I. Introduction 1.

sometimes the premium is actually taken from the common property or

separate properties.
A. What is Insurance? 2. If the payment of the insurance came from common property or
1. A contract whereby one party called the insurer undertakes for a consideration to pay property of either spouses, you will have to consider who will own the
another party called the insured or his beneficiary, upon the happening of a peril property o the insurance.
insured against, whereby the party insured or his beneficiary suffers loss or damage of
is exposed to liability Article 2011 The contract of insurance is governed by special laws. Matters not
expressly provided for in such special laws shall be regulated by this
Parties Code.

1. Insurer- one who undertakes for a consideration to pay another party called the insured Article 2012 Any person who is forbidden from receiving any donation under Article
for his beneficiary upon the happening of a certain peril 739 cannot be named beneficiary of a life insurance policy by the
2. Insured- one suffers loss or damage that would be paid by the insurer
person who cannot make any donation to him, according to said article.
B. History of the use of Insurance
C. Importance of Insurance to modern commerce Article 739 The following donations shall be void:

1. Scheme where economic damnification are spread out throughout the business, if not (1) Those made between persons who were guilty of adultery or
the cost of insurance are to be born individually concubinage at the time of the donation;
2. Regulation there is of public interest, a substantial bulk of financing in the Philippines
3. Certain business activities will not be taken. (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

II. The Contract of Insurance
ascendants, by reason of his office.
A. Applicable Laws -
a. RA 10607 (2013) re-enacted the Insurance Code of 1978 (PD 602) In the cases referred to in No. 1, the action for declaration of nullity
This law reenacted PD 602 as amended and introduced new concepts and provision. ( may be brought by the spouse of the donor or donee; and the guilt of
This law now includes a provision on microinsurance, bacassurance, trust operation of insurance the donor and donee may be proved by preponderance of evidence in
company) the same action.
b. Art 2011 CCP "Contracts of Insurance is governed by special laws
and matters not expressly provided for in special laws shall be
regulated by this Code". B. Requisites of the Contract of Insurance-
For instance, rules on perfection of contracts under Title IV of the New Civil Code on
obligations and contracts can be applied in the absence of provisions of the Insurance Code.
a. Object- The protection against loss, damage or
More specifically, the new civil code provides for grounds of disqualification of beneficiaries
under Article 2012 thereof. peril. The payment of indemnity when peril(contingency) arises ( the
The New Civil Code specifically deals with the right of the insurer to subrogation. If subject matter of the contract)
the plaintiff’s property has been insured, and he has received indemnity from the insurance b. Cause- The premium I cause of the obligation which is established, the
company for the injury or loss arising out of the wrong or breach of contract, the insurance rate of which is measured by the character of the risk assumed)
company shall be subrogated to the rights of the insured against the wrongdoer or the person
who has violated the contract. c. Consent- (See also Art .1327 and 1328, in relation
b.1. Civil Code Provision on donations. to persons who cannot give consent to contracts)
b.2. Civil Code Provisions on Wills and a.1.1 Persons who cannot give consent to a contract of insurance (Article 1327 and Article
Succession. 1328, NCC)
b.3. Provisions of the Civil Code on loss and fortuitous events.
An event which cannot be foreseen, and that if it is foreseen it is to be considered as Article 1327 The following cannot give consent to a contract:
inevitable. An accident is a fortuitous event. Why is it relevant to consider the provision of the
provision of loss and fortuitous event? (1) minors;
c. Certain provisions of the Family Code in relation to property Prior to 1986, you can be emancipated by reasons of marriage,
relationship between spouses.- This is relevant because they quickly amended the family code, so that the marrying age
is the same of the age of majority.
Do minors are always disqualified always to enter into a contract of insurance? Can a 16 year scheme to distribute actual losses among a large group
old minor enter into a insurance contract. of person bearing a similar risk and
Prior to 10607, minors can purchase life insunrace if they are
insuring the live of their parent or their siblings, but the amendment therein there is no more A part of a general scheme to distribute actual losses among large group of person bearing a
exemption. Minors cannot give consent to contracts. similar risk. This is an affirmation of the fact that insurance is a risk spreading devise. However
a single transaction may be deemed an insurance contract.
Minors can no longer enter into a contract of insurance, because e. In consideration of the insurer’s promise, the
a minor cannot enter into a contract. insured pays a premium.

(2) Insane or demented persons, and deaf-mutes who do not Case: VIRGINIA A. PEREZ vs. COURT OF APPEALS and BF LIFEMAN
know how to write.( they do not have a free will) INSURANCE CORPORATION
DOCTRINE
Article 1328 Contracts entered into during a lucid interval are valid. Contracts 1. A contract of insurance, like all other contracts must be assented to by both
parties, either in person or through their agents and so long as an application for
agreed to in a state of drunkenness or during a hypnotic spell are
issuance has not been either accepted or rejected it is merely a proposal or an
voidable.
offer to make

C. Elements of a Contract of Insurance - D. Characteristics of a Contract of Insurance

a. The insured has an insurable interest; A. ALEATORY- a contract is aleatory when one of the parties or both reciprocally bind
[Link] insured is subject to a risk of loss by the themselves to give or to do something in consideration of what the other shall give or do upon
happening of the designated peril the happening of an event which is uncertain or which is to occur at an indeterminate time. The
c. The insurer assumes the risk- the insurer will pay the insured if there case of insurance contract is not a contract of chance, but a contract where some of the rights of
if the risk insured against occurs. the parties are contingent upon chance or events.
 Insurance is not undertaken for profit purposes There is an element of risk. An aleatory contract is one which is dependent on the
occurrence of an uncertain event or one which is certain to happen but the time is unknown.
An aleatory contract contains elements of both a conditional obligations and the
A part of a general scheme to distribute actual losses among large group of person bearing a obligation is subject to a period.
similar risk. This is an affirmation of the fact that insurance is a risk spreading devise. However .
a single transaction may be deemed an insurance contract. Risk is an element of insurance B. bilateral- A bilateral contract is a reciprocal arrangement between two parties where each
contract that the insured is subject to the risk of loss by the happening of the designated promises to perform an act in exchange for other party act. Each party is an obligor ( a person
peril. who is bound to another) to its own promise and an oblige ( a person to whom another person is
The risk in this case must be a contingent or unknown even whether pass or future and it must obliged or bound ) on the party’s promise
damnify the insured or create liability against him. C. PERSONAL- the contract is personal because the contract is entered into with due
Uncertainty is a feature of insurance because it requires the presence of an unknown consideration to the circumstances of the parties.
and contingent event. The loss may or may not happen . 4. CONSENSUAL- the contract of insurance is perfected by mere consent without the need of
delivery or any formality.
As a general rule, the insurer is not liable for a loss due to the willful act except in 5. Uberrimae Fidae- the contract of insurance is one of perfect good faith. Thus both parties
some cases wherein he did not participate in his own willful act. must not only perform their obligations in good faith, but they must also avoid material
concealment or misrepresentation. The caveat emptor rule is not applicable.
Requisites of Insurable Risk
1. There must be a large number of homogenous exposure The obligation to maintain perfect good health is imposed not only to the ensured but
2. The loss must be accidental and unintentional also to the insurer as well This accounts for the readiness which the courts apply the doctrine of
3. The loss must be determinable and measurable estoppel as against the insurer when he seelks to take advantage of some condition of forfeiture
4. The loss should not be catastrophic in order to escape payment under the policy.
5. The chance of loss must be calculable
[Link] and Conditional- the contract is executory to the insurer and subject to conditions,
6. The premium must be economically feasible.
the principal one of which is the happening of an event insured against. In addition to the main
What is involved is Actuarial Risk, it is the risk that the cost of insurance claims might be higher conditopn, it usually includes many other conditions which must be complied with as precedent
than premiums paid. The amount of premium is to be calculate on the basis of assumption made to the right of the insured to claim the proceeds.
relative to the insured. 7. Onerous- This is a valuable consideration. Onerous describes a contract or lease that has
d. such assumption of risk is part of a general more obligations than advantages.
8. Form- It is a formal contract as the law requires a pre-approved contract called a POLICY.
E. Common Concepts IN Insurance builder’s risks, and all personal property floater risks;

