the cause of the loss results from an act of rescuing the insured property from an insured peril that would have otherwise caused the loss, the insurer remains liable. In this case, if the washing machines had not been removed from the building in an attempt to save them from the fire, they would have eventually been damaged by the fire and eventually will make the insurer liable still. []{#_Toc185186044.anchor}WILLFUL ACTS v. NEGLIGENT ACTS []{#_Toc185186045.anchor}**LIABILITY OF INSURER WHEN THERE IS WILLFUL OR NEGLIGENT ACT** 1. If the loss is caused by the willful act or through the connivance of the insured, then the insurer is not liable for the loss. 2. If the loss is caused by the negligence of the insured, or of the insurance agents or others, then the insurer is not exonerated from liability. **Insurance fraud** occurs if the insured **willfully performs acts** in order for them to be indemnified by the insurer. For willful acts of the insured, the insurer cannot be held liable. **Willful act of the insured** - **Willful act of third parties** - - - **Negligence** refers to the **failure to exercise the standard of care** that a reasonable person would have in a similar situation - []{#_Toc185186046.anchor}NOTICE AND PROOF OF LOSS []{#_Toc185186047.anchor}**WHO SHOULD PROVIDE NOTICE OF LOSS** 1. Insured **OR** 2. Some person entitled to the benefit of the insurance The insurer is not expected to know everything that is happening to the insured. []{#_Toc185186048.anchor}**WHEN SHOULD NOTICE OF LOSS BE GIVEN** The insured should give notice **without unnecessary delay**, otherwise, the insurer will be exonerated from liability. **\ ** []{#_Toc185186049.anchor}**RULES ON NOTICE AND PROOF OF LOSS** 1. If there are formalities required by the insurer, then the insured should comply with the formalities. 2. If the insurer received documents that are defective, then the insured shall be notified of the defects **RULE 01** If the insurance policy states that once a loss occurs, the insured is required to submit a police blotter report, an affidavit of damage, or, if the insured is required to fill out a form, the insured must comply with the formalities and documents required by the insurer. If there are also conditions set forth in the insurance policy, the insured must comply with such conditions. **RULE 02** If the insured entered into a disability insurance contract that stipulates that, in the event of a disability such as the loss of an arm or poor eyesight, the insured must submit a medical certificate issued by a governmental agency. Suppose that the insured suffered an accident that resulted in the loss of the arm. As a result, the insured filed an insurance claim and submitted a medical certificate issued by a private physician. However, the insurer denied the claim on the ground that the insured failed to pay the insurance premium. The insured appealed the decision to the Insurance Commission, who overturned the decision of the insurer and ruled that the insured was entitled to the insurance claim. Can the insurer subsequently raise the defense that the insured did not submit the required proof of loss pursuant to the insurance policy? No. The insurer cannot raise the defense that the insured did not submit the required proof of loss, as it is deemed waived due to the insurer\'s failure to promptly notify the insured of the defects in the submitted documents when it denied the claim. ::: {.section.footnotes} ------------------------------------------------------------------------ 1. ::: {#fn1} CCC Insurance Corporation v. Kawasaki Steel Corporation, et al., G.R. No. 156162, 22 June 2015[↩](#fnref1){.footnote-back} ::: 2. ::: {#fn2} Section 2(b) of the Insurance Code[↩](#fnref2){.footnote-back} ::: 3. ::: {#fn3} Sps. Tibay v. CA & Fortune Life and General Insurance Co., Inc., G.R. No. 119655, 24 May 1996[↩](#fnref3){.footnote-back} ::: 4. ::: {#fn4} Qua Chee Gan v. Law Union and Rock Insurance Co., Ltd., G.R. No. L-4611, 17 December 1955[↩](#fnref4){.footnote-back} ::: 5. ::: {#fn5} Pan Malayan Insurance Corp. v. CA, G.R. No. 81026, 03 April 1990[↩](#fnref5){.footnote-back} ::: 6. ::: {#fn6} Section 3, Insurance Code[↩](#fnref6){.footnote-back} ::: 7. ::: {#fn7} Section 3, Insurance Code[↩](#fnref7){.footnote-back} ::: 8. ::: {#fn8} Sylvia case[↩](#fnref8){.footnote-back} ::: 9. ::: {#fn9} Section 73, Insurance Code[↩](#fnref9){.footnote-back} ::: 10. ::: {#fn10} Multi-ware Manufacturing v. Cibeles Insurance Company, G.R. No. 230528, 1 February 2021[↩](#fnref10){.footnote-back} ::: 11. ::: {#fn11} Geagonia v. CA, G.R. No. 114427, 6 February 1995[↩](#fnref11){.footnote-back} ::: :::

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