Person or property in connection with or appertaining to a marine, inland marine, transit or

COMMON CONCEPTS IN INSURANCE transportation insurance, including liability for loss of or damage arising out of or in
connection with the construction, repair, operation, maintenance or use of the subject matter
Type of Insurance
of such insurance (but not including life insurance or surety bonds nor insurance against loss
a. Life Insurance –
by reason of bodily injury to any person arising out of ownership, maintenance, or use of
Section 181 of the Insurance Code defines insurance as an insurance on human lives and automobiles);
insurance appertaining thereto or connected therwith.
Life Insurance is not a contract indemnity. Consistently, the interest of the person Precious stones, jewels, jewelry, precious metals, whether in course of transportation or
insured in his or another person’s life is not susceptible of exact pecuniary measurement. Hence, otherwise; and
the measure of indemnity is whatever that is fixed in the policy
Section 186: Unless the interest of the person insured is susceptible of exact pecuniary
measurement, the measure of indemnity under the policy of insurance upon life or health is the Bridges, tunnels and other instrumentalities of transportation and communication (excluding
sum fixed in the policy. buildings, their furniture and furnishings, fixed contents and supplies held in storage); piers,
a. Individual life- the insured owns the policy and that it can be wharves, docks and slips, and other aids to navigation and transportation, including dry docks
taken( these are undertaken when personally) and marine railways, dams and appurtenant facilities for the control of waterways.
Upto retirement,
Marine protection and indemnity insurance, meaning insurance against, or against legal liability
[Link]- used to cover needs that will always be there such as funeral
expenses or supplemental income of the insured for loss, damage, or expense incident to ownership, operation, chartering,
2. Term- suitable for a more temporary needs or expenses that have a maintenance, use, repair, or construction of any vessel, craft or instrumentality in use of ocean
foreseeable end like mortgage and putting the children to school or inland waterways, including liability of the insured for personal injury, illness or death or for
b. Group life- the insured is a part of the employer’s group contract an loss of or damage to the property of another person.
can be covered under the group plan if eligible. ( usually it is the
employer who manages this) TWO BASIS TYPES OF MARINE INSURANCE
c. Industrial life- It is that form of life insurance under which the [Link] Machine insurance
premiums are payable either monthly or oftener If the face amount of An insurance against risk connect with navigation to which a ship, cargo, freightage, profits
insurance provided in any policy is not more than five hundered times
or other insurable interest in movable property may be exposed during a certain voyage or a
that of the current statutory minimum daily wage in the city of
fixed period of time.
Manila(eest2,000 pesos or less), and if the words industrial policy are
The different kinds of Ocean Marine Insurance may be group :
printed upon the policy as part of the descriptive matter.
b. Non-life insurance ( machinery and transportation) a. Insurance over the vessel craft and other conveyance
a. Marine Life- ( commercial marine vessel only – not military b. Insurance for the protection of the carrier against liability to others ofr the loss of
insurance)The term marine insurance cannot be given a simple damage to the property of another
definition, it has no unified conception. One might suppose that this c. Insurance over cargoes that are being transported and
type of insurance is limited to insurance that secures vessels and its d. Insurance over freight and income
cargoes against the perils of navigation, the present law does not limit B. Inland Marine Insurance
marine insurance to the risk of navigation.
Marine insurance may likewise cover risk that do not relate to navigation itself or transit
Enumeration of Marine Insurance of goods and passengers. The growth of transportation facilities and the expansion of
a. 3wInsurance against loss of or damage to inland business and commerce saw the need for a new type of insurance that cannot be
covered by ocean marine insurance and ordinary property or life insurance. ( Inland
Vessels, craft, aircraft, vehicles, goods, freights, cargoes, merchandise, effects,
Marine Insurance – insurance over cargoes, infrastructure and floaters)
disbursements, profits, moneys, securities, choses in action, instruments of debts, valuable
papers, bottomry, and respondent interests and all other kinds of property and interests
[Link] insurance
therein, in respect to, appertaining to or in connection with any and all risks or perils of
navigation, transit or transportation, or while being assembled, packed, crated, baled,
compressed or similarly prepared for shipment or while awaiting shipment, or during any Section 101 includes insurance over an aircraft as part of Marine Insurance. This includes
delays, storage, transshipment, or reshipment incident thereto, including war risks, marine different Aircraft Hull Policies which may take different forms depending on the type of
aircraft.
 the principal or obligor of an obligation or undertaking in favor
An Aircraft Hull Policy may cover all risks “ground and flight” which means that all damages of a third party called the oblige. It includes official
both on the ground and in flight are included. It may also cover insurance over the aircraft recognizances, stipulations, bonds or undertakings issued by
while the same is not in motion. any company by virtue of and under the provisions of Act No.
536, as amended by Act No. 2206.
[Link]
Section 178 The liability of the surety or sureties shall be joint and several
As used in the Insurance Code, the term “fire insurance” shall include insurance against loss
with the obligor and shall be limited to the amount of the bond.
by: (1) fire, (2) lightning, (3) windstorm, (4) tornado, (5) earthquake, and
It is determined strictly by the terms of the contract of
(6) other allied risks, when such risks are covered by extension to fire insurance policies or
suretyship in relation to the principal contract between the
under separate policies. Thus, fire insurance covers not only damage or loss by fire but also
obligor and the oblige.
allied risks if they are covered by extensions and separate policies.
Distinguished from Insurance Contract
[Link]
SURETYS INSURAN
Section 176 Casualty insurance is insurance covering loss or liability arising from accident or HIP CE
mishap, excluding certain types of loss which by law or custom are considered as falling There are three parties. The principal, There are two parties, the insurer and
exclusively within the scope of other types of insurance such as fire or marine. It includes, but oblige and surety. the insured.
is not limited to, employer’s liability insurance, motor vehicle liability insurance, plate glass The insurer expects loss to occur and in
The surety, in theory, expects no loss to
insurance, burglary and theft insurance, personal accident and health insurance as written by some cases, like life insurance, the loss
occur.
non-life insurance companies, and other substantially similar kinds of insurance. is
a certainty.
The surety has the right of
Thus, casualty insurance includes the following The insurer does not have the right of
reimbursement against the defaulting
[Link] and theft insurance reimbursement from the insured.
principal.
2. Personal accident and health insurance as written by non-life insurance companies
The surety guarantees qualities that
3. Plate glass insurance
are within the control of the insured, Insurance covers losses that are beyond
4. Employers liability insurance
that is, the insured’s character, the control of the insured.
5. motor vehicle liability insurance
honesty, and
[Link] substantially similar kinds of insurance integrity to perform the obligation.

d. Suretyship – if it is doing business in insurance business. Southern Luzon Employees vs Juanita Golpeo
Doctrine: The law on life insurance cannot apply to this case because it is a mutual
No. In order for a suretyship agreement to come under the purview of the Insurance Code, the
beneficial insurance. The rules on succession cannot have application in this case,
Surety undertaking to ensure the performance of the obligations must be registered with the
the contract of life insurance is a special contract and the destination of the proceeds
Insurance Commissioner and must have been issued by the latter with a certificate of authority.
thereof are to be determined by special laws that deal with that matter. The civil
Furthermore, the person acting as a surety is habitually engaged as such for a [Link]
code has no provision relating to life insurance contract or the destination of life
regulatory purpose,, a contact of suretyship shall be deemed to be an insurance contract within
insurance proceeds. That subject is exclusively regulated by the Code of Commerce
the meaning of the insurance code when made by a surety who or which as such is doing an
that provides for the terms of the contract, the relations of the parties and the
insurance business.
destination of the proceeds of the policy. ( Governed by the GODE OF
COMMERCE)
The contract of suretyship under the New Civil Code is simply defined as an
agreement whereby one binds himself solidarily with the principal debtor.
III. The business of Insurance
By suretyship, a person known as surety binds himself solidarily to the creditor to A. Doing an Insurance business- the term of doing business or transacting an
fulfill the obligation of the principal debtor. On the other hand, Sections 177 and insurance business includes :
1. Making or proposing to make as insurer any insurance contract
178 of the Insurance Code provides:
2. Making or proposing to make as surety any contract or suretyship as a vocation
and not merely incidental to any other legitimate business or activity of the surety
Section 177 A contract of suretyship is an agreement whereby a party called [Link] any kind of business, including a reinsurance business, specifically
the surety guarantees the performance by another party called recognized as constituting the doing of the insurance business
 Reinsurance : it is the practice whereby insurer transfer portions of the risk A contract of adhesion- it is to be construed against the contractor
portfolio to other parties by some form of agreement to reduce the likelihood of ( the insurance company
paying a large obligation resulting from an insurance claim
4. Doing o proposing to do any business in substance equivalent to any of the general rule that the insurance contracts are contracts of adhesion
foregoing in a manner designed to evade the provision of this code. which should liberally construed to be in favor of the insured and
Cases strictly against the insurer company which he usually prepares it .
A contract of adhesion is one wherein a party, usually a corporation
1. Republic vs Sunlife Insurance Company of Canada
prepares the stipulation in the contract, while the other party merely
How is this relevant to section 2? The practice of having mutual life
affixes their adhesion thereto. It is only when there is an ambiguity
insurance is similar to the cooperative ( SOUTHERN LUZON
that it is resolved against the insurer and liberally in favor of the
CASE) because the members are to obtain certain benefits. Which
accused- in this case this is not present
makes them eligible for certain tax breaks, ( kaya in this case they are
asking for their money)
4. Almendras mining Corporation vs Office of the Insurance
A mutual life insurance company is conducted for the benefit of its
Commission
member- policy holders who pay into the capital by way of premiums. To that extent
they are responsible for the payment of all its losses. In this case, the cash paid in Who has primary jurisdiction : It is the insurance commission who has
for the premiums and the premium notes constitute their assents, in the event the primary jurisdiction, it is the question on whether or not the party is suitable to
company itself fails before the terms of the policy expire, the member policy do business.
holders do not acquire status of creditors, they are merely debtors for whatever The Supreme Court held that it has no jurisdiction to try and decide the case. AMC should have
premiums that they gave originally paid the company if they have not yet paid those appealed the decision of the Insurance Commissioner to the Office of the Secretary of Finance.
amunts in full. Therefore, the mutual life insurance is a cooperative that promotes 1. As stated in the Insurance Code, the Office of the Insurance Commissioner is an
the welfare of its own members. It does not operate for profit, but for the benefit of administrative agency vested with regulatory and adjudicatory authority. It has the authority
its member -policyholders. to issue or refuse issuance of a Certificate of Authority to a person or entity desirous of engaging
in insurance business in the Philippines and to revoke or suspend such Certificate of Authority
2. White Gold Service vs Pinoeer Insurance upon finding of the existence of statutory grounds for such revocation or suspension.(
ADJUDICATORY)
Yes. It is an insurance business. Section 2.2 provides for what constitutes doing
2. The Commissioner may issue such rulings, instructions, circulars, orders and
insurance business or transacting an insurance business these are :
decisions as he may deem necessary to secure the enforcement of the provisions of
a. Making or proposing to make as insurer any insurance contract
this Code, subject to the approval of the Secretary of Finance. Except as otherwise
b. Making or proposing to make as surety any contract or suretyship as a specified, decisions made by the Commissioner shall be appealable to the secretary
vocation and not as merely incidental to any other legitimate business or of finance ( Regulatory)
activity of the surety
c. Doing any kind of business, including reinsurance business
The Supreme Court is not the proper party which can take cognizance of the case. The
d. Doing or proposing to do any business in substance equivalent to any of office of the Insurance Commission is an agency is vested with the regulatory power as well as
the foregoing manner designed to evade the provision of this code. adjudicatory authority. Among the several regulatory or non-quasi judicial duties of the
Insurance Commissioner under the Insurance Code is the authority to issue or refuse issuance of
The law provides that the fact that no profit is derived from te making of
a certificate of authority to a person or entity desiring to engage in the insurance business in the
insurance contract, agreement or transaction or that no separate or direct
Philippines and to revoke or suspend certificate of authority upon a finding of the existence of
consideration is received foes do not preclude the existence of an insurance
statutory ground for such revocation or suspension. ( the grounds for suspension are in Section
business. The test to determine if a contract is an insurance contract or not
241 and 247)
depends on the nature of the promise, the act required to be performed,
and the exact nature of the agreement in the light of the occurrence,
contingency or circumstances under which the performance becomes  What is the mode of appeal
requisites.
Insurance Commission
Secretary of finance ( The remedy afforded to you is administrative)
A mutual insurance company is a cooperative enterprise where the members are
both the insurer and the insured. In it the members of all contribute, by a system of
5. Philippine Health care Provider vs CIR
premiums or assessment to the creation of a fund from which all loses and liabilities
are paid and where the profits are divided among themselves in proportion to their
interest Doctrine: Principal object test, if the assumption of risk and indemnification of loss is the
3. Gulf Resort vs Philippine Charter Insurance Corporation principal object and purpose of the organization, it is to be considered as insurance
contract. ( Why did the supreme COURT NOT CONSIDER them to be doing insurance
business) If you are engaged in HMO you provide direct service, they are bound to offer you a b. Registered representative who work on a commission basis ( Civil code on agency)
continuing service whether you are not healthy or not)- this is a continuing service, unlike a
contract of insurance which will only happen when the peril arises.
Aboitz vs Insurance Company of North America

Philippine American Life Insurance vs Delos Reyes As a general rule , a foreign corporation cannot engage in business in the Philippines, exemption
is when they are exercised in a right of subrogation
The insurance commissioner has the authority to regulate the business of insurance which is
defined as follows The insurance company was claiming from ABOITZ as a right of subrogation.

1. The term doing an insurance business or transacting an insurance business within the Tongko vs De Dios
meaning of the code shall include making or proposing to make as insurer any
insurance contract making or prposing to make as surety any contract of suretyship as When it comes to determining relationship between the insurance company and the
a vocation and not merely incidental to any other legitimate business or activity of the agent, and that principle was stressed in PHILAM life, when you talk for a pure
surety agent, their relationship shall not be governed by any other law, it must be construed
under the insurance code
2. Doing any kind of business including a reinsurance business specifically recognized as
constituting the doing of the an isnurace business within the meaning of this code
B. What may be insured in a contract of insurance-
3. Doing or proposing to do any business in the substance equivalent to any of the a. Future, Contingent or past event may be insured. (Sec. 3. I.C.)
foregoing manner .
You can insure both
Section 3 Any contingent or unknown event whether past or future which may damnfy a person
The contract between PHILAM life and its agent does not fall under section2 of the having an insurable interest or create a liability against him be insured against
insurance code cannot be invoked to give jursidiciion over the same to Insurance Requisites for the Risk
Commissioner. ( it is an agency contract ) 1. A contingent or unknown event whether past or future
2. It must damnify the insured or created liability against him, the risk must be real and
The insurance code, the provision of the said chapter speaks only o the licensing such that neither the insured nor the insurance company may hasten or prevent it)
requirement and limitation imposed on the insurance agent and brokers. The insurance code
does not have provision governing the relations between the insurance agency and their [Link] can be insured in a contract of insurance
agents. It follows that the Insurance Commissioner cannot in the exercise of its quasi- a. Future, contingent or past even may be insured
judical power assume jurisdiction over controversies between the insurance company and b. Insurance on lottery ( difference between wager and insurance)
their agent.
Conditional- future and uncertain
HOWEVER: Insurance agents and brokers are under the regularotory power CONTINGENT EVENTS – FUTURE and UNCERTAIN
of the Insurance Commissioner. Hence the insurance commissioner can revoke their license Uncertainty is a feature of insurance contract because it requires the presence of an
in Proper cases, In addition, administrative sanctions can be imposed by the Insurance unknown and contingent event, The loss may or may not happen, in the case of life
Commissioner on erring insurance agent and broker insurance the uncertainty is with respect to the time and death will occur. The loss in this
case does not include losses from ordinary wear and tear do not entitle the assured to
recover unless an express stipulation enables him to do so , the insuring to all risk is not
In matters related to the insurance companies and its frontliners who regulates their enough.
relationship? Who will regulate the relationship? Insurance code will apply.
Exemption: Death is not an uncertain event hence it is not a condition but rather a
When it comes to settling dispute between insurance company and its agent- the rule which period
would be used is the insurance code. ( if this provision does not exist it will be the civil Risk
code who will regulate it)- if settle dispute- it is limited to adjudicating claims. The risk that can be assumed is the pure type of risk that is defined as a situation
where the possibility is either the person involved will suffer a loss or he will not suffer a loss .
There are two kinds of agent who sell its insurance policies
PURE RISK RESULTS IN EITHER LOSS OR NO LOSS.
Speculative risk- May either result in gain or loss, for example gambling because the
a. Salaried employee who keep definite hours and work under the control and player may lose or he may win. ( LOSS OR GAIN)
supervision of the company- ( the relationship is to be covered by the LABOR CODE)
PAST EVENT- A past event that may be insured against is peculiar to Marine Insurance There
can be an insurance of a past event , as long at the time the policy was taken the parties were not
aware that the insured item or thing was already lost. Hence, the result is the insurer will pay
even if the ship turns out to be lost at the time the policy was taken. Tends to equalize fortune. Tends to increase the inequality of fortune.
CIVIL CODE PROVISION ON RISK INSURANCE
A Condition is generally a future and A risk in this case, may be a future or What one insured gains is not at the expense of Essence is whatever one person wins from a
uncertain event uncertain event or it may even be a period in
cases of life insurance. another insured.  The entire group of insureds wager is lost by the other wagering party.

provides through the premiums paid, the funds

As a rule, losses that arise from the very nature of the condition are not covered by the insurance
contract UNLESS there is an express provision in the policy. Generally, insurance covers only which make possible the payment of all claims;
those which impinge or arise from external causes ( except for life insurance )

b. Insurance on Lottery (Sec. 4, I.C.); difference between Insurance and Purchase of insurance does not create a new and As soon as a party makes a wager, he creates
Wager. non-existing risk of loss to the purchaser.  In a risk of loss to himself where no such risk
As a general rule( NOT INSURANCE) purchasing insurance, the insurer faces an existed previously.
1. Consideration
2. Price already existing risk of economic loss.
3. Chance

For lottery to exist, three elements must concur, the lottery extends to all scheme for the
distribution of prices , however this definition does not apply to contracts of insurance. What are the similarities between an insurance contract and a gambling contract?
As provided under section 4 of the contract of insurance, it prohibits for any game against any They are similar in only one respect. In both, one party promises to pay a given sum to the
chance. An insurance against a chance to win a prize is prohibited even if there is no lottery. other upon the occurrence of a given future event, the promise being condition upon the payment
of, or agreement to pay, a stipulated amount by the other party to the contract.
An insurance contract will be a wager when:
1. The beneficiary may freely take the initiative in procuring the contract In either case, one party may receive more, much more, than he paid or agreed to pay.
2. The beneficiary has no interest in the life insured.
Problems.

Distinctions between an insurance contract and a wagering contract A, B, C and D decided to join a bungee jumping competition. They contributed P1,000 each to
a fund available for the use of any member who is injured in the contest. Is this insurance or
3. A contract of insurance is a contract of indemnity and not a wagering, or gambling gambling?

contract.(Sec. 25)  White it is based on a contingency, it is not a contract of chance and This is an insurance contract. Each member contributes to a common fund, out of which
one is reimbursed for the losses that he may suffer.
is not used for profit.  The distinctions are the following:
Suppose A, B, C, and D agree that the whole amount of 4T would be given to the one who
4. swings nearest to the ground. Is this insurance or gambling?

This is now a gambling contract. The parties are now contemplating a gain based upon
Insurance Contract- based on contingency, Gambling contract- chance , profit uncertain events.
indemnification ,
Cases: Lorcom Thirteen (Pty) Ltd v Zurich Insurance Company South Africa Ltd (54/08)
[2013] ZAWCHC 64; 2013 (5) SA 42 (WCC); [2013] 4 All SA 71 (WCC) (29 April 2013)
Parties seek to distribute loss by reason of Parties contemplate gain through mere chance
Lorcom doctrine: For you to have a valid contract of insurance you have to have a insurable
mischance or the occurrence of a contingent event.
interest, if not merely a wager. When you have insurable interest, it does not necessarily equate

Insured avoids misfortune. Gambler courts fortune to ownership- insurable interest does not necessarily equate to full ownership. Certain rights is
 that as a subsidiary and the sole subscriber of GFW, it should be allowed to obtain
enough to grant you insurable interest. ( in this case the ship lost at sea is not the same as the insurable interest .
basketball game)
Issue: Whether LORNCOM has an insurable interest? ( The policy states kasi that it was
GFW who was the owner of the ship)
Commonwealth time .You do not have insurable interest but you can actually obtain insurance
Ruling:
over it. What distinguishes insurance from the common wager? INSURABLE INTERST. In Yes. Upon interpretation of the policy, the court found that Lorcom did have an
wager, there is ni insurable interest. ( 1700 people are granted a right over contracts of insurance insurable interest as it was 100% shareholder of GFW and there was a “ direct correlation
between the company’s financial welfare and the shareholders financial welfare. This factor
to those without any insurable interest on its own) coupled with Lorcom’s right of use and the purchase agreement which would have vested
Lorcom the ownership gave Lorcom an insurable interest entitling it to claim the loss of the
property.
Doctrine : Expansion on the concept of Insurable Interest
The court declined to comment on the shareholder not holding 100 percent of the
company since in this case 67.5 percent lang. Also, there is no reason why a majority
Background shareholder not holding 100 percent share in the company should not be able to insure the
In this case, Theart is a fisherman, he later asked his friend Crous for help in order to property of such a company. This is because the same logic applies to a majority shareholder as
possess the ship Bucaneer which at that time was owned by Gansbaii. It is noted that LORCOM it would be a sole shareholder, being that the economic livelihood of the company may depend
owned all the shares of GFW. In this case Crous owned ( 62.5 %) stocks of GFW. The on the asset whether such asset is then destroyed, this will have effect on shareholder of that
remaining 37.5% was owned by Bucanner Crew. company. Hence such shareholders should be able to take out an insurance policy to cover the
In order to purchase the vessel, Threat and Crouz had an arrangement wherein the risk of loss or destruction to a company
former will purchase the shares of stock of Millivent in order to obtain the 62.5% stock of
Crouz. An insurance agreement was entered into and that it was stated therein that the insured
party was Lorncom , but the owner of the ship was GFW. III. PARTIES TO A CONTRACT OF INSURANCE -

What was stated in the purchase agreement : A. THE INSURED- the person who applied for and to whom an insurance policy is issued
to cover his life, property he has insurable interest or liability. ( he is the one who enters
1. Threat was to pay R3.8 Million of the members interest in Millivent. A deposit of into the contract with the insurer. )
R500 was payable on signature the balance is to be paid in installments, upon the a. Insured vs Assured-
last installment Milivent would be the owner of 62.5 share and Lorncom would
be the owner of the fishing permit and the vessel. This vessel was later insured a. Insured- A person to whose life is insured
( the proposed insured party is Lorncom , but it did not state who is the true b. Assured- the person who took out the life insurance
owner of the vessel, hence there is an assumption or through evidence it was
assumed that GSF is) PRIOR TO THE FAMILY CODE, a married woman cannot obtain life insurance prior to the
family code.
LornCom vest its argument on the purchase agreement B. Married woman may enter into contracts of insurance without the consent of their
1. That it was the sole shareholder of the owner GFW spouses ( Section 3. Family code simple acts of administration can be exercised by every
2. That the terms of the purchase agreement Lorcom was to be vested with the ownership spouse)
of the vessel by effective date a. In entering into an insurance contract, both the spouses need not consent if the policy is for
3. Lorcom had the right to use the vessel himself, his and her children
4. Lorcom has the fishing permit b. In entering into an insurance contract in favor of another other than his spouse, himself
and children
Facts :
The plaintiff in this case is the sole shareholder of GSF ( Gansabaii fishing 1. If the absolute community property- It is an act of
wholesaler)its subsidiary, GFW owned a fishing vessel in which Lorcom was vested a right of administration and must be exercised by both spouses
use and was to be vested ownership at effective date. Lorncom took out an insurance policy with jointly, in case there is a disagreement, the husband’s
ZURICH insurance to insure against any loss or damage to the vessel. When the vessel was lost decision prevails
at sea, Lorcom lodged a claim with Zurich Insurance which Zurich rejected on the ground that 2. If the insurance policy s for one’s own life and a third
Lorcom lacked insurable interest as it was not the owner of the vessel which it formed the person is made beneficiary- it must be approved by BOTH
subject matter of the insurance policy. Lorcom thus sued Zurich for R3Million it owned . The of the spouse.
insurance contract states that the owner of the ship is GFW, LORNCOM was alleging now
 What is the effect of war on the existing insurance contracts between the Philippines and a
citizen or subject of a public enemy, with respect to life insurance?
In life insurance, if a person insures the life on another, the person whose Three doctrines have arisen.
life is insured is called "the insured", while the person who took out the (1) Connecticut Rule – there are two elements in the consideration for which the
insurance is called the "assured". annual premium is paid:
a. The mere protection for the year; and
b. Married women may enter into contracts of insurance without the need of the b. The privilege of renewing the contract for each succeeding year by paying the
consent of their spouses. (cf. Sec. 3 ICP). premium for that year at the time agreed upon.
c. Minors may not enter into contracts of insurance. (nb. previously under PD
602, Minors may obtain life insurance over the life of his parents or siblings. This was Accdg. to this view, the payments of the premiums are a condition precedent, the
deleted in Sec. 3 of RA 10607) non-performance of which (as when the performance would be illegal) necessary defeats
the right to renew the contract.
2013- this privilege ended when the New Insurance Code took effect. PD 602 Minors can
obtain life insurance ( Meaning if this is the year 2012, a minor can obtain life insurance over (2) New York Rule – apparently followed by the number of decisions. War between
the life of the parents or the sibling) the states in which the parties reside merely suspends the contracts of life insurance and
Minors cannot enter into insurance contract. The rule under the New Civil Code is that that upon the tender of premiums due by the insured or his representatives after the war
contracts entered into between the minor and capacitated person is considered voidable. But the has terminated revives the contract which becomes fully operative.
life of the minor can be insured.
(3) US Rule – declared the contract not merely suspended but is abrogated by reason
c. Effect of death of owner- Applicable only to life insurance. “All interest, title and of non-payment of premiums, since the time of the payment is peculiarly of the essence
interest in the policy of insurance taken out by an original owner on the life or health of the contract. However, the insured is entitled to the cash or reserve value of the policy
of the person insured shall automatically vest in the latter upon the death of the (if any) which is the excess of the premiums paid over the actual risk carried during the
original owner, unless otherwise provided for in the policy”. years when the policy had been in force.

Example: The life of the minor can be insured by his parents. If the parents who are We follow the US Rule.
originally owners of the policy will die, all the rights, title and interest in the policy
shall automatically vest with the minor. Problem.

This provision previously applies to minor only, but the law deems it “ B is sideswiped by a balut vendor. Because he was previously indicted for many other crimes
person insured”the last paragraph is no longer limited to insurance taken on the life including illegal possession of balisongs, he was declared Metro Manila’s Public Enemy No.1.
of minor. – BUT TO ALL If A wants to secure insurance on the life of B, may the insurer refuse on the grounds that B is a
d. Public enemy - Sec. 7 of the ICP Provides "Anyone except a public enemy may be public enemy and therefore may not be insured under Sec. 7 of the IC?
insured". A public enemy is a state or citizens of a state at war with the Philippines.
NO. Sec. 7 speaks of a public enemy only in reference to a nation with whom the Phil is at
“ sabi ni bernas, wars were often not declared. It is hard to say that we are at war with another war and every citizen and or subject thereof.
country even if there is an exchange of bullets with them. ( Congress will often not declare a
state of war) – it is impossible because congress will not declare Cases.

What are the requisites in order that a person may be insured in a contact of insurance? (11) Filipinas Cia de Seguros v. Christern Huenfeld & Co.
There are 3 requisites namely: 80 PHIL 54
a) He must be competent to enter into a contract.
b) He must possess an insurable interest in the subject of insurance. Facts:
c) He must NOT be a public enemy.  Oct. 1, 1941, Domestic Corp Christern, after payment of the premium, obtained from
Filipinas, fire policy no. 29333 for P100T covering merchandise contained in a building
What is a public enemy? located in Binondo.
It is a nation with whom the Philippines is at war, and it includes every citizen or subject of  On Feb. 27, 1942, during the Jap occupation, the building and the insured merchandise
such nation. were burned. Christern submitted to Filipinas its claim.
 Salvaged goods were sold and the total loss of Christern was P92T.
What is the effect of war on the existing insurance contracts between the Philippines and a  Filipinas denied liability on the ground that Christern was an enemy corp and cannot be
citizen or subject of a public enemy, with respect to property insurance? insured.
With respect to property insurance, the rule adopted in the Phil is that an insurance policy
ceases to be valid and enforceable as soon as the insured becomes a public enemy. Issue: WON Filipinas is liable to Christern, Huenfeld & Co.
Held: NO. business, except MUTAL BENEFIT association , unless the context otherwise requires, the
Majority of the stockholders of Christern were German subjects. This being so, SC ruled term shall also include professional reinsurers .
that said corporation became an enemy corporation upon the war between the US and Germany.
The Phil Insurance Law in Sec. 8 provides that anyone except a public enemy may be insured. It CAN THE insurer be a natural person?
stands to reason that an insurance policy ceases to be allowable as soon as an insured becomes a No. it cannot be a natural person.
public enemy.
a.1.1 Insurance Companies and Reinsurance Companies
The purpose of the war is to cripple the power ad exhaust the resources of the enemy, and it Professional Reinsurer- any person, partnership, association or corporation that
is inconsistent that one country should destroy its enemy property and repay in insurance the transacts solely and exclusively reinsurance business in the Philippines.
value of what has been so destroyed, or that it should in such manner increase the resources of
the enemy or render it aid. An insurer may be DOMESTIC OR FOREIGN. Domestic company shall include
companies formed, organized or existing under the law of the Philippines. Foreign Company
All individuals who compose the belligerent powers, exist as to each other, in a state of when used without limitation shall include companies formed, organized or existing under any
utter exclusion and are public enemies. Christern having become an enemy corporation on Dec. laws other than those of the Philippines.
10. 1941, the insurance policy issued in his favor on Oct. 1, 1941 by Filipinas had ceased to be
valid and enforceable, and since the insured goods were burned after Dec. 10, 1941, and during a.1.2. Partnerships, persons, associations etc.
the war, Christern was NOT entitled to any indemnity under said policy from Filipinas.
A partnership can be an insurer, in applying section 6 you do not look at the labels, the
Elementary rules of justice require that the premium paid by Christern for the period important thing is the nature. ( even if it is an association, and named as association it is engaged
covered by the policy from Dec. 10, 1941 should be returned by Filipinas. in an insurance business. There are many cases where certain practice of cooperatives or
association may constitute certain practices of insurance business.
f. Capacity of Insured to contract in relation to the Civil Code. (See Art. 1327 and
1390 CCP) ( is there a need for the declaration of war?) a.1.3. Mutual Benefits Association- (Sec. 184 IC)

There are two classes of persons cannot give consent to a contract Reinsurance company- insurance company who insure another insurance company.
Definition: Mutual benefit associations are any society, association or corporation
1. If you are one of the person listed 1327( general disqualification from giving consent to any without capital stock formed or organized not for profit but mainly for the purpose of paying
kind of contract) sick benefits to members, or of furnishing financial support to members while out of
2. Particular disqualification ( these are people not the same in article 1327) the law gives employment, or of paying to relatives of deceased members of fixed or any sum of money
certain allowance for them to enter into a contract( those under civil interdiction, you cannot irrespective of whether such aim or purpose is carried out by means of fixed dues or assessment
enter into a contract of insurance). collected regularly form members.
Although excluded for the term insurer, the Insurance Commission still has
Example : Pemberton after pardon can now be sold a contract of insurance. REGULATORY power of the Insurance Commission
1390( VICES OF CONSENT)
1. Violence a.1.4. Mutual Insurance Companies (sec. 268 IC)
2. Undue influence ( a relationship of the college
SUNLIFE AND MANULIFE ARE demutualize companies ( Client) if the share is
professor and a student)
on mutual insurance company you are mutual insurance company
3. Intimidation
Any domestic stock life insurance company doing business in the Philippines may
4. Fraud convert itself into an incorporated mutual life insurer .TO that end , it may provide and carry out
a plan for the acquisition of the outstanding shares of its capital stock for the benefit of its
policyholders or any class or classes of its policyholders by complying with the insurance code.
B. THE INSURER-
a. Who can be an Insurer (Sec. 6, I.C.)- Every person, partnership, association
a.1.5. Cooperative and Cooperative Insurance Societies (Sec. 190 IC, in relation to Arts.
or corporation duly authorized to transact insurance business may be an insurer.
105-109 Philippine Cooperative Code)
Every person or corporation who is engaged in the business of making insurance contract of
Existing cooperatives may organize themselves into a cooperative insurance entity for the
insurance.
purpose of engaging in the business of insuring life and property of cooperative and their
members.
a.1. Kinds of Insurers
Art 106-under the cooperative insurance program, formed by virtue of the insurance
code, the cooperative insurance societies shall provide its constituting members different types
The term insurer or insurance company shall include all partnership, associations ,
of insurance coverage consisting of but not limited to Life insurance, with special group
cooperative or corporation including GOCC or entities engaged as principals in the insurance
coverage loan protection, retirement plans , endowment, motor vehicle coverage, bonding crop insurance has been effected any rebate from the premium which is specified in the
and livestock protection and equipment insurance . policy or any special favor or advantage in the dividends or other benefits to accrue
thereon
a.2. Basic Qualification of Insurer (Sec. 192 IC). 5. To give or offer to give any valuable consideration or inducement of any kind ,
No person, partnership or association of person shall transact any insurance business in the directly or indirectly which s not specified in the policy of contract of insurance
Philippines except as agent of a person or corporation authorized to do business of insurance 6. To make any discrimination against any Filipino in the sense that he is given less
in the Philippines UNLESS
advantage rates, dividends or other policy conditions or privileges that are accorded to
1. Possess of the capital and assets required Philippines and invested in the same
other nationals because of his race
manner (it must be substantial).
7. To use or circulate or cause to permit to be issued or circulate any sort of statement
2. Nor unless the commissioner shall have granted to him or them a certificate to the
promised thereby
effect that he or they have complied with all the provisions of the law which an
8. TO use any name or title of any policy, or class of policies misrepresenting the true
insurance corporation doing business I the Philippines is required to observe ( Given
nature thereof and
by the insurance commission)
9. To make misleading representation or incomplete comparison of policies to any person
insured in such company for the purpose of inducing tending to induce such person to
a.3. Certificate of Authority required for insurance companies (see lapse, forfeit or surrender his said insurance
Sec. 193 IC). 10. To commit unsafe business practice of acts.

’” No insurance company shall ntrasact any insurance business in the Philippines until
after it shall have obtained a certificate of authority for that purpose form the insurance C. THE BENEFICIARY-
commissioner upon the application therefor and payment by the company concerned of the
fees”” a. Definition of beneficiary (Sec. 53)
The certificate of authority is required because contracts of insurance involve public
interest and regulation by the secretary of the state is necessary. BENEFICIARY, a person to whom the proceeds are to be applied to. Can the insured
be a beneficiary? Yes he can be.( pero it rarely happens) What If dead? If there are no
Terms of the certificate : other beneficiary, the proceeds will go to the estate.
1. Shall expire on the last day of December, three years following the date of issuance
2. Renewable every three years subject to the ocmpnay continuing compliance with the On the other hand, a person may ensure his own life or property and designate
provision of the code. somebody else of a third person as a beneficiary. The designation of the third person as a
beneficiary may be required by a separate agreement as in the case of mortgage who is
designated by virtue of a stipulation in a mortgage who is designated by virtue of a stipulation in
Case: White Gold Marine Services Inc. vs. Pioneer Insurance and a mortgage contract. THE DESIGNATION may also be based on the will.
Surety [Link]., G.R. No. 154514, July 28, 2005.
White Gold obtained an insurance from steamship, the agent was Pioneer Insurance ( without b. Effect of designation of beneficiary - A person designated to be a
any license). The issue here is whether or not steamship engaged in insurance business, the main beneficiary in life insurance is the person entitled to receive the
problem is if steamship does not have any license he cannot ask for payment , he cannot go to proceeds , which may be difference from the heirs of the insured.
court to demand to be paid the premiums. When there is a valid designation, the proceeds shall not form part
of the estate of the insured.
Paano ka collect ng premium if wala kang license?
In life insurance , if there is a named beneficiaries and the designation is not invalid, it
c. Prohibited Acts for Insurers (Sec. 193 IC) - is the designated beneficiary who is entitled to receive the proceeds and not the heirs of the
insured. If another person is named the beneficiary, the proceeds of an insurance policy belong
The insurer is prohibited from doing among others the following: exclusively to the beneficiaries and not the estate of the person whose life was insured , In other
1. To transact in the Philippines both the business of life and nonlife insurance words, the proceeds are the separate and individual property of the beneficiaries and not the
concurrently unless specially authorized to do so. heirs of the person whose life was insured.
2. To have an equity in an adjustment company, neither shall an adjustment company
have an equity in an insurance company c. Third Parties - The insurer has no obligation to turn over the proceeds
3. To negotiate any contract of insurance other than its plainly expressed in the policy r of an insurance to third parties even if they are immediate relatives
other written contract issue to or to be issued as evidence thereof. of the insured.
4. To directly or indirectly by giving or by sharing a commission or in any manner The only person entitled to claim the insurance proceeds are either the insured, if still
alive or the beneficiary, if the insured is already deceased, upon the maturation of the policy.
whatsoever pay or allow or offer to pay or allow to the insurer or to any employee of
( this is measured from the face value of the property)The exception is a situation where the
such insured either as an inducement to them asking of such insurance or after such
insurance contract was intended to benefit third person who are not parties to the same in 1. After the finality of legal separation the innocent spouse may revoke the designation as
form of favorable stipulation or indemnity. a beneficiary in any insurance policy even if such designation is stipulated as
irrevocable
( example ni sir pede bai claim ng fam niya ung beneficiary na nakasulat si Kris Aquino?)= no 2. Life insurance policy.
bawal only the designated beneficiary can claim
Section 12: In cases where the forfeiture of the rights of beneficiaries .
Gen rule: The proceeds of the insurance belongs to the beneficiaries
Exemption: If there is no designate beneficiary the proceeds shall form part of the RA 10607- This case applies when at the inception of the contract, he later becomes disqualified
estate of the deceased.( the rules of survivorship will apply if both the beneficiary and the after the contact’s perfection. The underlying principle is the beneficiary should not benefit from
insurer died AT THE SAME TIME_ his misdeed .

If the property was bought using the conjugal funds Changed the default rules on beneficiary under section 12 of the life insurance, if a
beneficiary is disqualified under section 12, the proceeds of the insurance shall be paid in
The policy shall belong to the conjugal property of the spouses , the policy is accordance with the following rules:
community. 1. The forfeited share shall pass to other beneficiaries
Case: Heirs of Loreto C. Maramag vs. Eva Verna Maramag G.R. No. 2. If there are no other beneficiaries, the proceeds shall be paid in accordance with other
181132 June 05, 2009. policy contract
3. If there are no other beneficiaries and there is no provision in the policy contract, the
Notes: proceeds shall be paid to the estate of the insured.
In this case, the concubine and the illegitimate children are the designated Grounds for disqualification:
beneficiary. No. In order for a suretyship agreement to come under the purview of the 1. Those made between the person who were guilty of concubinage, and adultery at the
Insurance Code, the Surety undertaking to ensure the performance of the obligations must be time of donation thereof
registered with the Insurance Commissioner and must have been issued by the latter with a 2. Those made person found guilty of the same criminal offense, in consideration thereof
certificate of authority. Furthermore, the person acting as a surety is habitually engaged as such
3. Those made to public officers or his wife, decedent and ascendant by reason of his
for a livelihood.
office.
What will happen when the designated beneficiary to the policy are third parties?
As a general rule only the person who are the beneficiary can claim the proceeds of Note: The disqualification only comes into play with the concubine and mistress(it does not
insurance, exemption where the insurance contract is intend to benefit third persons who are not apply to illegitimate children. A conviction of adultery or concubinage is not necessary for one
parties of the insurance contract, they can now claim. to be disqualified. All that is needed is the preponderance of evidence.
The spouse is prohibited from donating to the other spouse under the NCC and Family
The third party in this case is the paramour, the paramour cannot be considered a code, this prohibition does not apply to insurance contact. The proceeds of the insurance policy
beneficiary ( you cannot enter into any kind of contract to benefit your paramour) What if the cannot be considered as a donation or gift.
claimant has illegitimate children? The proceeds of loreto’s insurance are given to the
illegitimate children because they are still designated beneficiaries in the contract of insurance. ASSIGNEMNT OF THE POLICY
d. Effect when there is no designated beneficiary or the designation is void- Article 184: A policy of insurance upon life or health may pass by transfer will or succession to
The rules of succession will apply. any person whether he has an insurable interest or not and such person may recover upon it
If there is no designated beneficiary or when the designation is void. the proceeds will go to the whatever the insured may have recovered.
estate.
Sec 11: The insured shall have the right to change the beneficiary he designated in the policy No formalities are required for the assignment of life or health insurance policies.
unless he expressly waived this right in the said policy. Notwithstanding the foregoing in the Hence the provision of the NCC on assignment of rights should be applied. Notice to the insurer
event the insured does not change the beneficiary during his lifetime, the designation shall be is not even necessary to validate the transfer. The assignment acquired right thereon even
deemed irrevocable. ( DOES NOT APPLY TO LIFE INSURANCE) without the knowledge of the insurer. In case of double assignment, the applicable principle is
prius tempore portior jure- “first in time first in right””
As a rule, the designation of the beneficiary is revocable. If the insured wants the ASSIGNMENT OF THE THING
designation to be irrevocable, the irrevocable nature should be provided for in the policy.( the
rule on the insured does not change the beneficiary during his lifetime the designation shall be The mere transfer of the thing insured does not transfer the policy, but merely suspends it until
deemed irrevocable THIS RULE does not apply to life insurance) hence in life insurance policy, the same person becomes the owner of both the policy and the thing insured.
it can be revoked. The policy can be transferred so long as the transferee has insurable interest in the
thing insured, if the transferee does not insurable interest there is an need for the assent of the
EXCEPTION: when is it revocable INSURER.
Exception: cases involving transfer through wills and succession and other instances of transfer .
by operation of law

Cases: Maramag vs. Maramag (Ibid)

SSS vs. Candelaria Davac G.R. No. L-21642, July 30, 1966.
 Case involving the SSS law and not the insurance code. The SSS is not an
insurance company ( SSS has similar characteristics that are similar to the
insurance law) What is the relevance of this case? There are certain characteristics of
SSS benefits that is actually parallel to insurance. You are taking this case as part of
understanding on who should be considered as beneficiaries, there is a
parallelism . How will the law treat the designation of beneficiaries and what will
happen when the designation of beneficiary is void?

DOCTRINE
When Petronilo died, the law that was in force was RA 1792 under the said provision it was
stated that his beneficiaries as recorded by the employer is the one entitled to the benefits .
Appellant ( First wife)
1. The donation is void because it contravenes the provision of the civil code
2. It deprives the lawful life of his or her share in the conjugal property as well as her
own and her child legitime in th inheritance.

The appellant in this case argues that the law on insurance should be applied
in this case ( it is the nature of the beneficiaries of life insurance policy) the
same qualification and disqualification should be applied.

Invoking article 2012

Any person who is forbidden from receiving any donation under Art 739 cannot be
made beneficiary of a life insurance policy by the person who cannot make any donation to
him according to the said article.

Note : the court did not rule on whether naming of the beneficiary is in the nature of a
donation or that it creates a situation that is analogouos to life insurance policy.

ISSUE : Whether the disqualification under Act 739 is applicable.

RULING
NO. They are not. Article 739 is not applicable to the appellee Candelaria because
she was not guilty of concubinage there being no proof that she had knowledge of the
previous marriage of her husband Petronilo. Regarding the second point, the benefits
accruing from membership in the SSS do not form part of the properties of the conjugal
partnership of the covered member. They are disbursed from a public special fund created by the
congress in pursuant to “” develop, establish and gradually and perfect a social security system
that provides protection against the hazard, disability, and old age.

The benefit receivable under this act is in the nature of the special privilege or
arrangement secured by law. The amounts that may thus be received cannot be considered as
property earned by the member during his lifetime.
The settlement of claims thereunder the procedure to be observed is governed not by
the general provision of law but by the rules and regulation promulgated by the commission.
Thus if money is payable to the estate of the deceased member, it is the commission and not the
probate or regular court that determines to whom it is payable.